Capital strategy tool
Capital Structure Comparison
See the same development funded four ways — senior, stretch senior, senior plus mezzanine, and senior plus preferred equity — and compare the equity you commit, the leverage, the finance cost, the profit and the return on equity, side by side. Illustrative only: it shows the trade-offs across the capital stack, it doesn’t pick a winner.
Stretch and combined caps track these and can’t sit below them — subordinate capital only adds leverage.
As you move up the capital stack — senior, stretch, mezzanine, preferred equity — leverage rises and the equity you commit falls, which can lift return on equity. But each higher tranche draws on more expensive capital, so absolute development profit and margin on cost come down. Preferred equity is the exception worth watching: because it takes both a priority return and a share of the profit, the developer’s return on equity can fall below less-leveraged structures despite the highest gearing. No structure is “better” — the right one depends on how much equity you want to deploy, your appetite for cost and risk, and the execution certainty you need. That’s the conversation this tool is built to start, not end.
Send feasibility →Illustrative only. All figures are hypothetical and for general information — not an offer, a quote, or current market terms, and no capital structure shown is a recommendation. Rates and fees are indicative defaults you can edit; actual terms depend on the lender, the project and prevailing market conditions. Preferred equity is modelled as a priority return plus an editable share of residual profit; actual preferred-equity terms vary and can include hurdles or waterfalls not modelled here. Figures are shown ex-GST; GST on fees is noted separately and is generally recoverable by a registered developer as an input tax credit — confirm GST and tax treatment with your accountant. Assumptions last reviewed August 2026. BluCow Capital does not provide financial product or investment advice.
Understanding the capital structure comparison
This tool takes one development and funds it four different ways, so you can see how the choice of capital structure changes what you put in, what it costs and what you get back. You set the deal (end value, cost and build period) and the lender caps on the left; the four columns update live and every column reconciles to the dollar — sources of funds always equal total development cost.
The point isn’t to find the highest return. It’s to see the trade-off: moving up the capital stack — senior, stretch senior, mezzanine, preferred equity — lets you commit less of your own equity and can lift your return on equity, but each higher layer is more expensive, so your absolute profit and margin come down. Preferred equity often takes a share of the profit as well as a coupon, which can pull its return on equity below the simpler structures despite the highest gearing.
What each figure means
Senior / base facility is the first-mortgage construction debt — the cheapest layer and the base of every stack. Stretch senior is a single facility pushed to a higher leverage point at a higher rate. Mezzanine is subordinated debt that sits above senior and lifts total leverage. Preferred equity sits above that again, usually earning a priority return plus a share of the profit.
Developer equity is the cash you contribute — total development cost less the debt and subordinate capital arranged. Peak debt / arranged capital is the most capital drawn across the build. LVR (loan to value) is debt divided by the end value (GRV); LTC (loan to cost) is debt divided by total development cost. Lenders size a facility to the lower of an LVR and an LTC limit, so both matter — the binding test tag shows which one is actually capping the loan on your deal.
Finance cost is every cost of funding added together — capitalised interest on each layer, establishment, line and exit fees, and BluCow’s brokerage, all shown as separate lines in the funding table so nothing is hidden. Development profit is GRV less total development cost. Margin on cost (ROC) is profit divided by total cost — a project-level measure lenders like to see comfortably in double digits. Return on equity (ROE) is the profit you keep divided by the equity you contributed. Equity multiple (MOIC) is how many times your cash comes back.
Interest is capitalised on an S-curve drawdown — debt is drawn progressively through the build rather than all on day one, which is how development interest actually accrues. Brokerage follows BluCow’s standard scale: 1.0% on the first $10m of capital arranged, 0.75% from $10–25m and 0.50% above, with a $20,000 minimum, shown ex-GST. Every rate and cap is an editable default, so you can dial the tool to your own lender terms. Move to a real project and send us the feasibility for a considered view.
Frequently asked questions
Does the tool tell me which structure is best?
No — deliberately. It shows the trade-offs so you can weigh them against your own priorities: how much equity you want to deploy, your appetite for cost and risk, and the execution certainty you need. The “best” structure depends on the developer and the deal, not just the highest return-on-equity number.
Why can preferred equity show the lowest return on equity even though it’s the most geared?
Because preferred equity is expensive twice over: it charges a high priority return and takes a share of the residual profit. On many deals that combination leaves the developer keeping less than a simpler senior-plus-mezzanine structure would, even though less of your own cash is tied up. Slide the profit-share input to zero and you’ll see preferred equity climb back up — that’s the crossover point for your deal.
Why is the loan smaller than my LVR limit suggests?
Lenders size to the lower of an LVR and an LTC limit. On a healthy-margin deal the cost is well below the end value, so the LTC test (a percentage of the smaller cost figure) usually binds first and caps the loan before the LVR limit is reached. The binding-test tag on each column tells you which limit is governing.
Are the rates and fees real?
They’re indicative market defaults as at the date shown, not current quotes or an offer. Actual terms depend on the lender, the project and prevailing conditions. Every figure is editable so you can model your own numbers.
Is this financial advice?
No. The tool is general information and every figure is illustrative. BluCow Capital does not provide financial product or investment advice. For a considered view on a real project, get in touch.