The capital stack has evolved over the years with the primary change being the complexity, structure and pricing of the tranches. When discussing Mezzanine debt its important to understand that pricing will be affected not only by the high-point of leverage but also how low in the capital stack (the attachment point) it sits. Additionally, the use and structure of mezzanine debt will also affect pricing. Though usually non-recourse (no principal repayment guarantee) In rare cases where a strong balance sheet entity can reduce its cost by providing the guarantee as a credit enhancement.
Unlike Senior Debt which is directly secured by the property, via a mortgage, a Mezzanine Loan is only indirectly secured by the underlying asset. The collateral for a Mezzanine loan is a pledge of the equity/partnership interests of the borrowing entity. That pledge is evidenced by a Uniform Commercial Code-1 (UCC-1) filing. For asset specific capitalization the borrowing entity is usually the property-owning entity.
When arranging Mezzanine financing it is good business practice to confirm that the potential provider has previously negotiated an intercreditor agreement with the anticipated senior debt provider. This agreement lays out the lien positions, rights and remedies of the creditor parties and as such when newly negotiated can increase closing times and costs for the borrower (who almost always pays closing costs).
Senior Mezzanine will have an attachment point of 50% LTC +/- and a last dollar exposure of 65% LTC +/-
Junior Mezzanine will have an attachment point of 65% LTC +/- and a last dollar exposure of 80-85% LTC +/-
Due to the common current pay requirement for a mezzanine loan, the amount held back from proceeds will usually reduce the true Max LTC to 82-83%.
Pricing will tend to be in the low double to high double digits depending on first/last dollar exposure.
Senior Mezzanine will have an attachment point of 55% LTC +/- and the last dollar exposure of 70% LTC +/
unior Mezzanine will have an attachment point of 70% LTC +/- and the last dollar exposure of 85-90% LTC +/-
Pricing will be in the mid-single digits on core and high single digits on lesser-quality assets. Low double digits for lower quality / junior mezzanine-secured assets
We source, structure and help close the following types of Mezzanine loan transactions:
Junior/ Senior Mezzanine Loans
Full/partial accrual pay options for transitional and development deals
Long-term co-terminus loans for stabilized assets
We maintain ongoing relationships with a large variety of Mezzanine debt providers including:
Aruyel Nurbekova joined Eyzenberg & Company in 2022 as Junior Analyst. She assists with underwriting, analysis, and financing memoranda preparation for commercial real estate debt and equity capitalization assignments.
Prior to joining the firm, Ms. Nurbekova worked as a Business Valuation Analyst at Ernst & Young company, one of the Big Four accounting firms.
Ms. Nurbekova completed her Bachelor of Science degree in Corporate Finance and Investment Management at KIMEP University in Almaty, Kazakhstan.
D: (305) 995-0777
Mr. Muniak joined Eyzenberg & Company in 2022 to focus on debt and equity originations in his newly adopted home of South Florida.
Mr. Muniak is Co-Founder and Managing Partner at Makal Equities, a real estate investment firm specializing in multifamily, industrial and retail property in Southern California and New York. He invested, sourced, and underwrote all commercial development and investment opportunities during this time. Furthermore, Mr. Muniak’s previous position as Managing Director at a Family Office in New York allowed him to develop his skills as he increasingly became involved in all aspects of fundraising and deploying the fund’s investment mandate. In his career to date he has invested, sourced, and underwrote commercial development and investment contracts, exceeding 100 million dollars.
Furthermore, Mr. Muniak is a Board Member and shareholder of the Mangia Hospitality Group in New York, where he oversees all aspects of fundraising, including the Group’s investment mandates. As a strategic dealmaker, Mr. Muniak is responsible for retail acquisitions & new developments and acts as a liaison with City and State Government bureaus. Due to his established reputation as a key player in the real estate and hospitality industry, Mr. Muniak has managed to build a wide portfolio of bicoastal projects and has worked closely with top developers, entrepreneurs, and restaurateurs nationwide.
Originally from New York City, Mr. Muniak graduated from Johnson & Wales University in Rhode Island, and completed his graduate Business certificate in Sydney, Australia. He is a long-time martial artist and a philanthropist.