Mezzanine Financing

How Mezzanine Differs from Preferred Equity

• Legal structure: Mezzanine = true loan secured by pledge of sponsor's equity in property entity. Preferred Equity = equity investment with priority distribution rights
• Foreclosure mechanics: Mezzanine = UCC Article 9 foreclosure on equity pledge — relatively fast (30–60 days). Preferred Equity = contractual remedies (forced sale, sponsor removal) — typically slower
• Senior lender preference: senior lenders typically permit preferred equity more easily than mezzanine without consent and intercreditor agreement
• Pricing: mezzanine typically 10–15%; preferred equity 9–14% — converging
• Tax treatment: mezzanine interest is deductible debt expense; preferred return is distribution
• Reporting: mezzanine is straightforward debt accounting; preferred equity carries equity treatment complexity

Florida Mezzanine Profile

• Rate: 10%–15% — sometimes blended current-pay + accrued
• Term: 3–10 years — typically matched to senior debt term or refinance window
• LTV: mezzanine adds 5–25% LTV over senior; combined 75–90% LTV
• LTC (on construction): mezzanine commonly funds 5–20% of total project cost — combined 65–85% LTC with senior construction loan
• Lockout: typically 12–24 months no prepayment, then declining prepayment schedule
• Intercreditor agreement: mandatory — defines mezzanine cure rights, standstill periods, recognition rights at senior foreclosure
• Closing timeline: 30–60 days typical

Florida Use Cases

• Multifamily acquisition gap: senior agency at 60% LTV + sponsor 25% equity leaves 15% gap → mezzanine fills at 10–12%
• Construction: senior construction at 60% LTC + sponsor 25% equity + 15% mezzanine = 100% project funding
• Value-add capex: mezzanine funds renovation capex tranche above senior bridge
• Bridge to permanent refinance: mezzanine in CMBS or bank refinance gap during rate-driven valuation compression
• Recapitalization rescue: mezzanine layered to bridge between original sponsor failure and new capital
• Senior lender restrictions: some FL senior lenders (especially CMBS) prohibit mezzanine without consent — preferred equity often preferable in these structures

What is mezzanine financing?

Mezzanine financing is subordinate commercial real estate debt secured by a pledge of the borrower's equity interest in the property-owning entity (not the property itself). Mezzanine sits between senior debt and common equity in the capital stack. Florida mezzanine typically: 10–15% rate; 3–10 year term; 70–90% combined LTV with senior; foreclosable under UCC Article 9 on the equity pledge.

How is mezzanine different from preferred equity?

Mezzanine = true loan secured by pledge of sponsor's equity in the property entity — foreclosable under UCC Article 9 (relatively fast, 30–60 days). Preferred equity = equity investment with priority distribution and return-of-capital rights — contractual remedies (forced sale, sponsor removal) that are typically slower. Senior lenders generally permit preferred equity more easily than mezzanine. Pricing has converged: mezzanine 10–15%, preferred equity 9–14%.

What's a typical Florida mezzanine rate?

Current Florida mezzanine rates: stabilized multifamily gap 10–12%; value-add multifamily 11–13%; ground-up development 12–15%; distressed/rescue capital 14–18%+. Structure may include all current-pay or blended current-pay + accrued. Some structures include equity kicker for upside participation beyond stated rate. Pricing varies materially with deal profile, senior debt structure, and sponsor credit.

What's an intercreditor agreement in mezzanine financing?

An intercreditor agreement is the binding agreement between the senior lender and the mezzanine lender defining their relative rights — typically including: mezzanine cure rights on senior defaults, standstill periods limiting mezzanine remedies during senior foreclosure, recognition rights for mezzanine at senior foreclosure (right to step in or take subject-to senior), amendment consent rights, and payment subordination provisions. Intercreditor is mandatory and material to enforceability.

Who can source Florida CRE mezzanine financing?

Michael R. Linton and Linton Global Solutions source mezzanine financing for Florida CRE sponsors across multifamily, industrial, retail, hospitality, mixed-use, and development. Active relationships with mezzanine debt funds, regional banks (some offering mezzanine programs), and accredited capital. 39 years of Florida CRE transaction experience and direct capital markets coverage in Orlando, Tampa, and the I-4 corridor produces mezzanine structures with clean intercreditor and senior-lender approval. Call (312) 612-1031.

Article Summary

Mezzanine financing = subordinate CRE debt secured by pledge of borrower's equity interest in property-owning entity (not the property). Sits between senior debt and common equity in capital stack. FL terms: 10–15% rate, 3–10 year term, 70–90% combined LTV with senior, 65–85% LTC on construction. Foreclosable under UCC Article 9 on equity pledge — typically 30–60 days vs. slower mortgage foreclosure. Differs from preferred equity (contractual remedies, equity treatment). Intercreditor agreement mandatory. Senior lenders (especially CMBS) may restrict mezzanine.

Key Takeaways

• ✓Mezzanine = subordinate debt secured by pledge of sponsor's equity interest.
• ✓Position: between senior debt and common equity in capital stack.
• ✓FL profile: 10–15% rate, 70–90% combined LTV, UCC Article 9 foreclosure.
• ✓Differs from pref equity: true debt with faster foreclosure remedies.
• ✓Intercreditor agreement with senior lender is mandatory.

About Michael R. Linton

Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.

Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.

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Works Cited

1. CRE Finance Council. "Mezzanine Debt Best Practices." CREFC, https://www.crefc.org/. Accessed Jul 20, 2026.
2. Pension Real Estate Association (PREA). "Capital Stack Research." PREA, https://www.prea.org/. Accessed Jul 20, 2026.
3. Urban Land Institute. "Real Estate Capital Sources." ULI, https://uli.org/. Accessed Jul 20, 2026.
4. American Bar Association. "Mezzanine and Intercreditor Treatise." ABA, https://www.americanbar.org/. Accessed Jul 20, 2026.

Disclosure & Compliance

Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.

Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.