Bridge Funding That Accelerates Growth

Mezzanine gives you priority over equity in the capital stack, so you get paid after senior debt but before common equity, with contractually owed interest and repayment terms rather than waiting for profits. Equity is last in line but captures unlimited upside if the project outperforms. Choose mezz when you want more predictable returns and less downside risk; it’s debt-like protection with a higher yield to compensate. Our structures keep it straightforward and aligned with execution—documents define the exact priority and terms.

If senior debt forecloses, your mezzanine position typically takes a hit because it’s secured by an equity pledge in the borrower entity, not a direct lien on the property. The senior lender’s foreclosure (or deed-in-lieu) can leave you holding equity in a shell with no asset, wiping out economic value even if the debt still exists.

Your main protection is the intercreditor agreement, which usually gives you notice, a cure period for certain defaults, and often a right to buy out the senior loan before they foreclose. If you don’t exercise those rights in time, the senior position prevails. We structure these protections clearly upfront—documents and the intercreditor control what happens in that scenario.

Your protection is almost entirely driven by the intercreditor agreement: it commonly gives the mezz lender notice plus a right to cure certain senior-loan defaults and/or a right to purchase the senior loan before the senior foreclosure happens. If you don’t (or can’t) exercise those rights in time, the senior foreclosure can proceed and your mezz position is typically wiped out economically even if the mezz loan still exists as a claim.

Yes, but only if the deal documents include an equity kicker like warrants or explicit conversion rights from the start—standard mezzanine debt doesn’t flip to equity just because performance is strong. Conversion is your option at triggers like a sale or refinance, based on a predefined ratio or percentage, trading debt priority for equity upside. Our structures spell this out clearly upfront so you know exactly when and how it works.

The trade-off is that converting generally means giving up your debt-like priority for equity-like upside, so you’d be stepping down the stack in exchange for more participation in the win.  Also, if there’s senior debt, the intercreditor and loan covenants can limit transfers or changes in ownership, so even “allowed” conversion can still require meeting conditions and getting the right approvals. 

The equity kicker percentage is usually set by working backward from the mezz lender’s target all-in return and then sizing the kicker to fill the gap after you’ve priced the “debt” parts (cash coupon, PIK, fees, OID).  In practice, if you can pay a higher cash coupon, you typically need fewer warrants (smaller kicker), and if the coupon is lower or cash flow is tight, the kicker grows to get the lender to the same target return. 

What the final percentage lands on is mostly a negotiation driven by risk and upside: higher leverage, thinner cushion, weaker collateral package, or more execution risk generally pushes the kicker up, while a safer deal pushes it down.  When the kicker is structured as warrants for a percentage of equity, common ranges are often in the low single digits (for example, 1%–5%), but it can be higher depending on the situation and structure.  The clean way to sanity-check it is to model your base-case and upside exit values and confirm that the kicker plus interest gets the mezz lender to their required IRR without giving away more equity participation than you intended. 

Mezzanine is generally safer than preferred equity because it’s structured as debt with contractually owed interest and stronger creditor remedies, sitting ahead of all equity in the capital stack. Preferred equity lacks that repayment obligation and relies more on negotiated governance rights, making it more vulnerable in distress. We keep it straightforward in our deals—mezz gets priority and defined economics, while equity waits for profits. Your documents and intercreditor agreement spell out the exact protections.

Mezzanine typically has a hold period of 2–5 years, matching the loan term with a bullet maturity at the end (often interest-only until payoff via refinance or sale). We align it with the senior debt timeline and project execution, so it’s medium-term capital built for deals that need speed without long-term lockup. Your loan documents set the exact maturity and any extensions.