The senior vs mezzanine interest split describes the division of interest costs between senior debt and mezzanine finance within a property development finance UK structure. Senior debt typically carries a lower interest rate due to its priority repayment status and lower risk. Mezzanine finance, positioned below senior debt but above equity, commands higher interest rates to compensate for increased risk and subordinated status. This split impacts the overall cost of capital, influencing project feasibility and returns. Understanding this interest differentiation is essential for SME developers structuring effective UK property development finance packages.
This sits beneath Capital Source Breakdown, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Mezz PIK-to-Cash Mix, as both are closely related measures used to assess similar aspects of performance or risk.
View glossary entry