Capital

This area covers the money side of commercial property: where equity and debt come from, who provides it, and what each party expects in return. Sponsors and family offices both ask these questions.

A reader can settle how a capital stack is layered between senior debt, mezzanine debt, preferred equity and common equity. Another question is what a lender tests, such as debt service coverage and loan to value, before it issues a term sheet. Investors want to know how a private placement memorandum and an operating agreement define the promote and the preferred return. Sponsors can check whether their own package will hold up when a family office or an institutional allocator reviews it. Diligence questions get direct answers.

• Capital raising process
  The steps a sponsor takes to find investors, present an offer and close the raise.
• Capital stack
  How senior debt, mezzanine debt, preferred equity and common equity layer into one deal and who gets paid first.
• Deal preparation
  What a sponsor assembles before approaching lenders or investors: the business plan, the numbers and the documents.
• Equity versus debt
  What each kind of capital costs, what it demands and how its claim on the property differs.
• Family offices in real estate
  How family offices evaluate real estate, size their exposure and choose partners and sponsors.
• Fund formation
  How a manager sets up a real estate fund, from the structure and terms to the first close.
• Investor relations
  How sponsors report to investors, handle capital calls and distributions, and keep trust after the check clears.
• Sponsor diligence
  The evidence an investor asks for before trusting a sponsor with capital, and how to read it.
• Syndication and sponsors
  How syndications and club deals are organized, who does what, and what the sponsor is paid.
• Vetting partners
  How to check a joint venture partner, operator or co-investor before you sign.
• Waterfalls and splits
  How profits are split between investors and sponsors: preferred returns, catch ups, promotes & fees.

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