- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 04 Jul 2018
When considering whether to proceed with a construction project, an assessment of funding options will generally be carried out. One of the options may be 'mezzanine finance', particularly in times of economic hardship when banks may take a more risk adverse stance in relation to property development.
Mezzanine finance provides a second layer of debt funding to bridge the gap between the senior debt (typically provided by a bank or fund), and the actual requirements of the developer. In the event of default the mezzanine lender will be paid only after the senior lenders. Equity investors are than last in line and receive whatever is left.
Returns on investment for lenders of mezzanine finance can be around 20%. While this is typically more expensive for the developer than senior debt, it may be less expensive in the long term than their own equity, and as short-term funding it can help to unlock potential profits, so the longer-term benefits can be considerable.
 Find out more
 Related articles on Designing Buildings Wiki
Featured articles and news
Have the pressures of the market shredded the core values of professionalism?
Lead times are a measure of the amount of time that elapses between initiating and completing a construction process.
Government releases first tranche of funding for removal of unsafe high-rise cladding.
How to ensure UK transport infrastructure copes with severe winter weather.
Location shortlist for controversial new footbridge revealed.
Under the Party Wall Act a property owner has the legal right to do works that might otherwise constitute trespass or nuisance.
BSRIA examine the 'unpredictable' 2018 global air conditioning market.
ICE publish new report calling for new sector-wide body to help avert structural failures.
The rainbow JCB will be making a welcome return to the London Build Expo on 23 and 24 October at Olympia.
An introductory article to external works - all activities carried out to the external environment of a building project.