Evaluate the lender and the structure
Consider the lender’s experience with the asset, the proposed loan size, its approval process and its ability to work with the senior lender. Confirm its funding conditions before relying on a proposal.
Compare the complete proposal
Review the cash-pay and accrued interest, fees, repayment date, extension conditions, collateral and enforcement rights. Compare the combined senior and mezzanine obligations with the property cash flow.
Confirm senior-lender consent
Permission for mezzanine debt depends on the senior loan documents and approvals. Discuss the proposed structure before incurring significant costs.
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Give lenders a complete picture of the senior loan
A mezzanine lender needs more than the size of the funding gap. Provide the senior loan terms, collateral structure, existing loan documents, property financials and a complete sources-and-uses statement. Explain how the new debt would be serviced during the hold and repaid at the exit.
The senior lender’s willingness to accept the structure is a separate question from the mezzanine lender’s interest. Identify the approval path and the intercreditor work early so an attractive preliminary quote does not become an unusable financing plan.
Compare proposals through repayment
Two proposals with the same stated rate can produce different balances at maturity. Separate current-pay interest from amounts that accrue, then include fees, minimum-interest requirements and extension costs. Use the expected timing of property cash flows to compare the total obligation.
Ask who makes the investment decision, what diligence remains and whether the quoted structure has been reviewed with the senior lender. Those answers help distinguish a preliminary indication from a financing process that is progressing toward executable documents.
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