Mezzanine Finance / Property Development
Mezzanine finance, structured to reduce your equity.
Mezzanine finance is a second debt tranche behind the senior facility that increases total leverage, reducing the equity a developer contributes. It is repaid after the senior lender and priced for that additional risk — often with interest capitalised to exit.
Speak to usWhat it is
A second tranche that sits behind senior debt.
Mezzanine finance increases total leverage on a development by sitting behind the senior facility in the capital stack. It is repaid after the senior lender, carries a higher rate to reflect that subordinated risk, and often has its interest capitalised to the project's exit so it does not strain cash flow during the build.
The point of mezzanine is rarely the rate — it is the equity it frees. Where senior debt alone leaves a large equity gap, a mezzanine tranche lets a developer preserve capital for the next acquisition rather than tying it all up in one project.
We design the capital stack around the project, not a lender panel — modelling where senior debt stops, what the mezzanine tranche costs all-in, and whether the additional leverage actually improves your return on equity.
Where it fits
Mezzanine in the capital stack.
Mezzanine is one layer of a structured capital stack. The right combination depends on the project, your balance sheet, and the senior lender's appetite.
Senior debt
The first-ranking construction or site facility — typically the largest tranche, funding the bulk of total development cost.
Mezzanine finance
Second-ranking debt behind the senior lender. Lifts total leverage and reduces the developer's equity contribution, priced for the added risk.
Preferred equity
Equity-like capital above common equity but below debt — reduces cash equity without diluting ownership the way common-equity partners do.
Common equity
The developer's own contribution. The goal of a well-built stack is to make this go further across more projects.
The trade-offs
What to weigh before adding mezzanine.
Mezzanine is a tool, not a default. These are the factors that decide whether it earns its cost on a given deal.
- —Leverage uplift — where senior debt funds around 60 to 65 percent of total development cost, a mezzanine tranche can lift total leverage to 80 to 90 percent (illustrative ranges, deal-dependent)
- —Equity released — that uplift can reduce a developer's equity contribution from around 35 percent to under 20 percent on a qualifying deal
- —All-in cost — mezzanine is priced for subordinated risk; the decision is whether the freed equity earns more elsewhere than the tranche costs
- —Repayment order — mezzanine is repaid after the senior lender, so the exit has to clearly cover both
- —Return on equity, not headline rate — the structure and the exit decide whether it is worth it, not the rate alone
- —Senior lender consent — the senior facility's terms govern whether and how a mezzanine tranche can sit behind it
Why Black Mountain
Why developers structure debt with us.
The structure matters as much as the rate
How your facility is structured determines your margin on exit. We design the capital stack around the project, not a lender panel.
Beyond the bank's limits
When the deal sits outside a bank's appetite or above its cap, we structure across senior, stretch and mezzanine to make it work.
Senior-led and local
The principal structures and runs the deal, with ACT and regional NSW lender and valuer relationships behind it.
Common questions
Mezzanine finance, answered.
Further reading
Where to go next.
Development Finance Canberra
Construction, land, residual stock and mezzanine for ACT and regional NSW developers.
Explore →Land Banking Finance
Funding to acquire and hold development sites before construction.
Explore →Debt Advisory
What a debt adviser does, and how it differs from a mortgage broker.
Explore →Working out whether mezzanine earns its cost on your deal? Let's model it.
Speak to usStart the Conversation
Tell us about your deal.
We'll come back to you within 24 hours — no obligation, no sales pitch.
Contact Details
Phone
02 6188 9849
Office
Level 1, 33 Allara Street
Canberra ACT 2601
Hours
Monday – Friday, 9am – 6pm
What to Expect
- Honest assessment of your options
- Response within 24 hours
- Strategic insight, not a sales pitch
- No obligation discussion