Capital markets
Capital stack analysis
Before choosing a lender or a partner, it helps to see the whole stack: how much debt the property supports, what fills the gap, and what each layer costs and controls.
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What it is
Modeling how senior debt, subordinate capital and equity fit together on a deal.
The capital stack is every source of money in a deal, ordered by who is repaid first: senior debt, then any mezzanine or preferred equity, then common equity. Each layer has a different cost, risk and set of rights.
A capital stack analysis lays out sources and uses, sizes the senior loan against income and value, and tests what happens to coverage and returns when assumptions change. It is the starting point for most of our capital conversations.
When it fits
Signs this is the right tool.
- You are evaluating an acquisition or development and need to know how much equity it really takes.
- Senior debt alone does not cover the gap and you are considering subordinate capital.
- You are comparing a refinance, a recap and a sale.
- You want a lender-ready view of the deal before going to market.
Typical structure
How it is usually put together.
Described in general terms. Actual structure, pricing, leverage and terms are set by each lender or capital partner for each transaction.
- Sources and uses
- Every dollar in and every dollar out, including closing costs, reserves and fees.
- Senior debt sizing
- Loan size by coverage and by loan-to-value, and which one binds. Our calculator on the Capital Markets page shows the arithmetic.
- Subordinate capital
- Mezzanine and preferred equity: cheaper than common equity, more expensive than senior debt, and governed by intercreditor terms.
- Sensitivity
- How coverage and returns move with income, value, rate and timing. Lenders will stress the deal, so we do it first.
Underwriting
What lenders look for in healthcare real estate.
Senior housing and behavioral health carry licensing and operating risk that a lender reads alongside the real estate.
- Total leverage
- Senior lenders look at all debt and debt-like capital behind them, not just their own loan.
- Sponsor cash in the deal
- How much of the sponsor's own capital is at risk.
- Coverage under stress
- Whether the property covers debt service at more conservative income than the base case.
- Intercreditor and control
- What subordinate capital providers can do if the deal underperforms.
Process
How we work it.
- 01
Gather the inputs
Price or cost, operating history or pro forma, existing debt and the sponsor's objectives.
- 02
Build the stack
Sources and uses, senior sizing and the gap, with clearly stated assumptions.
- 03
Stress it
Run downside cases on income, value and rate.
- 04
Decide the path
Which financing, partner or structure to pursue, and in what order.
Next step
Request a capital review.
Tell us about the property and what the capital is for. A CCGX advisor will review it confidentially and tell you what looks financeable and roughly where.
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