Mezzanine Financing
Mezzanine financing is subordinate debt provided to a direct or indirect owner of a borrower, secured by a pledge of equity interests in the borrower rather than by a lien on the property. In agency multifamily guidance, mezzanine financing is defined explicitly as debt secured by a pledge of the equity interest in the borrower and not by a lien on the property.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Capital stack structuring; closing; covenant monitoring
- Property types
- Multifamily (institutional); commercial assets with structured leverage
In practice
Mezzanine debt's collateral position (equity pledge) makes governance and intercreditor terms central; pricing alone is not a sufficient comparator.
Related terms
Capital Stack and Structured Finance
- Capital Stack
- Common Equity
- Cure Right
- Intercreditor Agreement
- Mezzanine Debt
- Preferred Equity
- Standstill Period
General information, not legal, tax or financial advice.