Subordinated or mezzanine debt is a type of property development finance UK that provides additional funding behind senior loans in the capital stack. It typically carries higher interest rates to compensate lenders for increased risk and may include an equity participation component. Mezzanine debt is commonly used by UK property developers to bridge funding gaps, support land acquisition, or finance construction when senior lending is insufficient. Repayment occurs after senior debt obligations are met, making it subordinate in priority. This financing option balances flexibility, higher returns, and strategic leverage for SME property developers managing complex development projects.
This sits within Capital Structure & Leverage, reflecting a specific measurement approach that influences how performance, risk, or funding constraints are assessed. It is commonly considered alongside Security & Ranking, as both are closely related measures used to assess similar aspects of performance or risk.
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