LTV is the leverage measure that determines how much of the property is financed by debt versus equity. Lower LTV = more equity, less leverage, lower returns but lower risk. Higher LTV = thinner equity, higher returns but more risk and more covenant exposure.
For coliving specifically, senior debt LTV is typically 55–70% reflecting the asset class's relative novelty and operating complexity. Traditional multifamily often gets 70–80% senior LTV; coliving's premium is the operator-execution risk component.
Formula
LTV = Loan Amount ÷ Property Value
Worked example: Property: €5M acquisition price, €3.25M senior loan. LTV = €3.25M ÷ €5M = 65%. Adding a €750k mezzanine loan: total debt = €4M, total LTV = 80%, but senior LTV is still 65% (the mezz lender sits behind).
In the field
Western coliving senior LTV: 55–65% bank, 65–70% specialist real-estate debt funds. Pan-European institutional deals trade at 60–65% all-in. Indian coliving senior LTV 55–60%. Adding mezz pushes effective LTV to 75–85% in many institutional structures.
Common pitfalls
- ×Quoting LTV on outdated property values — banks recalculate on current value, not historical.
- ×Confusing LTV with loan-to-cost (LTC) — LTC includes capex, LTV uses property value only.
- ×Treating mezzanine debt as 'equity' in pro-formas — it's debt, with senior covenants underneath.
- ×Underwriting at near-maximum LTV without buffer for cap rate expansion at exit.