Stack mechanics
- Senior to 65 percent LTGDV at 8 to 10 percent all-in.
- Mezz from 65 to 80 percent LTGDV at 12 to 18 percent all-in.
- Equity covers the remainder.
Inter-creditor terms
Inter-creditor deed sets payment waterfall, standstill rights and step-in. Mezz typically takes a second charge over the SPV's land and a pledge over SPV shares. Senior approves any change to mezz terms.
Pref-equity alternative
Pref-equity ranks behind both senior and mezz, takes equity not a charge, returns 15 to 25 percent IRR. Used where mezz is unavailable or where the equity sponsor needs to deconsolidate the debt.