Working on a $70M ground-up condo development on the West Coast.

Sponsor’s been sitting on the land for 2+ years and now wants to go vertical — but with ~80% LTC and aggressive pricing.

Tough ask in this market. But here’s how we’re structuring it:

Option 1: ~80% LTC, higher cost, tighter structure
Option 2: ~75% LTC, better pricing, smoother terms
Option 3: ~70% LTC, lowest cost, no exit fee

Each one has trade-offs.
The key? Structuring the capital stack to fit the actual business plan.

If you’ve worked on creative financing for ground-up deals (or seen a wild capital stack lately), I’d love to hear about it.

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What about Layered Debt and Equity with Mezzanine Financing?

Combine senior debt (bank loan) at 55–60% LTC. Then add mezzanine debt or pref equity to reach 75–80% LTC. With the sponsor and/or outside investors providing the remaining common equity.

For example, Senior lender provides $42M (60% LTC). Mezzanine lender provides $14M (20% LTC). Sponsor/investors contribute $14M (20% equity).

Either that or Preferred Equity Layer.

Instead of traditional mezz debt, use a pref equity tranche above senior debt. Pref equity investors receive a fixed return.

Or build an interest reserve into the loan. That way the sponsor doesn’t need to service debt during construction. Wouldn’t that improve cash flow and reduce equity needs?