CRE
Debt
Lend against property as collateral. Fixed income with defined terms, collateral protection, and priority claim over equity positions.
What is CRE Debt Investing?
CRE debt investors provide financing secured by real property. Instead of owning equity, you hold a lien position that entitles you to principal and interest payments. If the borrower defaults, you can foreclose and recover your investment from the collateral.
Debt positions offer lower risk than equity but with commensurately lower returns. They're ideal for investors seeking fixed income with real property backing, rather than the upside potential of ownership.
Debt Structures
Senior Debt
First lien position on the property. Bank or institutional lenders. Lower yield (6-9%) with lower risk.
Mezzanine Debt
Between senior debt and equity. Higher yield (10-14%) with secondary lien position.
Preferred Equity
Equity-like position with fixed returns. Higher yield but subordinate to all debt.