Mezzanine Debt
Quick answer
Mezzanine debt is subordinate financing secured by a pledge of equity interests in the borrowing entity rather than by a mortgage on the property.
Mezzanine debt sits between senior debt and equity in the capital stack. Because it is secured by an equity pledge rather than the real estate, it can be foreclosed far faster than a mortgage, and it is governed by an intercreditor agreement with the senior lender. Mezzanine typically lifts total leverage to 80–85% LTC and prices between senior debt and preferred equity.
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