Variable Rate Debt
Frequently Asked Questions about Variable Rate Debt in Commercial Real Estate
What is variable rate debt in real estate finance?
Variable rate debt—also called floating rate debt—is a type of loan where the interest rate fluctuates over time, typically based on a benchmark index like SOFR or the Prime Rate.
Is there another name for variable rate debt?
Yes, variable rate debt is synonymous with floating rate debt. See the related glossary entry for “Floating Rate Debt.”
Where can I learn more about floating rate debt?
Visit the glossary entry for Floating Rate Debt listed in the Related Content section of this page.
How is variable rate debt used in real estate models?
It is modeled to reflect interest rate volatility in underwriting and sensitivity analysis. Tools like the A.CRE Value-Add Apartment Acquisition Model allow inputs for variable interest rates tied to market indexes.
What tools support modeling variable rate debt?
You can use the A.CRE Value-Add Apartment Acquisition Model, Student Housing Acquisition Model, or enhance Excel with the ‘Excel 4 CRE’ Add-In, all linked in the Related Content section.
Where can I download the full CRE glossary?
Click the link in the post that says “Click here to get this CRE Glossary in an eBook (PDF) format.”
Click here to get this CRE Glossary in an eBook (PDF) format.