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Mezzanine Debt Definition

Mezzanine debt typically happens when one debt issues is of less importance than another debt from the same lender. Furthermore, this type of debt is intertwined with equity instruments. These are often referred to as a warrant. These equity instruments usually increase the overall value of the less important debt. Therefore, when handling bondholders one has more flexibility.

For example, in the case of a bankruptcy, the new owners of the property receive precedence over the previous owners.

Learn more about the various types of real estate investing here.