Capital Structure Basics
Most development projects use a combination of debt and equity. Understanding your options maximizes returns.
Debt Financing
Construction Loans
Short-term loans that fund construction. Typically:
- 60-80% loan-to-cost
- Interest-only during construction
- Floating rates
- 12-36 month terms
Bridge Loans
Short-term financing for acquisitions or to bridge between construction and permanent financing.
Permanent Financing
Long-term mortgages for stabilized assets. Used to pay off construction loans.
Equity Sources
- Developer equity (typically 10-30%)
- Private equity investors
- Family offices
- Institutional investors
Alternative Structures
- Joint ventures with landowners
- Ground leases
- Mezzanine financing
- Preferred equity
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