Mezzanine Commercial Loan Program
Mezzanine financing allows borrower to have higher leverage levels than conventional financing. These loans can be provided for existing properties or properties under construction. Mezzanine loan is junior loan to the permanent financing and may be secured by second mortgage or stock of the entity that owns the property. Mezzanine loans are structured in several ways including interest only to fully amortized loan as well recourse and non-recourse loan.

City Capital Finance structures Mezzanine commercial loans for commercial and multi-family properties, focusing on smaller size transactions from $2M to $25M. We work with capital markets and mezzanine lenders day-in and day-out and have established the relationships with these lenders to secure the best terms and smartest money for each of our mezzanine financing requests.

Mezzanine Commercial Loan Highlights:

  • Minimum loan size: $2M
  • Maximum 90% combined loan to Value
  • Recourse and Non-Recourse
  • Acquisitions, construction and recapitalization



Mezzanine Commercial Loan - Straight Debt Financing

This is the most common Mezzanine loan structure in which the mezzanine lender would take the junior lien position and has no equity or stock ownership of the company that holds the property. In this case, the mezzanine lender has no control over the management of the project and no participation in the property's cash flow.

Straight debt mezzanine financing is often common in stabilized properties in which the property generates enough cash flow to pay for first mortgage, mezzanine loan, operating expenses and still generates some returns for the ownership entity.

Mezzanine Commercial Loan - Participation Note Structure

This type of Mezzanine financing is structured similar to a debt/equity hybrid. The borrowing entity needs higher leverage and is willing to give up some of the ownership or cash flow of the property. The mezzanine lender's note rate would be slightly lower however; the overall rate of return would potentially increase by participating in property's cash flow or exit fee if the property is sold. Since the lender is taking higher risk, higher yield is considered in structuring the note rate and equity ownership percentage.

Mezzanine Commercial Loan - Preferred Equity Structure

This mezzanine structure would allow the lender to take greater ownership position in the borrowing entity and have some control over the management of the project. The borrowing entity and mezzanine lender would enter into a partnership agreement which spells out the roles and equity ownership of each party. This structure is suitable for borrowers with limited capital commitment to the project. Mezzanine lenders would take higher risk in exchange for higher overall return, more control and they can quickly take over the property if the borrower is in default.

Property Types: