Mezzanine debt is the middle layer of capital that sits between secured senior debt and equity.

This type of capital is usually secured by a second ranking mortgage over real property.

It is a way for developers to bridge the gap between what conventional banks will lend against assets, and the total cost of a new project, without issuing equity and diluting the ownership of the business.

Mezzanine debt is more expensive than senior debt, but less expensive than equity.