Tag Archives: CapitalStack

How OZ Developers Can Use Forward Sale Structures Before Stabilization

by: Adam Horowitz

Developers Need Capital Before the Asset Is Finished

Many Opportunity Zone developers think about the capital event after the project is complete. The common path is simple: build the asset, lease it, stabilize it, then look for a buyer, long-term capital partner, or refinance.

But in today’s market, waiting until stabilization can create unnecessary risk.

A developer may have a strong Opportunity Zone project, a clear development plan, and a quality multifamily asset in progress. But the capital stack may still need support before the asset reaches stabilization. Construction starts may be delayed. Equity may still be coming together. Senior lenders may want more certainty. Investors may want a clearer exit path.

That is where a forward sale or pre-stabilization acquisition structure can become valuable.

Instead of waiting until the asset is complete to solve the next capital event, the developer can create a framework earlier. The future sale, partnership, or buyout can become part of the capital plan before the project is fully stabilized.

A Sale Does Not Always Need to Wait Until Stabilization

The traditional assumption is that a developer builds the project first, then searches for a buyer after the property is complete and leased.

That approach can work, but it also leaves the developer exposed to market conditions at the end of the project. If rates move, valuations shift, buyer demand slows, or permanent financing becomes harder to secure, the exit may not look the way the developer originally expected.

A forward sale structure helps address that uncertainty.

In a forward sale structure, the developer and capital partner agree on a future transaction framework before the asset is stabilized. The project still needs to be built, leased, and moved toward permanent financing. But the developer has a clearer path for what can happen once the asset reaches the stabilization milestone.

The benefit is not just having a future buyer. The benefit is creating more certainty around the transition from development to stabilized ownership.

Why This Matters for Opportunity Zone Projects

Opportunity Zone projects are not always simple merchant-build developments.

The tax structure, investor requirements, and long-term hold period can make the capital plan more complex. Some investors may want to remain in the asset for the full Opportunity Zone holding period. Others may want liquidity at stabilization. The developer may want to exit, stay in the deal, or continue as a partner after construction is complete.

That creates a structural question, not just a financing question.

Who stays in the deal after stabilization? Who exits? How is the asset valued? What happens to OZ investors? Can non-OZ investors receive liquidity? Does the developer remain involved?

A forward sale structure can help answer these questions before the project reaches the point where time pressure becomes a problem.

Earlier Capital Can Change the Timeline

For qualified OZ developers, pre-stabilization capital can help move a project forward earlier.

A capital partner may provide common equity or other structured capital at the construction start or pre-TCO stage. That capital can help the developer begin construction sooner, support the capital stack, and create more confidence for senior lenders and investors.

The final purchase price can then be determined later, based on the appraised stabilized fair market value of the asset.

This gives both sides a more objective framework. The developer gets a clearer path to capital and exit planning. The capital partner gets a defined opportunity to acquire or participate in a stabilized asset after construction and lease-up risk have been reduced.

The Stabilization Event Becomes the Trigger

The key moment in a forward sale structure is stabilization.

By that point, the property has typically completed construction, achieved lease-up, established operating income, and secured or qualified for permanent financing. The asset can then be valued based on stabilized fair market value, often through an independent appraisal process.

This creates a cleaner transaction framework than trying to negotiate everything from scratch after the asset is finished.

The forward structure gives the parties a path. The stabilized appraisal gives the transaction a value.

Developers Can Preserve Optionality

One of the advantages of a forward sale structure is that it can be designed with multiple outcomes.

In some cases, the capital partner may buy out all equity at stabilization. In other cases, the developer may remain in the deal as a partner or co-manager. In another structure, certain investors may exit while others remain in the ownership structure for the long-term Opportunity Zone hold.

That optionality matters.

The developer does not always need to choose between a full sale and no sale. A forward structure can create a more flexible set of outcomes based on the asset, investor needs, and market conditions at stabilization.

How Lever Can Help

Lever Capital Partners helps OZ developers evaluate whether a forward sale or pre-TCO acquisition structure may fit their project.

