What is a Mezzanine Loan?
Mezzanine Loans can be subordinated debt or preferred equity instruments that represent a claim on a company’s assets which is senior to the claims of a company’s common shareholders. In real estate finance, mezzanine loans are often used by developers to secure supplementary financing for development projects. These loans are collateralized by the stock of the development company rather than the developed property itself. Standard mortgage foreclosure proceedings can take more than a year, but stock is a personal asset of the borrower and legal seizures can occur in just a few months.
