Mezzanine Loans

Mezzanine loans are similar to second mortgages, except a mezzanine loan is secured by the stock of the company that owns the property, as opposed to the real estate. A mezzanine loan is a form of commercial loan used to finance a large commercial property, typically tall office towers, large hotels, shopping centers and industrial parks.

Mezzanine loans are different from mortgages in that the debt is secured not by a mortgage on the property, but rather by a security agreement against the owner’s stock in the company that owns the property. If the borrower doesn’t make his payments, the mezzanine lender will simply foreclose on the stock of the corporation or the membership interests of the LLC that owns the property.

Mezzanine loans are large loans, typically at least $3 million. They are generally placed behind large first mortgages of at least $8 million. Few institutional mezzanine lenders will consider mezzanine loans of less than $3 million, although a handful of expensive hard money lenders may consider mezzanine loans as small as $1 million.

National Commercial Property Loans has the sources and experience you'll need for mezzanine loan funding.