In today’s market, with values bottoming out, business is fairly buoyant for banks, so there might be a trend towards senior lenders wanting more equity in the capital stack rather than a mezzanine tranche, which can be disruptive and makes negotiating intercreditor agreements more complicated. “Therefore, perhaps lending terms for mezzanine finance might get watered down significantly”. But once the market starts to pick up, there will be more debt options for borrowers, so banks will not be able to dictate the terms so forcefully. “There will always be a place for mezzanine finance,” Doug concludes.
Doug King, ASK’s COO and Co-founder comments in Property Week on where mezzanine finance fits in the current real estate debt market.
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