Connect with us


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




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.

The idea of Bigtime Daily landed this engineer cum journalist from a multi-national company to the digital avenue. Matthew brought life to this idea and rendered all that was necessary to create an interactive and attractive platform for the readers. Apart from managing the platform, he also contributes his expertise in business niche.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Turning Tragedy into Triumph Through Walking With Anthony




On the morning of February 6, 2010, Anthony Purcell took a moment to admire the churning surf before plunging into the waves off Miami Beach. Though he had made the dive numerous times before, that morning was destined to be different when he crashed into a hidden sandbar, sustaining bruises to his C5 and C6 vertebrae and breaking his neck.

“I was completely submerged and unable to rise to the surface,” Purcell recalls. “Fortunately, my cousin Bernie saw what was happening and came to my rescue. He saved my life, but things would never be the same after that dive.”

Like thousands of others who are confronted with a spinal cord injury (SCI), Purcell plunged headlong into long months of hopelessness and despair. Eventually, however, he learned to turn personal tragedy into triumph as he reached out to fellow SCI victims by launching Walking With Anthony.

Living with SCI: the first dark days

Initial rehabilitation for those with SCIs takes an average of three to six months, during which time they must relearn hundreds of fundamental skills and adjust to what feels like an entirely new body. Unfortunately, after 21 days, Purcell’s insurance stopped paying for this essential treatment, even though he had made only minimal improvement in such a short time.

“Insurance companies cover rehab costs for people with back injuries, but not for people with spinal cord injuries,” explains Purcell. “We were practically thrown to the curb. At that time, I was so immobile that I couldn’t even raise my arms to feed myself.”

Instead of giving up, Purcell’s mother chose to battle his SCI with long-term rehab. She enrolled Purcell in Project Walk, a rehabilitation facility located in Carlsbad, California, but one that came with an annual cost of over $100,000.

“My parents paid for rehabilitation treatment for over three years,” says Purcell. “Throughout that time, they taught me the importance of patience, compassion, and unconditional love.”

Yet despite his family’s support, Purcell still struggled. “Those were dark days when I couldn’t bring myself to accept the bleak prognosis ahead of me,” he says. “I faced life in a wheelchair and the never-ending struggle for healthcare access, coverage, and advocacy. I hit my share of low points, and there were times when I seriously contemplated giving up on life altogether.”

Purcell finds a new purpose in helping others with SCIs

After long months of depression and self-doubt, Purcell’s mother determined it was time for her son to find purpose beyond rehabilitation.

“My mom suggested I start Walking With Anthony to show people with spinal cord injuries that they were not alone,” Purcell remarks. “When I began to focus on other people besides myself, I realized that people all around the world with spinal cord injuries were suffering because of restrictions on coverage and healthcare access. The question that plagued me most was, ‘What about the people with spinal cord injuries who cannot afford the cost of rehabilitation?’ I had no idea how they were managing.”

Purcell and his mother knew they wanted to make a difference for other people with SCIs, starting with the creation of grants to help cover essentials like assistive technology and emergency finances. To date, they have helped over 100 SCI patients get back on their feet after suffering a similar life-altering accident.

Purcell demonstrates the power and necessity of rehab for people with SCIs

After targeted rehab, Purcell’s physical and mental health improved drastically. Today, he is able to care for himself, drive his own car, and has even returned to work.

“Thanks to my family’s financial and emotional support, I am making amazing physical improvement,” Purcell comments. “I mustered the strength to rebuild my life and even found the nerve to message Karen, a high school classmate I’d always had a thing for. We reconnected, our friendship evolved into love, and we tied the knot in 2017.”

After all that, Purcell found the drive to push toward one further personal triumph. He married but did not believe a family was in his future. Regardless of his remarkable progress, physicians told him biological children were not an option.

Despite being paralyzed from the chest down, Purcell continued to look for hope. Finally, Dr. Jesse Mills of UCLA Health’s Male Reproductive Medicine department assured Purcell and his wife that the right medical care and in vitro fertilization could make their dream of becoming parents a reality.

“Payton joined our family in the spring of 2023,” Purcell reports. “For so long, I believed my spinal cord injury had taken everything I cared about, but now I am grateful every day. I work to help other people with spinal cord injuries find the same joy and hope. We provide them with access to specialists, funding to pay for innovative treatments, and the desire to move forward with a focus on the future.”

Continue Reading