Mezzanine Debt in Commercial Real Estate Explained | CRE Financing

Описание: Mezzanine debt is one of the most powerful — and most complex — financing tools in Commercial Real Estate. In this video, we break down exactly how mezz debt works in the CRE capital stack, how it's secured by pledged equity interests rather than the property itself, how intercreditor agreements govern the senior-mezz relationship, and when borrowers and lenders should consider using it.

From UCC foreclosure mechanics and PIK interest to bad boy guarantees and the latest market trends, this is your complete guide to mezzanine debt in CRE.

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✅ What You'll Learn:
• What mezzanine debt is and where it sits in the CRE capital stack
• How mezz debt is secured by pledged equity interests — not a mortgage on the property
• UCC foreclosure on equity interests vs. real property foreclosure — speed & cost differences
• Typical mezz debt terms: rates (9–14%), LTV, amortization & interest-only structures
• Current pay vs. PIK (payment-in-kind) interest — how each affects risk and yield
• Intercreditor agreements: standstill provisions, cure rights & purchase options
• How combined senior + mezz debt reaches 80–90% LTV — reducing sponsor equity requirements
• Advantages for borrowers: leverage, control retention, tax efficiency & flexibility
• Advantages for lenders: higher yields, UCC foreclosure speed & equity upside kickers
• Key risks: subordination wipeout, fraudulent conveyance, cash flow pressure & covenant limits
• Mezzanine debt vs. preferred equity — critical legal and structural differences
• Bad boy guarantees: what triggers full recourse in a non-recourse mezz structure
• Market participants: debt funds, REITs, insurance companies & opportunity funds
• How rising interest rates since 2022 have compressed mezz demand and deal viability

📌 Perfect for: CRE investors, developers, syndicators, brokers, lenders, and asset managers structuring or evaluating commercial real estate capital stacks.

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