Real Estate Finance for Commercial Real Estate

Real Estate Finance for Commercial Real Estate


So let’s talk today about real estate finance
for commercial real estate and the capital structure. How do you put together a capital structure,
how do you think about a capital structure. Often what is referred to as the capital stack. How much equity, how much debt, is there a
mezzanine in between. What type of debt, what type of equity. So let’s go through some of the basics of real
estate finance in this regard. First, there is no such thing as an optimal
capital structure any more than there is the right size suit. Imagine I tried to say there is the perfect
size suit to fit every male in the United States or the perfect sized dress that fits
every female. Well of course that would be absurd. Every male has a different body size, a different
body shape, coloration, so what may look great on you as a suit, I couldn’t fit into. Or what may look great on me, you would swim
in. So in the same way, real estate finance should
always be thought of as if not a customized process at least a highly tailored off the
rack concept.

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