Caps
Get the right protection at the best price.
We scour the market for the best price, not just one or two common hedge providers. We work on over 2,000 caps every year - that economy of scale means you get a smooth closing process and great pricing.
Doing what the lender requires isn't a hedging strategy.
An interest rate cap is the most common hedging tool of commercial real estate. Most floating-rate lenders require one, which leads many borrowers to treat it as a checkbox, a cost of getting the loan closed. That mindset is exactly what produces overpaying. A cap is a traded option, and its price moves with the strike you choose, the term, the index, the provider's credit-rating requirements, and, above all, how the purchase is run.
The single biggest lever is competition among eligible providers. When a cap is shopped to one bank, you accept the price you're given. When it is competitively auctioned across multiple providers at the same moment, you get real price discovery, and the gap between the best and worst quote on the identical cap is often material. Pensford runs that auction on your behalf, with no stake in which provider wins.
Quick Cap Pricer
Buying a hedge just to satisfy the lender requirement might be the right decision, but shouldn't you at least understand the alternatives first?
We provide detailed analysis to help you arrive at the best decision for your business. You may ultimately decide to simply match the lender requirement, but we'll help you investigate the risks, considerations, and alternatives first.
Explore how strike selection changes your upfront cost, projected payout and true economic cost.
Cap Cost Breakdown
Even with agency loans, there's not a lot of creative solutions. But Pensford helped us take a more strategic approach to our cap strategy, and taught me how to monitor the economic data to better forecast where prices were going.
