Interest Rate Swap and Cap Advisory for
Commercial Real Estate and Multifamily

Your Lender Requires a Swap or Cap. We Make Sure You Get the Best Deal.

If you’re a commercial real estate developer, multifamily operator, or institutional asset manager with floating-rate debt, chances are your lender has required you to hedge your interest rate exposure. Whether it’s a rate cap on a construction or bridge loan, a swap on a permanent financing, or a collar to manage risk within a defined band, the hedge is a real cost in your deal, and how it’s structured and priced has a direct impact on your returns.

The challenge is that most borrowers have limited visibility into how these instruments are priced. Swap rates don’t trade on an exchange. Rate cap quotes vary significantly between providers. And your lender, who may also be your swap counterparty, has a financial incentive to charge you more than the market requires. Evercrest Advisors provides independent advice that levels the playing field.

Rate Caps: Getting Competitive Pricing Without Disrupting Your Closing

Rate caps are the most common hedging requirement on floating-rate CRE loans, particularly construction and bridge loans. Your lender sets the strike rate and term based on their underwriting, and you’re expected to purchase the cap before closing.

Many borrowers let the lender source the cap on their behalf, assuming it’s a commodity product with little room for savings. This is a mistake. Cap pricing varies meaningfully between providers, and the spread between what a lender quotes and what’s available in the market can be tens of thousands of dollars on a large loan. Some lenders even purchase the cap in the lender’s name, which means the borrower can’t monetize the cap’s residual value if they refinance or sell.

Evercrest handles the entire cap procurement process: we obtain competitive quotes from multiple counterparties, ensure the cap structure meets the lender’s requirements, and coordinate with lender’s counsel on documentation. The cap is purchased in your name, on your terms, at the best available price.

Interest Rate Swaps: Protecting Your Fixed-Rate Economics

When a CRE borrower enters into a swap on a term loan or permanent financing, they’re making a significant financial commitment. The swap rate determines your effective fixed cost of debt for the life of the hedge. A few basis points of pricing improvement can translate to six figures of savings over a five- to ten-year swap on a large loan.

Your lender’s swap desk builds a profit margin into the rate they quote. That margin is not disclosed, and it can vary significantly depending on the size of the deal, the term, and how much competition the bank faces. An independent advisor knows what current market pricing is and can negotiate directly with the bank to tighten the spread between the market rate and what you pay.

ISDA Negotiation: Avoiding Hidden Traps

The ISDA Master Agreement and Schedule that govern your swap contain provisions with real business consequences. Cross-default clauses can cause your swap to terminate because of an unrelated event. Additional Termination Events can give the bank broad discretion to end the swap. And if the swap terminates early, whether because you sell the property, refinance, or trigger a default, the breakage payment can be substantial.

Banks routinely tell borrowers the ISDA is “standard.” It isn’t. An experienced advisor knows which provisions to push back on and how to negotiate terms that protect you without blowing up the deal. We’ve reviewed and negotiated ISDAs with every major CRE lender in the market.

Portfolio-Level Advisory for Asset Managers

Institutional asset managers and operators managing portfolios of floating-rate loans often have multiple swaps and caps across different properties, counterparties, and maturities. Evercrest provides portfolio-level oversight, helping you track your aggregate hedging exposure, evaluate upcoming cap expirations and renewal costs, identify opportunities to restructure or novate existing swaps, and manage the hedge component of refinancings and dispositions.

For firms executing multiple transactions per year, we can serve as your ongoing hedge advisor, providing consistent pricing oversight and documentation review across your entire portfolio.

About Evercrest

Evercrest Advisors is an independent advisory firm serving commercial real estate developers, multifamily operators, and institutional asset managers nationwide. We have worked with more than a hundred different lenders and every active hedge provider in the market. Our only interest is getting you the best possible outcome on your hedge.

Email: info@evercrestadvisors.com | Phone: 212-837-8900