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  • Member You - Commercial Loans: How Mezzanine Debt Closes the Deal

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    modern-day equivalent of second trust deeds.

    First, you need to understand that “modern”

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    This is the “answer” to a question I received this past week concerning a class of commercial real estate loans called “mezzanine” debt. If you’ve never heard of it, don’t worry. It’s usually used by fairly substantial commercial real estate developers and investors in situations where the existing debt doesn’t go far enough to get the property financed. Mezzanine debt is the modern-day equivalent of second trust deeds.

    First, you need to understand that “modern” c

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    eal estate loans called “mezzanine” debt. If you’ve never heard of it, don’t worry. It’s usually used by fairly substantial commercial real estate developers and investors in situations where the existing debt doesn’t go far enough to get the property financed. Mezzanine debt is the modern-day equivalent of second trust deeds.

    First, you need to understand that “modern”

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    ly used by fairly substantial commercial real estate developers and investors in situations where the existing debt doesn’t go far enough to get the property financed. Mezzanine debt is the modern-day equivalent of second trust deeds.

    First, you need to understand that “modern”

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    re the existing debt doesn’t go far enough to get the property financed. Mezzanine debt is the modern-day equivalent of second trust deeds.

    First, you need to understand that “modern”

    Real Estate Note Holder Facts - What to Know Before You List Your Real Estate Note
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    modern-day equivalent of second trust deeds.

    First, you need to understand that “modern” commercial lenders are a jealous lot: Most of them, whether bank, CMBS* mortgage bank, and sometimes life insurance companies won’t allow a junior lien to be recorded against a property where they have a first trust deed. There are several reasons for this, but the bottom line is that real estate investors would have needed a great deal of cash to get larger transactions done un

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