The Capital Stack

In today’s difficult capital market, BankerBroker.com  is a powerful and strategic resource with an enviable track record of financing success, especially for projects unable to obtain needed capital from conventional sources.

For one thing, BankerBroker.com  is an ideal intermediary between the client in need of financing – especially those with challenging projects – and the hundreds of private and institutional sources of commercial capital with whom BankerBroker.com  has strong, active and productive relationships.

For another, BankerBroker.com ’s financing specialists have in-depth knowledge, market expertise, and a commitment to client advocacy that translates into the kind of creative, value-enhancing insight needed to evaluate, restructure, and customize previously difficult-to-fund transactions into new financing opportunities.

Equity
Equity financing is an important option for BankerBroker.com  clients to consider as they explore the gamut of funding solutions available. When it comes to equity investment, the experience and knowledge of BankerBroker.com  professionals is unmatched in the industry, which is why BankerBroker.com  professionals often are called upon to identify appropriate equity partners for clients seeking equity assistance. 


Mezzanine Debt
For those commercial real estate and other businesses looking to add debt rather than equity when senior debt is maxed out near 70% LTV, borrowers may want to consider mezzanine financing. One of the uses of mezzanine debt is to add as much leverage as possible by increasing LTV to about 75-90%. It is also common for real estate developers to secure mezzanine loans when supplemental financing is needed.


Senior Debt
In the typical capital structure for commercial real estate, senior debt usually accounts for 50-70% of the capital stack. By definition, senior debt is just that. It is senior to equity and all other forms
of mezzanine (junior, subordinated) debt. As such, senior debt stands first in line before all other creditors for interest and principal payments and, in the event of liquidation, the repayment of debt. Most senior debt on commercial real estate is amortized over 15 to 40 years, with interest rates, either fixed or floating. Rates tend to be based on the quality of the collateral involved and the property’s historic cash flow, with higher rates tied to the degree of risk involved

 

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