To Fix or Not to Fix?

That is the question. In any rate environment, clients are wrangling over whether to fix the rate or float it. Particularly when you get into swap deals, this issue tends to arise. We have done deals were clients fix part of the loan and float part of it, where they float with the right to fix for up to the first 24 months following closing, or just about any combination you can imagine.Last year, we financed the acquisition of a 45-unit apartment complex in suburban Philadelphia that included around $8.5 million in acquisition and closing funds and around $1 million of available loan proceeds for future capital improvements. Overall, this represented 75% of total project cost. The client’s plan was to renovate half of the units initially and the other half over time as they turn over, funded through cash flow.


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