Capital Stack Creativity: Deals That Actually Close

From The Ground Up — Issue #17

Capital Stack Creativity: Deals That Actually Close Date: August 9, 2025

Market Insights

Lenders aren’t “open for business” in the old way, but deals are getting done when the capital path is pre-engineered.

• Banks = selective, standards tighter. The Fed’s July SLOOS shows banks tightened standards for CRE loans again in Q2 and saw weaker borrower demand—translation: vanilla requests die, creative packages live. Federal Reserve
• Delinquencies keep inching up in securitized land. CMBS delinquency rose for a fifth straight month in July to ~7.23%, led recently by multifamily—another reason lenders prefer bespoke fixes to fire sales. Trepp
• “Extend & amend” is mainstream. Loan mods nearly doubled from $21.1B (Mar ‘24) to $39.3B (Mar ‘25); many 2025 maturities were already pushed from prior years. Creative structures aren’t the exception—they’re the plan. CRED iQCRE Daily
• Earnings say: resilient but cautious. Big-bank takes show solid profits while CRE lending posture stays careful, good credits with clear business plans are still getting to yes. Trepp

Bottom line: The market rewards clarity and optionality. Show multiple ways to win, and you’ll find the one your counterparty can live with.

The Alpha Effect

Constraints don’t block momentum,they shape it. In 2025, you don’t “find” capital; you design it. Start with the deal’s constraint (rate, term, DSCR, LTC, timing, power to the site, entitlement risk), then architect three clean paths that neutralize it. Certainty beats price. Narrative beats noise. Options beat ultimatums.

One Step at a Time

Build your 3-Path Capital Menu (steal this and ship it today):

1. Seller Carry + Accrual (Bridge the Gap)
2. Pref Equity + Mini-Perm (Institutionalize the Takeout)
3. Land Subordination / Phased Takedown (For Dirt & Dev)

Drop-in Email Template (Choose-Your-Own-Terms Brief) Subject: [Deal Name] – Three Capital Paths, You Pick the Lane Body (short & skimmable):

• Asset: [Type, SF/Acres, Location, Status]
• Constraint We Solved: [e.g., DSCR at current rate/timing to permit/rollover risk]
• Path A – Seller Carry + Accrual: [Amount, rate, accrual term, trigger to cash pay]
• Path B – Pref + Mini-Perm: [Senior/Pref targets, term, covenants, earn-outs]
• Path C – Land Subordination/Phased: [Basis, milestones, takeout mechanics]
• Why This Works: [2 lines on business plan + downside protection]
• Data Room: [link] | Models: [link] | Next Step: 20-minute huddle this week.

Quick Checklist Before You Send

• Terms fit today’s SLOOS reality (size to real DSCR, not hopes). Federal Reserve
• Clear sources & uses, contingency, and month-by-month cash flow.
• A/B sensitivity on rate (+100 bps) and lease-up slip (-3 months).
• Pre-wired consents (seller, HOA, ground lease, utility/power letters if relevant).
• Exit math tied to cap rate band and refi tests—no fairy dust.

Here’s to building your success, one step at a time—from the ground up. Kris “Dirt Dawg” McGee

P.S. Want help structuring your 3-Path Capital Menu on a live deal? Hit reply with the deal blurb, and I’ll send back a first pass in 24 hours.