Remington Capital » capital stack

A Look at the Capital Stack

Travis — Tue, 08 Mar 2011 18:47:43 +0000

Capital Stack is a term that gets used a lot in our industry but is not well understood by many brokers new to commercial finance. In a commercial transaction, there is usually a mix of types of financing that combine to create the capital stack. If you were to look at a diagram of the capital stack you would find that as you worked your way up the stack, the financing becomes more risky to the investor and thus requires a greater return.

Senior Debt – At the very bottom of the capital stack is senior debt. Senior debt usually makes up 50-70% of the capital stack. Senior debt can include fixed rate loans, floating rate loans, construction loans, bridge loans and hard money loans.

Mezzanine Debt – In the middle of the capital stack is mezzanine debt. Mezzanine debt is subordinate to senior debt, so the risk is higher to the lender. Mezzanine debt is typically used to add additional leverage beyond the 50-70% provided by the senior debt. Adding an equity component to the mezzanine debt results in a participating loan or hybrid mezzanine loan.

Equity Financing – At the top of the capital stack is equity financing. Equity is different from debt in that the investor participates in the success of the project being financed for a set period of time. Equity capital can include preferred equity, joint venture equity and/or sponsor equity

As a commercial loan broker, your clients count on you to help them secure the financing they need from options across the capital stack.

Investors Find Opportunities

Travis — Tue, 23 Mar 2010 22:25:52 +0000

As a recent article in DSNews.com http://www.dsnews.com/articles/investors-find-opportunities-in-distressed-commercial-real-estate-assets-2010-03-22 states, “Now is the time to invest.” With the access to capital, savvy investors have the opportunity to capitalize on the challenges holding the majority back – Remington doesn’t face this problem!
With access to capital, all across the capital stack, RFG has been structuring this type of distressed asset financing before the problem was upon us. Our dedicated structured finance division works diligently everyday, continually working viable solutions for each one of these troubled owners. As I have always believed, “Great rewards are achieved by the ones standing up and working with the conditions that we are faced with.”

Remington Provides Financing Across the Capital Stack

Travis — Tue, 05 Jan 2010 02:03:50 +0000

The capital stack is the total mix of capital invested in a project, including pure debt, hybrid debt, and equity. The capital stack is described as containing the most risk at the top and traveling down the stack to the position with the least risk. Higher positions in the stack expect greater returns for their capital because of the higher risk. Typically the capital stack is arranged as follows:

1. Senior Debt

2. Mezzanine Debt

3. Preferred Equity

4. Sponsor Equity

Our team at Remington is well-equipped at every level of the capital stack with the best access to active lending funding sources. We are also in an unmatched position to guide owners and brokers to the optimum financing structure.

Wishing you the best in 2010. I hope we can talk soon about how we can help. Thank you – Travis Schmidt