A Fixed-Return Priority Note is a type of preferred debt instrument in property development finance that offers a predetermined return to investors, typically on a second charge basis. It is structured to ensure that investors receive their capital and interest before any profit is distributed to equity holders. These notes are frequently used in UK property development schemes to attract mid-risk investors seeking stable, contractual returns without taking full equity exposure. The fixed return and repayment priority make this instrument suitable for both institutional and private investors participating in structured finance packages.
Fixed Return Priority Note sits within the Preferred Debt layer, offering investors a contractual fixed return while maintaining a defined repayment priority ahead of equity distributions. It is commonly used in UK property development finance to provide mid-risk capital with predictable cash-flow characteristics. In structure and risk positioning, it is often considered alongside Secured Note with PG, particularly where additional credit support is present. The instrument is typically governed by a Trust Deed for Security, which sets out enforcement and repayment mechanics. Performance and downside protection may be assessed using metrics such as Exit Value to Debt, particularly when stress-testing exit scenarios.
View glossary entry