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Commercial Building reflection

What is Mezzanine Financing?

Mezzanine financing is an important funding tool for real estate transactions.


[Updated: Feb 04, 2021 ] Apr 04, 2020 by Matthew DiLallo
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Metric Amount
Annual operating income for the property $100,000
5% annual interest on the $600,000 senior loan $30,000
Pre-tax income $70,000
Annual pre-tax return on $400,000 equity investment 18%

Data source: Author's calculations.

Metric Amount
Annual operating income for the property $100,000
5% annual interest on the $600,000 senior loan $30,000
10% yearly interest on the $200,000 mezzanine loan $20,000
Pre-tax income $50,000
Annual pre-tax return on the $200,000 equity investment 25%

Data source: Author's calculations.