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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
12/5/19

Oil Prices Lackluster Amid Wait on OPEC+
Posted on Wednesday December 04, 2019

Brent crude oil futures showed a meager gain Thursday, and West Texas Intermediate (WTI) posted no gain at all.

Energy Transfer Expands Pipeline Network
Posted on Wednesday December 04, 2019

The expansion comes with the closure of Energy Transfer's SemGroup acquisition.

OPEC+ Agrees to New Deal That Leaves Oil Supply Barely Changed
Posted on Wednesday December 04, 2019

OPEC reached an agreement that adjusts its official production targets, but removes few barrels from a market that's forecast to return to surplus early next year.

N. American Shale Primed for Growth Despite Possible Oil Price Declines
Posted on Wednesday December 04, 2019

The production outlook for North American shale will remain robust in coming years, despite a potential drop in oil prices, according to Rystad Energy.

Shale Frac Spread Rebound Hopes Fade
Posted on Wednesday December 04, 2019

A seasonal increase in the number of US shale basin-based frac spreads has not materialized.

Oil Tankers Idling Off China Possess Key to Shipping Rates
Posted on Wednesday December 04, 2019

The fate of at least 15 oil tankers idling off the coast of China holds the key to determining the path of global freight rates.

Saudis Offer OPEC+ Quid Pro Quo
Posted on Wednesday December 04, 2019

Saudi Arabia is offering fellow OPEC+ members a quid pro quo - If you stop cheating, we'll curb production.

TGS Starts Additional Montney Project
Posted on Wednesday December 04, 2019

TGS has started onshore seismic acquisition for an additional Montney basin 3D project in Canada.

FSMR Sticks to Oil Price Forecast Again
Posted on Wednesday December 04, 2019

Fitch Solutions Macro Research has left its Brent crude price forecasts unchanged for the second time in a row.

Petrobras Plans $34B in Dividends by 2024
Posted on Wednesday December 04, 2019

Petrobras plans to pay its shareholders $34 billion in dividends over the next five years as it cuts debt and sells assets to shore up its finances.

Wall Street Journal
Commercial News

12/5/19

WSJ.com: US Business

United Airlines CEO to Step Down
United Airlines said Chief Executive Oscar Munoz will become executive chairman in May, with President Scott Kirby taking the CEO post.

Uber Issues Report Detailing Safety Incidents on Ride-Hailing Platform
Uber says 235 sexual assaults reported on platform in 2018 vs. 229 in 2017.

GM, LG to Spend $2.3 Billion on Electric-Car Battery Venture
General Motors and South Korea?s LG Chem plan to build a large battery factory in Ohio, the latest example of an auto maker plowing money into electric cars.

Smith & Wesson Parent Sees Higher Gun Sales
American Outdoor Brands, Inc., the parent of Smith & Wesson, provided more evidence that demand for guns was stabilizing, with full-year sales and profit guidance that topped analysts? expectations

How Amazon Dodges Responsibility for Unsafe Products: The Case of the Hoverboard
Lawsuits are testing an argument that underpins the modern tech industry, that internet companies are mere platforms connecting buyers and sellers and aren?t responsible for the quality or safety of the products.

American Firms Import Fewer Chinese Goods
Imports of Chinese goods fell in October after the U.S. imposed new tariffs on consumer goods, and the overall trade deficit narrowed on a drop in imports and exports.

Mnuchin Working Closely With Fed, Bank Regulators on Repo Market Issues
Treasury Secretary Steven Mnuchin said he is working closely with the Fed to make sure there are ample reserves, or deposits banks keep at the Fed, following funding strains in money markets in September.

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