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.
Understanding mezzanine finance
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.
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.
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.
Our Benefits
How Tiger Financial help:
We aim to respond to your enquiry within the hour.
Tiger Financial are experts in sourcing and arranging alternate funding solutions, including mezzanine development financing, due to our innovative approach and dedicated team.
We quickly advise on the best funding solution.
We always strive for what’s best for our clients. Relationships and quality funding are the key.
Development criteria
We find the most flexible options with best rates for every project, subject to lender’s criteria and existing capital.
- Mezzanine tranche should be economically viable, within loan covenants
- Residential & commercial developments are both suitable
- Profitable scheme – minimum profit on cost of 20% after finance costs
- Profit on GDV >20%
- Loan to GDV up to 75%
- Hybrid mezzanine and JV equity available for higher LTVs
Developer
- Proven track record as a developer
- Experience with comparable sized scheme
- Credible net worth
- PG (personal guarantee) required with most lenders
Mezzanine Loans
- From £100,000 – £25,000,000, 6 – 36 months
Mezzanine process
A four phased approach, consisting:
The development appraisal and supporting documents are studied. If there is lender appetite, indicative terms are issued.
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.
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.
Throughout the course of the loan facility, and prior to each tranche drawdown, a monitoring surveyor will check on the progress of works.