Glossary definition
Blended Rate
The weighted average interest rate across multiple tranches of debt in a capital stack, reflecting the combined cost of senior and mezzanine or junior debt. For example, a scheme funded with 65% LTGDV senior debt at 7% and stretch mezzanine to 85% LTGDV at 15% might produce a blended rate of around 9.5%.
Definition
The weighted average interest rate across multiple tranches of debt in a capital stack, reflecting the combined cost of senior and mezzanine or junior debt. For example, a scheme funded with 65% LTGDV senior debt at 7% and stretch mezzanine to 85% LTGDV at 15% might produce a blended rate of around 9.5%. Understanding the blended rate allows developers to compare the true all-in cost of different capital structures.
See also
Closely related terms.
Capital Stack
The total structure of funding used to finance a development project, arranged by seniority from senior debt at the bottom through mezzanine finance to developer equity at the top.
Senior Debt
The primary layer of debt in a development finance structure, secured by a first legal charge on the property and sitting at the bottom of the capital stack with first priority on repayment.
Mezzanine Finance
A layer of debt that sits between the senior loan and developer equity in the capital stack, secured by a second legal charge on the property.
Coupon
The stated interest rate on a loan, expressed as an annual percentage and representing the periodic cost of borrowing before fees and other charges.
Further reading
Guides that touch this term.
Guide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
Mezzanine vs JV Equity: Cost Worked Example on One Scheme
A worked cost comparison of mezzanine finance and joint venture equity on the same development, showing what each costs when the scheme performs, when profit falls short and where the break-even sits.
5 min read readReadGuide
Bridge First, Then Development Finance: When Bridging Comes First
Some sites have to be bought before a development facility can be put in place. This guide explains when a bridge comes first, how the bridge-to-development refinance works, and what to agree with the bridging lender at the outset.
6 min read readRead
Where it shows up
Finance products using this term.
Ready to apply
Knowing the term is one thing.
Getting it on your term sheet is ours.
Send us the outline. We come back with indicative pricing from the right lenders inside a working day.