MEZZANINE FINANCE

Mezzanine finance sometimes referred to a ‘Mezz Funding’ or ‘Stretched Senior Debt’ provides additional loan capital to help fill a gap between a developer’s equity and the amount that the main lender will provide. This is normally secured with a second charge over the property in question, while the bank or senior lender holds a first charge. 

Over recent years it has become harder for property companies to gain funding from banks at a higher Loan to Cost above 65%. Capital constraints imposed on Banks require them to be more aware of the risks involved to the property sector. A bank will now typically restrict the Loan to Cost covenant to between 50-75% and the Loan to Gross Development Value to 55-65%. 

 

By taking out Mezzanine funding the developer can achieve a maximum return with minimum cash contribution/Equity. Assured will consider up to 90% Loan to Cost for periods from 6-24 months for experienced developers providing the the ability to invest in other opportunities. 

 

Mezzanine funding allows property developers to move onto that next project pending sales income from a previously completed scheme or where equity is tight. It allows you to spread your risk, increase development capacity and widen your development options. 

Assured Property Finance is a UK based financial lender of bridging loans,  Mezzanine loans and developer Equity Release.

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