Preferred Equity Loans

PREFERRED EQUITY / MEZZANINE

Like today’s equity, mezzanine lending is seeking risk adverse projects. Most mezzanine financings today will require some level of debt service coverage, ranging from 1.10x and up. 100% accrual mezzanine transactions have been replaced by moderate current pays of between 7-10% with the remaining return realized through the exit strategy (refinance or sale). Pricing is risk adjusted but typically starts in the low to mid teens. The length of term varies from project to project.

Today, mezzanine financing will play a crucial role in filling the gap in the capital stack between the current senior debt and a newly originated 1st Trust Deed. Furthermore, mezzanine financing is a cost effective way to fill the stack for an acquisition where assumable financing is in place.

CCP works with an array of mezzanine providers. In some cases, our mezzanine lenders offer both equity and senior debt which allows for a one-stop-shop execution.

CLOSED TRANSACTIONS

Borrower was looking to put subordinate financing behind an existing CMBS loan that did not allow subordinate financing:

  • 6% pay rate, accrued to 12% overall rate
  • 90,000 SF Class “A” Trophy Office Building investor.
  • Private East Coast Investor worked diligently with the borrower to overcome a number of issues including a complex ground lease.
  • 3 years with two 1 year extension options.
  • Proceeds used for working capital, TI/LC/Cap Ex to complete stabilization of the property.
Loan Amount: $12,500,000
Loan Type: Preferred Equity: Office Building
Loan Location: Santa Monica, CA

Borrower was looking for Preferred Equity to lever up on recent acquisition after getting tenant to extend lease:

  • Combined 70% of Purchase Price/LTV
  • Prime + 3.75%, 2 Points
  • 4 year Term
  • Interest Only
  • Sponsor pulled cash out
  • Recourse to Entity only (not warm body)
  • 100,000 Sf, Single Tenant Office Building
  • National Bank
Loan Amount: $3,500,000
Loan Type:Preferred Equity: Office Building
Loan Location: Southern Callifornia