Mezzanine & Preferred Equity

Redmon Capital specializes in mezzanine and preferred equity, which are two types of capital structures that sit between senior debt (traditional bank loans) and common equity (ownership interests).

Mezzanine Equity: Mezzanine financing involves providing capital that is subordinate to senior debt but senior to common equity. Mezzanine lenders typically receive higher interest rates compared to senior debt lenders because they assume more risk. In the event of default, mezzanine lenders have the right to take ownership stakes in the property or to convert their debt into equity. It’s commonly utilized when senior debt falls short of project capital requirements.

Preferred Equity: Preferred equity is a type of investment that combines features of both debt and equity. Preferred equity investors have priority over common equity investors in terms of receiving distributions and recovering their investment in the event of liquidation or sale of the property. However, they generally lack the same voting rights as common equity holders. These investments often provide fixed returns similar to debt investments, yet they also participate in the upside potential of the property's performance akin to equity investments.