Why Is Refinancing Such a Critical Issue for Denver Property Owners Right Now?
Denver's commercial real estate market faces one of the most consequential refinancing environments in modern history, driven by the convergence of a massive national loan maturity wall, elevated interest rates compared to the ultra-low rates of 2019 through 2021, and shifting property valuations across different asset classes. For property owners seeking commercial refinance loans in Denver, understanding this landscape is essential to protecting equity, maintaining cash flow, and positioning assets for the next market cycle.
The numbers tell a compelling story. Over $1.5 trillion in commercial real estate loans are scheduled to mature nationally by the end of 2026, with 2026 alone bringing $936 billion in maturities, nearly 19% more than the 2025 estimate. Many Denver property owners who locked in rates between 3.5% and 4.5% during the low-rate era now face refinancing into loans at 6.0% to 8.0% or higher, creating significant payment shock that impacts debt service coverage ratios and property economics.
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Denver's property-specific fundamentals vary dramatically by asset class. Multifamily properties benefit from tight vacancy and strong rental demand, making them the easiest assets to refinance on favorable terms. Industrial and logistics assets along the Front Range corridor remain lender favorites. Retail properties with low vacancy (5.8% metro-wide) and limited new supply attract competitive refinancing. Office properties, however, face the tightest refinancing environment, with metro vacancy at 26.3% pushing lenders to require additional equity or accept lower loan proceeds.
For property owners exploring commercial loans in Denver, proactive refinancing planning, ideally beginning 12 to 18 months before loan maturity, provides the time needed to evaluate options, address property-level issues, and secure the most competitive terms available.
What Commercial Refinance Loan Programs Are Available in Denver?
Denver's commercial refinancing landscape offers multiple pathways, each suited to different property types, borrower goals, and property performance levels. Selecting the right program can save hundreds of thousands of dollars over the loan term.
Conventional Bank Refinance Loans serve stabilized Denver commercial properties with strong occupancy and consistent income. Local and regional banks with Colorado market expertise offer rates between 6.25% and 7.75% with 5 to 10 year terms, up to 75% loan-to-value, and 25 to 30 year amortization. Banks evaluate refinancing applications based on current property performance, borrower financial strength, and their existing lending relationships. Properties with strong Denver banking relationships often receive the most competitive terms.
CMBS/Conduit Refinance Loans offer non-recourse refinancing for larger Denver commercial properties. Rates range from 5.88% to 7.49% with 5 to 10 year terms and up to 75% LTV. CMBS refinancing works particularly well for Denver multifamily, retail, and industrial properties where the borrower values non-recourse terms and fixed-rate certainty. The CMBS market has become increasingly selective, with lenders focusing on property quality, market fundamentals, and sustainable debt service coverage.
Agency Refinance Loans (Fannie Mae and Freddie Mac) provide the most favorable terms for Denver multifamily properties with 5 or more units. Rates start as low as 5.18% to 5.50% with 5 to 30 year terms, up to 80% LTV, and non-recourse execution. Agency refinancing offers the highest leverage and lowest rates available for qualifying Denver apartment properties, with streamlined processing for loans under $7.5 million through small balance programs.
SBA 504 Refinance Loans enable Denver business owners to refinance existing commercial mortgages on properties they occupy. With up to 90% financing at fixed rates between 5.75% and 6.75% for 20 to 25 year terms, the SBA 504 program can dramatically reduce monthly payments for owner-occupied Denver commercial properties. The program also allows cash-out refinancing for eligible business expenses.
Bridge Refinance Loans serve Denver properties that do not qualify for permanent refinancing due to vacancy issues, below-market rents, deferred maintenance, or transitional circumstances. Rates range from 8.5% to 11.0% with 12 to 36 month terms and up to 75% LTV. Bridge refinancing buys time for property owners to stabilize operations before seeking permanent financing at better terms.
DSCR Refinance Loans allow Denver investors to refinance based solely on the property's rental income without personal income documentation. Rates range from 7.0% to 9.0% with 30 year terms and up to 75% LTV. DSCR refinancing works well for self-employed investors, borrowers with complex tax returns, or investors with large portfolios who want to streamline the documentation process.
How Does the Maturity Wall Affect Denver Property Owners?
