A maturing bridge loan asks two questions: when, and how much. We have spent a lot of this year on the first one, from the fourth-quarter queue to the rate cut that came off the table. This piece is about the second, and about the one ratio that answers it before any lender does.
When a bridge matures into a takeout that will not refinance the full balance, the difference is a check. The sponsor writes it, someone else's capital writes it, or the asset is sold. The size of that check is knowable today, before any lender has sized the file, from one ratio and one multiplication. The ratio is debt yield.
Debt yield, defined once
Debt yield is net operating income divided by the loan balance. On a maturing loan the balance that counts is the one you actually have to pay off, not a hypothetical new loan amount.
There is no rate in it, no amortization and no value. That is the point. Coverage moves when the rate moves, and value moves when cap rates move. Debt yield moves only when NOI or the balance moves, which makes it the fastest honest triage number in a maturing file. It tells you where you stand before anyone has quoted you anything.
The break-even: the coverage floor times the constant
A takeout sized to a coverage floor lends until annual debt service reaches NOI divided by the floor. Divide that by the annual loan constant, twelve monthly payments per dollar borrowed, and you have maximum proceeds. The loan refinances in full when those proceeds reach the balance, and that rearranges to one line:
Break-even debt yield = coverage floor x annual loan constant
Proceeds / balance = debt yield / break-even debt yield
On a 30-year amortization the constant moves less than the coupon, which we traced on another file in July. Here is the break-even across a range of takeout rates, at the 1.25x amortizing floor Conventional Small sizes to and at 1.20x, for a lender who sizes to that:
| Takeout rate, 30-year amortization | Annual constant | Break-even debt yield at 1.25x | At 1.20x |
|---|---|---|---|
| 6.50% | 7.58% | 9.48% | 9.10% |
| 6.75% | 7.78% | 9.73% | 9.34% |
| 7.00% | 7.98% | 9.98% | 9.58% |
| 7.25% | 8.19% | 10.23% | 9.82% |
| 7.50% | 8.39% | 10.49% | 10.07% |
That table is a sensitivity, not a rate sheet. Blue Sky publishes no rates, and none of those rows is a quote. Your quote supplies the row. Each quarter point of takeout rate moves the 1.25x break-even about a quarter point, so a rate outside the table is one step of arithmetic away.
At a 7.25 percent takeout rate on a 30-year amortization and a 1.25x coverage floor, a maturing loan needs a debt yield of about 10.2 percent to refinance its full balance; at a 6 percent debt yield the same takeout returns roughly 59 percent of the balance.
The rest of that scale, at the same 7.25 percent and 1.25x: an 8 percent debt yield refinances 78.2 percent of the balance, a 9 percent debt yield 88.0 percent, and a 10 percent debt yield 97.7 percent. Across the middle of the table the line sits near 10 percent. That is the number to hold every maturing file against right now.
The Treasury did the work before the Fed did
On September 16 the committee raised the federal funds target range a quarter point, to 3.75 to 4.00 percent, on a unanimous 12–0 vote. It was the first increase since July 2023. In the projections released with the decision, 16 of the 18 participants put at least one more hike on the path before the end of 2026. The next meeting is October 27–28.
That is the headline. It is not what sizes a takeout. A fixed-rate takeout prices off the Treasury curve at its term plus a lender's spread, and the curve kept its own schedule. The 10-year Treasury, from the DGS10 series on FRED:
| Date, 2026 | 10-year Treasury |
|---|---|
| September 8 | 4.80% |
| September 11 | 4.96% |
| September 16, decision day | 5.01% |
| September 22 | 4.96% |
Sixteen basis points came in the three sessions after September 8, before the committee met. Across the meeting the 10-year went from 4.96 percent on the Friday before to 5.01 percent on decision day and back to 4.96 percent the following Tuesday. The meeting came and went, and the 10-year ended where it started.
Then, on September 23, a week after the meeting, it rose roughly 14 basis points in a single session to about 5.1 percent, the highest close since July 2007, on strong economic data.