That includes reviewing the development timeline, capital stack, construction financing, equity needs, stabilization plan, and long-term ownership goals. Lever can help developers prepare the capital story, identify the right capital partner, and position the opportunity around what forward sale capital providers are actually underwriting.

For developers, the goal is not just to find capital before stabilization. The goal is to create a structure that supports construction, stabilization, permanent financing, and the next ownership phase.

The Bottom Line

For OZ developers, a forward sale structure can turn the future capital event into part of the development strategy.

Instead of waiting until the project is complete to find a buyer or capital partner, the developer can create a framework earlier, bring in capital sooner, and preserve optionality at stabilization.

In today’s market, the most valuable capital partner may not be the one who shows up after stabilization. It may be the one who helps define the path before the project gets there.

Why Stabilized Opportunity Zone Assets Are Attracting Preferred Equity

by: Adam Horowitz

Stabilization Does Not Always End the Capital Need

For many Opportunity Zone multifamily projects, the development story gets most of the attention. Sponsors focus on site control, entitlement, construction financing, lease-up, and eventually stabilization.

But stabilization does not always mean the capital stack is finished.

A sponsor may complete construction, lease the asset, and create a performing multifamily property, only to find that the balance sheet still needs work. Existing debt may need to be paid down. Capital improvements may still be required. Operations may need additional investment. Ownership may want more flexibility. The sponsor may want to hold the asset longer, but the existing capital structure may not fully support that plan.

That is where preferred equity can become relevant.

For some stabilized Opportunity Zone multifamily assets, the next challenge is not development risk. It is recapitalization.

A Stabilized Asset Can Still Need Capital

There is a common assumption that once an Opportunity Zone asset stabilizes, the hardest part is over. In many ways, that is true. Construction is complete, leasing has been established, and the asset may now have operating income.

But a stabilized property can still have a capital problem.

The original construction or bridge financing may be too expensive. The senior debt may need to be reduced. The asset may need additional capital for improvements or operational optimization. The sponsor may want to avoid a forced sale while still creating liquidity or resetting the capital stack.

In today’s market, this issue is becoming more common. Higher rates, tighter underwriting, and lower refinance proceeds can create pressure even when the property itself is performing.

The asset may be working, but the debt stack may still need to be fixed.

Why Preferred Equity Fits the Post-Stabilization Moment

Preferred equity can be attractive after stabilization because the asset has already moved through some of the riskiest parts of the business plan.

Construction is complete. Lease-up is further along. The property has a clearer valuation. Operating performance is easier to measure. The capital provider is no longer underwriting only a future development plan. They are looking at a real multifamily asset with a more established income profile.

That makes preferred equity a useful option for certain Opportunity Zone owners.

Preferred equity can help pay down existing debt, fund capital improvements, support operational improvements, and create a more flexible capital structure. It can also help sponsors avoid a full sale or a more dilutive common equity recapitalization.

This is especially important for Opportunity Zone assets, where the long-term hold period and tax structure can make ownership decisions more complicated. Sponsors may not want to sell too early. Investors may want to preserve the OZ strategy. The capital solution needs to fit the real estate and the structure.

Debt Paydown Is Becoming a Real Need

Many sponsors are not looking for capital because the asset is distressed. They are looking for capital because the capital stack was created in a different market.

A loan that made sense during development may not be the right long-term structure after stabilization. A refinance may not provide enough proceeds to fully solve the existing debt. A lender may require lower leverage. A sponsor may need to reduce pressure on the asset before moving into the next phase of ownership.

Preferred equity can help address that problem.

Instead of relying only on a larger senior loan, the sponsor can bring in preferred equity to reduce debt, improve the capital structure, and create more breathing room for the asset.

The purpose is not just to add capital. The purpose is to add capital in a position that supports the long-term strategy.

What Sponsors Should Be Prepared to Show

Preferred equity can be flexible, but it is not automatic. Capital providers still need a clear story.

Sponsors should be prepared to explain the current debt balance, stabilized occupancy, net operating income, valuation, use of proceeds, capital improvement plan, existing lender terms, and long-term ownership strategy.

They should also be able to explain why preferred equity is the right fit instead of a traditional refinance, mezzanine debt, common equity, or a sale.

