Bridge the gap between your senior loan and your equity. Mezzanine debt and preferred equity up to about 85% combined leverage, case by case, with all property types considered.
Every real estate deal is funded by a capital stack. Mezzanine is the middle layer: it is repaid after the senior loan but before the owners' equity, so it carries more risk than the senior loan and less than equity, and it is priced in between.
First lien on the property from a bank, agency lender, life company or debt fund. Lowest cost, but it usually stops around 55%–65% of value or cost.
Subordinate debt secured by a pledge of the ownership interests in the borrowing entity, governed by an intercreditor agreement with the senior lender. It brings combined leverage to roughly 75%–85%.
An ownership position with a priority return. It fills the same gap when a senior lender does not allow mezzanine debt.
The sponsor's and investors' cash. Paid last, with all the upside.
Fund 75%–85% of the deal with debt, so you bring 15%–25% instead of 35%–45%.
Fill the gap without taking on a new equity partner and giving away control or upside.
When the property earns more than the mezzanine costs, the extra return goes to your equity.
The equity you save can go into reserves or the next acquisition.
Recapitalize a stabilized property and return capital to investors while you keep the asset.
Usually interest-only, sometimes with part of the interest accruing, and structured around your business plan.
| Senior loan | Mezzanine | Preferred equity | |
|---|---|---|---|
| Position | First lien | Behind the senior loan | Behind all debt |
| Security | Mortgage on the property | Pledge of ownership interests | Ownership rights in the entity |
| Typical combined leverage | 55%–65% | Up to 75%–85% | Up to 85%–90% |
| Typical cost (2026) | Lowest | About 11%–18% all-in | Usually 1%–2% above mezzanine |
| Best when | Always the base | Senior lender allows subordinate debt | Senior lender prohibits mezzanine |
Costs and leverage are typical market ranges for illustration; actual terms depend on the property, sponsor, senior loan and lender.
How senior debt, mezzanine and equity combine on different kinds of deals. Illustrations only; every deal is structured case by case.
$20,000,000 purchase
| Senior loan | 65% | $13,000,000 | Bank, agency or debt fund |
| Mezzanine | 15% | $3,000,000 | Behind the senior loan |
| Sponsor equity | 20% | $4,000,000 | Your cash |
Without mezzanine, the sponsor brings $7,000,000 (35%). With it, $4,000,000: about 43% less equity for the same building.
$10,000,000 purchase + renovation
| Senior loan | 65% | $6,500,000 | Bridge loan with capex holdback |
| Mezzanine | 20% | $2,000,000 | Funds the renovation gap |
| Sponsor equity | 15% | $1,500,000 | Your cash |
The sponsor keeps more cash in reserve, or spreads the same equity across two deals instead of one.
$30,000,000 total cost
| Construction loan | 60% | $18,000,000 | Senior, funded in draws |
| Mezzanine | 20% | $6,000,000 | Closes the cost gap |
| Sponsor equity | 20% | $6,000,000 | Land, soft costs and cash |
Construction lenders often stop at 55%–65% of cost. Mezzanine brings combined leverage to about 80% of cost.
$25,000,000 current value · $12,000,000 existing loan
| New senior loan | 60% | $15,000,000 | Refinances the existing loan |
| Mezzanine | 20% | $5,000,000 | Additional proceeds |
| Sponsor equity | 20% | $5,000,000 | Equity left in the property |
About $8,000,000 before closing costs comes back to the sponsor and investors without selling the property or bringing in a new partner.
$20,000,000 purchase
| Senior loan | 60% | $12,000,000 | Hospitality lender |
| Mezz or preferred equity | 20% | $4,000,000 | Pref equity if the senior prohibits mezz |
| Sponsor equity | 20% | $4,000,000 | Your cash |
When a senior lender does not allow subordinate debt, preferred equity fills the same slot in the stack.
Still short on equity after mezzanine? See how JV, GP/LP and preferred equity can fill the rest of the stack, or let us help you raise capital.
Share the basics and explain the deal in your own words. We'll review it with our mezzanine and preferred-equity partners and reach out as soon as possible.
Subordinate financing that sits between the senior mortgage and the sponsor's equity. It is usually secured by a pledge of the ownership interests in the property-owning company rather than a lien on the real estate.
Senior loans typically stop around 55%–65% of value or cost. Mezzanine usually brings combined leverage to 75%–85%, occasionally higher on strong multifamily, case by case.
In 2026, mezzanine generally prices from about 11% to 18% all-in depending on deal size, leverage, property and sponsor. Larger deals price tighter. Payments are usually interest-only, sometimes part current pay and part accrued (PIK).
Yes. Most senior lenders require an intercreditor agreement that sets out each lender's rights, including cure rights. We coordinate it with your senior lender.
Mezzanine is debt, secured by a pledge of ownership interests, with interest that may be deductible. Preferred equity is an ownership position with a priority return; it is often used when a senior lender (such as an agency lender) does not allow mezzanine debt, and it usually costs a little more.
Multifamily, mixed-use, retail, office, industrial, hospitality, self-storage, senior and student housing, portfolios and development, case by case.
Mezzanine financing and preferred equity are arranged through Win-Win Capital Funding's network of capital partners; Win-Win may be compensated. Not a commitment to lend; all terms are subject to underwriting, senior lender consent and approval. Business-purpose loans only.
#CRE #CommercialRealEstate #Multifamily #BridgeLoans #RealEstateFinance #Investing · Share on X · Facebook · LinkedIn · Email
