Market
Whole loans: speed as a competitive advantage
One counterparty instead of two, no intercreditor process. The blended rate is higher — under tight deadlines it is still the cheaper calculation.
A whole loan covers the entire debt side from one source, typically to a leverage level no single bank will reach. The blended rate sits above a senior-plus-junior combination — the advantage lies elsewhere.
Where the time advantage comes from
No intercreditor agreement. That negotiation between senior and junior lender is regularly the slowest part of a stacked structure and takes four to eight weeks. With a whole loan it disappears entirely.
Plus one credit process instead of two, one valuation, one data room, one committee round. In acquisitions with a fixed deadline that is what decides who wins the asset.
When the higher rate pays
When the alternative is not getting the asset. Obvious in principle, rarely calculated properly: a premium over eighteen months of construction is often smaller than the forgone development profit.
It does not make sense for long-term investment financing on a calm timetable. There the stacked structure clearly beats simplicity.
What to watch
Prepayment terms and minimum periods. If you plan to move to conventional bank debt after twelve months, make sure the agreement allows it without penalty.
In short
A whole loan buys time, not interest savings. Under tight deadlines, time is usually the dearer commodity.
Read next
Related articles
Market
M&A in real estate: consolidation in Germany and Switzerland
Who is buying whom, and why. Notably many portfolio company sales driven by refinancing pressure.
Market
ESG and office refurbishment in the top seven
Poor energy performance means neither tenants nor buyers. What a repositioning costs and when it pays.
Want to go deeper?
Half an hour on the phone usually beats ten pages of paper.