Glossary definition
Tranche
A distinct portion or layer of funding within a development finance structure, each with its own terms, pricing, and priority of repayment. A typical development scheme might include a senior debt tranche, a mezzanine tranche, and a developer equity tranche.
Definition
A distinct portion or layer of funding within a development finance structure, each with its own terms, pricing, and priority of repayment. A typical development scheme might include a senior debt tranche, a mezzanine tranche, and a developer equity tranche. Tranches are drawn sequentially, with equity typically deployed first, followed by senior debt, and mezzanine last, ensuring each lender's risk is proportionate to their position in the capital stack.
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.
Drawdown
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones.
Intercreditor Deed
A legal agreement between two or more lenders in the capital stack that defines their respective rights, priorities, and remedies in relation to the same borrower and security.
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
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVReadService
Equity & Joint Ventures
Equity partnerships and JV structures for developers seeking capital partners.
Profit share from 40% · Up to 100% of costsRead
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