Overview
Mezzanine Finance for Property Development proposals enables developers to secure 'top slice' funding, when waiting for either existing projects to be completed to release capital or require some additional funding in addition to cash input available for the particular scheme. Mezzanine finance is effectively the layer of funding below risky common equity and above low-risk commercial bank debt.
Mezzanine funding can be used either as part of a structured finance package or in addition to existing funding that may be in place. The advantage of mezzanine finance is that while it is more costly than standard senior debt it can improve the equity returns while at the same time giving greater confidence to the commercial banks. If information about risk was perfectly known then mezzanine finance might not exist; banks could perfectly judge projects and their risks and equity providers would allocate their funds exactly. But such is not the case and thus mezzanine finance serves as the buffer between these two common types of financiers. Mezzanine takes more risks than banks but less than the equity.
If you are looking to finance a property development project and are looking for structured funding please do not hesitate to contact us to discuss if we could be of assistance.
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