Mezzanine participations

Abstract

In April of 2005, one of the architectural icons of the New York City skyline, the Met Life Building, on Park Avenue above Grand Central Terminal, was purchased by an affiliate of one of the leading real estate companies in the USA, Tishman–Speyer. Designed by Emery Roth and Walter Gropius, the building now boasts some of the highest asking rents in Manhattan. The acquisition financing for this transaction was originated by a leading investment bank and was structured to include a mortgage loan and three mezzanine loans. The mortgage loan was carved into a number of pieces and sold in several securitization transactions. Through participation and servicing agreements put in place by the originator, the mezzanine loans were each carved into participations and sold off in a series of transactions to a variety of institutional investors. This transaction is an example of the critical role that mezzanine financing has come to play in large real estate financings over the past half-decade. Copyright © 2005 John Wiley & Sons, Ltd.