建筑贷款下的每月还款，通常是只支付利息(不偿还本金)，其年利率是基于一个关键基准利率，比如伦敦同业拆借利率(Libor)。在建筑完工并且收入稳定之后(在创造收入型房地产的情况下)，开发商通常通过再融资获得长期贷款来替代和还清建筑贷款。长期贷款通常是一个附带偿还本金的固定利率贷款。长期贷款通常是5到10年。建筑贷款和再融资的长期贷款，一般是贷款人拥有借款人财产的第一顺位抵押权的高级抵押贷款(senior mortgage loan)。
高级抵押贷款：senior mortgage loan
“A Roadmap to the Use of EB-5 Capital: An Alternative Financing Tool for Commercial Real Estate Projects”
Conventional Projects - Summary background of mezzanine financing and preferred equity in conventional real estate projects
A conventional real estate project (without EB-5 capital) can be financed in several ways. A very basic description of a typical project’s capital structure follows. The development entity that owns and operates the property obtains a construction loan to finance all, or a substantial part, of the construction costs. In the case of an income-producing property, the construction loan term is typically the anticipated construction period plus the estimated period for the project to achieve a stabilized cash flow. Thus, the term varies depending on various factors that affect the construction and stabilization periods. The monthly payments under a construction loan are typically interest only (with no principal amortization) at a per annum rate equal to a spread over a key benchmark interest rate, such as Libor. After completion of the construction and stabilization of the income (in the case of an income-producing property), the development entity typically obtains a replacement permanent loan to refinance and pay off the construction loan. The permanent loan is often a fixed-interest rate loan with principal amortization. The term of the permanent loan is generally 5 to 10 years. The construction loan, and the permanent loan that refinances it, are typically senior mortgage loans with the borrower granting to the senior lender a first mortgage lien against the property.
Until the mid-2000s, many senior mortgage lenders were willing to lend as much as 90% of a property’s total market value, especially for a property that already was developed. However, in today’s market, senior lenders are generally only willing to lend in a range from 50% to 70% of the total project costs. The lender obtains a first lien against the property. Lenders demand that the developer invest some equity to evidence a financial stake in the project (“skin in the game”). The amount of developer equity required varies by lender, but generally ranges from 5% to 10%. This leaves a gap somewhere in the range of 20% to 45% of the capital stack. The obvious choice to bridge the gap would be a second mortgage loan from another lender. Although second mortgages were sometimes utilized in the past, today most senior lenders prohibit them. Thus, capital sources have developed to satisfy the demand for more leverage by the developer without being characterized as mortgage debt. In conventional commercial real estate deals, mezzanine (mezz) debt or preferred equity fills this gap.
Conventional mezz debt
In a senior mortgage loan, the property owner is the mortgage borrower. The collateral for the loan is the mortgage borrower’s direct ownership of the property. Mezz debt is a loan secured by the mezz borrower’s equity in another entity, and not secured by the property.
If the property owner (mortgage borrower) desires mezz financing, the senior mortgage lender typically requires that a special purpose entity (SPE) be created to serve as the mezz borrower that will own the equity interests in the property owner. The mezz loan is funded to the mezz borrower SPE. The collateral is the mezz borrower’s equity interest in the property owner.
The mezz borrower does not directly own any real property and does not operate a business. Thus, the value of the mezz lender’s collateral is derived solely from the indirect ownership of the underlying property.
If the mezz borrower defaults, the mezz lender may foreclose under the state’s commercial law,206 rather than under the state’s real property law that is applicable to mortgages.207 Upon the completion of the foreclosure process, the mezz lender replaces the mortgage borrower as the owner of the entity that owns the property (the senior mortgage borrower). However, the mezz lender’s interest is subject to all of the liens and encumbrances of the property, including the senior mortgage.
The mezz loan provides for a fixed maturity date and creates a firm obligation to comply with the loan terms. The periodic loan payments are interest only. Sometimes, the mezz loan provides for a portion of the interest to be paid currently, with the balance to be accrued and not due until loan maturity. In addition, sometimes mezz loans provide for a profit participation to the mezz lender, also known as an “equity kicker”. The entire principal balance is typically payable in one installment at maturity. Conventional mezz loan providers (“mezz lenders”) include private equity debt funds, mortgage REITs and insurance companies.
