Mezzanine Financing & Preferred Equity Nationwide | CRE Capital Stack

Mezzanine financing is junior debt secured by a pledge of equity interests in the property-owning entity, positioned behind the senior loan and in front of common equity. Preferred equity is a similar instrument structured as an equity investment with a fixed preferred return and priority distribution. Rad Capital Group places both products from $3 million to $200 million nationwide.

Sponsors use mezz and pref to push total leverage from 65–70% senior LTV up to 85–90% combined LTV, reducing equity check size on acquisitions, value-add deals, recapitalizations, and ground-up construction. Pricing runs 10% to 18% on mezz and 12% to 20% on pref, blended through current pay and accrued/PIK components.

Mezzanine debt requires senior lender approval and an intercreditor agreement; preferred equity typically avoids intercreditor complexity but requires an operating agreement amendment. We structure both with flexible exit fees, lookback IRRs, and conversion features depending on sponsor objectives.

These products are most commonly stacked behind CMBS conduit loans, bank bridge debt, agency multifamily loans, and construction loans — and are especially useful when current senior debt sizing is constrained by DSCR or in-place cash flow.