Story

I priced a job for a guy who kept saying "the mezz lender" like I knew him

Got called out to quote signage and lobby refresh for a mid-size office building that had just changed hands on paper. Not a sale. A recap, whatever that meant. The guy walking me through kept referring to "the mezz lender" the way you'd refer to a mother in law. The mezz lender wants this done by March. The mezz lender doesn't love the tenant mix. The mezz lender approved the budget but not the timing.

I finally asked who that was and he laughed and said, my second lender, the expensive one. He said the bank would only refinance about two thirds of what he needed to pay off the old loan, and the rest came from a group that charges him a lot more and takes a pledge of his ownership in the building entity as security.

What stuck with me is how much that person shaped my little job. My scope, my start date, my paint colors, all downstream of somebody who's never going to walk in the lobby.

I quoted it. I got it. But I went home and looked up what mezzanine even meant and found out it's literally named for being the middle floor. Between the bank and the owner's own money. Which is a better name than most things in this business.

6 replies

nataliehsuSO1BPRO7

"the expensive one" is the most honest description of a capital source I've heard.

ehernandez74PO2BPRO5

How much of the approval process was actually running through that lender though? Was he asking permission for the paint or just reporting it? I ask because those are very different arrangements and I'd want to know which one I was in before I signed.

marcus_hale41CG4A

@anchor depends entirely on what the loan documents say about capital expenditures and consent rights. Some of those agreements require sign off over a dollar threshold, some just require notice. That's negotiated per deal and you'd read it in the docs, not guess from how the sponsor talks.

diane_kowalskiPassivePRO9

The naming thing is real. Mezzanine floor, the half level between two proper floors. I never connected it either until somebody said it out loud.

tonyv88SO4CPRO6

I manage a couple of buildings where there's subordinate money in the stack and you feel it in reporting. Monthly instead of quarterly, more line items, more questions about why the lease up slipped. Nobody at the property level ever meets that lender.

@lantern did the March date hold?

jordan_ellis2ActivePRO6

The guy filling the gap has opinions about paint, and after all my reading that had never once crossed my mind. That's the part they leave out of the diagrams.