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What is real estate capital stack?

A valuable tool available to investors for evaluating and comprehending risk in real estate investments is the capital stack. For the purposes of commercial real estate, the capital stack can be viewed as the different layers of financing sources that go into funding the purchase and improvement of a real estate project. Ideally, a real estate investment would satisfy its business plan or pro forma target, but, there is risk that this would not be the case. The capital stack helps provide investors with valuable information about where they are in the order of cash flows, and what that order means from a risk of repayment standpoint. 

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