Senior and Junior Loans refer to two types of debt financing in real estate, differing in repayment priority. Senior Loans offer stability and low interest rates but are limited in their amount. Junior Loans complement financing through greater flexibility and higher interest rates, while carrying increased risk for capital providers. Together, they enable complete and efficient financing of real estate projects.
Senior Loan is a senior-ranking loan that is repaid first in case of regular payments or default.
Advantages:
Junior Loan is a subordinated loan that is only repaid after all senior loan obligations are met.
Advantages:
A Whole Loan is an indivisible loan granted directly from the lender to the borrower, without securitizing or selling it to investors. Whole loans are ideal for customized financing of individual, larger real estate projects. Benefits include flexible terms, direct communication, and a stable relationship. Possible drawbacks include limited liquidity and potentially higher risks for the lender.
Senior Loan is a senior-ranking loan that is repaid first in case of a default scenario.
Advantages:
For the borrower:
For the lender:
Mezzanine capital is a hybrid form of equity and debt. It preserves the developer’s equity, offers flexible terms, and does not grant the capital provider any voting rights in the project. In return, capital providers benefit from high returns and a secured but subordinated position. It is an attractive solution to close financing gaps and implement projects efficiently.
For the developer/borrower:
For the capital provider:
Preferred equity is a form of equity that ranks between traditional equity and debt. It gives the capital provider a preferred position in distributions and repayments compared to common equity holders, but does not offer a fixed interest rate like debt. It allows the developer to secure more financing without diluting control. For project developers, it enables greater financing flexibility, and for investors, it provides a preferential return structure with attractive yields. It is ideal for projects with moderate risk that need capital beyond what conventional debt provides.
For the developer/borrower:
For the capital provider/investor:
Joint ventures enable partners to realize larger, more complex projects by pooling resources and sharing risks. Developers gain capital and expertise, while investors benefit from attractive returns and access to professional management.
For all participants:
For developers:
For investors:
Benefits for You:
• Access to innovative financing models and exclusive market opportunities.
• Expert knowledge for optimal financing strategies.
• Straightforward execution through an excellent partner network.