Mezzanine Finance

Mezzanine funding is used to help close the gap between what your bank will lend you and the shortfall in the money you have available. The banks and lending institutions are cutting back their lending ratios and this is creating the need for more capital in each project. The capital intensive transactional nature of property makes its entrepreneurs' asset wealthy but cash flow challenged. Mezzanine funding can be used for the development of a single house up to a multi-million multi-tenanted commercial portfolio.Mezzanine funding is a loan not a profit share so if you save money you keep the savings. If sales go up you get to keep the increase. Generally speaking the quicker you are able to repay the funding, the less it costs to you. You could even use the sales revenue from another project to do this.

Mezzanine is not a joint venture, it's your project. The projected figures should show you taking at least 65% of the net proceeds after the mezzanine is repaid. In fact the funders are even happier if the figures show you earning a lot more. The more you stand to make out of the project the better the funders feel about helping you fund your project.

The equity from you plus the mezzanine funding will all be drawn down in full at the start of the project. The mezzanine will be injected on day one leaving only the money from the bank to be drawn thereafter. Having 100% of the mezzanine in on day one means you do not have to worry about the mezzanine drying up half way through. No hit and miss, it's all there on day one so you don't have to worry about the monthly certificates being paid.

If you would like to consider Mezzanine Funding, the first step is to send us some information about the project. How much you send us is up to you however good quality, detailed information is critical to helping us decide if we can help you. The basic information should include plans, details of the existing property, what you propose to do and how long it will take and an appraisal showing the money to be spent and the profit to be made.

To help us build a more detailed picture you should include some or all of the following; some information about yourself or your company, a market report and comparable, photographs or the site and surrounding area, and a copy of the planning consent and Section 106.

If we think it has potential you can come and see us at our office or we can meet you at the property. There is no charge for looking at the site. If we like what we see we will go away and prepare some figures and then send you a proposal. Its not a formal document, we just set out the figures as we see them, based on the information you have provided, and what we would expect each investor to receive at the end of the project. All this is included in a heads of terms document we send to you.

If you have a specific requirement for Mezzanine Funding and would like to find out more about the terms of the agreement, please contact us and we would be happy to explain this to you.