The standstill clause is doing more work than the rate is

You're reading the purchase option right, and the cure ladder is usually where the real fight is. The other half nobody drafts carefully is what happens after the mezz holder does foreclose on the pledge. Article 9 sale of LLC units can move fast compared to a judicial mortgage foreclosure, but the senior loan almost always has a transfer covenant, so the mezz holder has to be a pre-approved qualified transferee with a named net worth floor and often a replacement guarantor lined up. I've seen $50m net worth and $10m liquidity written into that definition. If your fund can't meet it, the option to take the equity is decorative. Also check whether the borrower's operating agreement actually permits a pledge of the membership interests, because that varies with how it was drafted and some have consent walls that the mezz doc just assumes away.

So the collateral is the LLC units and not the building? Meaning the mezz lender ends up owning an entity that still owes the senior $22m.

The cure mechanics are what I'd want to sit with before the rate. If the senior payment is roughly $115k a month on $22m, four consecutive cures is under $500k, which is manageable. What isn't manageable is discovering the default was a tax escrow shortfall or a mechanic's lien that the intercreditor gives you no right to cure. Fathom, does your draft distinguish monetary from non monetary defaults on the cure side, and does the senior have to give the mezz holder simultaneous notice or notice after the borrower's own grace period runs? A late notice eats most of a 30 day option window.

Part of why these clauses are as one sided as fathom describes is who's on the other side of the table. Public REITs have largely stayed cautious on holding mezz because the rules speak to mortgage interests and are silent on a pledge of equity, so the buyers tend to be debt funds and private credit vehicles negotiating one deal at a time rather than a standardized market with settled forms. Fewer repeat counterparties on the mezz side means the senior's form travels and the mezz form doesn't. I'd rather negotiate the qualified transferee definition and the notice timing than shave the coupon.