Equity

Equity in commercial real estate represents the owner’s financial stake in a property — calculated as the difference between the property’s current market value and the outstanding balance of any debt secured by it. As a property appreciates in value or mortgage principal is paid down, equity grows.

Equity is a fundamental concept in CRE investment, used in structuring deals (debt vs. equity financing), measuring returns, and evaluating leverage. Investors may also access equity through refinancing or a sale, and equity partners in a deal typically share in profits and losses in proportion to their ownership stake.