Sources & Uses: The Foundation of Every CRE Capital Request
A Sources & Uses table is the single most important document in a real estate capital request. Sloppy math here ends the conversation before page two.
The Uses Side
Lists every dollar the deal needs — land/acquisition, hard costs (construction), soft costs (A&E, legal, fees), closing costs, interest reserve, and contingency. Every line must be defensible to a lender or LP.
The Sources Side
Lists every dollar coming in, ordered by capital stack seniority:
- Senior Debt — first lien, lowest cost (5–8%)
- Mezzanine Loan — second lien or pledge of equity (10–14%)
- Preferred Equity — non-recourse, equity-priority (10–13%)
- Sponsor (GP) Equity — 5–20% co-invest, earns promote
- LP Equity — passive capital, earns preferred return plus share of remaining cash flow
The Balance Rule
Sources must equal Uses to the dollar. A $50,000 variance on a $40MM deal is a red flag — not a rounding error. Capital partners assume sloppy math means sloppy underwriting throughout.
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Open Sources & Uses Calculator →Frequently Asked Questions
What is a Sources & Uses table?
A Sources & Uses table is a one-page financial summary showing every dollar a real estate deal needs (Uses — land, hard costs, soft costs, reserves) and every dollar coming in (Sources — senior debt, mezzanine, preferred equity, sponsor equity, LP equity). Both sides must equal — to the dollar — for the deal to close.
Why do Sources need to equal Uses?
Any variance between Sources and Uses signals a capital gap. Lenders will not close on an unfunded deal, LPs will not commit to one, and the sponsor cannot bridge that gap at closing. Balanced Sources & Uses is the most basic test of sponsor competence.
What is the standard capital stack order?
Senior debt (5–8%) → Mezzanine (10–14%) → Preferred Equity (10–13%) → Sponsor (GP) Equity → LP Equity. Cheaper capital sits at the bottom with first claim on cash flow; expensive capital sits on top with higher returns but later payment priority.
When do I need Sources & Uses?
For every capital request — refinance, acquisition, construction, value-add. Lenders ask for it before issuing a term sheet. LPs read it before reading anything else in the deck.