Work out mezzanine finance cost instantly with clear inputs, formula shown and shareable results.
Mezzanine debt sits between senior loan and equity and is priced accordingly. Part of the return is paid as a cash coupon during the term and part accrues as payment in kind, compounding until repayment. The blended cost is the total divided by the facility and the term, which typically lands between fifteen and twenty percent a year.
Mezzanine cost
Total = amount x cash coupon x years + amount x ((1 + PIK)^years - 1)
Blended rate
Blended = total cost / (amount x years)
Total = amount x cash coupon x years + amount x ((1 + PIK)^years - 1). Mezzanine debt sits between senior loan and equity and is priced accordingly.
It preserves cash during construction or lease-up when the project cannot service interest. The price is a larger repayment at exit, compounded.
This calculator takes 4 inputs: Mezzanine facility amount, Cash coupon, Payment in kind accrual, Facility term. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.