Tag Archives: RealEstateCapital

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.

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

by: Adam Horowitz

A Loan Can Mature Before the Capital Stack Is Ready

Many CRE owners are not dealing with a broken property. They are dealing with a broken capital structure.

A property may still be occupied, generating income, and performing close to plan. But when the loan matures, the refinance may not produce enough proceeds to pay off the existing debt. That creates a difficult situation for sponsors: the asset may still be working, but the capital stack no longer clears.

This is becoming a common issue in today’s commercial real estate market. Higher rates, tighter underwriting, lower valuations, and more conservative lender assumptions are reducing refinance proceeds across many deals.

The problem is simple: the loan is due, but the new loan is not large enough to take it out.

A Performing Property Does Not Guarantee a Full Refinance

In the past, many sponsors assumed that if a property was performing, the loan would refinance. That assumption is no longer safe.

Performance still matters, but lender proceeds are based on today’s underwriting, not yesterday’s loan terms. A property that supported a certain loan amount three or five years ago may not support the same amount today.

Lenders are looking closely at debt service coverage, interest rates, valuation, cash flow stability, asset class risk, and market conditions. Even if the property is not distressed, the refinance may still come in short.

This is especially true for loans originated during a lower-rate environment. Many of those loans were sized when debt was cheaper, values were higher, and exit assumptions were more forgiving. Today, the same property may support less debt, even if operations have not materially declined.

The Refinance Math Has Changed

The refinance shortfall is often a math problem.

If interest rates are higher, the property’s income may not support the same loan amount. If cap rates have moved, the appraised value may be lower. If lenders are more cautious, they may reduce leverage or require more cushion.

For example, a sponsor may have a $40 million loan maturing, but the best refinance option only produces $33 million. That creates a $7 million gap.

That gap does not disappear just because the property is performing. It has to be solved.

The sponsor may need to bring in fresh equity, negotiate an extension, add preferred equity, consider mezzanine debt, restructure the deal, or explore a sale. In some cases, the existing lender may be willing to work with the sponsor. In other cases, the lender may expect the borrower to solve the shortfall before maturity.

The Asset May Be Fine, But the Payoff Still Has to Clear

This is one of the most important distinctions in the current market.

A refinance problem is not always a property problem. Sometimes the asset is doing what it was supposed to do, but the original capital stack was built for a different market.

A deal may have assumed cheaper permanent debt. It may have expected stronger valuations. It may have relied on a sale or refinance that no longer pencils under current conditions.

That is why performing assets can still face pressure at maturity. The issue is not always occupancy, rent collection, or asset quality. The issue is whether the deal can support enough new debt to repay the old debt.

Sponsors Should Address the Gap Early

Sponsors should not wait until the final months before maturity to understand the problem.

The earlier the refinance gap is identified, the more options the sponsor has. That means reviewing the current payoff, estimating likely refinance proceeds, testing debt service coverage under current rates, reviewing extension rights, evaluating lender flexibility, and identifying whether gap capital may be needed.

Waiting too long can reduce negotiating leverage and limit available capital options.

How Lever Can Help

Lever Capital Partners helps sponsors evaluate refinance risk before maturity and identify solutions when new loan proceeds do not fully clear the existing debt.

That can include sourcing refinance options, identifying preferred equity or mezzanine capital, negotiating with lenders, or structuring fresh equity to bridge the gap.

For sponsors facing a maturity issue, the question is not just, “Can we refinance?”

The better question is: what capital structure gives the deal the highest probability of surviving the maturity and moving forward?

Lever can help sponsors pressure-test the refinance, understand the size of the gap, and connect with capital providers aligned with the asset, timeline, and risk profile.

The Bottom Line

A maturing CRE loan is no longer just a debt event. It is a capital structure test.

The property may still be performing, but if refinance proceeds do not clear the existing payoff, the sponsor needs a plan. That plan may involve new debt, gap equity, preferred equity, lender negotiation, or a broader restructuring.

