Mezzanine loans applied to commercial, industrial, and multifamily real estate are quite different to the standard commercial mortgaging common in this business arena. They are generally secured via a subordinate lien on the property or/and by assuming an interest in the owning entity (i.e. a partnership, trust, corporation, LLC, Delaware Corporation, estate – even a foreign national holding). Mezzanine financing for real estate can sometimes bring special advantages to the borrower by increasing asset returns alongside reducing out-of-pocket expenses.
Our mezzanine financing for real estate guidelines are:
- Sizes from $1 million to $50 million (total capitalization no limit)
- Nationwide geography
- Property must be commercial
- Typical transaction types are acquisition, recapitalization, value-add, and construction
- Cost of capital scenario based, market competitive
It is definitely an out-of-the-box option on a wide spectrum of leverage options that also includes commercial mortgages, mezzanine construction loans, cash out leveraging, refinancing loan vehicles, CMBS, bridge lending, preferred equity, and real estate private equity. When electing to raise a commercial mezzanine loan, success almost always depends on the unique circumstances of the client and most often aligns closely with one or more of the funding vehicles seen above.
Clopton Capital specializes in structuring mezzanine lending for private investors, small/middle market real estate entities, and family offices in the main. Our many $ billion of closed commercial property deals in the last 10 years qualifies us to consider all applications between $1 million and $ 40 million. Moreover, mezzanine financing for real estate stretches its reach to every city, town, and rural area in the USA. Therefore Clopton, as a nationwide commercial mortgage broker, is positioned to carry these esoteric loan options to all its clients looking for straight purchase, new construction, renovation, and short-term bridge financing or refinancing, with or without cash outs.
We have built close relationships with an array of distinguished lenders from coast to coast that give us the easily demonstrated capability to offer you direct access to the most competitive commercial property mezzanine funders in the USA for the easiest terms and lowest mezzanine interest rates possible.
Case Studies of Mezzanine Financing for Real Estate with Clopton Capital
Case Study 1: An LLC needed mezzanine debt to acquire an apartment building in Washington. The investors wanted to use part of the LLC’s existing equity in buildings already owned as collateral for the down payment, therefore avoiding the complex process of refinancing the first liens on the existing properties. There was no way that local banks would lend into this type of strategy – they simply don’t have the flexibility needed, despite the loan to value ratio looking good. Clopton stepped in and structured a $3 million mezzanine loan, secured against the LLC’s existing portfolio and the new building. Happily, for our client, we never had to refinance, therefore neither the existing lender on the portfolio nor the new lender on the acquisition was disturbed in any way. Shortly thereafter, once the new property was under control, the owner was able to refinance the entire capital structure with a new first commercial mortgage, secured by all of the LLC properties linked to an attractive interest rate.
Case Study 2: A trust looking to acquire a large retail center in Mississippi was looking for maximum leverage, a long-term fixed rate, and 30-year amortization debt financing. We were able to structure two loans: the first was a standard commercial mortgage based on 75% LTV; the second was classified as a small mezzanine financing arrangement that got the borrower additional loan dollars up to 80% loan to value – thus reducing the trust’s equity investment. Both of the loans were delivered to the borrower as one financing package, creating a simple structure with lower costs for its closing and loan servicing going forward.
Asset-backed mezzanine financing for real estate is a useful mechanism that can help investors in straightforward purchase transactions but reaches further afield into the world of mezzanine construction loans, short-term bridging, and refinancing. Our clients apply this option to real estate in categories like mobile parks, self-storage, retail malls, and offices – to name but a few. To learn more contact one of Clopton Capital’s commercial mortgage lenders by calling 866-647-1650 or using the Contact Us form available from the menu. You’re always welcome to work with us to find the right mezzanine funding loan rates and repayment plans to suit your every possibility. And with low closing costs attached to a straightforward documentation and underwriting process, your commercial loan process will be stress-free.