According to a recent survey of mezzanine debt participants conducted by KeyBanc Capital Markets, the total leverage for most transactions falls between 3.1x and 4.5x.

According to the survey, more than two thirds of respondents say they limit mezzanine investments to 11 to 20 percent of their capital structure. Just under a third however, leverage mezzanine debt in more than 20 percent of their capital structure.

Four out of five respondents to the survey indicated a need for at least 30 percent equity below mezzanine debt. Meanwhile, less than 20% of those surveyed selected a minimum of 20 to 30 percent equity below mezzanine debt.

The survey did not indicate any significant change in the use of mezzanine debt. Transactions and refinancing continue to dominate mezzanine exits.

While the norm for cash pay interest is typically between 12 and 13 percent, nearly two thirds of respondents indicated that all-in IRR falls between 15 and 17 percent.

Almost three quarters of those surveyed indicated a PIK rate in the two to three percent range.

Of those surveyed, about two thirds noted that a majority of their transactions have equity upside, including warrants. More than a quarter have warrants on all transactions.