The lesson for a maturing file is the one this series keeps arriving at. Underwrite to the curve, not the meeting. The spread a lender puts on top of the curve is the part of your rate this piece will not guess at. Your quote supplies it.
The $3 million trace
A value-add multifamily bridge is maturing with a $3,000,000 balance. The business plan worked: in-place NOI after the renovation is $270,000. Debt yield on the maturing balance is 9.0 percent.
The takeout is sized to a 1.25x floor on a 30-year amortization. That is Conventional Small's amortizing floor, and a $3,000,000 loan sits inside that program's $2 million to $10 million band. Maximum annual debt service: $270,000 divided by 1.25, which is $216,000.
There is no current quote behind this file, so the example runs at two rates, 6.75 and 7.25 percent. Read them as a range, not a quote and not a forecast. Proceeds are rounded to the nearest $1,000.
| 6.75% takeout | 7.25% takeout | |
|---|---|---|
| Annual constant | 7.78% | 8.19% |
| Break-even debt yield at 1.25x | 9.73% | 10.23% |
| Maximum proceeds | $2,775,000 | $2,639,000 |
| Gap to the $3,000,000 balance | $225,000 | $361,000 |
| NOI that would refinance the full balance | $291,869 | $306,979 |
A 9 percent debt yield against a line near 10 percent is a gap of $225,000 to $361,000 on $3 million, 7.5 to 12.0 percent of the balance. That is a real check, and a sponsor can size it today, in a spreadsheet, without waiting for a lender to do it.
Now run the same asset at a 6 percent debt yield, $180,000 of NOI. Maximum debt service falls to $144,000, and at 7.25 percent proceeds come to about $1,759,000 against the $3,000,000 balance. The gap is about $1,241,000. That is the edge of the bucket Trepp calls severely impaired, in one number.
What Trepp's September cohort says
Trepp's September 2026 hard-maturity analysis puts $2.74 billion of private-label CMBS hard maturities across 100 whole loans, 109 loan pieces, down from $5.49 billion in August. Of that balance, 26.96 percent carries a debt yield below 6 percent, up from 18.13 percent in August, and Trepp classifies that range as severely impaired for refinancing. At the takeout terms in this piece, a 6 percent debt yield refinances roughly 59 to 62 cents on the dollar, and those loans sit below it.
Almost none of it is delinquent. 96.4 percent of the cohort, $2.65 billion, is still performing, and so is 93.05 percent of the severely impaired balance. These loans are paying. They cannot refinance. That is the problem in its purest form: a capital question sitting inside a performing file.
Scale it to the year. Trepp counts $76.6 billion of 2026 hard maturities, 39 percent of them in the fourth quarter and 36 percent at or below an 8 percent debt yield, the calendar we covered in July. In Trepp's refinance analysis of the second-half 2026 maturities with no extensions left, 799 loans and $15.1 billion, 206 loans holding $8.1 billion, 54 percent of the analyzed balance, would need fresh equity to refinance, and $5.6 billion of it would need a cash-in of 20 percent or more.
Those are CMBS loans, most of them larger than the files our readers carry. The arithmetic does not care about size.
Three doors, keyed to the gap
Cash-in. Write the check when it is smaller than the value you would give up selling into today's cap rates, and NOI is still rising. A 9 percent debt yield with a $225,000 to $361,000 gap on $3 million is a cash-in. The check is 7.5 to 12.0 percent of the balance, and the asset that produced the gap is still improving.
Extension. Only with a dated path to the break-even: a lease-up with signed leases, a rent roll turning on dates you can name. On the trace, NOI has to reach $291,869 at 6.75 percent or $306,979 at 7.25 percent, 8.1 to 13.7 percent above where it sits today. If the plan gets there on a known date, extending can beat the check. If it doesn't, the extension buys time at a price, and the price comes in two invoices: the replacement rate cap and the exit rate the extension quietly assumed.
Sale or recapitalization. When the gap is larger than the sponsor's equity can bear and NOI is flat. At a 6 percent debt yield, a 1.25x takeout on a 30-year amortization refinances the full balance only at a rate near 2.6 percent. No plausible rate move closes a $1.2 million gap, and the dot plot points the other way.