The national commercial real estate maturity wall has direct implications for Denver property owners, creating both urgency and opportunity depending on asset quality and market position.
Multifamily properties represent 32% of national loan maturities, with multifamily maturities jumping 56% from approximately $104.1 billion in 2025 to roughly $162.1 billion in 2026. Denver apartment owners with maturing loans face refinancing into higher rates, but the metro area's strong rental fundamentals, including tight vacancy and growing rents, support favorable underwriting that partially offsets the rate increase.
Office properties face the most challenging refinancing environment. Denver's 26.3% office vacancy rate, combined with declining valuations, means many office loans maturing in 2025 and 2026 will not qualify for refinancing at the original loan amount. Property owners may need to inject additional equity, accept lower loan proceeds, bring in equity partners, or pursue a sale to resolve maturing office debt.
Retail properties benefit from Denver's tight 5.8% vacancy and minimal new supply, making retail refinancing relatively straightforward for well-occupied properties in strong locations. Retail makes up approximately 9% of national maturities, and Denver's above-average retail fundamentals support competitive refinancing terms.
Industrial and logistics properties remain the most lender-friendly asset class for refinancing, with Denver's Front Range corridor positioning and e-commerce-driven demand supporting strong underwriting across the capital stack.
Many Denver property owners who obtained loans in the 2019 through 2021 low-rate window face a significant rate gap at refinancing. A property that locked a 4.0% rate in 2021 refinancing into a 7.0% rate in 2026 will see its annual debt service increase by approximately 40% on the same loan amount, potentially pushing the property below minimum DSCR requirements. Proactive planning is essential to navigate this transition.
What Factors Determine Your Denver Refinance Rate and Terms?
Refinancing terms for Denver commercial properties depend on a matrix of property-level, market-level, and borrower-level factors that lenders evaluate during underwriting.
Property type is the primary determinant of refinancing terms in Denver's current market. Multifamily and industrial properties receive the most favorable rates and highest LTV, while office properties face the most restrictive terms. The spread between the best and worst property type rates can exceed 200 basis points.
Occupancy and income stability directly impact DSCR calculations and, by extension, the maximum loan amount. Denver lenders typically require a minimum DSCR of 1.20x to 1.35x based on in-place income. Properties with occupancy above 90% and stable or growing net operating income qualify for the most competitive terms.
Lease term and tenant quality matter for commercial properties. Denver retail and office properties with long-term leases to creditworthy tenants receive better refinancing terms than properties with near-term lease rollover or small-business tenants. A weighted average lease term (WALT) of five years or more significantly improves underwriting outcomes.
Borrower financial strength, including net worth, liquidity, credit score, and commercial real estate experience, influences both rate and structure. Borrowers with net worth exceeding the loan amount, strong liquidity reserves, and a track record of successful property ownership receive the most competitive pricing.
Loan size affects available options and pricing. Denver commercial refinance loans below $1 million have fewer lender options and typically higher rates. Loans between $1 million and $10 million access the broadest range of lenders. Loans above $10 million attract institutional capital with potentially lower rates but more complex documentation requirements.
How Can Denver Property Owners Prepare for a Successful Refinance?
Preparation is the single most important factor in achieving a successful commercial refinancing in Denver's current market. Starting early and addressing potential issues proactively makes the difference between competitive terms and a distressed outcome.
Begin the refinancing process 12 to 18 months before your loan matures. This timeline provides sufficient runway to identify and resolve property-level issues, shop multiple lender options, and complete the underwriting process without time pressure that could force you into unfavorable terms.
Review your current loan documents carefully. Identify prepayment penalties (defeasance, yield maintenance, or step-down penalties), extension options that may provide additional time, and any covenants that require lender notification of your refinancing plans. Some CMBS loans carry substantial defeasance costs that may make early refinancing prohibitively expensive.
Stabilize property performance before approaching lenders. Fill vacancies, execute lease renewals, address deferred maintenance, and ensure your rent roll reflects current market conditions. A property with 95% occupancy and growing rents will refinance at dramatically better terms than one at 80% occupancy with declining income.
Prepare a comprehensive refinancing package including at least three years of historical operating statements, a current rent roll with lease abstracts, a property condition assessment, and a borrower financial statement with supporting tax returns. Denver lenders expect thorough documentation, and incomplete packages delay the process and signal a lack of sophistication.
