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Looking for a mezzanine loan? Ocean Pacific Capital is a leader in providing all types of mezzanine programs. Whether mezzanine purchase, mezzanine refinance, or mezzanine construction, our mezzanine department offers a wide variety of options. Particularly in today's tight senior debt market, mezzanine is an increasingly important capital option for growing companies. We provide mezzanine financing from $1,000,000.00 to $1,300,000,000.00. If you are looking for a commercial mezzanine conduit, or construction mezzanine financing in California, or any other state, with good or bad credit, we can help you find the mezzanine program that meets your unique and individual needs.

A mezzanine loan is a relatively large, unsecured loan (a loan that is not backed by a pledging of assets) with a maturity of at least five years. The loan carries a detachable warrant (the right to purchase a certain number of shares of stock or bonds at a given price for a certain period of time) or a similar mechanism to allow the lender to share in the future success of the business. Mezzanine loans are dependent on cash flow for repayment.

Mezzanine loans are similar to second mortgages, except that mezzanine loans are secured by a percentage of ownership of the project, a 2nd T.D. that owns the property, as opposed to the real estate. If the company fails to make the payments, the mezzanine lender can foreclose on the stock in a matter of a few weeks. If you own the company that owns the property, you control the property. Therefore, a mezzanine loan is secured by the stock of a company, which is personal property and can be seized much faster. Mezzanine loans are large. It is hard to find a mezzanine lender who will thoroughly read through all of the required paperwork for a loan of less than $5 million. Typically, mezzanine lenders typically prefer big projects.

Furthermore, a mezzanine loan, as John C. Murray explains in his article entitled "The Mezzanine Financing Endorsement," is "a result of the increased securitization of real estate and the packaging of pools of loans for sale into the secondary market, mezzanine financing has become very popular in recent years. Mezzanine financing (or, perhaps more appropriately, mezzanine capital) fills the gap between the first mortgage financing, which usually has a loan-to-value ratio of forty to seventy-five percent, and the equity participation of the principals of the borrower, which is usually no more than ten percent of the cost of the project. Mezzanine financing commonly supplies financing of ten percent to fifty percent of the project's capital structure cost. This type of financing can take several forms. Most commonly, it involves extending credit to the partners or other equity holders of a borrower and taking a pledge of such parties' equity interests (including the right to distributions of income). Alternatively, the lender may take a preferred equity position, which is entitled to distributions of excess cash flow after debt service, ahead of the borrower's principals. A "combination" loan structure may also be used to combine a first mortgage loan with mezzanine financing at an aggregate loan-to-value ratio of ninety to ninety-five percent. This type of structure may contain a shared appreciation or contingent feature, an exit fee paid by the borrower, or sometimes, both. The borrower in a mezzanine loan is often an LLC, and the equity participant in the borrowing entity is frequently itself an LLC. In those situations where the mezzanine lender is taking a pledge of some or all of the equity interests in one or more of these entities in connection with the mezzanine loan, the lender may look to the title insurer for special forms of title-insurance coverage. The lender may seek some form of non- imputation coverage, i.e., assurance that the title insurer will not deny coverage under the owner's policy based on matters known to the borrowing entity (or its members) being imputed to the lender. Copies of endorsements offering this type of coverage are attached hereto. Title underwriters may require an affidavit and an indemnity agreement from the existing LLC members, and from the mezzanine lender when it exercises its foreclosure rights under the pledge and succeeds to an ownership interest in the mezzanine borrower. These affidavits and indemnity agreements will state that the respective parties have no knowledge of any fact that will affect the coverage under the policy, and will hold the title insurer harmless for losses resulting from its reliance on such affidavits and indemnities. The title insurer may also require, and review, financial statements from all relevant parties in order to achieve a comfort level for relying on the aforementioned indemnity. The attached endorsements state that (as agreed to by the insured and its equity members) all payments for loss under the policy will go directly to the mezzanine lender, and that there will be no denial of coverage as the result of the transfer of any of the LLC membership interests to the mezzanine lender. The endorsements further provide that the title insurer waives its right of subrogation and indemnity against any of the insured owner's equity owners until the mezzanine loan is paid in full. If a loss occurs under the policy, the amount paid by the title insurer is limited to the actual loss less a percentage thereof equal to the percentage of LLC membership interests not owned by the mezzanine lender at such time. If the loss occurs before the mezzanine lender's acquisition of the insured owner's membership interests, the mezzanine lender is not required first to pursue its remedies against other collateral. However, the title insurer's liability in any event is limited to the amount of the mezzanine loan, and the title insurer is entitled to credit for any amount paid out under a simultaneous loan policy. The title insurer is also entitled to reimbursement from payments received by the mezzanine lender from other security. The term "mezzanine lender" can be defined to include the owner of the mezzanine loan and each successor in interest in ownership of the mezzanine loan, and include any subsidiary or affiliate entity of the owner of the mezzanine loan. The availability and content of the attached endorsements will vary depending on factual and underwriting considerations, as well as statutory and regulatory restraints in certain states." Mezzanine lenders and commercial mezzanine construction lenders await our clients' application for a mezzanine loan, a multifamily or apartment construction loan, a commercial construction loan, a condo, or residential subdivision construction loan, or a land development loan.

