Mezzanine Finance Real Meaning
Lately I have heard some very interesting definitions of what “Mezzanine Finance” means.
To clear up the actual meaning; “Mezzanine Finance” is subordinated debt with ranks behind a 1st mortgage/senior debt.
Mezzanine Finance will usually be secured by a 2nd Mortgage.
I have seen other definitions where they say Mezzanine Finance “gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full”. This is incorrect. A mezzanine lender may or may not include rights to takeover the project in the event of default although it is certainly not the definition of “Mezzanine Finance”.
Therefore “Mezzanine Finance” is subordinated debt which ranks behind 1st mortgage/senior debt and ranks before preferred equity and equity. The terms can vary from lender to lender.
If you require Mezzanine Finance call Prudential Finance today 1300 550 669.