• The mezzanine financing option is appealing to developers and investors for many reasons:
• The amount financed can vary; it need not follow a set formula.
• It fosters flexibility in project timing and often comes to the rescue of deals that threaten to unravel at closing time due to last-minutes changes.
• It allows developers to employ their cash over a greater number of projects without an excessive commitment of personal assets.

The approach to working with a mezzanine lender should be like any other strategic partnership in the development process. Look for a track record of success in similar situations. And, make every effort to build a long-term relationship in order to steer clear of potential shortsighted decisions. Long-term relationships continue through thick and thin, where both parties are as good as their word.

The best mezzanine lenders offer speed in the decision-making process. Timing is critical in modern retail as developers juggle land-purchase options, municipal approvals, tenant commitments and demands, or construction resources. Once a project is approved, everything must happen quickly. Time to market can make or break a project and, as part of the financing team, the mezzanine lender should understand that.

While the "collateral" for mezzanine lending often exhibits equity-like qualities, many mezzanine lenders will adopt a hands-off philosophy with respect to day-to-day project decisions and management. In this way, they add value as financial and strategic partners, as opposed to an operational one.