Mezzanine and Preferred
Equity Financing
Partner capital for commercial real estate sponsors when senior debt alone does not solve the problem.
- Structures: Mezzanine capital, preferred equity, co-GP, LP capital, and structured gap capital
- Use Cases: Acquisition, completion, carry, recapitalization, partner buyout, and stabilization
- Focus: Sponsor strength, basis, senior debt, investor protections, and credible exit strategy
When Senior Debt Is Not Enough
Some commercial real estate deals are fundable, but the senior loan does not cover the full capital need. The question becomes how to structure the rest of the capital stack without weakening the deal.
What Mezzanine and Preferred Equity Can Solve
Mezzanine financing, preferred equity, co-GP capital, and LP capital can help fill the space between conventional debt proceeds, sponsor cash, project costs, and the return required by outside capital.
Capital Behind the Senior Loan
Mezzanine capital may sit behind senior debt and help increase total available proceeds when the senior lender stops short.
Structured Return With Protections
Preferred equity can provide capital in exchange for a preferred return, reporting rights, consent rights, and negotiated investor protections.
Bring in the Right Partner
Co-GP and LP capital can help sponsors close larger transactions, strengthen the balance sheet, or add credibility to execution.
What Capital Partners Need to See
Capital partners need a clean explanation of the sponsor, basis, senior debt, downside protection, control rights, timing, and exit. The story has to be credible, not just optimistic.
Experience and Liquidity
Track record, net worth, liquidity, team strength, and prior similar deals matter.
Is the Deal Bought Right?
Capital is easier to place when the cost basis leaves room for risk, delay, and profit.
Rights and Protections
Investors care about consent rights, remedies, reporting, reserves, and key decision control.
How Capital Gets Repaid
The exit may be refinance, sale, condo sellout, lot sales, stabilization, or institutional takeout.
Common Equity and Partner Capital Structures
The right structure depends on how much capital is needed, where it sits behind the senior loan, what control rights are required, and how the investor gets repaid.
Debt-Like Capital Behind the Senior Loan
Mezzanine debt is usually subordinate to the first mortgage and priced for higher risk. It can add leverage without replacing the senior loan.
Priority Return Before Common Equity
Preferred equity usually receives a preferred return and negotiated protections before the common equity receives upside.
A Partner Inside the Sponsor Stack
Co-GP capital may bring balance sheet strength, experience, guaranty support, or execution credibility in exchange for economics and influence.
Outside Equity for the Business Plan
LP or joint-venture equity is more ownership-oriented and depends heavily on the waterfall, projected return, reporting, and exit strategy.
Need Mezzanine, Preferred Equity, or Partner Capital?
Send the basic story: sources and uses, senior debt terms, project budget, sponsor background, proposed exit, and a direct explanation of the capital gap.
We help determine whether the better path is senior debt, mezzanine capital, preferred equity, LP capital, co-GP capital, or a combination. The structure should fit the deal and support the business plan, not complicate it.