It’s hard to read anything about Fairview without coming across the term “senior secured.” But what do those words actually mean for your capital?
Being a senior secured lender means two things: 1) you are first in line to be repaid and, 2) your loan is backed by a tangible asset. Both are core to how we preserve capital.
To understand why this matters, it helps to visualize the capital stack. Think of a property’s financing structure as floors in a building: common equity investors occupy the penthouse—they enjoy the upside when things go well, but they are the last to be paid and the first to absorb losses when they don’t. Below them sit preferred equity holders, then junior or mezzanine debt holders.
Fairview sits at the ground floor—the foundation. If a property’s value declines, losses are taken at the top of the stack first. Our position, by contrast, is shielded by a margin of safety. Because we are conservative in valuation and structuring—with an average loan-to-value ratio of 57% since inception—the properties securing our loans would need to lose, on average, more than 40% of their value before we’d face a loss as a senior secured lender.
This margin of safety is what allows us to pursue equity-level returns with debt-level risk. Our business is straightforward: We aim to make sure every investment is worth significantly more than what we paid for it, and to stay in control if things don’t go as planned. While it certainly isn’t rocket science, our strategy does require deep networks, disciplined diligence, thoughtful structuring, and hands-on servicing. Over the past 15 years and more than one billion dollars invested, these are the things we’ve learned to do best.
