In property development, securing the right funding mix is critical to keeping your project on track.
While senior debt covers the bulk of your costs, it doesn’t always stretch far enough. That’s where mezzanine finance comes in — filling the gap between your primary loan and your equity contribution.
What is Mezzanine Finance?
Mezzanine finance is a type of secondary loan that sits behind your senior debt. It’s designed to provide additional capital when your primary lender won’t extend further credit. This extra funding can be the key to:
- Completing construction or fit-outs
- Covering unexpected costs
- Enhancing a project’s quality to boost market value
- Reducing your equity contribution so you can take on other projects
Why Developers Use Mezzanine Funding
For developers, the main advantages of mezzanine finance include:
- Increased leverage – take on larger projects with the same amount of equity
- Liquidity preservation – free up funds for other investments
- Project momentum – avoid delays caused by capital shortfalls
- Profit maximisation – fund upgrades that increase sale prices and margins
How AMF Finance Adds Value
Many lenders shy away from mezzanine finance due to its complexity. At AMF, we specialise in structuring mezzanine facilities that complement your senior loan and protect your project’s viability. Our advantages include:
- Direct access to private capital for faster decisions
- Tailored terms to align with your senior lender’s requirements
- National reach for projects across Australia
- Decades of combined development finance experience
When to Consider Mezzanine Finance
- You have secured senior debt but need extra funding to finish your project
- You want to limit your equity outlay to retain liquidity
- You are working on multiple projects and need to spread your resources
- You have a value-add opportunity that requires extra capital
Transaction Example
A developer secures senior debt for a high-end apartment project but needs an additional $3 million to complete premium fit-outs that will drive higher sales prices. AMF structures a mezzanine facility that bridges the funding gap, allowing the project to finish at a standard that maximises return on investment.
If you need to bridge the gap between senior debt and equity, talk to AMF Finance about a tailored mezzanine funding solution today.