CRE deals are often layered. The "Capital Stack" describes the priority of repayment. At the bottom is Senior Debt (the safest position), followed by Mezzanine Debt or Preferred Equity , and finally Common Equity at the top. The higher you go in the stack, the higher the potential return, but the greater the risk of loss if the project fails.

These lenders typically seek low-risk, long-term investments for stabilized, high-quality assets.

The ratio of the loan amount to the property’s appraised value.

Capital doesn't just come from local banks. It flows from a variety of sources, including:

The rate of return based on the income the property is expected to generate. The Changing Landscape

These are bundles of commercial loans sold to investors as bonds, providing liquidity to the market.

These provide more flexible, albeit more expensive, capital for "value-add" projects that need renovation or repositioning.