Click here to apply now or for more information, and our recent closings, please visit our commercial loans page.

Whatever your financing needs,
we will tailor a loan that's right for you.

 


Daily Oil & Gas and Wall Street Journal News
11/21/19

Some LNG Sellers Could Miss Out on $15B
Posted on Wednesday November 20, 2019

Nearly 50 percent of LNG contracts worldwide are indexed to the Japan Crude Cocktail price.

Billionaire Fracking Brothers Hit Hard by Permian Holdings
Posted on Wednesday November 20, 2019

Two brothers hit pay dirt during the shale boom when they sold their Texas fracking company in 2011 for $3.5 billion. But many of their more recent investments in the Permian have turned to dust.

India Approves State-Run Refiner Privatization
Posted on Wednesday November 20, 2019

India launched its biggest privatization drive in more than a decade.

OGUK Launches Educational Campaign
Posted on Wednesday November 20, 2019

Oil & Gas UK is challenging the UK to put its energy knowledge to the test as part of a new educational campaign.

OPEC+ Likely to Retain Output Targets in Dec
Posted on Wednesday November 20, 2019

OPEC+ seems 'increasingly likely' to retain its production targets at its next meeting, according to a new research note from Jefferies.

Fredriksen Leaves Seadrill Board
Posted on Wednesday November 20, 2019

Billionaire John Fredriksen steps down as chairman of Seadrill.

Oil Eases as Investors Monitor Trade War
Posted on Wednesday November 20, 2019

Oil eased after the biggest increase in more than two weeks as investors monitor developments in the U.S.-China trade war.

Oil Rises as Key US Storage Hub Shows Biggest Draw in Months
Posted on Tuesday November 19, 2019

Oil jumps the most since the first of the month as American crude stockpiles at a key storage hub shrank by the most since August.

Canadian Heavy Crude Weakens Amid Worker Rail Strike
Posted on Tuesday November 19, 2019

The price of Canadian heavy crude weakened Tuesday as a worker strike at the nation's largest railway curbed oil shipments, exacerbating a supply glut that's crippled Canada’s oil industry.

Tallgrass Energy Kicks Off Open Season
Posted on Tuesday November 19, 2019

Pony Express plans to build 25 miles of new 12-inch pipeline from the Hereford origin to the new origin point in Wyoming.

Wall Street Journal
Commercial News

11/21/19

WSJ.com: US Business

Macy's Posts Lower Sales; Cuts Forecast
Macy?s said sales declined in the third quarter and lowered its guidance for the year, highlighting the continuing struggle to attract shoppers to traditional department stores.

Kroger Dials Back Overhaul as Sales Sputter
Kroger is turning back to the basics of selling groceries after trying to sell too many new products and renovate too many stores at once.

Xerox Threatens to Go Hostile With HP Takeover Bid
Xerox told HP?s board that it would take its $33 billion takeover bid to shareholders if HP doesn?t reconsider its rejection of the offer by Nov. 25.

Google to Restrict Political Ad Targeting on Its Platforms
Under the new policy, political ads can only be targeted based on users? age, gender and postal code.

Once Upon a Time in Hollywood, Reboots Ruled---Now, Not So Much
Weak openings for new installments in several older movie series highlight a challenge facing Hollywood studios: Even familiar titles often have trouble finding audiences?with the notable exception of superhero films.

China Invited U.S. Trade Negotiators for Direct Talks
China?s chief trade negotiator has invited his American counterparts for a new round of talks, according to people briefed on the matter, as both sides are struggling to strike a limited deal to help de-escalate tensions.

U.S. Existing-Home Sales Increased 1.9% in October
Sales of previously owned homes rose in October after a decline the previous month, with gains concentrated in mid- and high-priced homes, a sign limited inventory is posing challenges for sales of homes priced at the low end.

BRE #:00619059
Charles Elfsten, President
Charles A. Elfsten
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