Preferential Equity & Mezzanine Finance
For Developers who want to preserve their own equity and don’t want to bring in a Joint Venture partner we recommend Mezzanine funding (or second mortgage funding), as an ideal finance option.
A mezzanine loan is a hybrid of debt and equity which is subordinated to any senior lender, usually receiving a higher rate of interest for a higher level of risk. This allows for adequate capital to fund opportunity purchases of land or key staff to build the development pipeline and operations capacity.
Successful Property Developers utilise mezzanine finance once their projects have de-risked with DA and pre-sales achieved. They do this to settle the land, finalise design and approvals, fund sales and marketing costs, thereby achieving pre-sales.
Benefits of Preferential Equity & Mezzanine Finance
- Mezzanine funding, or preferential equity, enables developers to bring their project to market sooner and lower the amount of pre-sales required.
- Free up your valuable cash to drive your pipeline.
- Decrease your portfolio risk by increasing diversification and increasing your liquidity.