Nice Collateral. Shame If Something Happened to It.

Sad to admit I learned something obvious the hard way: apartment boards kind of suck.

I signed my first tiny apartment because it had 24/7 access to a rooftop—great view, fresh air, and a refuge from the bustle of the city. But, within 6 months of moving in, the apartment board decided that access to the rooftop was paid only and limited to work hours. With the flick of a pen, a majority made the best part of my apartment basically disappear.

Investors are now experiencing the same thing, but that rooftop is actually hundreds of millions of dollars of collateral.

All lender consent terms for lien subordination prevent majority rule for stripping collateral in capital markets deals—and our Q1 '25 data shows a fascinating trend:

→ These terms appeared in 52% of deals in Q1 ‘25

→ That's down from a two-year peak of 64% in Q4 ‘24

→ But still up 17 points from Q1 ‘24 (a 48.6% increase year-over-year)

Why does this matter? Without this protection, majority lenders can vote to put new debt ahead of minority lenders in the collateral line—without their consent.

Most revealing? A few weeks ago, I shared that 68% of deals protect how payments get distributed among lenders. But here's the kicker: only 52% of deals protect collateral rights the same way. That 16-point gap means many deals protect how cash is shared but not who gets first claim on assets. It's like making sure your neighbors can't use the rooftop but they can still vote to block you from using it yourself.

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