While some lenders get tough during a credit crunch, others get creative.

Many banks have scaled back lending and tightened standards on commercial property in North Texas and across the country, but capital is still available – for a price.

Local borrowers are seeing more:

Mezzanine financing: A debt-and-equity hybrid that bridges the gap between a borrower's equity and a first mortgage.

B notes: Second mortgages that fill the gap between a borrower's equity and a first mortgage.

Syndicated loans: Loans in which lenders band together, limiting their risk.

"The perception in the market is that no transactions are happening," said Randy Fleisher, executive vice president at CB Richard Ellis Debt and Equity Financing in Dallas, which helps companies find financing. "There is liquidity, but people don't like what it looks like. The disconnection between what lenders are willing to offer and what borrowers are willing to pay is widening."

The commercial credit crunch began a year ago, after the collapse of the market where lenders sold loans as securities to reduce their risk.

Those commercial mortgage-backed securities are down 90 percent this year from last year.

Deals are getting done.

Last month, Dallas-based MGHerring closed $462.6 million in financing – three construction loans and a land loan – for a 400-acre mixed-use project in Collin County. Eight lenders participated.

"In today's world, you definitely have to get creative," said MGHerring president Gar Herring. "It doesn't matter how good your deal is if you don't have the financial backing and experience."

Lead lender Bank of America relied on its experience with MGHerring on another loan and its relationship with MGHerring's partner, said Dan Harrington, the bank's commercial real estate executive for North Texas. The bank would not have made the large loans on its own, he said.

Alternative lenders are offering short-term bridge financing to fund acquisitions or help borrowers repay their original debt in refinancings.

GE Real Estate is making second mortgages at 75 to 80 percent of a property value at an interest rate of 6 to 7.5 percent with no personal guarantee required. Its volume rose nearly 30 percent to $18 billion in the first half of 2008 from a year earlier.

"The creativity GE provides is the flexibility we offer when structuring deals," said Lance Wright, Southwest regional director in Dallas. "We fill a void. A lot of people just need time right now, and they're not getting it from their existing lender, who wants to be paid off."

Mezzanine financing is also popular.

Let's say a developer wants to build a $30 million hotel in Dallas.

A bank may provide only 60 percent of the property's cost, leaving the borrower to supply 40 percent equity, or $12 million.

A $6 million mezzanine loan would cut the borrower's required capital in half. Interest rates typically are in the mid to high teens.

"We probably will take some mezzanine financing" to augment a construction loan, said Jud Pankey, who's developing residential and retail projects in Dallas.

"Mezzanine is more expensive than senior debt,but less expensive than equity." [an error occurred while processing this directive]