Common Pitfalls in Commercial Real Estate Lending-and How We Help You Avoid Them

Even the most seasoned developers can hit unexpected snags when navigating the commercial real estate lending process. At HALL Structured Finance, we’ve worked with borrowers across the country and seen where projects tend to go off track—and how to keep them moving forward. While every deal is unique, there are a few recurring missteps that we help our clients avoid early in the process. 

Here are three of the most common. 

Overestimating Revenue and Lease-Up Timelines

We often see developers use overly optimistic assumptions in their projections, expecting premium rents, fast lease-up, or unrealistically high occupancy from the start. But the market doesn’t always move that quickly, especially in today’s environment. 

According to CBRE’s 2024 U.S. Real Estate Market Outlook, rising construction costs and cautious consumer behavior are slowing absorption across several sectors, including hospitality and multifamily. We encourage our borrowers to build models that reflect real-world conditions, not best-case scenarios. Conservative projections don’t just protect the deal—they give lenders confidence that the numbers will hold up if the market shifts. 

Overlooking Key Loan Terms

Getting the deal closed is a big milestone, but signing without fully understanding your loan terms can create major issues later. We’ve seen borrowers get tripped up by things like prepayment penalties, variable rate exposure, or covenants they didn’t realize would be triggered mid-project. 

A 2023 report from the Mortgage Bankers Association noted that borrowers are increasingly focused on transparency, particularly as floating-rate debt becomes more common and refinancing windows tighten. We’re aligned with that mindset. We take time to walk through the structure and terms so there are no surprises down the road—and so your financing stays aligned with your hold strategy. 

 Failing to Define an Exit Strategy

Every loan we structure starts with a conversation about the exit. Are you refinancing after stabilization? Do you plan on selling once value is created? Are you holding long-term and looking to reposition? That clarity is critical—not just for us, but for you and your equity partners. 

According to a recent JLL investor survey, capital availability is tightening, and the ability to demonstrate a clear path to liquidity is now one of the top factors lenders consider. Too many borrowers focus solely on getting the money in—and not enough on how it’s going to be repaid. 

We help our borrowers build an exit strategy into the structure from day one, factoring in both timing and market conditions so the project isn’t backed into a corner later. 

 How We Help Developers Stay Ahead 

We’ve built HALL Structured Finance around collaboration and transparency. Our approach combines institutional underwriting discipline with real-world development experience. That means we’re not just looking at spreadsheets—we’re thinking about construction timelines, lease assumptions, local comps, and lender protections that work for both sides. 

If you’re navigating a deal and want to avoid the common pitfalls, we’re here to help you structure it right from the start—and stay aligned to the finish line.