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Why Mezzanine Today?
Demand for mezzanine debt from property owners is set to intensify over the next few years due to a confluence of trends. Mortgage financing for commercial real estate is in limited supply. Mortgage securitizations, which supplied a large share of funds prior to the credit crunch, have decreased dramatically and now provide a fraction of what was available in 2007. Commercial banks, constrained by new regulatory capital requirements, have reduced overall lending and adopted more conservative lending standards.

Against this backdrop, over $1 trillion worth of commercial mortgages will mature between 2016 and 2019. Many of these mortgages will expire with larger loan balances than can now be financed with new senior loans. This funding gap creates an unprecedented opportunity for real estate mezzanine lenders and should allow fund managers with expertise and experience to lock in high rates and generate stable current income into the future.