The best candidates are usually assets where the real estate fundamentals are strong, the sponsor has a credible plan, and the preferred equity solves a specific capital need.

How Lever Can Help

Lever Capital Partners helps sponsors evaluate whether preferred equity is the right solution for an existing stabilized Opportunity Zone multifamily asset.

That includes reviewing the capital stack, identifying the debt paydown need, evaluating use of proceeds, and positioning the opportunity for capital providers that understand both stabilized multifamily and Opportunity Zone structures.

For sponsors, the goal is not simply to find capital. The goal is to find capital that fits the asset’s stage, risk profile, ownership goals, and long-term OZ strategy.

Lever can help sponsors determine whether the asset is a fit for preferred equity, prepare the capital story, and connect with aligned capital sources.

The Bottom Line

A stabilized Opportunity Zone multifamily asset may have passed through the riskiest phase of development, but that does not mean the capital stack is complete.

Sponsors may still need capital to pay down debt, fund improvements, create flexibility, or support long-term ownership.

For OZ sponsors, stabilization may not be the end of the story. It may be the moment when preferred equity becomes the right capital solution.

2026 CRE Refinancing: Why Capital Availability Is No Longer Enough

by: Jack Moskow

Entering 2026, capital has returned to commercial real estate, but it is being deployed much more selectively than in prior cycles. Banks, life insurance companies, agencies, and private credit lenders are still active, yet the market is no longer rewarding broad risk-taking the way it did when rates were near historic lows. Today, lenders are focused on asset quality, sponsorship strength, income durability, and the borrower’s ability to support the capital stack under current underwriting standards. In this environment, the issue is not simply whether liquidity exists. The real question is whether a property’s basis and structure can support a refinance or transaction.

For many owners and developers, this has changed the financing conversation. A few years ago, borrowers could often focus mainly on pricing, proceeds, and execution speed. Now, the conversation is shifting from “What’s the rate?” to “How do we rebuild the capital stack?” Higher borrowing costs, with stabilized assets still seeing rates in roughly the 5.5%–6% range combined with lower valuations and more conservative lender sizing, have made structure just as important as liquidity. Even if capital is available, it may not be available at the leverage level needed to refinance an existing loan or support the original acquisition basis.

Liquidity is available, but it is selective.Stabilized multifamily, industrial, and grocery-anchored retail assets with strong cash flow continue to attract lender interest. Experienced sponsors with proven track records are also better positioned to access capital. However, assets with weaker fundamentals, uncertain leasing, or business plans that depend heavily on future rent growth are facing more scrutiny.

The bigger challenge is the refinancing gap created by loans originated during the low-rate environment. Between 2019 and 2022, many properties were financed at 70–75% loan-to-value, often with interest rates below 4%. As those loans mature, borrowers are now facing a very different lending environment.

Today, lenders are sizing closer to 50–60% loan-to-value placing more weight on debt yield, debt service coverage, and downside protection. As a result, new senior loan proceeds may fall well short of the existing debt balance.

That gap can create serious pressure for owners. A property may still be performing, but if the new senior loan cannot cover the maturing debt, the sponsor must find additional capital. In many cases, senior debt alone is no longer enough. This is where capital stack restructuring becomes essential. Mezzanine debt, preferred equity, joint venture equity, and other structured solutions can help bridge the gap between lender proceeds and the asset’s existing basis.

For owners who still believe in the long-term value of their assets, this type of structuring can be the difference between preserving ownership and being forced to sell at an unfavorable time. Layered capital can provide flexibility, help complete a refinance, and allow sponsors to hold through a difficult part of the cycle. However, these solutions need to be structured carefully. The wrong capital partner or an overly expensive structure can create new problems instead of solving the original one.

Lever Capital Partners helps sponsors navigate this environment by identifying the right financing solution for each asset and situation. In a market where basis increasingly determines liquidity, Lever works with borrowers to assess the gap, evaluate available capital sources, and structure the appropriate mix of senior debt, mezzanine financing, and preferred equity.

