For large projects, syndicated loans allow lenders to spread risk and participate in financial opportunities that may be more than their capital base can sustain. For these loans, interest rates on can be fixed or floating. Longer-term lenders, such as Fannie and Freddie, tie their loans to treasures and thus offer fixed-rate debt. Because these fixed-rate loans are in place for a presumably long-term period, the prepayment penalty can be high. This may deter the sponsor from selling or refinancing the loan early. Shorter-term lenders offer floating rates tied to the 1-month London Interbank Offered Rate (LIBOR). These short-term loans offer greater flexibility for the sponsor to sell or refinance without a large prepayment. Whether fixed-rate of floating-rate is the best option comes down to the property. Your sponsor will choose either loan type depending on the goals of the business plan. Generally, value-add properties are better suited for fixed-rate loans. If the sponsor chooses to refinance the fixed-rate debt early in the holding period, they can secure supplemental loans.