Mezzanine debt is a hybrid lending vehicle, commonly used by real estate developers, to secure supplementary financing. Mezzanine debt gives the lender the right to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.
For more on mezzanine debt, please review this long-form article.
For more on how mezzanine debt figures into the broader picture of commercial real estate finance, please see our longer-form blog post on the capital stackBack to Glossary