By leveraging relationships across banks, life insurance companies, agencies, and private credit lenders, Lever Capital Partners helps clients access capital that fits today’s underwriting standards. The goal is not just to find a loan, but to build a capital stack that can close, support the asset, and preserve long-term value. In 2026, surviving the refinancing cycle will depend less on whether capital exists and more on whether sponsors can structure around today’s reality. 

When a CRE Loan Matures and the Refinance Doesn’t Clear the Existing Debt

by: Adam Horowitz

Most borrowers coming into maturity today expected to refinance. What they’re realizing is that the refinance doesn’t clear the loan.

Across the deals we’re seeing, it’s not a question of whether debt is available. It’s that the new loan is coming in materially below the existing balance. That gap is what’s driving decisions right now.

According to industry data from groups like the Mortgage Bankers Association and Trepp, over $1.5 trillion of U.S. commercial real estate debt is maturing between 2025 and 2027. Much of that was originated in a very different environment. That’s the backdrop for what’s happening today. In this environment, working with us at Lever Capital Partners can help borrowers understand where their deal actually stands and what options are realistically on the table.

This Isn’t a Rate Problem, It’s a Proceeds Problem

Higher rates are part of the story, but they’re not the core issue.

What has changed more meaningfully is how loans are being sized. Lenders are underwriting to higher debt yields, lower leverage, and actual in-place cash flow. There is less reliance on projected growth, and more emphasis on where the deal stands today.

The result is straightforward. Even when a property is performing, it often doesn’t support the same loan proceeds it did a few years ago. We are consistently seeing situations where the new loan comes in 10 to 25 percent below the existing balance. That is where deals start to break.

This is not a liquidity issue. Capital is still there. It is a structure issue.

A Lot of These Deals Only Worked in One Environment

Many of the loans coming due today were structured between 2020 and 2022, when leverage was higher, rates were lower, and underwriting gave more credit to future rent growth.

Take those assumptions away, and the structure does not hold the same way.

That does not mean the asset failed. In many cases, the property is stable and performing. The issue is that the original capital stack was built around conditions that no longer exist.

Where the Pressure Shows Up

The pressure point is simple. The existing loan balance is higher than what the market will refinance today.

That gap forces decisions.

In some cases, it is driven purely by leverage. In others, it is a combination of rate movement, flat values, and underwriting discipline. For deals that were already thinly capitalized, there is very little room to absorb that shift.

What we are seeing more frequently is that sponsors are not dealing with an operational problem. They are dealing with a capital structure that no longer works.

What Sponsors Are Actually Doing

At this point, most borrowers are not choosing between ideal outcomes. They are choosing how to manage the gap.

Some are writing checks to complete a cash-in refinance and protect their basis. Others are bringing in preferred equity or mezzanine capital, not as an optimization, but as a way to get the deal closed. That comes with a higher cost of capital and a different risk profile.

There are also situations where the numbers simply do not justify putting more money into the deal. In those cases, the conversation shifts toward a recapitalization, a sale, or stepping away entirely.

There is no clean solution once the gap shows up. There are only trade-offs.

What Lenders Are Actually Doing

Lenders are still active, but the approach is more disciplined.

They are sizing to current performance, not future expectations. They are more focused on downside protection, and less willing to stretch to make a deal fit a prior capital structure. Extensions are happening, but they are no longer automatic and almost always come with conditions.

The assumption that every loan refinances has been removed from the market.

What This Looks Like in Practice

A deal financed in 2021 at around 70 percent leverage reaches maturity today. Under current underwriting, that same asset might support something closer to the mid-50s to low-60s range, depending on the asset and market.

That difference creates the gap.

At that point, the borrower is not deciding whether to refinance. They are deciding how to solve the shortfall, whether that means adding capital, restructuring the deal, or exiting.

What Matters Now

The sponsors navigating this best are the ones getting in front of it early.

That means running realistic refinance scenarios, understanding where proceeds will land, and identifying the gap before time becomes a constraint. The biggest mistake we see is treating maturity like a formality instead of what it has become, which is a capital event.

This is where we typically come in, helping sponsors quantify that gap, understand how lenders are actually sizing deals today, and structure solutions that reflect current market conditions rather than past assumptions.

