Commercial Real Estate Mezzanine Financing

Mezzanine Financing and Preferred Equity for Commercial Property

Mezzanine financing is structured to increase leverage on commercial properties through inserting a layer of debt between the first mortgage loan and the owner’s equity. Mezzanine loans allow the lender to go higher on the capital stack than what traditional debt would normally allow, and are ideal for recapitalizations and refinancing when the current amount owed is higher than what can be obtained through conventional lenders.  Other uses are to offset investor equity which can often be more expensive than debt; this is particularly the case when building commercial property from the ground up. Preferred equity is available when the first lien holder will not allow for a secured second position and the mezzanine lender uses shares of the borrower/LLC as collateral instead of the underlying real state itself. Have questions? Contact loans@cre.capital to speak with a commercial mortgage broker about questions or inquiries you may have regarding mezzanine financing and preferred equity. 


Mezzanine Financing And Prefered Equity Terms

  • Minimum Loan: $2MM.
  • Term: Coterminous with the first lien. 
  • Leverage: Up to 90% LTV on stabilized property and 85% LTC on construction.
  • Amortization: Interest only.
  • Recourse: Non-Recourse options available.

LENDERS AVAILABLE FOR PERMANENT FINANCING

  • Country Club Syndicates
  • Crowdfunding Platforms
  • Pensions Funds
  • Private Debt Funds

Cons.

  • Debt can be expensive and drive up blended debt cost.

Pros.

  • Cheaper than equity
  • Provides higher leverage