Funding condominium construction has slowly become a much more complicated process throughout the last decade, according to The Real Deal.

Especially in the past year, the amount of money that banks in the US are willing to lend to developers has decreased a large amount, especially for high-end luxury projects.

This decrease is forcing developers of new condo buildings to gain financing from a wider range of different sources, including equity partners, high-yield debt funds, hedge funds and foreign investors.

This has created a more complex stack for developers on these projects, requiring them to find more sponsor equity, mezzanine debt, preferred equity, EB-5 funds and possibly crowdfunding. While some developers are able to fill the gap themselves, others are turning to varied sources that can end up being more expensive and less secure.

It is now unusual for a bank to cover 50% of the cost of a condo project, when prior to 2008 banks would usually lend between 60-70% of the cost of a condo project. With this split and after mezzanine loans, developers only needed to cover around the remaining 10% with equity.

In more complex scenarios, financing a condo project can include more than four layers of mezzanine debt and preferred equity, plus other sources and the larger the deal is the more layers will be required.

View the original article on The Real Deal.