OVERVIEW
Slatt Capital’s structured finance team offers first class expertise with the confidence to execute a variety of financing options beyond traditional debt financing. Our national platform includes experts in every product type including, multifamily, office, industrial, retail, student housing, senior housing, and hospitality.
Every transaction presents a unique challenge that requires a knowledgeable professional who can navigate complex structures-that is where we come in. Through years of experience, our team has developed an in-depth understanding of all options in the capital stack, positioning our team to find the right solution to your need.
At Slatt Capital, our extensive experience in both equity and debt markets enables us to offer comprehensive coverage of traditional lenders and emerging capital sources. Our track record in providing solutions for various types of financing, including senior debt, JV and Co-GP equity, construction, bridge, mezzanine and preferred equity, and structured financings, is unparalleled.
As financial intermediaries, we expertly connect users of capital and providers of capital. Whether it’s conventional or creative financing, we leverage our expertise and network to provide tailored solutions for each unique situation.
Senior Debt
Senior debt is a type of loan that is secured by property and has priority over other types of financing in the event of default or foreclosure. This type of loan is usually provided by banks, commercial mortgage-backed securities lenders, or institutional investors. Since senior debt is the first mortgage loan to be repaid in the event of default or foreclosure, it’s also commonly referred to as a first mortgage loan.
To obtain senior debt financing, borrowers typically need to provide personal guarantees and property-level collateral. In addition, senior debt loans usually have a lower loan-to-value ratio (LTV) compared to other types of financing.
Because senior debt is secured and the lender has the first claim on the property and cash flows in the event of default, it is generally considered less risky than junior debt or equity financing. In addition, senior debt typically offers lower interest rates compared to other forms of financing. For these reasons, senior debt is a preferred way of financing for many commercial real estate investors, developers, and property owners.
Mezzanine (MEZZ) / PREF
A mezzanine loan is a powerful tool to achieve higher leverage on commercial projects than what traditional sources like conduits, banks, and life insurance companies offer. This type of loan is typically subordinate to senior debt and can be secured by the corporation that owns the property. With a mezzanine loan, borrowers can obtain the financing they need while keeping ownership of their company intact, as long as they repay the debt promptly.
Unlike traditional loans, mezzanine loans typically require very little collateral from borrowers, which means that lenders may charge higher interest rates to compensate for the added risk. However, this type of financing can be a valuable option for businesses looking to pursue growth opportunities that require significant capital investments. With a mezzanine loan, borrowers can access the funding they need to execute their plans while preserving their ownership structure and retaining control over their business.
Equity
Joint Venture (JV)
In real estate development, a joint venture (JV) involves a collaboration between two or more entities pooling their resources, including capital, expertise, and property assets, to create a new project. This type of partnership allows the partners to share both the risk and reward of the project, which is governed by the terms of the agreement. Joint ventures can be a powerful way to achieve strategic goals, access new markets, or leverage complementary strengths and expertise. They can also help to diversify risk, increase economies of scale, and generate attractive returns for all parties involved.
Co-GP Equity
Co-GP equity is a form of joint venture where two or more entities act as general partners to manage the day-to-day operations of a commercial real estate project. This structure allows partners to share expertise, costs, and risks based on the terms of their agreement. Typically, partners contribute different resources to the project, such as land, capital, or experience in development or management. Co-GP equity is a useful tool for smaller companies to participate in larger projects they could not afford alone, and for larger companies to access niche markets and local knowledge.
Preferred Equity
Preferred equity is a form of funding in which an investor invests in a real estate project and receives preferred returns on their investment. The preferred return is a set percentage of the project’s cash flow or profits, which the investor receives before the developer or owner receives any returns. This type of financing is ideal for developers or owners who want to raise capital for a project but do not want to give up ownership or control. It can also be used to bridge the gap between traditional debt financing and common equity, enabling developers or owners to obtain more favorable terms and interest rates.
Construction
A commercial construction loan is a financing option designed to fund the development of real estate projects, such as apartment complexes, office buildings, or shopping centers. This type of loan provides the necessary capital to start construction, allowing developers to break ground and begin building before securing long-term financing. However, due to the higher risk associated with these loans, lenders often charge higher interest rates than traditional loans.
Bridge
A bridge loan is a temporary financing option used for commercial properties when permanent financing is not available. It’s commonly used for properties that require significant renovations to qualify for permanent financing. Borrowers may also consider a bridge loan when they need to close on a property within a short timeline, recover a property from foreclosure, stabilize the property’s cash flow, address a short-term issue affecting the property, or improve the property’s occupancy rates. Typically, bridge loans have a term of less than 3 years, after which the property is either sold or refinanced with permanent financing. Borrowers accept higher interest rates on these loans due to the quick and convenient access to funds they provide.