Wrote a $60k check into a mezz tranche and got paid back last month

Small one, and I mostly want to write down how it went because everything I read about mezz before this was written for people moving ten times the money.

A sponsor I'd co-invested with twice before needed $1.4M behind a $4.6M senior on a 44 unit building in a market I know. He syndicated the mezz piece in $50k units, 12% current pay, monthly, 30 month term. I took $60k because that was what I could put somewhere and not need for three years.

What it actually looked like: interest hit my account on the 15th of every month, $600, for 29 months. Then a refinance paid off the senior and the mezz together and I got my $60k back plus a 1% exit fee I'd forgotten was in the docs. Total collected was about $18,000 on $60,000 over two and a half years.

The part that nearly broke it was month two. No payment. I emailed and got told the lockbox with the senior lender was holding funds until the reserve was fully funded and the mezz payment couldn't be released until that cleared. It took six weeks and two payments arrived together. I spent those six weeks reading the intercreditor for the first time properly, which I should have done before wiring, and learning that the mezz payment sat behind a reserve funding condition I hadn't noticed.

What I'd keep: only doing this with a sponsor whose last two deals I watched all the way through. What I'd change: read the cash management section before the wire, not after.