An attractive operating plan can still depend on a difficult financing event. Build a debt calendar before treating the sponsor’s projected hold period as the investment’s timetable.
For each loan, request the outstanding balance, maturity, payment structure, fixed or floating rate, collateral, and any extension conditions. If a rate cap or other hedge is involved, ask when it ends and what replacement could cost. Do not assume “extensions available” means extensions are unconditional.
Now place the business plan next to that calendar. Will construction, leasing, or operational improvements finish before the debt comes due? What happens if completion slips six months? Who supplies additional cash if the lender requires it?
Use a deliberately simple scenario: suppose a hypothetical property has $10 million of debt coming due and can obtain only $8.5 million of replacement financing. The $1.5 million difference must come from somewhere. Ask which sources are available, what approvals they require, and how they affect existing investors.
This is a funding-gap illustration, not a prediction about lending markets. Actual refinancing depends on the asset, lender terms, costs, and timing.
Leave the conversation with a dated list of financing milestones and a person responsible for each. “We expect to refinance” describes an intention. It does not explain the fallback plan.
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Related reading: Sponsor Due Diligence: 12 Questions Beyond the Pitch Deck
Sponsor Due Diligence: 12 Questions Beyond the Pitch Deck
A pitch deck is a starting point. Your next job is to connect its important claims to documents, people, and numbers that can support—or contradict—them.
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This guide is for educational purposes only and is not investment, legal, or tax advice. Private investments can be illiquid and can lose money. Review the governing documents and consult your own advisers before investing.