Final Thought

Loan maturity used to be routine.

Today, it is where the capital stack gets exposed.

The deals that get through this cycle are not the ones with the best story. They are the ones where the structure works under today’s constraints.

$1.8 Trillion of CRE Debt Is Coming Due. Here’s How Deals Are Actually Getting Refinanced in 2026

by: Adam Horowitz

Over $1.5 trillion to $1.8 trillion in U.S. commercial real estate debt is set to mature between 2026 and 2027, according to industry estimates from the Mortgage Bankers Association and Trepp. Much of this debt was originated in a very different environment, characterized by lower interest rates, higher leverage, and more aggressive underwriting. Today, the landscape has shifted. Refinancing is no longer a routine process. It has become one of the most critical strategic decisions sponsors face. In this environment, working with experienced capital advisors like us at Lever Capital Partners can help sponsors navigate changing lender expectations and structure deals that are positioned to close.

This is not simply a rate issue. It is a structural one.

Why Refinancing Is More Difficult Today

Higher interest rates continue to pressure debt service coverage ratios, reducing loan proceeds even for otherwise stable assets. Many loans that were originated in the 3–4% rate environment are now refinancing into 6–8%+ rates, significantly impacting cash flow and loan sizing.

At the same time, lenders are more selective. Leverage levels have come down, credit boxes have tightened, and underwriting assumptions are more conservative.

In many cases, asset values have not kept pace with these changes. As a result, loans that were once comfortably sized at 70–75% loan-to-value are now being underwritten closer to 55–65%. The outcome is a growing disconnect between existing loan balances and what new lenders are willing to provide.

The Refinancing Gap Is Now the Central Challenge

This disconnect has created what many are calling the refinancing gap. Even high-quality assets with strong sponsorship are facing situations where senior debt alone cannot take out the existing loan.

Sponsors are left with a limited set of options. They can contribute additional equity, sell into a potentially unfavorable market, or restructure the capital stack to bridge the difference. Increasingly, the third option is becoming the most practical path forward.

How Deals Are Actually Getting Done

In 2026, refinancing is less about replacing a loan and more about rebuilding the capital stack.

Sponsors are combining senior debt with mezzanine financing or preferred equity to close proceeds gaps. Stretch senior loans and structured debt solutions are also gaining traction, particularly for assets with strong fundamentals but temporary constraints.

For transitional properties, bridge-to-permanent strategies are being used to buy time and improve loan sizing at stabilization.

These approaches reflect a broader shift in the market, where debt funds and alternative lenders now account for a significant share of new CRE lending activity, stepping in where traditional banks have pulled back.

What Lenders Are Prioritizing

Lenders today are focused on durability and downside protection. Strong, stable cash flow remains the primary driver of loan sizing.

Debt yields have moved meaningfully higher, with many lenders targeting 8–10%+ debt yields, reinforcing the shift toward lower leverage and more conservative structures.

Conservative underwriting, realistic business plans, and clear exit strategies are essential.

Sponsor quality also matters more than ever. Liquidity, experience, and the ability to navigate complexity all play into lender confidence. Perhaps most importantly, lenders are prioritizing structure. Deals that are thoughtfully assembled and aligned with current risk parameters are far more likely to close than those chasing maximum leverage.

Execution certainty has become more valuable than headline pricing.

Timing Is Now a Strategic Advantage

In this environment, timing is not just a logistical consideration. It is a strategic one. Sponsors who begin the refinancing process early have more flexibility to explore different capital options and structure the deal appropriately.

Waiting too long often results in limited choices and reactive decisions. In a market where structure determines outcome, time has become one of the most important forms of leverage.

Where Lever Capital Partners Helps

Refinancing today requires more than simply finding a lender. It requires aligning the right mix of capital with the realities of the deal.

At Lever Capital Partners, we work with sponsors to source and structure that capital. By accessing a broad network of banks, life companies, debt funds, mezzanine lenders, and preferred equity providers, Lever helps bridge refinancing gaps and position transactions for execution. Equally important, we translate complex situations into clear, financeable structures that lenders are willing to support.

