With no sign that the Federal Reserve’s restrictively high interest rates are coming down anytime soon, the commercial real estate industry is still looking at ways to shake loose financing as lending is set to drop around 40% this year. One term gaining popularity is “dequity,” an ambiguously defined mix between debt and equity that developers are increasingly using to fill holes in their capital stacks. The funding carries increased risk for borrowers — but not enough to discourage the commercial real estate sector from using it to plug a gap. “It is the de facto solution to every problem,” Sam Friedland, a senior vice president at Related Fund Management, the private equity arm of The Related Cos., said onstage at Bisnow’s 2023 National Finance Summit last week. 
Dequity is simply “not taking the last dollar of risk,” Friedland said when asked to define the term. By not being the last rung in the capital stack, dequity holders are more likely to see a return and are in first position to take over a struggling building from a borrower.“It’s an… Read the full story here. | 
