Among the victims of the Great Recession were sophisticated investors, who were holding mezzanine debt secured by “equity” in entities owning real estate (usually a single purpose entity (SPE)).
Most of the large deals that collapsed in the last three years had a debt stack that included mezzanine loans, the most famous of which was the $1.4 billion in mezzanine debt that was lost on the Stuyvesant Town/ Peter Cooper Village (ST/PCV) transaction, but the list includes trophy properties such as the John Hancock Tower in Boston, Las Olas Center in Fort Lauderdale, St. Regis Monarch Beach Resort in Dana Point, Calif., and numerous other properties as billions of dollars of mezzanine debt disappeared.
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