what is mezzanine financing in real estate 
a real estate mezzanine loan is generally used to pay for acquisitions or development projects they are subordinate to senior debt within the entity s capital structure but receive priority over preferred and common equity mezzanine bridge loans cover the cost of a purchase or development project that is not covered by senior debt the loans are unsecured but may be replaced by equity in the event of a default mezzanine financing allows the loan to increase the funding without the ownership dilution that would be caused by the issuance of a significant amount of preferred or common equity on the other hand real estate mezzanine loans appear as equity on the balance sheet which may make obtaining further financing somewhat easier for the lender real estate mezzanine loans offer very high rates of return in a low interest rate environment the opportunity to obtain some equity or control of the business and occasionally the ability to apply some control to the operations of the business 