Mezzanine debt is a type of financing that is typically used to fund the purchase or renovation of commercial real estate. Mezzanine debt is typically structured as a loan, with interest payments and a balloon payment due at the end of the loan term. Though it is the riskiest type of debt, mezzanine debt returns high rewards, usually 12% to 20%. Mezzanine debt is often used in conjunction with senior debt, such as a mortgage, to finance the purchase of a property.
