Mezzanine Construction Loans
When large construction projects don’t have sufficient equity to secure the debt financing for the project, its a fairly common practice for the owner to try and secure a mezzanine construction loan.
Even though this type of funding is used to cover off the equity position, it is still secured by a subordinate debt mortgage.
The requirements for mezz financing includes a financing requirement of at least two million dollars, no more than 75% of the equity to be covered off, an annual return on capital of from 20% to 30%, a term no longer than 5 years, presales for condo projects of 20% to 50%.