SOFR reset dates on a commercial real estate loan

On a floating-rate commercial real estate loan, the rate you pay has two halves. ArborCrowd's explainer states it directly: interest rates "are comprised of a nominal 'spread' and an index," and "the spread is fixed, but the index is adjustable, which is why floating rates can fluctuate." Their illustration is a "3.0% spread plus 30-Day SOFR of 2.0% for a total interest rate of 5.0%."

The half that moves is SOFR. Per Commercial Real Estate Loans' glossary, SOFR "is a rate tied to the cost of interbank Treasury repurchases" and "measures the overnight trading rate for the repurchases (repos) of U.S. treasury bonds." It replaced LIBOR outright: the same page records the USD panel ending June 30, 2023 and synthetic USD LIBOR ending September 30, 2024.

The reset is a date, not a drift

The index publishes daily. Your loan does not repay daily. Somewhere in the loan documents is a schedule that says when the loan picks up a new index value, and that date is the reset. Between two resets the all-in rate is fixed, so debt service moves in steps.

That distinction changes what is worth watching. The index level today tells you very little you can act on. The next reset date, and what the index has done since the last one, tells you what the next payment looks like.

Most commercial real estate loans use a forward-looking term rate for exactly this reason. LoanBoss's SOFR glossary entry notes that "CRE floating-rate loans are typically priced as SOFR plus a credit spread (e.g., SOFR + 250 basis points), with the SOFR component resetting monthly or quarterly," and that most loans reference term SOFR "because it provides a known rate at the start of each interest period, simplifying cash flow planning."

Floors, and the direction that stops paying off

The same glossary flags the provision borrowers most often forget they signed: "Many loans also include a SOFR floor (e.g., 'SOFR shall not be less than 0.50%'), which sets a minimum benchmark rate regardless of where SOFR actually trades." A floor means falling rates help you down to a point and then stop. If you are modeling relief from a rate cut, the floor is the first term to read.

What the reset calendar is for

Three things on a floating-rate loan key off the same schedule, and they usually live in three different places.

The reset determines the payment. The rate cap, if there is one, settles against those same dates, which is the reason cap settlement is ordinarily synchronized with the loan at all. And the maturity date sits at the end of a run of resets you can count.

Pull those apart and a borrower ends up with a hedging file, a servicing statement, and a maturity report that never agree. Pull them together and the questions that matter get short answers: what is the rate after the next reset, is the cap still in force then, and how many resets are left before this loan has to be refinanced.

TractTerm, part of Composed Studio, tracks each loan's rate structure, fixed or floating, index and spread, all-in rate, and SOFR value history, and keeps a forward-looking rate-reset calendar across the portfolio. It does not price, forecast, or trade anything. It puts dates you already agreed to in one calendar so the next one is not a surprise.

A reset calendar also makes the adjacent dates legible. Cap coverage is a separate contract that can lapse mid-loan, which is the subject of when a rate cap expires before loan maturity, and a rising all-in rate is the most common way a healthy loan drifts toward the DSCR covenant it was clearing comfortably a year earlier. Both are easier to see coming when the resets are on the calendar, and both feed the maturity planning that follows them.