When the exit slips on a 12-month bridge, who pays for the extension?

Before the pricing, what actually happens on day 366 if the refi isn't ready and they've already used the extension? Does the rate step to default interest, and at what number? I've seen 18% to 24% mentioned and I don't know if that's typical or the scary end.

The month 7 certificate of occupancy is the number I'd push on. Final inspections and the utility connection are outside the sponsor's control and they routinely add six to ten weeks in the jurisdictions I work in. A 12-month plan with permits in it is usually a 14-month plan wearing a 12-month schedule.

Panel upgrades are the quiet killer on lease-up timelines. If the service has to be increased the utility schedules it when they schedule it, and eight weeks isn't unusual. No amount of extension fee makes that faster.

Stabilized doesn't mean full. Most DSCR and agency takeouts I've looked at want 90 days of trailing collected rent, sometimes 90% occupancy for three consecutive months. So the clock on the refinance starts after lease-up finishes, not when the last unit signs. That alone is a quarter nobody puts in the pro forma.

Bridge money on anything with a discretionary approval in the path is a bet on a hearing calendar, and hearing calendars get continued for reasons that have nothing to do with your borrower. If the exit needs a public body to say yes, the term should be double what the sponsor thinks.

The extension point is cheap. What hurts is three extra months of interest on a loan sized to a construction budget that already went over, because the overrun and the delay are the same event. If a sponsor is short on the rehab they'll be short on the extension too, and you find out in the same phone call.

Reading all this, I don't understand how you'd ever get comfortable stressing the takeout at today's rates when nobody knows what rates do in 14 months. Do you just pick a number and see if the deal survives it?