From View From The Top, 3 June 2026
When Everyone Says No
Creative Capital, Aligned Incentives, and How Deals Get Done When the Conventional Stack Breaks Down
It was September 2001. I was developing across six Central and Eastern European markets. Multiple projects in the ground. Institutional equity partners committed. Major international brands contracted. The kind of momentum that takes years to build and feels, for a brief period, like it will continue indefinitely.
Then the world changed overnight.
9/11 didn’t just change geopolitics. It froze capital markets with a speed and completeness that nobody operating at the time had experienced before. Within weeks our institutional equity partners had pulled back. Not reduced. Not renegotiated. Pulled back.
Suddenly, funding for a major big box retail development — fully contracted, delivery due, a significant German brand waiting on the other side — was gone.
We called everyone we knew. Every institution. Every fund. Every relationship we’d built over a decade of operating in markets most Western capital hadn’t yet reached.
Everyone said no.
Not maybe. Not later. Not at a different price.
No.
THE CONVENTIONAL STACK AND WHY IT BREAKS
To understand what happened next it helps to understand how real estate capital structures normally work — and why they seize up when sentiment freezes.
The conventional stack is elegant in its design. Senior debt provides the majority of the capital at the lowest cost, secured against the asset. Mezzanine sits behind it, taking more risk for more return. Equity sits at the bottom, taking the first loss and the highest return if everything goes to plan.
Each layer has a defined role. Each layer has a defined source — clearing banks for senior debt, specialist lenders or funds for mezzanine, institutional equity from pension funds, insurance companies, sovereign wealth vehicles, or private equity.
In normal markets, this is the well worn path and it works. Capital flows to each layer, the structure closes, the project proceeds.
But the conventional stack has a critical vulnerability.
It depends on each layer being available simultaneously. And in moments of genuine market stress — 9/11, 2008, the inflation shock of 2022 — the layers don’t dry up sequentially. They dry up together.
Debt freezes first. Institutional equity freezes next. Risk appetite collapses. The equity that was committed in writing is suddenly subject to force majeure clauses, material adverse change provisions, or simply the phone call that says “we need to pause.” Most often at tat that time lenders will review valuations and re-size. More equity will need to come in.
But when equity gets wiped clean and when equity disappears, the debt layers follow. Senior lenders don’t lend against projects with no equity cushion. Mezzanine providers don’t take junior risk when the senior is uncertain.
That’s what we are seeing now in the market in terms of legacy deals across the living sector.
The stack collapses from the bottom up.
And the developer is left with a contracted project, a waiting occupier, a construction team mobilised on site — and no capital. That was my situation in September 2001.
WHERE CREATIVE CAPITAL ACTUALLY COMES FROM
Here is what most operators miss when the conventional stack breaks down. The instinct is to keep calling the same people and hope the answer changes. To wait for sentiment to turn. To pause the project and accept the costs of delay.
Maybe the better instinct is to ask a different question.
Not “where is the conventional capital?” but “who else has skin in the game?” In our case the answer was sitting on site.
Our contractors had mobilised. They had committed resources, deployed equipment, hired people. If the project stopped, they faced their own financial crisis. The losses weren’t theoretical — they were immediate and real.
That alignment of interest is the foundation of creative capital.
The contractors didn’t become equity partners because we asked them nicely. They became equity partners because their downside from the project failing was comparable to ours — and their upside from the project completing was real and tangible.
So we structured hybrid equity. The contractors’ committed costs became an equity contribution. Their ongoing work was priced at a rate that balanced their cash needs against the project’s viability. The equity structure was unconventional. But the incentives were perfectly aligned.
The project got delivered. The market turned. We refinanced. Everyone was made whole — and then some.
THE CREATIVE CAPITAL TOOLKIT
That 2001 experience shaped how I think about capital structure permanently. There are more sources of creative capital in any given situation than most operators consider. Here are the ones worth understanding.
1. Contractor and supplier equity
When contractors have mobilised and have real costs at risk, they are natural equity partners. The structure requires careful negotiation — they are not financial investors and the terms need to reflect that — but the alignment of incentive is genuine and powerful.
2. Landowner joint ventures
In a market where land values have repriced but landowners are reluctant to sell at distressed values, a joint venture structure can unlock sites that won’t transact conventionally. The landowner contributes the land at an agreed value. The developer contributes the development expertise and manages the capital raise. Profit is shared on completion. Both parties avoid the forced sale dynamic that destroys value.
3. Forward funding from occupiers
Pre-let or pre-sold developments can access capital from the end user rather than the financial markets. A retailer or occupier who needs the space and has balance sheet capacity will sometimes forward fund a development — effectively lending against their own future occupation. The economics work for both sides. The developer gets capital. The occupier gets certainty.