Refinancing Is Now a Strategy

The upcoming wave of maturities will test even experienced sponsors. The difference between preserving value and losing it will often come down to how well the capital stack is designed.

In today’s market, refinancing is no longer a transaction. It is a strategy.

Industrial and Multifamily Still Dominate, But Here’s Where Real Opportunity Is Hiding in CRE Right Now

by: Adam Horowitz

Industrial and multifamily continue to lead U.S. commercial real estate investment in early 2026. Lenders understand these asset classes, capital is available, and long-term demand drivers remain intact. But as more capital crowds into the same trades, pricing tightens and real opportunity becomes harder to find.

Today, the most compelling opportunities are not disappearing. They are simply hiding in places where capital is more selective, underwriting is more complex, and financing requires a smarter approach. This is where experienced capital advisors like Lever Capital Partners help sponsors navigate complexity, structure the right capital stack, and connect deals with lenders that can actually execute.

Why Industrial and Multifamily Still Attract Capital

Industrial and multifamily remain the default choices for a reason. Both asset classes offer durable demand, relatively predictable cash flow, and deep lender familiarity. Even after several volatile years, lenders are comfortable underwriting these properties, especially in strong markets with experienced sponsors.

That comfort, however, comes with a tradeoff. Competition has increased, leverage has compressed, and investors often face lower upside unless they are buying distressed or operating at scale. For many sponsors, the challenge is no longer finding capital. It is finding returns.

Where Capital Is Quietly Shifting in 2026

As investors look beyond crowded trades, several less obvious sectors are gaining attention.

Last-mile logistics continues to benefit from e-commerce growth and delivery speed expectations. Cold storage is attracting interest as food supply chains and pharmaceutical distribution become more complex. Student housing is seeing renewed demand in supply-constrained university markets, particularly where enrollment remains strong and new construction is limited.

Medical office and life science adjacent assets are also drawing capital, especially properties tied to essential services rather than speculative lab development. Specialized residential strategies, including build-to-rent and workforce housing, are gaining traction as affordability pressures persist across major metros.

These sectors share a common theme. Demand is real, but financing is not straightforward.

The Financing Gap in Non-Traditional Assets

The biggest challenge in these emerging opportunities is not fundamentals. It is capital fit.

Many traditional banks struggle with limited comps, operational complexity, or non-standard lease structures. Debt funds may be interested, but pricing and structure vary widely. Deals often stall because the capital stack does not match the asset’s risk profile, even when the business plan is sound.

In today’s market, strong assets can fail to transact simply because they are paired with the wrong capital source.

What Capital Providers Want to See Now

In 2026, lenders and capital partners are less focused on aggressive projections and more focused on clarity and downside protection.

They want to see a clear operating story, conservative assumptions, and realistic exit planning. Sponsor experience matters, but so does the quality of operating partners. Capital providers are also paying close attention to structure, including reserves, covenants, and how risk is allocated across the stack.

Deals that succeed are designed for lender comfort, not maximum leverage.

How Smart Sponsors Are Getting These Deals Done

Sponsors closing deals in niche sectors are approaching financing strategically. Many are using blended capital stacks, combining senior debt with stretch components or preferred equity. Bridge-to-perm strategies remain common, especially where lease-up or operational improvements are required before stabilization.

Rather than forcing conventional debt onto unconventional assets, these sponsors are using structure to reduce perceived risk and increase execution certainty.

This is where experienced capital advisory becomes critical. Firms like Lever Capital Partners help sponsors translate complex asset stories into financeable transactions by matching each deal with the right mix of lenders, debt funds, and structured capital providers.

Finding Opportunity Where Capital Has Not Fully Arrived

The best CRE opportunities in 2026 are not always obvious. They exist in sectors with real demand but higher financing complexity. Investors who understand this dynamic and design their capital strategy accordingly gain a meaningful edge.

As industrial and multifamily remain crowded, the next wave of opportunity will belong to sponsors who can navigate nuance, structure intelligently, and execute with certainty. In today’s market, capital strategy is no longer a back-office function. It is a competitive advantage.