FAQs
What is Mezzanine Finance?
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, generally, after other senior lenders are paid.
Mezzanine finance is often used as a ‘top up’ in addition to the amount provided by the main lender. For example, if the main lender provides 65% LTV, mezzanine finance might provide a further 20%, leaving just 15% for the business to put in.
What is Senior Debt?
Senior debt is borrowed money that a company must repay first if it goes out of business. Senior debt is a company’s first tier of liabilities, typically secured against some type of collateral, in our case, property.
How much can I borrow?
Between £400,000 and £2m. Depending on the type of lending chosen, the Interest Rates, maximum Loan to Value and Exit Terms may vary.
How much equity is required from the developer?
Typically, we would expect a minimum equity contribution of 20% of the total project costs except where we also procure equity participation in which case equity contribution can be as low as 5%.
What type of projects do you consider?
Multi-unit residential, PRS, mixed-use, student accommodation, care home, healthcare, commercial and hotel are all considered.
What locations do you consider?
We will look at projects in London, the South East, and major metropolitan areas around the UK. Currently, we do not have appetite for schemes outside the UK.
Does the scheme require planning consent?
Generally we require the scheme to be fully consented, though are able to consider schemes likely to achieve consent (subject to enhanced due diligence).
Do you consider planning gain as part of the equity contribution?
Yes we can take into account sites without planning or requiring planning enhancement
What security is required?
A typical security package will entail;
Do you require personal guarantees?
Yes we would look for a personal and corporate guarantee. Guarantees are on a case-by-case basis and can be limited.
Is bridging finance available?
We are able to provide short-term bridging finance where there is a defined exit possibility at the end of a bridge. For example, a developer has a site on which he is improving the existing planning permission and will develop the site once the enhanced permission is achieved. Hambros would consider providing a first charge facility for the bridge period, reverting to a second-charge mezzanine facility once the development begins and the senior funding has been arranged.
Do you invest equity?
In select cases, equity investments are available. These typically sit alongside mezzanine investments and comprise a minority equity position. Hambros does not have appetite for up to 95% equity investments.
Which senior lenders do you work with?
We maintain strong relationships with a number of high-street and mid-market banks. As such, we are able to quickly agree and document inter-creditor arrangements.
How much can I borrow?
Up to £50m.
I have a project that I would like Hambros to consider; how can I get in touch?
Please Contact Us.
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, generally, after other senior lenders are paid.
Mezzanine finance is often used as a ‘top up’ in addition to the amount provided by the main lender. For example, if the main lender provides 65% LTV, mezzanine finance might provide a further 20%, leaving just 15% for the business to put in.
What is Senior Debt?
Senior debt is borrowed money that a company must repay first if it goes out of business. Senior debt is a company’s first tier of liabilities, typically secured against some type of collateral, in our case, property.
How much can I borrow?
Between £400,000 and £2m. Depending on the type of lending chosen, the Interest Rates, maximum Loan to Value and Exit Terms may vary.
How much equity is required from the developer?
Typically, we would expect a minimum equity contribution of 20% of the total project costs except where we also procure equity participation in which case equity contribution can be as low as 5%.
What type of projects do you consider?
Multi-unit residential, PRS, mixed-use, student accommodation, care home, healthcare, commercial and hotel are all considered.
What locations do you consider?
We will look at projects in London, the South East, and major metropolitan areas around the UK. Currently, we do not have appetite for schemes outside the UK.
Does the scheme require planning consent?
Generally we require the scheme to be fully consented, though are able to consider schemes likely to achieve consent (subject to enhanced due diligence).
Do you consider planning gain as part of the equity contribution?
Yes we can take into account sites without planning or requiring planning enhancement
What security is required?
A typical security package will entail;
- First and Second-ranking legal mortgage over the property.
- First and second-ranking debenture and share charge over the borrowing vehicle.
- Personal and corporate guarantee for cost overruns of the developments (on a case-by-case basis).
Do you require personal guarantees?
Yes we would look for a personal and corporate guarantee. Guarantees are on a case-by-case basis and can be limited.
Is bridging finance available?
We are able to provide short-term bridging finance where there is a defined exit possibility at the end of a bridge. For example, a developer has a site on which he is improving the existing planning permission and will develop the site once the enhanced permission is achieved. Hambros would consider providing a first charge facility for the bridge period, reverting to a second-charge mezzanine facility once the development begins and the senior funding has been arranged.
Do you invest equity?
In select cases, equity investments are available. These typically sit alongside mezzanine investments and comprise a minority equity position. Hambros does not have appetite for up to 95% equity investments.
Which senior lenders do you work with?
We maintain strong relationships with a number of high-street and mid-market banks. As such, we are able to quickly agree and document inter-creditor arrangements.
How much can I borrow?
Up to £50m.
I have a project that I would like Hambros to consider; how can I get in touch?
Please Contact Us.
