Mezzanine Finance
Higher-leverage capital structures
We arrange mezzanine and stretched senior facilities within our £2m to £100m+ transaction range for experienced property investors and developers. The structure is designed around total project leverage, cash flow and a realistic repayment plan.
Typical use cases
- Development equity gap Supplementing senior development debt where the sponsor seeks to reduce the cash equity requirement.
- Acquisition leverage Adding subordinated capital behind a senior lender for an investment or value-add purchase.
- Cost overruns or change Providing additional capital where a viable scheme needs a revised funding structure.
- Stretched senior alternative Using one lender at higher leverage where a simpler structure is preferable to separate tranches.
How we structure the deal
- We model the senior debt, mezzanine requirement, sponsor equity, total interest and repayment sensitivity as one capital stack.
- Intercreditor terms, payment priority, security and enforcement rights are considered before approaching compatible lenders.
- For development, drawdowns follow an agreed cost plan and monitoring process, usually behind the senior lender's funding sequence.
- We compare a layered structure with stretched senior debt to establish which route provides the clearest execution and acceptable total cost.
What lenders look for
- Sponsor equity Meaningful cash invested and clear evidence of its source.
- Senior lender terms A senior facility that permits mezzanine debt and an intercreditor position acceptable to both lenders.
- Project margin Sufficient headroom after finance costs, contingencies and a prudent movement in values or timing.
- Track record Relevant delivery, asset management and exit experience for a higher-leverage transaction.
Frequently asked questions
What is mezzanine property finance?
It is subordinated debt sitting behind a senior facility and ahead of sponsor equity, used to increase the total capital available for a transaction.
How is mezzanine finance repaid?
It is usually repaid with the senior loan from sale or refinance. The exit must cover both facilities and all accrued costs.
What is stretched senior finance?
Stretched senior finance provides higher leverage through one facility, avoiding a separate mezzanine lender and intercreditor agreement.
Does mezzanine finance require a second charge?
Often, although the security and priority arrangements vary. They must be agreed with the senior lender through appropriate legal documentation.
Is mezzanine available for investment property?
Yes, for suitable value-add or investment cases. Lenders will examine income, business plan, total leverage and the refinance or disposal route.
Offices
Registered and North of England office: Ayrshire Lodge, Brass Castle Lane, Nunthorpe, Middlesbrough, TS8 9EB.
London office: 167-169 Great Portland Street, 5th Floor, London, W1W 5PF.
Telephone +44 7746 212528. Email som@unicorn-commercial.co.uk
Unicorn Capital Advisory is a trading name of Unicorn Capital Advisory LLP (LLP No. OC459692). Finance is arranged for business purposes only and is not regulated by the Financial Conduct Authority.
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