MEZZANINE DEVELOPMENT FINANCE
Bespoke / Creative / Flexible
MEZZANINE FINANCING FOR REAL ESTATE DEVELOPMENT
Mezzanine financing is used in both commercial and residential development to bridge the gap between a senior development loan and the amount of cash or equity that the developer has to put towards the project. Mezzanine financing loans rank behind the senior development loan in terms of priority of repayment, and will be secured by way of a second charge over the scheme. However, using this higher leverage, although slightly more expensive than senior funding, allow developers to reduce the amount of fresh equity they need to put up themselves, thereby providing a more effective deployment of capital and the potential to manage multiple projects at once.
As with most development lenders, and in particular with mezzanine development finance providers, they will only work with experienced developers. Here at Tiger Financial, we are adept and innovative brokers, user our granular industry knowledge to connect prospective borrowers with the best lenders in the market.
As we have mentioned, this is often subject to the experience of the developers, as criteria will apply. Qualified and eligible developers will be part-evaluated on historical projects. This can then be shared with our pool of lenders and could help to drive appetite. Tiger Financial will be able to tell you what your options are and provide a quick turnaround for those seeking capital.
Our funding solutions look to help developers get their projects off the ground, whatever they might be. Mezzanine financing for real estate development is a popular option to reduce the equity cheque when sourcing commercial and residential property development funding.
- Fast response time: we aim to respond to your enquiry within the hour.
We know the importance of moving fast and staying reactive in business. We ensure you stay flexible, getting back to you as soon as possible.
- Expert knowledge and outstanding customer service.
Tiger Financial are experts in sourcing and arranging alternate funding solutions, including mezzanine development financing, due to our innovative approach and dedicated team.
- Clear & concise deal analysis: we quickly advise on the best funding solution.
Development projects and sourcing finance is complicated enough. We keep things clear and simple, bridging the gap between you and finance providers in multiple ways.
- Long-term relationship focus: we always strive for what’s best for our clients.
Established in the development industry or looking to build up your profile? Relationships and quality funding are the key. We help to deliver long-term relationships that are lucrative and lasting for mezzanine financing for real estate developments.
Mezzanine Finance (top up funding)
MEZZANINE FINANCE PROPERTY DEVELOPMENT CRITERIONS
We strive to find the most flexible mezzanine development finance options with the best rates for every project. This is subject to lender’s criteria and existing capital..
- Using a mezzanine tranche should be economically viable and within the loan covenants
- Residential & commercial developments are both suitable
- Profitable scheme – minimum profit on cost of 20% after finance costs
- Profit on GDV >20% – mezzanine finance providers will calculate their required repayments as a proportion of the initial loan.
- Loan to GDV up to 75%
- Hybrid mezzanine and JV equity available for higher LTVs
- Proven track record as a developer
- Experience with comparable sized scheme
Credible net worth
- PG (personal guarantee) required with some lenders
- Loan size £100,000 – £25,000,000
- Loan term 6 – 36 months
PHASE 1: INITIAL PROJECT APPRAISAL
The development appraisal and supporting documents are studied. If there is lender appetite, indicative terms are issued.
PHASE 2: DUE DILIGENCE AND OFFER LETTER
If the client accepts the indicative terms from the mezzanine finance provider, a valuation is instructed, and the underwriters will start analysing the deal in detail.
PHASE 3: DRAWDOWN
Once the underwriters and legal teams are satisfied everything is in order, a mezzanine finance property development loan can be called for drawdown. Usual timescale is 6 weeks.
PHASE 4: MONITORING AND REPAYMENT
Throughout the course of the loan facility, and prior to each tranche drawdown, a monitoring surveyor will check on the progress of works.