Mezzanine Property Funding

Since the start of the year, Castlehill Capital have provided 3 of our clients with mezzanine funding facilities totalling £2.2m

These projects have been in London and one in Scotland.  And the injection of mezz funding has enabled the clients to get their projects over the line and fully funded.

The increase in enquires for this type of funding has been in direct correlation to the diminishing appetite for mainstream property lending from the high street lenders over the last 18-24 months.

Castlehill Capital provide mezzanine funding for experienced property developers to plug the gap between senior debt and the borrower’s own equity contribution.  Generally we can consider loans from £500k – £3m – or higher depending on the individual development.

In the 3 deals we closed this year, the borrower had a 10% equity contribution, and 80% of cost from a senior debt partner.  Castlehill provide the remaining 10% equity as part of the Day 1 costs that enabled them to complete the purchase and then access the build loan facility from the senior debt partner.

Our mezzanine funding facility is quite flexible in that we can tailor it to fit the precise requirements of the borrower’s situation.  In the above examples we structured the facility so that the bulk of the interest was paid on exit once the development was completed and sold.  This means most of the cost of finance is a charge against profits earned rather than an additional working capital requirement.