Glossary definition
Capital Stack
The total structure of funding used to finance a development project, arranged by seniority from senior debt at the bottom through mezzanine finance to developer equity at the top. The capital stack determines the order in which each tranche of funding is repaid upon exit, with senior debt having first priority.
Definition
The total structure of funding used to finance a development project, arranged by seniority from senior debt at the bottom through mezzanine finance to developer equity at the top. The capital stack determines the order in which each tranche of funding is repaid upon exit, with senior debt having first priority. Understanding the capital stack is essential for structuring the optimal mix of debt and equity on any deal.
See also
Closely related terms.
Senior Debt
The primary layer of debt in a development finance structure, secured by a first legal charge on the property and sitting at the bottom of the capital stack with first priority on repayment.
Mezzanine Finance
A layer of debt that sits between the senior loan and developer equity in the capital stack, secured by a second legal charge on the property.
Equity
The developer's own capital contribution to a project, sitting at the top of the capital stack and bearing the highest risk but also receiving the residual profit.
Intercreditor Deed
A legal agreement between two or more lenders in the capital stack that defines their respective rights, priorities, and remedies in relation to the same borrower and security.
Further reading
Guides that touch this term.
Guide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
Mezzanine Finance vs Joint Venture Equity: How to Choose
Both mezzanine and JV equity reduce the cash you need to invest. But they work very differently and suit different situations. This guide helps you decide which is right for your project.
4 min read readReadGuide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVReadService
Equity & Joint Ventures
Equity partnerships and JV structures for developers seeking capital partners.
Profit share from 40% · Up to 100% of costsRead
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