3 Capital Structuring Strategies for Today’s Market

Capital markets are undergoing a period of heightened uncertainty. Rising rates, increased scrutiny from lenders, and shifting sector performance are forcing investors to think more creatively about how deals get structured. For operators and sponsors, the ability to align structure with both opportunity and risk tolerance has become a differentiator. Below are three structuring strategies we see gaining traction in today’s market:

1. Blended Senior + Mezzanine LayersTraditional senior debt remains available, but leverage has contracted. To bridge the gap, many sponsors are layering mezzanine financing on top of senior loans. This approach can preserve equity while still offering lenders downside protection. For qualified operators, it provides a middle ground between traditional borrowing and dilutive equity raises.

2. Hybrid Instruments for FlexibilityHybrid capital solutions—such as convertible notes, preferred equity with participation rights, or debt with equity kickers—allow both investors and sponsors to benefit from upside while protecting downside. These structures are particularly effective in transitional assets like hotels or development deals, where timing and stabilization risk are more pronounced.

3. Partnering with Institutional AllocatorsFor larger transactions, institutional partners often bring balance sheet strength that opens doors to more favorable terms. They can also push through investment committee approvals when the structure meets standards of diligence, governance, and risk management. Operators who can present deals in a format familiar to institutions are best positioned to secure this kind of capital.

ConclusionIn today’s environment, structuring isn’t just about finding capital—it’s about aligning capital. By layering debt intelligently, incorporating hybrid instruments, and engaging with institutional allocators, sponsors can unlock opportunities even in a constrained market. The key is preparation and flexibility.