New Launch - India Real Estate Report 2026.

What is a Capital Stack in real estate?

The real estate capital stack represents the multiple layers of financing used to fund a real estate investment, where each layer corresponds to different levels of risk, return, and priority of repayment, with debt at bottom and equity at top determining who gets paid first in refinancing or sale.

Comprehensive Definition and Layers

  • Senior Debt at bottom with lowest risk
  • Mezzanine Debt or Preferred Equity in middle
  • Common Equity at top with highest risk
  • Payment priority top to bottom in order

Components and Structure

  • Debt and equity are main components
  • Layers representing different capital types
  • Order corresponds to payment priority
  • Financial structure of commercial deal

Capital stacks represent multiple financing layers with different risk, return, and repayment priority levels typically consisting of senior debt, mezzanine debt, and common equity.

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