Commercial real estate developers and investors often utilize mezzanine debt to finance their projects. Mezzanine debt can be an attractive capital structure for several reasons:
- It can provide additional financing beyond what is available from traditional sources like banks.
- It typically has a lower interest rate than equity, making it more attractive financially.
Mezzanine debt is often structured as a subordinate loan, which means it will be repaid only after senior loans have been paid off. This can provide some protection for lenders in the event of a default.
While mezzanine debt can be a useful tool for financing commercial real estate projects, it is important to understand the risks involved. Mezzanine loans are often more expensive than traditional debt, so they should only be used when necessary. In addition, mezzanine loans are typically unsecured, making them riskier for lenders.
If you are considering using mezzanine debt to finance your commercial real estate project, it is important to speak with a trusted advisor such as Clearwater to discuss your options and find the proper capital structure for your needs.
Mezzanine debt can be valuable for commercial real estate developers and investors. It can provide additional financing at a lower interest rate than equity when used correctly. Mezzanine debt can also be structured as a subordinate loan, providing some protection for lenders in the event of a default.
More information: www.clearwatercm.com/real-estate-debt