The capital stack and DSCR

Next, a lesson. A capital stack is every source of money in a project, from senior debt to equity, in the order each gets repaid.

When the sources do not add up to the cost, the shortfall is called the gap. DSCR, the debt service coverage ratio, divides a building's net operating income by its loan payments.

Lenders use it to ask whether the building can carry its debt.