Mezzanine Loan Finance Solutions
Mezzanine loan finance provides a top up layer of funding, sitting above the senior debt provider but under the developers equity. Typically this funding is secured by a second charge and allows for the loan to cost to be increased thereby providing debt funding facilities up to a 90% net loan to costs.
It allows developers to de-risk their equity by minimising the cash required to be invested in any one project meaning it can instead be spread among several. This will ultimately provide a greater return.
- Full planning needs to be granted.
- Project terms between 3 months and 36 months.
- Second charges must be available over the project.
- GDV’s of £500k plus.
- Mezzanine loan requirements from £50k to £10m.
- Projects throughout the UK.
- Strong track record and experience required
Mezzanine loan finance is a popular option for developers to decrease their equity contribution to a project. It is used in conjunction with a senior debt facility and is typically secured by a second charge over the project.
- This example demonstrates a project with a £8m build cost and a £10m GDV.
- Senior debt provides for £5.2m – 65% of build costs and 48% of GDV.
- Mezzanine funding increases the lend by £2m – an additional 25% of build costs.
- The total debt facility increases to £7.2m – 90% of project costs.
- The affect is a reduction in the developer’s contribution.
- Funding is available to most developers but a strong track record is preferred.
- Mezzanine loan facilities can leverage the project thereby minimising the developers contribution.
- Interest rates are from 14% per annum
- Interest rates and are non compounding which dramatically decreases the overall cost.
- Loan facilities are available from £50k to £10m.
- Terms can be between 3 months and 36 months.
- Loans are available for a multitude of developments.
How Oakmead Finance can help
Oakmead Finance is a trusted specialist in property development finance having helped source and arrange development finance facilities from £250k to £94m. We have experience in arranging and structuring development finance facilities up to 90% loan to costs including senior debt, mezzanine loans, bridging loan finance and equity finance for our clients. Contact us to discuss your requirements and explore the options available to you.
“I had the opportunity to undertake two developments and went to Oakmead to help secure funding for one. They were able to structure a facility with a mezzanine loan enabling me to split my money between both sites instead of just the one.”
Oakmead Finance Ltd is a company registered in England and Wales. Registered office: Lynwood House, Crofton Road, Orpington, BR6 8QE. Registered number: 09478864.
Mezzanine Finance facilities are not regulated by the Financial Conduct Authority.