The capital stack refers to the legal organization of the capital invested in a project. The stack contains the most risk at the top, traveling down the stack to the position with the least risk. Higher positions in the stack expect higher returns for their capital because of the higher risk. Lenders and equity stakeholders are highly sensitive to their position in the stack. Typically, the stack is arranged as follows, though not all levels are present in all transactions: 1. Sponsor equity 2. Preferred equity 3. Mezzanine investors (hybrid debt and equity) 4. Second and other junior mortgages 5. Investment-grade first mortgages The capital stack determines who has legal rights to certain assets and income and the priority of payment in the event of default or sale or liquidation of the property. For more on the capital stack, please consult our longer-form blog post on the topic.