Evcorp arranges mezzanine finance and preferred equity for Australian property developers who need to bridge the gap between their senior construction loan and available equity. In a market where senior lenders are applying tighter LVR constraints and equity requirements have increased, mezzanine finance has become an essential tool in the capital stack.
We work with a specialist panel of mezzanine lenders — private credit funds, family offices, and high-yield debt providers — to structure second-mortgage facilities that complete your capital stack and allow your project to proceed with reduced equity injection.
Mezzanine finance sits between the senior debt and equity in the capital stack of a property development. It is typically secured by a second registered mortgage over the development site and ranks behind the senior lender in priority.
A typical development capital stack with mezzanine looks like this:
| Layer | Position | Typical Cost | Who Provides It |
|---|---|---|---|
| Senior Construction Debt | First mortgage — lowest risk, first repaid | 6–10% p.a. (capitalised) | Banks, non-bank lenders, mortgage funds |
| Mezzanine Finance | Second mortgage — higher risk, higher return | 14–22% p.a. (capitalised) | Private credit funds, family offices, Evcorp panel |
| Developer Equity | Residual position — highest risk, highest return | Target 20%+ ROE | Developer and equity partners |
For a detailed worked example, read: Mezzanine Finance for Australian Property Developers: A Plain-English Guide
The senior lender's LVR limit creates a funding gap that cannot be bridged with available equity. Mezzanine bridges this gap and allows the project to proceed.
The developer wants to preserve equity capital to run more projects simultaneously. Mezzanine finance reduces the equity required per project, improving portfolio returns.
A project is viable at 85–90% LTC but the bank will only lend to 65% of GRV. Mezzanine completes the stack without requiring additional equity injection.
Mezzanine lenders can move significantly faster than banks. When speed of execution is critical — land settlement deadlines, construction start obligations — mezzanine lenders are the right call.
Mezzanine finance and preferred equity are related but structurally different instruments. Evcorp advises on the optimal structure for each project.
| Feature | Mezzanine Finance | Preferred Equity |
|---|---|---|
| Security | Second registered mortgage | Equity interest / shareholder loan |
| Ranking | Ranks after senior debt, before equity | Ranks after debt, ahead of common equity |
| Return structure | Fixed interest rate (capitalised) | Preferred return + potential profit participation |
| Typical use | Complete the loan stack without diluting equity | Equity replacement — less dilutive than JV equity |
| Senior lender consent | Usually required — inter-creditor deed needed | Generally not required (no mortgage) |
Evcorp advises on the optimal structure for each project — sometimes mezzanine is right, sometimes preferred equity is more appropriate, and sometimes a combination is the answer.
Discuss your mezzanine finance requirements — project, location, quantum, current senior position — and Evren will respond directly.
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