Mezzanine Gap Calculator

Mezzanine fills the space between senior debt and equity. This calculator sizes mezz need and blended cost of capital.

Total project cost

Senior loan

Equity

Senior rate

Mezz all-in rate

Mezz needed

$1,000,000

Total debt

$7,500,000

Blended debt rate

7.37%

Total LTC

75.00%

How the math works

Mezz = cost − senior − equity. The blended debt rate tells you true cost of leverage.

Mezz is expensive (12-16%) but cheaper than stretching senior LTV or diluting equity IRR. Right-sized mezz produces optimal LP returns.

How to Use

Enter total project cost.
Enter senior loan.
Enter equity investment.
Enter mezz rate (all-in).
Enter senior rate.
Read mezz gap and blended cost.

Frequently Asked Questions

Typical mezz sizing?

Mezz fills 5-20% of capital stack, sitting between senior (60-75% LTV) and equity (20-35% LTC). Mezz rates 10-16% current, higher in distressed markets.

Is mezz same as pref equity?

Similar but legally different. Mezz = debt against LLC interests in borrower, with UCC foreclosure rights. Pref equity = equity position with priority distribution. Mezz is more senior in waterfall.

What's blended cost?

Weighted-average of senior rate, mezz rate, and equity IRR target. A well-structured stack targets blended cost 200-400bps below project IRR — that's the spread to LP.