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Mezzanine Construction Loans
Multifamily and Commercial Construction Mezzanine Financing Mezzanine and Preferred Equity Loans For Construction
Mezzanine Loans and Preferred Equity Financing For Ground Up Commercial and Multifamily Construction
When balancing the cost of debt vs. equity, sometimes layering a second debt piece on top of a lower leverage senior loan becomes necessary. Capital markets today are providing less aggressive senior leverage when it comes to construction debt, particularly non-recourse construction debt.
As such, if you find yourself with a 55% LTC senior loan, it may make sense when in search of bolstered IRRs to layer a piece of mezzanine financing on top of your senior (using either the real estate itself or the shares of the single asset entity as collateral).
Construction Mezzanine and Preferred Equity Highlights for Multifamily and Commercial Properties in 2023
Amount: $3 million and up
Term: Coterminous with first
Interest Rates: L + 900 - 1400
Amortization & Payment: Interest only with partial pay-current
Maximum LTC: 85% LTC (but generally 75%)
Recourse: Non-recourse to key principals with standard carveouts
Security: Pledge of Shares and/or Second Lien