01 Senior debt
The first-ranking construction or site facility — typically the largest tranche, funding the bulk of total development cost.
What 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.
02 Mezzanine finance
Second-ranking debt behind the senior lender. Lifts total leverage and reduces the developer's equity contribution, priced for the added risk.
03 Preferred equity
Equity-like capital above common equity but below debt — reduces cash equity without diluting ownership the way common-equity partners do.
04 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.
01
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)
02
Equity released — that uplift can reduce a developer's equity contribution from around 35 percent to under 20 percent on a qualifying deal
03
All-in cost — mezzanine is priced for subordinated risk; the decision is whether the freed equity earns more elsewhere than the tranche costs
04
Repayment order — mezzanine is repaid after the senior lender, so the exit has to clearly cover both
05
Return on equity, not headline rate — the structure and the exit decide whether it is worth it, not the rate alone
06
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.
01 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.
02 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.
03 Senior-led and local
The principal structures and runs the deal, with ACT and regional NSW lender and valuer relationships behind it.