Get Pricing
Mezzanine Finance
Our experience over the past 23 years in property mezzanine finance and construction loan funding provides you with an edge in the market by achieving funding objectives, quickly and effectively. We will provide you with the best mezzanine finance interest rates and terms available at the time of applying.
A property developer’s ability to acquire new projects directly relates to the amount of equity/cash the developer is required to contribute to the project. Through prudent financial structuring Prudential Finance can maximise a developer’s debt gearing to free up capital for the next project.
Q&A
Mezzanine finance is a form of funding that sits between senior debt and equity in the capital stack. It is typically secured by a second mortgage and allows a developer to increase total gearing and reduce cash equity.
Senior debt is first-ranking and priced lower because it bears less risk. Mezzanine finance is subordinated to the senior loan, takes second-ranking security, carries higher pricing and is used to bridge the gap between senior debt and developer equity.
Mezzanine finance interest rates typically range from around 14.5 percent to 20 percent or more per annum, depending on project risk, loan-to-cost ratio and the senior lender's terms. Rates are quoted per application.
When combined with senior debt, mezzanine finance can lift total gearing to approximately 85 to 90 percent of Total Development Costs. Typical mezzanine loan sizes range from $1 million to $100 million or more.
Prudential Finance facilitates mezzanine finance through its network of mortgage funds, private lenders, family offices and high net worth investors seeking higher-yielding secured property exposures.
Typically yes. Where a second mortgage is not possible due to senior lender restrictions, mezzanine finance can be structured as unsecured debt, a preferred equity position or a combination.
Mezzanine interest is usually capitalised into the facility and repaid in full on project completion from sale proceeds, alongside senior debt repayment.
Mezzanine loans are generally structured to match the senior construction loan term, typically 12 to 24 months plus a short tail for sales settlement.
Yes. Mezzanine finance can be applied to land acquisition, construction or a combined facility covering both phases of a development project.
Most senior lenders permit mezzanine finance subject to review of the mezzanine terms, priority deed execution and the combined gearing ratio. Prudential Finance manages this coordination between lenders.
Indicative terms can often be issued within a few business days, with formal settlement typically achieved within four to six weeks once senior debt and security documentation align.