In this episode of the AAA Storage podcast, Paul Bennett discusses the intricacies of the capital stack in real estate investing. He breaks down the components of senior debt, mezzanine debt, preferred equity, and common equity—discussing their risk profiles, returns, and why certain tranches might appeal to different investors. With decades of real estate experience, Paul provides actionable insights for seasoned and novice investors alike, making this episode essential for anyone looking to understand real estate financing.

Key Highlights:

• Explanation of the capital stack, including senior debt, mezzanine debt, preferred equity, and common equity.
• Discussion on how different tranches cater to varying risk appetites and investment goals.
• Insights on the importance of underwriting risk and market evaluation by sponsors.
• Paul Bennett's reflections on the evolution of financing in real estate from the 1980s to today.

Quotes:

• "Senior debt is in the most protected position of anybody in the capital stack." – Paul Bennett
• "Risk and return are inextricably linked." – Paul Bennett