What Comes After the Maturity Wall: The Refinance Gap and the New Reset Reality

December 2025

After so many headlines about the ‘wall of maturities’ and our most recent newsletter about the evolution of this situation, it’s easy to assume the worst is behind us. Many owners successfully extended loans, found short-term capital, or executed partial refinances. But as we look ahead to 2026, a new challenge has taken center stage - the refinance gap.

The size of the hole between the debt amount coming due and the new loan amount that lenders are willing to provide today is now the central issue. That gap is now shaping the next phase of the market.

Understanding the Refinance Gap

The refinance gap is the difference between what lenders will underwrite today and the payoff amount tied to peak-cycle loans. Even if assets are performing reasonably well, this gap can be meaningful. Several forces are driving the disconnect, including more conservative income underwriting, higher debt yield and DSCR requirements, slower rent growth, rising expenses, and elevated costs of capital. In short, deals that work operationally often don’t ‘pencil’ under today’s standards. The industry now needs to confront the math.

The New Reset Reality: Extensions, Paydowns, and Structure

Extensions are still achievable in some situations, but they look very different today. Most lenders now require partial paydowns, cash sweeps, updated valuations, tighter covenants, or enhanced guaranties. They want real progress toward a long-term ‘right-sized’ capital solution, not another delay.

For borrowers seeking a refinance loan, bridge lenders and debt funds remain active. However, on bridge-to-bridge financings, they apply tighter cash flow underwriting, offer lower leverage, and focus heavily on sponsor strength, liquidity, and business plan execution details.

Preferred equity, mezzanine capital, and structured recapitalizations have re-emerged as tools to close the gap, but those are not always easy to secure. Many sponsors who assumed they would simply “roll the loan” are now reshaping their capital stack or selling. The next two years will be less about maturity volume and far more about how borrowers restructure their financing or sell assets to meet a new market reality.

What Borrowers Should Do Now

The best outcomes are going to sponsors who start early and recognize current market realities. A few practical steps include:

Engage lenders sooner. Timing is now a risk factor.

Align underwriting assumptions with the market. Normalized operating expenses, tax projections, insurance realities, and stabilized growth assumptions carry greater weight.

Strengthen the sponsor narrative. Liquidity, portfolio performance, and execution track record play a major role in credit decisions.

Evaluate strategic paydown options. LP capital, preferred equity, mezzanine, JV recapitalizations, or targeted dispositions may be needed.

Use competition strategically. In this market, structure can matter more than the last few basis points in rate.

Borrowers who position their deals thoughtfully are finding lenders willing to work with them, even in the face of valuation resets.

Where Talonvest Fits in This Next Phase

Because Talonvest is active with a variety of capital sources and across multiple asset classes, we see in real time how lenders are recalibrating leverage, structure, and appetite. That insight allows us to design refinance strategies grounded in reality and tailored to each client’s objectives.

Our team brings disciplined underwriting, lender-ready packaging, and broad access to insurance companies, banks, credit unions, and debt funds that remain engaged. In a market defined by uncertainty, clarity and preparation matter more than ever.

As the cycle moves from maturity management to capital stack recalibration, the strongest outcomes will go to sponsors who reset early and partner with advisors who can navigate this evolving landscape.