Capital Stack
Quick answer
The capital stack is the full set of capital funding a transaction, ordered by repayment priority from senior debt at the bottom to common equity at the top.
A typical commercial real estate capital stack runs senior debt, then mezzanine debt, then preferred equity, then common equity. Each layer accepts more risk and demands a higher return than the one below it. Structuring a capital stack means deciding how much of each layer to use so that total proceeds meet the business plan without creating coverage or control problems.
Related product: Mezzanine Debt
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