Business

Are you looking for Mezzanine debt finance for your property development?

Published

2 years ago

April 20, 2021

Getting funding for an upcoming project is never an easy ordeal. Property developers and builders have to work hard to secure funding for their upcoming projects, especially during these unprecedented times of Covid-19. Obtaining funding is especially hard for small developers and builders as the market is dominated by high-end developers and big-time builders. Of course, factors such as the rising cost of land and the strict lending criteria do not make it any easier for small developers and builders to secure financing. If you are looking for Mezzanine debt finance for your property development, here is everything that you need to know.

What is Mezzanine debt finance?

First, let’s talk about Mezzanine debt finance. When a builder or a development company has fully utilised their debt borrowing capacity or looking to preserve their senior debt for the future, the builder or developer will need to look for an additional source of capital. This capital could be used for growth opportunities such as starting new projects or taking over ongoing projects and distributing among shareholders, and in some cases, buying back shares from shareholders. This is when developers need to start raising finance for property development.

Equity vs Mezzanine debt finance

Now, there are two options. One option is to raise more equity, which means that the builder or developer has to further dilute their share in order to get funding. The second, and more viable option, is Mezzanine financing. Mezzanine debt is used to bridge the gap between equity financing and debt. In simpler terms, think of Mezzanine financing as a more expensive form of debt or a cheaper form of equity. Since it is a more affordable form of equity, the interest rate is higher while the overall cost of capital is lower. Mezzanine debt financing allows a developer to get the highest return on investment while putting in the least amount of capital.

Let’s say a high-end builder wants to take over an ongoing project that has £20 million in debt, but the builder does not want to put up their capital. So, the builder will look for Mezzanine financing to cover around £15 million while the builder will only have to invest £5 million from their capital. Since the builder used Mezzanine debt financing, it will be possible to convert the debt into equity only once certain criteria are met. However, this allows the builder to reduce the amount of capital required to complete the transaction and eventually allows the debt to convert into profitable equity.

Tools for Mezzanine debt finance

For builders and developers who are looking for Mezzanine debt financing, technology is a great boon! Now, there are so many online tools that have made the process of securing funding so much easier. Sqft.Capital is one such company that works as an online finance raising tool for property developers and provides mezzanine debt for property developers! Sqft.Capital is a platform that has been created for UK property developers to model their deals, raise debt and equity, secure funding and optimise profits seamlessly.

The average debt raise request for Sqft.Capital is £2,945,179, while the average mezz raise request is £1,088,745. The average equity raise request is £688,211, and the average GDV projects that this company raises funding on is £4,640,130. This platform allows builders and developers to use free tools to model a financial projection and then puts all the data together to make it look presentable for lenders. Once the model is ready, Sqft.Capital finds the best financing options for the upcoming project, which either have the highest profit or require the least amount of equity.

Why choose Mezzanine debt finance?

One important reason that developers should opt for Mezzanine debt financing is that it allows them to increase their internal rate of return. Also, since the developers do not have to give up equity, they have complete control over their projects and businesses. Usually, when developers get more equity partners on boards, things can get messy. Additionally, the main chunk of mezzanine finance is payable as an exit fee when the loan is redeemed, which means most of the cost is a charge on profits.

Business

Vanex Group’s Superior Exchange Rates Surpass Traditional Banks

Published

2 days ago

September 29, 2023

Matthew Wiles

Acquiring the highest possible rates for foreign exchange is a top priority for both people and organizations. Traditional banks are no longer the only choice for currency conversion as the financial landscape changes. Enter Vanex Group, a pioneer in the money service sector that offers exchange rates that surpass traditional banks and many services that have revolutionized the industry.

Vanex Group has quickly become the go-to option for individuals looking for the best exchange rates thanks to its track record and dedication to customer satisfaction. Vanex Group, Western Canada’s top private foreign exchange firm, has challenged the status quo by providing better ways to exchange currencies than the conventional banking route.

Traditional banks sometimes burden customers with unfavorable rates and hidden fees, but Vanex Group stands out for its dedication to openness. Every financial transaction is a step toward maximizing value thanks to the company’s favorable and competitive exchange rates, well-known for saving clients thousands of dollars annually. Individuals and companies may feel secure knowing their hard-earned money is being exchanged at rates that put their financial well-being first by choosing Vanex Group.

The proficiency of Vanex Group in the foreign exchange market is the foundation for its commitment to offering better rates. The organization navigates the complexities of conversion rates to give customers a clear advantage. It is supported by a team of financial specialists with an in-depth understanding of international currencies. By ensuring that currency swaps are carried out at the most advantageous times, this economic prowess translates into real advantages for clients, further increasing the value of their transactions.

The variety of services offered by Vanex Group offers unmatched ease and competitive exchange rates. The organization makes it easy for people and businesses to conduct worldwide commerce by emphasizing rapid, secure, and safe money transfers. Vanex Group’s customer-centric strategy guarantees that the procedure is quick, dependable, and stress-free, whether shipping money across continents or enabling currency transactions related to travel.

Vanex Group’s dedication to innovation is another noteworthy aspect of its products and services. The company’s user-friendly mobile application and internet platform give customers the power to track real-time pricing and start transactions whenever convenient. The way currency exchange is done has been revolutionized by this technological integration, which saves time and encourages a more knowledgeable and empowered clientele.

The commitment of Vanex Group to offering lower prices extends beyond specific customers. The organization advances its competitive advantages to corporate partners looking to maximize their international trade initiatives with wholesale currency solutions designed for businesses. Vanex Group helps to improve profit margins and facilitate strategic expansion by enabling firms to buy or sell significant volumes of foreign currency at wholesale prices.

In conclusion, Vanex Group’s innovative strategy for offering exchange rates surpassing conventional banks is a game-changer for both consumers and companies. The business provides a more beneficial route for currency exchange by adhering to transparency standards, having a thorough understanding of finance, and using cutting-edge technology, ensuring each transaction is a step toward financial empowerment and success. Vanex Group is a leader in the field of foreign exchange for individuals looking to get the most out of their currency exchanges and optimize value.