Subordinate capital sits between senior debt and common equity, stretching total leverage while helping sponsors preserve operational control.
What We Do
Subordinate capital sits between senior debt and common equity, stretching total leverage while helping sponsors preserve operational control.
When It’s the Right Tool
Reducing Equity Requirements: Push leverage beyond senior-only proceeds and reduce the common equity requirement.
Enhancing Returns: Use less sponsor cash while preserving upside and operational control.
Partner Buyouts & Recaps: Acquire partnership interests or extract equity without disturbing attractive senior debt.
Development Gap & Rescue Capital: Fill construction shortfalls or inject liquidity to cure defaults and stabilize assets.
Representative Market Terms
Parameter | Guideline |
|---|---|
Investment Size | $3M to $100M+ |
Combined LTV / LTC | Up to 85–90% |
Mezzanine Pricing | 10–15% |
Preferred Equity Returns | 12–18% + potential upside |
Term | 2–10 years, coterminous with senior |
Structure | Current pay, accrual, or hybrid |
Prepayment | Flexible with minimum holds |
Geography | Nationwide |
The Johnson Capital Edge
Structural Expertise: We guide the mezzanine-versus-preferred-equity decision around remedies, tax, and intercreditor requirements.
Integrated Capital Stack: Senior and subordinate capital are arranged together and sized to close on one timeline.
Full Provider Spectrum: Institutional debt funds and family offices compete across deal sizes and risk profiles.
