Case Studies

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Mezzanine financing has proven itself to be a valuable lending option for investors and those seeking commercial or development financing.

Hodgestone Finance’s mezzanine finance has assisted numerous clients, with one such client being a developer who had multiple live projects running at once. This meant that a lot of their equity was tied up, and they were not able to commence another project that was ready due to the low lending parameters that their bank had approved.

The bank also did not allow for a second mortgage to be registered on the title of that, or any other, project, cancelling out the option of acquiring mezzanine financing through the bank.

Hodgestone Finance assisted by amending the Unit Trust (SPV Borrowing Entity) with a new class of preference units included that were in favour of the client.

The client then advanced funds just prior to the senior funder’s first drawdown. The client can then be repaid with the option of staying in the project for the life of the project, or by the profit proceeds of other project/s upon completion.

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Mezzanine Financing Australia - Best Mezzanine Financing

What is mezzanine financing?

Mezzanine financing is a type of subordinated debt that fills the funding gap between senior debt and equity.

What are the benefits of mezzanine financing?

Some of the benefits of mezzanine financing include:

  1. It’s less expensive than equity
  2. It provides a higher rate of return on equity, while still allowing the borrower to use their equity elsewhere as a means of diversifying risk
  3. It makes it easier for the developer to determine exactly how much equity they want to put into a development
  4. It’s can be raised much quicker than equity, meaning the development can begin sooner
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Mezzanine Financing Rates

How can I find out the rates for a mezzanine financing structure?

To discuss your mezzanine financing and begin the process to getting your development or business off the ground, call Hodgestone Finance today.

What are factors that can influence mezzanine financing rates?

Factors influencing your eventual mezzanine financing rate can include:

  1. Assessed risk (as mezzanine financing represents a junior obligation when it comes to the company’s capital structure.
  2. The total mezzanine investment/equity/debt cost
  3. The mezzanine investment/equity/debt percentage - as this also represents the percentage of claim to a company’s assets in the case of defaulting.
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Pros and Cons of Mezzanine Loans

What is a mezzanine financing broker?

A mezzanine financing broker is a financial broker with specialist experience in brokering - i.e. negotiating and settling the terms of - a mezzanine capital structure.

What are the benefits of a mezzanine financing broker?

A mezzanine financing broker - like Hodgestone Finance - comes with a number of benefits, including:

  1. Established relationships with some of Australia’s leading private lenders means we’re in the best position to find and set up a mezzanine capital structure on your behalf.
  2. With these contacts in place, in addition to our experience, we can streamline the process so you can meet your project timeline faster.
  3. By taking on this part of your project or investment, financial brokers give you the time to focus on other important tasks.

What are the benefits of seeking private mezzanine financing?

While some of the major banks, including NAB and ANZ, accept subordinated debt and preferred equity, mezzanine financing is more often seen as the domain of private investors - particularly when it comes to property developers seeking additional capital. This is because private mezzanine financing is often secured faster, yet offers more flexibility and room for negotiation.

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Mezzanine Financing Property Loan - Mezzanine Financing Real Estate Loans

What are mezzanine financing property loans?

Mezzanine financing property loans are financing options for property investment and development that blends the divide between debt and equity.

What are the benefits of a mezzanine finance real estate loan?

Mezzanine Finance has the ability to top up any funding gaps you might have as a result of the Senior Funder not being able to increase their loan limit any further. In summary, the benefits include:

  1. Increases your Return on Equity
  2. Frees up capital to allow you to secure another site for your next project
  3. Is cheaper than bringing in a JV Partner

Disclaimer

Consulting and broking services provided by Hodgestone Finance do not constitute a guarantee on the loan itself when arranged with a third-party (whether bank or non-bank) and we do not accept responsibility for any failure for lenders to deliver on the outlined terms.

Got questions about Mezzanine Financing? We can help.


Client Testimonials

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The knowledge around Commercial Property & the customer service at Hodgestone is the best you will get. I was really struggling to get a Commercial Loan & Hodgestone came to the rescue with a great solution.

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Tristan M

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I was overly happy with how quick Hodgestone had my Home Loan approved, it was settled in three weeks of contacting them! I could organise my wedding, renovate my house & buy a new car thanks to Daniel & Alex. Great work Hodgestone.

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David B

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I was at major risk of losing my block of Land, I had a week to settle to avoid this. I contacted Hodgestone, who structured my loan with a private lender and it was settled 4 days later! I highly recommend Hodgestone to everyone.

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The situation we brought to Hodgestone Finance was very complex & it was dealt with in a very professional & timely manner by the team, we are so glad we found Hodgestone to help with our Short-Term lending. A better fit would be hard to find!

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