Completing 100% Development Finance by Mezzanine

By: Cherry Bo

Loans for commercial development are helpful in funding commercial properties. is usually pre-let in advance and the lease terms and tenants quality are acceptable in terms of obligation and covenant. Banks will normally consider providing finance for office, retail, industrial, leisure or mixed use development. Lenders generally expect repayment of the loan provided by them to come from the sale of the property or refinance soon after the work is completed. Sometimes, it is also possible to structure a loan to allow the developer to hold the property until the first rent review in order to maximize the resale values.

Usually, high street banks provide up to 70% of the site purchase costs and 70% of the works in commercial development finance. If you need 100% development finance under the commercial category, the additional 30% will be provided by development finance UK in the most common form of finance - mezzanine funding. Although equity is acceptable with other companies in development finance UK, mezzanine funding is preferred due to its stability while other financing becomes unfavorable.

Nowadays, there are dismaying results in the equity investments so there are businesses that are unwilling to give out part of their ownership to equity arrangement in development finance UK. Others also experience high profile defaults in high yield bonds, which used to be another funding option for 100% development finance.?In the end, mezzanine funding becomes the best?option?for 100% development finance.

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