In this episode, David Moghavem sits down with Michael Khalilzad, founder of Castle Square, to discuss the realities of raising equity in today’s market and how creative structuring is unlocking deals. Michael shares why capital is demanding high cash-on-cash yields and strong basis, how he structured a second-loss equity position to overcome investor objections, and why reputation and certainty are driving discounted acquisitions. They dive into ground-up development challenges, co-GP structures with blue-chip developers to unlock financing, and why Michael believes innovative hybrid equity products will be key to getting deals done in this market. If you want real insights on where capital is flowing and how to structure deals creatively, this episode is packed with tactical takeaways.
Chapters
00:00 Introduction & Podcasting with Sam Zell
07:14 Today’s Capital Markets Reality
10:03 Creative Structures to Get Deals Done
15:26 What Investors Are Looking For Today
18:18 Midwest Six Caps, Below Replacement Cost
21:14 Seller Capitulation is Happening, We Have The Receipts!
24:54 How To Source Great Deals in This Market
27:48 PUBLIC SERVICE ANNOUNCEMENT: The Importance of Proper Underwriting
29:48 Underwriting Sponsors
33:58 Deploying Ground Up Construction Capital in An Unfavorable Development Market
36:55 CO-GP Ground Up Development Program
40:21 Loan Guarantee & Credit Enhancement Program
42:34 Advice for Emerging Operators and Capital Raisers
46:14 The Need for Innovative Capital Products
