How We Think About Leverage (and Why It Helps Borrowers)

One of the most important parts of our underwriting is leverage, specifically loan-to-ARV.

In 2025, our average LTARV across all loans funded was under 75 percent.

That is intentional.

Leverage should protect a deal, not stretch it. When leverage is structured responsibly, it gives borrowers more flexibility, more options, and more control throughout the life of a project.

Why Lower Leverage Works in Your Favor

Lower leverage helps borrowers:

• Refinance more easily into permanent or bank debt

• Exit deals even if the market softens

• Absorb construction delays or cost overruns

• Reduce stress and decision-making pressure mid-project

We have seen time and again that conservative leverage creates cleaner exits and fewer surprises. It keeps the focus on execution instead of scrambling to solve problems late in the deal.

Our Role as a Lending Partner

Our job is not to push leverage to the limit. It is to help you stay in control from acquisition through exit.

Thoughtful leverage is one of the most effective tools we have to manage risk, protect timelines, and keep projects moving when conditions change. It may feel conservative on the front end, but it often proves invaluable on the back end.

If you are thinking through leverage on an upcoming deal and want to understand how we approach loan-to-ARV and risk, reply to this newsletter. We are always open to conversations around structuring deals in a way that supports long-term execution and clean exits.