💼 Understanding Capital Raising Structures for CMBS and Agency Acquisitions 🏢

💼 Understanding Capital Raising Structures for CMBS and Agency Acquisitions 🏢

📈 Capital Raising Strategies for CMBS and Agency Purchases Explained 🏙️

💼 Capital Raising Structures for CMBS and Agency Acquisitions

In the world of commercial real estate, capital is the fuel that drives acquisitions, refinances, and development. But for institutional-grade transactions—particularly those involving CMBS (Commercial Mortgage-Backed Securities) and Agency loans (like Fannie Mae, Freddie Mac, or HUD)—how capital is raised can make or break the deal.

🏢 What Are CMBS and Agency Loans?

CMBS loans are securitized commercial mortgages pooled and sold to investors, offering fixed-rate, non-recourse financing for stabilized assets. Agency loans, on the other hand, are government-sponsored programs that finance multifamily properties with favorable terms, especially for affordable housing and stabilized communities.

Both lending types require sophisticated capital structures to ensure compliance, mitigate risk, and optimize returns.

💰 Common Capital Raising Structures

1. Joint Ventures (JV)

A JV structure allows an equity partner (capital provider) and a sponsor (operator) to share ownership and profits.

·Example: An institutional fund contributes 80% equity while the sponsor invests 20% and manages the deal.

·Benefit: The sponsor leverages outside capital to control larger assets.

2. Preferred Equity

This hybrid structure sits between debt and equity. Preferred investors earn a fixed return before common equity sees profits.

·Benefit: Offers predictable income and mitigated downside risk.

·Use Case: Often paired with CMBS loans for acquisitions with value-add components.

3. Mezzanine Debt

Mezzanine financing fills the gap between senior debt (CMBS or agency) and equity.

·Benefit: Allows sponsors to reduce equity requirements while maintaining control.

·Caution: Carries higher interest rates due to subordinate position in the capital stack.

4. Syndication

For smaller investors, syndication allows pooling of funds into a single LLC that owns the property.

·Benefit: Diversified access to institutional-grade deals.

·Use Case: Common in multifamily agency acquisitions.

5. Crowdfunding & Private Placement

Online platforms now enable direct-to-investor capital raising for CMBS and agency-backed projects.

·Benefit: Access to a broader investor base without institutional red tape.

🧮 Example: CMBS Acquisition Capital Stack

Layer

% of Capital

Source

Return Type

Senior Debt (CMBS)

60–70%

Institutional Lender

Fixed Interest

Mezzanine Debt

10–15%

Private Credit Fund

10–14% Interest

Preferred Equity

5–10%

Family Office / Fund

8–10% Preferred Return

Common Equity

10–20%

Sponsor / JV Partner

Residual Profits

⚖️ Key Takeaways

·CMBS and Agency acquisitions thrive on well-structured capital stacks.

·Balancing risk, control, and yield determines investor appeal.

·Working with experienced commercial mortgage brokers—like the Viking Enterprise Team at eXp Commercial—ensures access to top-tier lenders and capital partners.

📍 Houston Market Insight

The Houston metro—particularly Katy, Fulshear, and West Houston—has become a magnet for institutional-grade investments. With strong rent growth, logistics expansion, and infrastructure investment, sophisticated capital structures are helping investors scale portfolios efficiently while maximizing leverage under CMBS and agency programs.

⚡ Final Thoughts

Capital raising isn’t one-size-fits-all. Understanding which structure aligns with your investment strategy and loan program is crucial. Whether you’re targeting a stabilized multifamily deal under Fannie Mae or a large industrial acquisition with CMBS financing—smart structuring drives scalable growth.

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© 2023-2024 Bill Rapp, Broker Associate, eXp Commercial Viking Enterprise Team