So you’re able to be eligible for the newest secure harbor, an excellent mezzanine loan need certainly to satisfy the following standards:
LTV rates are generally indicated as a portion of your own collateral’s appraised well worth. Such as for example, if for example the guarantee have a keen appraised property value $100 billion additionally the lender’s limitation permitted LTV ratio try 55%, then the loan amount may well not surpass $55 mil.
The newest mutual LTV ratio is sold with the new balances from both the financial and mezzanine fund. Thus, if the a home loan company keeps an optimum LTV proportion off 55% and a good mezzanine bank an additional 30%, new combined limit LTV proportion are 85%.
Investment Trusts, because of the Micah Bloomfield, Evan Hudson, and you will Mitchell Snow. Section 2, Area 2:52; pick and additionally Nyc County Club Organization Tax Section, Overview of Revenue Process 2003-65, ([M]people REITs doesn’t own a valuable asset such as for instance an effective mezzanine loan except if discover confidence you to definitely its control of one’s advantage and relevant earnings about resource will not threaten its REIT condition.).
Immediately following home financing, Always home financing-Use (and you may Punishment) of Mezzanine Funds and you can Prominent Security Investments, by Andrew R. Berman, eleven Stan. J.L. Coach. & Fin. 76 (2005).
According to the government income tax legislation, a forgotten about organization are people entity (typically a keen LLC) who’s got one holder and has not decided on to-be taxed as another type of organization.
