Tag Archives: CapitalStackStrategy

Finding Opportunity in Office: How Lever Capital Partners Is Guiding a New Wave of Deals

by: Raisa Sarkisyan

Over the past few years, the U.S. commercial real estate market has undergone a seismic shift, none more dramatically than in the office sector. Once the bedrock of institutional portfolios, office assets have faced steep headwinds in the post-COVID landscape: hybrid work trends, elevated vacancies, pricing uncertainty, and lender pullback have forced market participants to re-evaluate what makes an office deal viable.

Yet amid this turbulence, interest in office is quietly resurfacing. Opportunistic investors are re-entering the conversation, not because the storm has passed, but because they know this is when real value can be created. And Lever Capital Partners is uniquely positioned to help these investors navigate that complexity.

The Office Reset: Post-COVID Challenges and Shifting Fundamentals

The pandemic introduced lasting behavioral and structural changes. Remote and hybrid work models remain sticky, pushing vacancy rates to historic highs in many core markets. As of Q2 2025, the national office vacancy rate is approximately 19.4%, up from 12.3% pre-COVID. In key markets like San Francisco, vacancy rates have reached 28.4%, and Chicago is hovering around 25.1%.

These pressures have translated into steep value declines. Office pricing is down 35–40% from 2019 peaks, and transaction volume has dropped sharply, over 60% below pre-pandemic averages in the first half of 2025. Investor hesitation is widespread, but so is opportunity: distressed pricing, low competition, and creative repositioning strategies have made this a compelling moment for experienced capital to step in.

Why Debt Is Leading the Way

In today’s market, debt is taking the lead. With equity investors more hesitant, and valuation uncertainty driving caution, debt strategies offer greater flexibility and lower risk exposure. This has coincided with a sharp pullback from traditional lenders: CRE lending volume among banks has declined nearly 40% since 2022, and many have placed office loans in a “watch” or restricted category.

As a result, the lending landscape has shifted. Non-bank lenders now account for roughly 66% of all non-agency CRE originations, including 26% from CMBS conduits, 21% from life companies, and 19% from private credit and debt funds. Borrowers face a more fragmented and opaque market, where execution hinges on aligning with the right capital at the right time.

Lever’s Role: Capital Clarity in a Complex Market

This is where Lever Capital Partners brings outsized value. As an advisor that works across the capital stack, not as a direct lender, Lever can identify and structure financing solutions that meet the evolving needs of each sponsor and asset. That might mean sourcing bridge-to-repositioning loans, arranging preferred equity in recapitalizations, or packaging bespoke capital stacks for non-core office acquisitions.

In a market where office deals require nuance, creativity, and speed, Lever’s deep network of capital providers gives sponsors a competitive advantage.

Market Outlook: A Window for the Bold

Looking ahead, the opportunity set continues to grow. Over $80 billion in U.S. office loans are maturing over the next 18 months, many on assets worth less than their current loan balance. This wave of maturities coupled with elevated interest rates and constrained refinancing options is leading to increased distress, recapitalizations, and discounted sales.

For sponsors willing to take a long-term view, particularly on value-add or repositioning plays, the dislocation presents a rare entry point. Lever is already helping clients capitalize on this window by delivering clarity, creativity, and capital when it’s needed most.

Conclusion: Redefining the Future of Office Finance

As the office sector continues to recalibrate, one truth is clear: creativity will define the next cycle of winners. While banks retrench and others wait on the sidelines, Lever Capital Partners is helping investors move forward with confidence.

By thinking beyond traditional financing and embracing the full spectrum of the capital markets, Lever is shaping what the next generation of office deals will look like, one capital stack at a time. Position your office deal for success, reach out to Lever Capital Partners today.

Credit Enhancement Strategies to Strengthen Your CRE Capital Stack in 2025

by: Adam Horowitz

In 2025, commercial real estate sponsors face a capital market shaped by cautious underwriting, selective lenders, and growing pressure across all asset classes. Debt is available, but it is harder to access. Equity is even more selective, especially for transitional and value-add projects. In this environment, credit enhancement has shifted from a supplemental tactic to a strategic requirement. It is no longer just about managing risk, it is about improving leverage, reducing pricing, and increasing the likelihood of closing.

Lever Capital Partners Helps Turn Strategy Into Execution

At Lever Capital Partners, credit enhancement is more than a checklist item, it is a core part of the deal strategy. Lever works with sponsors to design and structure enhancements tailored to each project’s profile, including preferred equity layers, corporate guarantees, or interest reserves.

With direct insight into what capital providers expect today, Lever helps align sponsor needs with lender requirements. Whether you are raising mezzanine capital, improving bridge loan terms, or securing equity for a repositioning play, Lever offers full-cycle support. The result is better terms, faster approvals, and fewer surprises from term sheet to close.

Strategic Use of Credit Enhancement in Today’s Market

Today’s capital providers demand clarity, alignment, and a credible path to execution. Enhancements allow sponsors to deliver those elements, especially on deals where asset performance, tenancy, or the business plan introduces complexity. Whether you are underwriting a lease-up, recapitalizing a distressed property, or managing construction risk, enhancement strategies can bridge the gap between lender caution and sponsor execution.

Unlike prior cycles, where enhancement was often limited to third-party guarantees, 2025 calls for a more strategic, deal-specific approach. Enhancements today are structured to reflect the actual risk and to strengthen the weakest parts of the capital stack. In a competitive market, even a small advantage can help sponsors secure capital that others cannot.

Why Credit Enhancement Matters in 2025

Credit enhancement matters because lenders and investors are more cautious. Traditional financing sources have lowered loan-to-value thresholds, raised debt service coverage minimums, and added more scrutiny before issuing approvals. At the same time, transitional assets like outdated office buildings or value-add multifamily still offer strong upside if sponsors can unlock the capital to execute.

Credit enhancements help improve the deal narrative. They solve for weaknesses in underwriting, such as unproven post-renovation values or lease-up projections. They offer lenders downside protection and give investors more confidence to move forward. In short, they help turn hesitation into commitment.

Common Credit Enhancement Tools in CRE

Here are the most common credit enhancement tools used in commercial real estate:

  • Personal Guarantees
    A sponsor or principal personally backs the loan, providing a fallback in case the property underperforms.
  • Corporate Guarantees
    A related company supports repayment, giving lenders more comfort in the borrower’s financial strength.
  • Letters of Credit (LOCs)
    A bank issues a letter of credit on the borrower’s behalf, guaranteeing payment to the lender in the event of default.
  • Cash Collateral
     Cash reserves are placed in escrow, typically for interest or operating shortfalls.
  • Mezzanine Debt or Preferred Equity
    These fill gaps in the capital stack and are structured to protect senior lenders while allowing the project to move forward.

Final Thoughts

In today’s market, credit enhancement is no longer optional. It is the edge that allows sponsors to win deals in a competitive, cautious capital environment. In a cycle defined by complexity, timelines, and tighter underwriting, the sponsors who succeed will be those who come prepared and structured.

With the right enhancement strategy and the right advisor, sponsors can turn complexity into opportunity, and gain access to capital others cannot. Position your deal for approval in today’s market, talk to us about credit enhancement solutions.