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 Finance vs Joint Venture Equity: How to Choose
Both mezzanine and JV equity reduce the cash you need to invest. But they work very differently and suit different situations. This guide helps you decide which is right for your project.
4 min read readReadGuide
Development Finance vs Bridging Loans: Which Do You Need?
Two of the most common short-term property finance products, but they serve very different purposes. We break down the rates, terms, and scenarios where each makes sense.
8 min read readRead
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