In terms of pay structure, mezzanine financing holds senior positions to common equity and is subordinate to the first-mortgage debt.
Like a senior mortgage, it is debt, with a pledge of the ownership entity, and in some cases, a lien will be recorded against the property.
A Quick Clarification About Mezzanine Debt vs. Equity
For those curious about the difference between mezzanine debt and preferred equity, the main difference is that mezzanine debt is a loan while preferred equity is an equity investment.
What throws some people off is that mezzanine debt and preferred equity can be seen as either a loan or just equity. In both structures, the borrower has to pay back the mezz or pref provider before they can cash out their equity.
There are, of course, many other differences between these forms of finance, mainly in how they are structured on the technical side of things. If you want more information, you can call us anytime!
Who Exactly Provides Mezzanine Financing For Real Estate?
No other companies offer our small-balance mezzanine financing. This is why since 1989, Gelt has closed over 10,000 loans!
We Do Flexible Commercial Real Estate Financing
Taking every situation on a case-by-case basis, we offer excellent flexibility. Our goal is to accommodate your needs!