- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 24 Nov 2020
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.
 Related articles on Designing Buildings Wiki
Featured articles and news
Four outstanding professionals recognised.
Sustainable flooring from super strong grass.
Organisation presents reactions from industry leaders.
New infrastructure bank to be based in the North of England.
Fairer, faster, greener. A summary of the key points.
Strategies to help provide safer working conditions.
Protecting flora, fauna and the other natural features of Scotland.
Architecture considered somewhere between 'sublime and beautiful'.
Polish piano factory revived through an energy-oriented tune up.
Dynamic architectural approach sets out to restore and improve the environment.
Entries accepted from 1 December 2020 to 14 April 2021.
Procedure discontinued for sale or re-mortgage of buildings without cladding.
The art of negotiation.