4. Family office and private capital
Institutional capital moves slowly and freezes collectively. Family office capital moves faster and makes independent decisions. In moments of institutional paralysis, the family offices and private capital providers who understand the underlying asset — who have been in the market, who know the developer, who have done their own analysis — can move when institutions can’t. The terms are often more expensive. The availability is more reliable.
5. Preferred equity structures
Between debt and common equity sits a range of preferred equity structures that can bridge the gap when conventional equity is unavailable. Preferred equity takes a defined return — typically 10 to 15% — and participates in upside above a threshold. It is more expensive than conventional equity in good outcomes but cheaper than the cost of project failure.
6. Mezzanine from specialist lenders
The clearing banks retreated from development finance in 2008 and never fully returned. What replaced them was a generation of specialist lenders — private credit funds, challenger banks, family office lending vehicles — who understand development risk and will price it at a return that reflects the reality rather than the institutional risk framework.
THE CREDIT SIDE — THINKING DIFFERENTLY ABOUT DEBT
On the debt side, the same principle applies.
The conventional senior lender — the clearing bank with its standardised credit process, its committee approvals, its 18-week timeline — is not the only source of senior debt. And in markets where the clearing banks are cautious or absent, it cannot be the assumed source.
Specialist development finance lenders exist specifically to fill this gap. They understand construction risk. They understand planning risk. They understand the developer’s track record in a way that a bank credit committee reviewing a standardised application cannot.
They are more expensive than clearing bank debt. But they are available. And availability at a higher price is worth more than unavailability at a theoretical lower price.
Bridging finance — short-term, higher cost, secured against the asset — provides liquidity while longer-term structures are assembled. Used correctly it buys time. Used incorrectly it compounds problems. The difference is whether it is part of a plan or a substitute for one.
The private credit market we have discussed at length across multiple issues of this newsletter exists precisely because of the gap left by conventional lending. The operators who understand how to access it — who have the relationships, who understand the pricing, who can structure deals that work for specialist lenders — have a significant advantage over those still waiting for the clearing banks to come back.
WHAT CREATIVE STRUCTURE ACTUALLY REQUIRES
Creative capital structure is not desperation dressed up as innovation.
It is a genuine skill. And like all genuine skills it requires specific capabilities that take time to develop:
Understanding what each party actually needs.
The contractor equity structure in 2001 worked because we understood precisely what our contractors needed — cashflow protection, cost recovery, a realistic path to completion — and structured around that. Creative capital fails when the developer imposes conventional terms on unconventional providers.
Alignment of incentive, not just alignment of interest.
Every party in a deal has an interest in it succeeding. Not every party has their incentives structured to make success the most likely outcome. The difference between interest and incentive is the difference between a deal that closes and a deal that falls apart.
Speed and decisiveness.
Creative capital providers are not institutional committees. They move faster and expect the developer to move faster too. The ability to structure, negotiate, and close quickly is as important as the ability to identify the source.
Honesty about the situation.
Creative capital providers are sophisticated. They know why they’re being asked. The developer who is transparent about the challenge — here is the situation, here is why the conventional stack isn’t working, here is why this project is still worth completing — will find a more receptive audience than the developer who obscures it.
THE PARALLEL TO TODAY
The UK residential development market in 2025 and 2026 is not 9/11.
But the dynamic is recognisable.
Institutional capital is cautious. Conventional debt is expensive and restricted. Valuations are uncertain. The SME developers who are trying to build the homes the market needs are caught between planning constraints, cost inflation, and a funding market that doesn’t fully work for them.
The conventional stack is not functioning for a significant portion of the market. Which means the question is the same as it was in September 2001. Not “where is the conventional capital?” but “who else has skin in the game?”
- The landowner sitting on a consented site that won’t transact at current values.
- The contractor who needs the pipeline.
- The family office that understands the local market and can move faster than an institution.
- The specialist lender who prices development risk correctly and moves at the speed the market requires.
- The landowner sitting on a consented site that won’t transact at current values.
- The contractor who needs the pipeline.
- The family office that understands the local market and can move faster than an institution.
- The specialist lender who prices development risk correctly and moves at the speed the market requires.
The capital is out there. It just isn’t always where you expect to find it.
And the operators who know how to find it — who have the relationships, the structuring skills, and the willingness to think beyond the conventional stack — are the ones who keep building when everyone else stops.
HARD LANDING
September 2001 taught me something I have never forgotten.
The market doesn’t care about your institutional relationships when sentiment freezes. It doesn’t care about your track record, your brand commitments, or your contracted pipeline. What it cares about is whether you can find a way through.
The operators who find a way through are not necessarily the ones with the best conventional relationships. They are the ones who ask the right question when the conventional answer isn’t available.
Not “why won’t they lend?” but “who else needs this to work?” That question — and the creative thinking it demands — is what separates the developers who kept building in 2001, in 2008, and in the market we’re operating in now, from the ones who waited for conditions to return to normal.
