Mezzanine Finance
for Spalding Developers

Mezzanine finance fills the gap between senior debt and developer equity in the capital stack. For schemes where the senior lender will fund 60-65% of costs, mezzanine can stretch total leverage to 85-90%, dramatically reducing the equity you need to inject. This capital efficiency lets you pursue multiple projects simultaneously.

The intercreditor relationship between senior and mezzanine lenders is the critical structural element. Not all senior lenders will accept mezzanine behind their facility, and those that do typically require an approved intercreditor agreement that governs priorities in a default scenario. We work with both parties to ensure the capital stack is structurally sound.

Mezzanine pricing reflects its subordinated position — typically 12-18% per annum — but the overall blended cost of your capital stack is often lower than alternative structures that achieve similar leverage. The key calculation is whether the additional leverage creates sufficient incremental return to justify the cost.

London and the South East remain the UK's most active property development markets, underpinned by persistent housing undersupply against some of the strongest demand fundamentals in Europe. Land values are elevated but so are achievable sales prices, creating viable margins for well-structured schemes — particularly in outer boroughs and commuter towns where affordability pressures are redirecting buyer demand.