Mezzanine Debt

Banks will typically fund between 65% and 80% of the total cost of a project with the balance funded by developer equity. IMA can provide mezzanine debt, which is a second layer of debt that depending on individual project fundamentals, can be a partial or total substitute for equity.

Interest on mezzanine debt is compounded (usually monthly) and paid at the end of the project only after the bank or senior lender has been repaid or refinanced. Factors that influence the cost of mezzanine funding include: -

 • The level of equity contributed by the developer;
 • The track record of the developer;
 • The security provided to IMA;
 • Presales and or preleasing commitments; and
 • The project risks and the extent to which they can be mitigated.

IMA can structure a mezzanine facility to provide for tiered interest rates as a project is ‘de-risked’ by increasing presales and or preleasing.

Equity Raising

Equity is generally raised by IMA for longer term projects (two – five years) where capital is required to ‘work up’ a project concept or where some or all of the traditional development risks cannot be appropriately mitigated at the time of providing the funds.

Equity carries a higher risk profile than mezzanine debt but also carries a potentially higher return. Transactions are usually structured to allow the investors who provide equity funding to share in the development profit of a project with a pre agreed target internal rate of return.

Sourcing of senior debt

IMA has a strong network of contacts in the banking and finance industry and is well placed to be able to secure senior debt funding. In conjunction with the developer in sourcing senior debt IMA will: -

 • Prepare information memoranda for prospective lenders;
 • Analyse offers from senior debt lenders;
 • Negotiate the terms, conditions and pricing of the senior debt with the preferred lender; and
 • Assist in finalising the loan documentation.