Mezzanine Loans

Mezzanine loans are commonly referred to as “soft” second liens because they are similar to 2nd mortgages in pricing and purpose but unlike a 2nd mortgage, mezzanine loans are not secured by a recorded deed of trust (a hard lien). Mezzanine loans are only secured by or in other words, only hold a “security interest” which is typically 100 percent of the equity interests in the legal entity that holds title to the property. This “security interest” is often referred to as a “pledge of partnership interests”. Mezzanine loans also require pre-approval by the senior mortgage lender by way of an inter-creditor agreement signed by the senior mortgage lender, the mezzanine lender and the borrower. Mezzanine financing is considered an alternative to expensive high priced preferred equity financing and is structured similar to a senior mortgage in regard to repayment terms and maturity. Mezzanine loans also provide high leverage that is often referred to as “gap financing” that bridges the gap between the senior mortgage and the borrower’s down payment.


Mezzanine Loan Criteria

  • $1 million – $25 million
  • Recourse & Nonrecourse
  • Existing Stabilized or Unstabilized Cash Flowing Properties
  • Major Markets Nationwide
  • Up to 90% of Total Project Cost
  • Up to 75% of “As-Completed” Stabilized Value
  • Interest Rates 7% – 15%
  • 2- 5 year fixed rate terms
  • Interest Only Payments
  • Collateral: Pledge of Partnership Interests & Inter-creditor Agreement
  • Purpose: Acquisition & Rehab, Recapitalization, Debt Consolidation and Partner Buyout