No one can go to a bank and get the entire payment covered when it comes to financing commercial real estate. No bank, regardless of how excellent your credit is, will ever fully finance anything. There must always be some sort of down payment and security.

However, banks frequently offer senior debt financing up to 75% LTV of the property if you are an experienced investor or partner with one. Mortgage debt is senior debt since it has priority in repayment and the lowest interest rate when compared to other types of debt.

Investors in commercial real estate have a variety of choices for financing the final 25–20% of the project. Developers typically seek to rely as heavily as they can on preferred equity and mezzanine loans in the fight between preferred equity and common equity. This is so because, although being the riskiest investment, common equity is also associated with the greatest rates and shares in after-tax earnings.

What distinguishes pref equity vs mezz? Mezzanine debt and preferred equity differ primarily in that one acts as debt and the other as equity, as their names would suggest. Both forms of financing are hybrid in the sense that their respective structures, which we'll describe later, combine elements of equity and debt. But whether it comes from a public or private lender, mezzanine funding is seen as debt. It follows senior debt in the order of repayment, and the recall rights are set up differently than they are for preferred equity.

The financing for senior, subordinated, mezz, real estate, and preferred stock is managed by Clearwatercm. Due to their solid connections in the real estate debt capital markets, they specialize in loan placement for pre-development, development, transitional, and stable properties across the United States.

They have a number of connections with institutional investors and limited partners who are willing to step aside in a direct purchase, joint venture, or discretionary fund to allow sponsors to effectively buy or recapitalize assets. Consult Clearwater Cm for details on domestic and foreign financial options, including Mezz loan real estate debt funds, insurance firms, banks, and government-sponsored organizations.

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