Finance
In New York, a 'mezzanine loan' in commercial real estate is:
AA loan for the second floor (mezzanine level) of a commercial building
BA loan secured by equity interests (such as LLC membership interests) in the entity that owns the real property, not directly by the real property itself✓ Correct
CA second mortgage on residential property
DA government-sponsored loan for mixed-use developments
Explanation
A mezzanine loan in New York commercial real estate is a loan secured by the equity interests (such as membership interests in an LLC or shares in a corporation) of the entity that owns the real property — not by a mortgage directly on the property. In the event of default, the lender can foreclose on the equity interests using UCC Article 9 procedures (not a real property foreclosure), which is much faster than a judicial foreclosure.
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