Mezz is back…tell your friends!
Mezzanine finance is back, for real. We’ve recently closed two mezzanine loans and have seen an uptick in inquiries for this capital type, which for the last few years has remained dormant.
This is an interesting shift in market and perhaps an indicator of where we expect to see activity in real estate debt capital through 2021.
A few quick points/take away to make here:
- The combination of trading bank senior and junior debt in a development finance stack remains materially more price competitive than non-bank senior only alternatives. Our modelling indicates the savings are around 15%-20% of your borrowing costs. We closed a $20m capital stack recently using bank and mezzanine, which proved $250,000 cheaper than the alternative non-bank senior only solution.
- A resurging residential market should drive pre-sales and consequently developers back to considering the banking market for debt.
- We […]