Conventional preferred equity
In contrast, the capital provided by the preferred equity investor does not constitute a loan. Preferred equity provides a direct ownership interest in the project owning entity. The investor makes a capital contribution to the property owner in exchange for an equity share of the ownership entity.
As one of the owners of the project entity, preferred equity investors do not possess collateral or foreclosure rights. Instead, the preferred equity investors have contractual rights and remedies under the organizational documents of the project owning entity (such as an LLC Operating Agreement) that governs the relationship of the project entity’s owners, including the developer. Theoretically, these rights should be automatic and self-exercising, but in reality, enforcement is typically more complicated and uncertain than mezz foreclosure.210 For example, typically in the case of certain defaults as defined in the LLC Operating Agreement or LP partnership agreement, the preferred equity investors can remove and replace the developer. However, if the investors were to seek to assert these rights, it is likely that the developer would challenge the claim in court.
The preferred equity investors will often have a direct ownership interest in the project owning entity. However, similar to the requirement imposed in the case of a mezz loan, some senior mortgage lenders will require that the preferred equity be invested in a SPE that in turn owns an equity interest in the project entity.
The term “preferred” refers to the preferred investor’s right of payment with priority over the common equity owner (typically the developer). In a conventional real estate project, a cash flow distribution waterfall provides that the project’s cash flow be allocated first to operating expenses, reserves and debt service payments. Any available remaining cash flow is then distributed to the equity owners.
Under a typical “true” equity structure, the preferred equity investors are entitled to a preferential return on their investment (typically ranging from 6% to 10% per annum) until the preferred equity investors receive that return and recover their capital investment (sometimes referred to as a “preferred return” or a “pref”). After the pref is recovered, the residual or excess cash flow available for distribution is split with the developer, often disproportionately to the relative capital contributions in favor of the developer (sometimes referred to as the “profit split”).
Preferred equity typically does not provide a fixed or mandatory redemption date on which the capital must be repaid to the preferred equity investors. Instead, the occurrence of a “capital event”, such as a sale or refinancing of the project, is typically the trigger that generates sufficient cash flow for the investors to achieve the pref and a profit split.
If the developer contributes equity to the venture, as is typically the case, then often times the pref is structured for payment to the preferred equity investors and the developer (the common equity). In that case, the pref distributions can be pari passu to the investors and the developer, or distributed first to the preferred investors.
The preferred equity possesses some debt characteristics. The preferential return on the investment is similar to the interest component on a loan. The recovery of the capital is similar to the repayment of principal under a loan. The payment preference over common equity is similar to the priority that debt has over equity.
Private equity funds, sovereign wealth funds, pension funds, life insurance companies and wealthy individuals often provide this type of equity capital. A more detailed explanation of preferred equity is beyond the scope of this paper.
Relative cash flow priority and loss exposure
A basic understanding of the relative cash flow priority and loss exposure of the various capital sources is fundamental to understanding the capital structure. After the payment of project expenses and the retention of any reserves for anticipated expenses, the project’s available cash flow is allocated first to pay debt service to the senior lender. The remaining cash flow is then allocated to pay any mezz debt, then preferred equity and common equity. Any project losses are absorbed in the reverse order. For example, if the senior lender were to foreclose on the property due to a mortgage default and the foreclosure sale proceeds were equal only to the senior mortgage loan balance, the senior lender would be made whole and the other capital source providers would suffer the economic loss. (A more in-depth discussion of lien priority is beyond the scope of this paper.) Thus, the senior mortgage loan is the most secure and the common equity is the least secure. Accordingly, the rates of return demanded by these various conventional capital sources reflect these relative risks.
Below is a diagram that shows a generic depiction of the capital stack, with relative risk, expected return, loss absorption and the portion of the total project costs (TPC) funding applicable to each layer in a conventional real estate project.