Recapitalization

Changing the capital structure of an investment, including the debt and equity mix, to optimize financing. This often involves exchanging one form of financing for another.

In private equity, a company can perform a recapitalization by increasing or decreasing debt in exchange for equity or assets. For example, a company can sell shares or assets to pay back debt, lowering interest expenses. 

In real estate, recapitalization occurs when investors change the capital structure of a property, usually by taking on additional investors. Recapitalization typically changes the proportion of debt and equity within the capital structure with the goal of making it better for the real estate investor. 

Recapitalizations usually occur to improve financial structure, manage debt/interest rates, restructure the ownership of an investment and/or help unperforming assets improve.