Mezzanine financing

What is it

A mezzanine loan stands between traditional bank debt financing and equity and combines aspects of both financing methods. The loan is subordinated and has no collateral in the form of real estate. A mezzanine loan has a higher interest rate than a senior bank loan due to the higher risk associated with it. Mezzanine loans can also include elements of equity. This means that in addition to receiving interest payments, the lender is sometimes also entitled to profit sharing or an equity interest in the company.

For whom

  • Real estate developers
  • Builders/contractors
  • Real estate investors

What is the purpose

  • Additional source of capital in addition to traditional forms of financing, such as bank loans and equity
  • Limitation of the contribution of equity
  • To increase the potential return on a real estate investment (leverage)
  • Freeing up equity for alternative investments

What is funded

  • Purchase of new real estate (object and/or land position)
  • Existing real estate (object and/or land position)
  • Construction and transformation costs
  • Conversion/renovation costs
  • Other development/foundation costs
  • Bestaand vastgoed (object en/of grondpositie)

In which phase

  • Purchase phase
  • Permit process
  • Construction phase
  • Refinancing

Financing partners of Novel Finance

  • Specialist providers of mezzanine loans (international)
  • Real estate developers
  • Builders/contractors
  • Private investment funds
  • Private investors