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The Collins Finance Group has access to a
number of Mezzanine Finance providers. Mezzanine Finance can best be
described
as "top up" finance
for construction projects when the owner's equity or capital falls short
of standard lending requirements. Typically, the Mezzanine funding will
be provided against the land security and that debt will be fully drawn
for the entire project. The finance is secured by way of a second mortgage
and director/sponsor guarantee. Interest (and typically fees) for the
Mezzanine facility will be capitalized within the loan amount. Generally,
pre-sale levels are a key focus area of mezzanine fund providers who
like to see at least the first mortgage debt (or the greater majority
of it) covered by genuine "arms length" pre-sales. As a guide,
you can expect to pay an establishment fee of between 5% and 10% and
an interest rate of between 15% and 20% on the Mezzanine funding. While
that might seem expensive at first glance, it only applies to the actual
second mortgage funding amount and negates the need for sponsors to give
away profit share in exchange for equity from external investors. Quite
apart from the profit issue, most clients prefer not having to account
for their every move to "investors" who may seek to influence
design, colour schemes etc of the project. In a nutshell, Mezzanine Finance
can provide a very viable alternative to giving away equity in a project.
If you’d like to discuss your current situation, please contact
us by telephone or email.
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