Why Use Mezzanine Finance?
By using mezzanine finance, developers can spread financial exposure whilst at the same time doubling the return on available capital AND increase property development capacity.
With mezzanine funding, developers are in a position to move onto their next development(s) while still completing current projects. This can provide developers with a critical advantage at a time when competition for good development projects is extremely high.
In addition to increasing development capacity by carrying out two to three developments in the same period (with staggered commencement dates) the developer is in a position to spread their risk over more than one project at any given time.
Mezzanine finance could theoretically treble development capacity, i.e. for every £100,000 of equity a developer has available, the “mezzanine contribution” could be £200,000
Finally, when using Mezzanine finance the return on equity (ROE) is virtually doubled on each development. With mezzanine funding you can also:
Spread your risk
Increase your development capacity
Widen your development options