ARD (Absolute Return Debt)

Definition

A mezzanine financing structure where the lender receives a percentage of property profits in addition to interest payments, used in high-risk development projects. It's designed for situations where traditional debt won't cut it and investors need a seat at the casino.

Example Usage

The developer offered ARD financing to bridge the gap between construction loans and permanent financing.

Origin

Developed as a hybrid financing structure combining debt and equity characteristics

Fun Fact

ARD is popular in bridge financing because lenders get both debt returns plus equity upside—making risk more tolerable.

Source: Commercial real estate financing

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