Mezzanine Financing Cost Calculator
Mezzanine debt fills the gap between senior debt and equity. It is more expensive than senior (10-15% typical) but cheaper than diluting equity. This calculator compares blended cost of capital between mezz-stacked and equity-only structures.
Where Mezz Fits In The Capital Stack
Senior debt (60-70% LTV) is cheapest but capped by lender. Equity is uncapped but most expensive. Mezzanine bridges 10-20% of LTV at 10-15% rates — between senior and equity. The lower WACC frees more equity for additional deals.
How Mezz Is Secured
Standard structure: mezz lender takes a pledge of the partnership interests in the property owner, not a direct lien on the property. On default the mezz lender can foreclose on the partnership equity and take control of the property without disturbing the senior mortgage.
When Mezz Makes Sense
Three scenarios: equity is constrained but the deal is attractive, the project has stable cash flow to service the higher coupon, and the sponsor expects to refinance or sell within 3-5 years. Mezz is rarely useful for long-term hold strategies because the 12%+ coupon eats cash flow over time.
Source: CBRE Capital Markets Mezzanine Report, ULI Real Estate Capital Markets. Last updated: May 2026.