Equity vs. Debt: How Capital Stack Changes for Modular

How does modular construction change your capital stack? The front-loaded payment requirements of modular projects fundamentally shift the balance between equity and debt—and most developers don't model it correctly. In this episode of Built Different, we break down the capital stack implications of modular construction. Factory deposits due before groundbreaking, progress payments tied to production schedules instead of site work, and the collateral challenges that make lenders hesitant to fund at normal advance rates. When modules sitting in an Indiana factory don't count as California real property improvements, equity fills the gap. Topics covered: Why modular front-loads capital requirements with 10-30% factory deposits The collateral problem: modules in production vs. site improvements How early equity deployment compresses IRR for investors Factory financing facilities and payment term negotiations Modeling true equity deployment timelines for accurate deal pricing Who this episode is for: Real estate developers evaluating modular construction, equity investors analyzing modular deal structures, capital partners structuring construction financing, and CFOs modeling project returns. Key takeaway: Projects that pencil with traditional construction capital stacks might not pencil when you adjust for modular's front-loaded equity requirements. Structure accordingly. Built Different is produced by Spring Street Management Group. New episodes on modular construction, off-site building, and volumetric construction drop every weekday at 6 AM Pacific.]]>