The asset may still be working. But if the capital stack does not refinance, the deal needs a new structure.

Opportunity Zone Capital Is Becoming More Selective

by: Adam Horowitz

The Old Assumption Is Breaking

For several years, many Opportunity Zone projects benefited from a simple assumption: if the deal qualified, capital would pay attention. The tax benefits created a strong reason for investors to look at projects in designated communities, and that helped bring new interest to markets that may have otherwise been overlooked.

That assumption is weakening.

Opportunity Zone capital is still active, but it is becoming more selective. Investors are no longer underwriting the tax incentive alone. They are underwriting the actual real estate, the sponsor, the market, the basis, the capital stack, and the execution plan.

Being in an Opportunity Zone Is Not a Capital Strategy

In the earlier stages of the market, some projects leaned heavily on the tax story. The pitch was often built around location, eligibility, and the potential investor benefit.

Today, that is not enough.

Capital providers are asking harder questions. Is the basis defensible? Is the submarket actually investable? Does the sponsor have the experience to execute? Is there enough demand for the finished product? Can the project survive higher costs, slower leasing, or a delayed exit?

The tax incentive can improve the investment story, but it cannot fix weak real estate.

Why Investor Behavior Has Changed

This shift is happening because the broader capital market has changed. Debt is more expensive than it was during the low-rate cycle. Construction costs remain difficult to control. Exit assumptions are less forgiving. Investors are more focused on downside protection, liquidity, and whether a project can perform under more conservative assumptions.

That means Opportunity Zone investors are behaving more like disciplined real estate investors, not just tax-motivated capital. They still care about the tax treatment, but they also want to understand the full risk profile of the deal.

What Investors Are Underwriting Now

Sponsor quality matters more. Investors want to know whether the sponsor has relevant experience, local market knowledge, lender relationships, and the ability to manage execution risk.

Market fundamentals matter more. Population growth, employment drivers, tenant demand, absorption, rent support, and competing supply all carry more weight.

Basis matters more. A project may qualify for Opportunity Zone treatment, but if the basis is too high, the return profile may not work.

Capital structure matters more. Investors want to know whether the debt is realistic, whether the sponsor has enough equity, whether preferred equity is needed, and whether the capital stack can survive delays or cost increases.

Exit strategy matters more. A project needs a credible path to stabilization, refinancing, or sale. If the exit depends on aggressive cap rates or a perfect market recovery, investors will push back.

The OZ Label Does Not Remove Execution Risk

This is why some Opportunity Zone deals are harder to capitalize today. The OZ label does not remove execution risk.

Ground-up projects with unclear demand, thin sponsor equity, weak submarkets, or unrealistic refinance assumptions are facing more scrutiny. Investors are less interested in the zip code alone. They want to know whether the project can perform.

What This Means for Sponsors

For sponsors, this creates a more demanding fundraising environment. The opportunity is still there, but the story has to be sharper.

Sponsors need to explain why the project deserves capital now, why the market supports the business plan, how the risks are being managed, and why the Opportunity Zone benefit enhances the investment instead of carrying it.

At Lever Capital Partners, we see Opportunity Zone capital becoming more selective, with investors placing greater weight on sponsor quality, basis, structure, and execution risk.

How Lever Can Help

Lever helps sponsors position Opportunity Zone projects for today’s capital market. That means looking beyond tax eligibility and focusing on what investors are actually underwriting.

For sponsors raising capital for Opportunity Zone real estate, Lever can help identify aligned capital sources, structure the financing strategy, and present the opportunity in a way that speaks to current investor behavior.

The challenge is not just finding investors who understand the tax incentive. It is finding capital that believes in the project itself.

The Bottom Line

Opportunity Zones are not dead. The market is simply more disciplined.

Before, the tax benefit often came first and the real estate came second. Now, the real estate comes first, and the tax benefit supports the story.

The tax incentive still opens the door. But the deal still has to earn the capital.

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.