Has anyone used mezzanine debt financing / can speak to rates charged?
Looking to finance small hotel deals and curious to required rate of returns mezz lenders and preferred equity investors are looking for nowadays.
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by a searcher
from University of Pennsylvania - The Wharton School
in New York, NY, USA
in New York, NY, USA
5yrs ago
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by a searcher
5yrs ago
from Babson College in Raleigh, NC, USA
from Babson College in Raleigh, NC, USA
Might be a while before institutional capital is interested in hospitality again. It will take many months or years to find market clearance due to the covid situation. Occupancy is down across the board by unprecedented levels.
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by a searcher
5yrs ago
from University of Pennsylvania in Chicago, IL, USA
from University of Pennsylvania in Chicago, IL, USA
Not sure on preferred - but sub debt that I have seen has been quoted at 15-18%. 15% being the the required payment with 3% in PIK notes to get to an all-in cost of 18%. Those numbers are what I have seen for middle-market business acquisition financing. Real estate is a distinct vertical, and probably has lower rates. Perhaps closer to 12-15%. Agreed though that hospitality has been gutted, which will likely create opportunities of its own.
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