Interview: Commerical Mortgage Observer on Mezzanine Lending and Preferred Equity Investing

In an interview appearing in the September issue of The Mortgage Observer, Real Estate partner Jay A. Neveloff discussed the trends and challenges involved with mezzanine and preferred equity financing. Asked what trends he’s seeing in these areas, Mr. Neveloff said that the largest volume of deals he’s worked on this year have been preferred equity deals, and that the totality of capital invested in typical real estate deals has become very complex. He said that a deal’s risk profile and how remedies are exercised play a role in whether money comes in as a mezzanine loan or preferred equity investment. Mr. Neveloff said issues ranging from how fees are paid to how profits are distributed are among some of the legal questions that need to be addressed in preferred equity deals. On the challenges that mezzanine and preferred equity deals can present, Mr. Neveloff said that the complex capital structure of such deals has made the legal work more sensitive to the business issues involved.