Most mezz loans carry one to two extension options that mirror the senior's, with extension fees of 25 to 50 basis points. Tests typically include a current-pay DSCR or debt-yield threshold, no defaults, and renewed rate- cap purchase. Senior consent is required and the extensions must be exercised together.
What tests apply?
Combined senior plus mezz debt yield (e.g. 8.0 to 9.0 percent), trailing-three-month current-pay DSCR (1.05 to 1.15x including mezz current-pay), no events of default on senior or mezz, and refreshed rate-cap purchase. Some lenders add a partial-paydown test if the property has not stabilized to plan.
What does it cost?
Extension fee of 25 to 50 basis points on the mezz balance plus the rate-cap renewal cost. Where current-pay DSCR fails, lenders may require a sponsor cash deposit into a debt-service reserve or a partial paydown to qualify the extension.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1