Senior debt is cheap but capped at 65% LTC. Mezzanine fills the gap at 2x the rate. Equity plugs the rest at 15%+ return. Drag the stack — watch the blended cost of capital change, and the design budget shrink or grow.
65%
15%
$45M
Blended cost of capital
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Annual debt service
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Design budget (5% of total)
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Cheap debt = more room to spend on design. Expensive mezz + equity = value-engineer everything. The capital stack doesn't just fund the building — it constrains it.