The counter-case: what debt yield can't see
Debt yield is a blunt instrument, and it is blunt in specific ways. Know them before you let it decide anything.
It can't see amortization. The break-even in this piece assumes a 30-year schedule. A takeout that amortizes over 25 years carries a higher constant and moves the line up. At 7.25 percent, a lender sizing to 1.20x on a 25-year schedule puts the break-even at 10.41 percent, above the 10.23 percent at 1.25x on 30 years, even though its coverage floor is lower. A sponsor who shops the floor and not the constant can pick the wrong lender.
It can't see value. The break-even assumes the coverage test binds, not the leverage test. Conventional Small's leverage test runs 75 to 80 percent on an amortizing loan, depending on term. Capped at 8 percent, $270,000 of NOI is worth $3,375,000, and 75 percent of that is $2,531,250, less than the coverage test allows at either rate in the trace. Capped at 5 percent, the same NOI is worth $5,400,000 and leverage never binds. Same 9 percent debt yield, a different check.
It can't see basis. A sponsor who bought at a 5 cap and one who bought at an 8 are deciding whether to protect very different amounts of equity with the same check. The debt yield is identical. The decision is not.
And the program changes below $2 million. There is no Freddie Mac execution under that line; a community bank or a private credit lender is the path, and each sizes on its own coverage floor and its own amortization. The break-even moves with them. We walked that end of the market in the refi-gap piece. Run your own constant.
Start with the number
Compute the debt yield today, on the balance you actually owe at maturity. Put it next to the break-even for the takeout you expect to get. If it is under the line, the maturity is a capital question, not a timing question, and knowing the size of the check early is what preserves the options for raising it.
FAQ
What debt yield do I need to refinance a bridge loan in 2026? Enough to clear the break-even for your takeout, which is the coverage floor multiplied by the takeout's annual loan constant. At a 1.25x floor on a 30-year amortization, that is about 9.7 percent at a 6.75 percent takeout rate and about 10.2 percent at 7.25 percent. Those two rates are a sensitivity range, not a quote. Measure debt yield as current NOI divided by the balance you owe at maturity. Below the break-even, the takeout refinances only part of the balance, and the rest is a check.
How do I estimate the cash-in on a maturing loan? Divide NOI by the coverage floor to get the maximum annual debt service, divide that by the takeout's annual loan constant to get maximum proceeds, and subtract the proceeds from the balance you owe at maturity. On a $3,000,000 bridge with $270,000 of NOI, a 9.0 percent debt yield, a 1.25x floor on a 30-year amortization gives about $2,775,000 of proceeds at a 6.75 percent takeout rate and $2,639,000 at 7.25 percent. The cash-in is $225,000 to $361,000 before closing costs.
Does the Fed hike change my takeout proceeds? Not directly. A fixed-rate takeout prices off the Treasury curve at its term plus a lender's spread, not off the federal funds rate. The committee raised the target range to 3.75 to 4.00 percent on September 16, 2026, and the 10-year Treasury was 4.96 percent on the Friday before the meeting and 4.96 percent the following Tuesday. It then rose roughly 14 basis points on September 23, on economic data. Proceeds follow the loan constant: at 1.25x, each quarter point of takeout rate moves the break-even debt yield about a quarter point.
Break-even debt yields, loan constants and proceeds are computed on the amortization and coverage floors shown, with proceeds rounded to the nearest $1,000. The 6.75 and 7.25 percent takeout rates are a sensitivity range, not quotes. The 10-year Treasury figures for September 8 through 22, 2026 are the DGS10 series on FRED, Federal Reserve Bank of St. Louis; the September 23 figure is that day's market close as reported. The September 16, 2026 decision and projections are from the FOMC statement and the Summary of Economic Projections released that day. The September cohort figures are from Trepp's September 2026 hard-maturity analysis, and the full-year and second-half 2026 figures are from Trepp's 2026 maturity research. Conventional Small's coverage floor, leverage range and $2 million to $10 million band are from Freddie Mac's Optigo Conventional term sheets. Every deal sizes to its own underwriting on the day it is quoted.