Finance
What is 'mezzanine financing' in Hawaii commercial real estate and who uses it?
AA. A small loan for mezzanine floor improvements in commercial buildings
BB. A hybrid debt/equity financing layer between senior mortgage debt and equity; used by developers to fill funding gaps without additional equity dilution✓ Correct
CC. Short-term bridge financing for commercial property acquisitions
DD. A government grant program for commercial development in Hawaii
Explanation
Mezzanine financing fills the capital structure gap between senior mortgage debt and equity. It typically takes the form of a loan secured by the borrower's equity interest (rather than the property directly) and carries higher interest rates than senior debt but lower cost than pure equity.
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