Consider your refinancing goals carefully. Are you seeking the lowest possible rate, the highest loan proceeds (cash-out), the longest fixed-rate term, or non-recourse execution? No single loan program optimizes for all objectives simultaneously, and clarifying your priorities helps narrow the field to the most appropriate lender options.
What Should Denver Property Owners Know About Cash-Out Refinancing?
Cash-out refinancing allows Denver property owners to access equity built through appreciation, principal paydown, or income growth without selling the property. Understanding the rules and trade-offs is essential to making informed decisions.
Cash-out refinancing is available across most Denver commercial loan programs, though it typically comes with slightly lower maximum LTV ratios and marginally higher rates compared to rate-and-term refinancing. The difference is usually 5% lower maximum LTV and 10 to 25 basis points higher in rate.
Denver property owners most commonly use cash-out refinancing proceeds for several purposes: funding the acquisition of additional investment properties, completing capital improvements to the existing property, paying off higher-cost debt (such as bridge loans or mezzanine financing), providing returns to investors in syndication structures, or funding business operations for owner-occupied properties.
The key constraint on cash-out refinancing is the DSCR test. The higher loan amount generated by cash-out must still produce a DSCR of 1.20x or higher based on current property income. Properties with strong income growth since the original loan was placed are the best candidates for meaningful cash-out proceeds.
Using a commercial mortgage calculator helps Denver property owners model different cash-out scenarios and evaluate the impact on monthly debt service and returns. A DSCR calculator can determine the maximum loan amount supported by current property income under various rate assumptions.
How Do Denver Refinancing Costs Compare Across Programs?
Refinancing costs vary significantly across loan programs and can materially impact the net benefit of a refinancing transaction. Denver property owners should evaluate the total cost of refinancing, not just the interest rate.
Origination fees range from 0.25% to 1.0% for bank and agency loans to 1.0% to 2.0% for CMBS and 2.0% to 4.0% for bridge refinancing. On a $5 million refinancing, origination fees alone can range from $12,500 to $200,000 depending on the program.
Appraisal costs for Denver commercial properties typically range from $3,000 to $8,000 for standard properties and up to $15,000 or more for complex mixed-use or large multi-tenant assets. Environmental assessments (Phase I ESA) cost $2,500 to $5,000 and are required for most refinancing transactions.
Legal costs for lender counsel, borrower counsel, and title insurance typically run $15,000 to $40,000 for standard commercial refinancing and can exceed $75,000 for complex CMBS transactions.
Prepayment penalties on the existing loan represent a significant cost consideration. Defeasance costs for maturing CMBS loans can reach 5% to 10% of the outstanding balance depending on the interest rate environment. Yield maintenance penalties on bank loans typically range from 1% to 3%. Step-down prepayment penalties (such as 5-4-3-2-1%) are the most predictable and least costly exit structure.
Typical all-in refinancing costs in Denver's 2025 to 2026 market run 2% to 4% of the loan amount, depending on loan complexity and program. Borrowers should factor these costs into their refinancing analysis to ensure the transaction produces a net positive outcome over the remaining hold period.
What Happens If Your Denver Property Cannot Qualify for Traditional Refinancing?
Not every Denver commercial property will qualify for traditional permanent refinancing, particularly in the current environment of elevated rates and strict underwriting. Understanding the alternatives prevents distressed outcomes.
Loan extensions or modifications from the existing lender often provide the simplest solution for properties facing temporary challenges. Many Denver lenders prefer extending a performing loan at modified terms rather than forcing a borrower into default and foreclosure. Extension fees typically run 0.25% to 0.50% of the outstanding balance, and the extended loan may carry a slightly higher rate.
Bridge refinancing provides 12 to 36 months of additional runway for Denver properties that need time to improve occupancy, complete renovations, or wait for market conditions to improve before seeking permanent financing. Bridge rates of 8.5% to 11.0% are higher than permanent debt but significantly better than the costs of default.
Equity recapitalization, where the property owner brings in a new equity partner to contribute fresh capital, can solve the shortfall created when a property's current value does not support refinancing the full existing loan balance. The new equity partner receives an ownership interest in exchange for their capital contribution.
