Call Us: (800) 419-4923
 Call Us: +44 (0)20 3865 7701
 Call Us: (787) 822-8377
 Call Us: (437) 855-4925
Partner Engineering and Science, Inc.
Partner Engineering and Science, Inc.
You are here: Home » Resources » Articles » Bridge, CLOs and Construction Risk: 6 Questions To Ask

December 9, 2021

Bridge, CLOs and Construction Risk: 6 Questions To Ask

By Charles Tallinger, LEED AP

Collateralized Loan Obligations (CLOs) and bridge lending hit record levels in 2021, driven by market uncertainty, a large inventory of transitional assets and an insatiable demand from the debt capital markets. Feedback from our clients confirms that they see no sign of the CLO market slowing in 2022.

These loans “bridge” the gap between acquisition and permanent financing and the CLO structure provides funding mechanisms for the sponsor to implement the necessary renovation or redevelopment required to stabilize the asset. Proper execution of the renovation/redevelopment plan by the sponsor is integral to the success of the loan and experienced CLO originators understand the need to manage the construction risk associated with these projects.

As a bridge or CLO lender, are you properly quantifying and underwriting the risks associated with the construction component of the loan? What risk management protocols do you have in place? Are they enough?

With so many fresh players entering the bridge lending and CLO space in the last two years we have seen some that aren’t doing enough to mitigate risk. In this Globe St. article, Charles Tallinger discusses what questions to ask yourself and your consultant to gain greater certainty of execution. 

Other Resources You Might Like

Let us be your Partner

Learn how we can support your next project or share insights via our newsletter.
crossmenuarrow-up linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram