Mezzanine Finance
As a developer in the current climate, you may find that you require a specialist broker to help you source funds to complete your project. This is where we can help you.
Our brokers are experts in sourcing the best deals for developers no matter what your project may be. We understand the complexity of funding property development projects and that almost every project is different. We can offer a range of funding from independent sources as well as from banks, ensuring the best financial package is available to our clients.
Funding for a development project is usually made up from three sources
- The developer’s equity
- Bank or institutional finance often referred to as senior debt
- Mezzanine funding
Mezzanine finance is not necessarily required for every development project. A lot will depend on the type of funding secured through the first tier lender. It is when there are insufficient funds provided by the initial lender and funds cannot or will not be made up from the developer themselves that mezzanine finance is called for in order to fill the gap. It therefore provides the developer with the opportunity to use their equity elsewhere,opting to fund the project from the mezzanine finance.
It is a more expensive form of finance as it is usually secured by a second mortgage over the project and consequently takes a back seat credit ranking behind the first tier lender. Therefore in order to compensate for this increased risk the mezzanine funder will secure a higher interest rate from the borrower. However, it may be possible to negotiate a better interest rate from the senior debt provider as a result of having mezzanine funding in place.
This is definitely an area of finance requiring knowledge and expertise, so call us if you have a project you need to finance as we are here to help.
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