Partial paydown, where the borrower contributes additional equity to reduce the loan balance to a level the property can support, represents the most straightforward solution when the shortfall is manageable. Denver lenders typically require the paydown at closing as a condition of the new loan.
Property disposition (sale) may be the best option for Denver properties where the refinancing gap is too large to bridge through other means. The current market, while challenging for office, still offers reasonable exit pricing for well-located multifamily, retail, and industrial assets.
Contact Clearhouse Lending to discuss your Denver commercial refinancing needs and develop a strategy tailored to your property's specific circumstances and timeline.
Frequently Asked Questions About Commercial Refinance Loans in Denver
When should I start planning my Denver commercial refinancing?
Start the refinancing process 12 to 18 months before your loan maturity date. This timeline allows sufficient time to address property-level issues that could affect underwriting, shop multiple lender options for the most competitive terms, complete the application and due diligence process without time pressure, and close the refinancing before your existing loan expires. Properties facing challenges like vacancy or deferred maintenance should start even earlier to allow time for stabilization before approaching lenders.
What is the minimum DSCR required for Denver commercial refinancing?
Most Denver commercial lenders require a minimum debt service coverage ratio of 1.20x to 1.35x for permanent refinancing, meaning the property's net operating income must cover the annual mortgage payment by at least 120% to 135%. Agency multifamily loans (Fannie Mae/Freddie Mac) may accept DSCR as low as 1.15x to 1.20x. SBA 504 refinancing may accept 1.15x for owner-occupied properties. Bridge loans may accept lower DSCR with compensating factors such as borrower strength or property upside.
Can I refinance a Denver commercial property with below-market occupancy?
Properties with below-market occupancy face limited refinancing options but are not without solutions. Bridge lenders will refinance properties at 60% to 70% occupancy, providing time to lease up before seeking permanent financing. If the property is partially vacant due to renovation or repositioning, lenders may underwrite to projected stabilized income with appropriate holdbacks. Properties below 70% occupancy will typically only qualify for bridge financing at higher rates and lower LTV than stabilized permanent debt.
How much cash-out can I get from refinancing my Denver commercial property?
Cash-out proceeds depend on the property's current appraised value, the maximum LTV for the loan program, and the DSCR constraint based on current income. Most Denver commercial refinancing programs cap cash-out at 70% to 75% LTV, which is 5% lower than rate-and-term maximum LTV. The actual cash-out amount equals the new loan amount minus the existing loan payoff, closing costs, and any required reserves. Properties with significant equity and strong income growth since the original purchase offer the most cash-out potential.
What prepayment penalties should I expect when refinancing in Denver?
Prepayment penalties vary by existing loan structure. CMBS loans typically require defeasance, which can cost 5% to 10% of the outstanding balance depending on Treasury yields. Bank loans with yield maintenance provisions typically charge 1% to 3% of the balance. Step-down penalties (such as 5-4-3-2-1%) are the most predictable. Some bank loans allow penalty-free prepayment in the final 6 to 12 months of the term or during an open window. Always review your existing loan documents early to understand the exact prepayment terms and factor these costs into your refinancing analysis.
Are there refinancing options specifically for Denver apartment buildings?
Denver apartment buildings with 5 or more units qualify for agency financing through Fannie Mae and Freddie Mac, which offers the most favorable refinancing terms available: rates starting as low as 5.18%, up to 80% LTV, 30 year terms, non-recourse execution, and streamlined processing for smaller balance loans. Additionally, HUD/FHA 223(f) refinancing provides fixed rates for 35 year terms with up to 85% LTV for market-rate apartments and 87% LTV for affordable properties. These programs make apartment refinancing in Denver significantly more favorable than other property types.
Taking Action on Your Denver Commercial Refinance
Denver's commercial refinancing environment demands proactive planning, thorough preparation, and strategic program selection. The maturity wall creates urgency for property owners with loans expiring in 2025 and 2026, but it also creates opportunity for well-prepared borrowers who can demonstrate strong property fundamentals and meet lender requirements.
The most important step is starting early. Properties that enter the refinancing process with stabilized operations, clean documentation, and clear objectives consistently achieve better outcomes than those that approach refinancing as an emergency under time pressure.
Contact Clearhouse Lending to begin your Denver commercial refinancing analysis and connect with lending programs that match your property type, loan amount, and investment objectives.