Mezzanine finance
Senior and mezzanine finance
ACM Finance is an Australian mortgage manager arranging senior and mezzanine debt through funds we manage.
We fund projects from $5M to $100M+ from committed capital.
Definition
What is mezzanine finance?
Mezzanine finance is a second-ranking loan that sits between senior debt and developer equity in a property development's capital stack. It funds the gap when a senior lender covers only part of the total development cost, so the developer can contribute less cash equity.
Mezzanine debt, also called a mezzanine loan, "mezz" or subordinated debt, is repaid after the senior loan. Because it carries more risk, it is priced higher than senior debt. In return, the developer's capital stays free for other projects.
Comparison
Mezzanine finance vs stretch senior: what's the difference?
Both structures reduce the equity a developer needs to contribute, but they do so differently:
| Feature | Stretch Senior | Mezzanine Finance |
|---|---|---|
| Number of Loans | One | Two (Senior plus Mezzanine) |
| Security Ranking | First mortgage | Second-ranking, behind senior |
| Documentation | Single facility | Two facilities (usually with an Intercreditor Deed) |
| Typical Use | Higher gearing in a single loan | Topping up an existing senior base |
| With ACM Finance | One facility | Two lenders, both managed by ACM (intercreditor terms agreed in-house) |
Because we manage both layers, the structure is chosen to suit the project, not the availability of third-party lenders.
The single-manager structure
Why use one manager for senior and mezzanine debt?
ACM Finance arranges mezzanine debt only behind senior facilities we also manage. The senior and mezzanine lenders are separate funds, but both are managed by ACM, which means:
Our funding is backed by proprietary capital vehicles. Capital is committed at credit approval, not raised from outside investors post-approval. The funding position you are approved on is the position you settle on.
01
No Third-Party Negotiation
Intercreditor terms are agreed between funds we manage, not negotiated with an outside lender before settlement.
02
One Credit Decision
Any variation or drawdown request is assessed by one credit team across both layers.
03
Consistent Documentation
Documents across both layers use aligned definitions and covenants.
04
Single Assessment
The project is underwritten once, eliminating duplicate due diligence fees.
Repayment
How is mezzanine finance repaid?
Mezzanine is typically repaid from the project's exit event, such as the settlement of pre-sales, refinancing completed stock, or a combination of both.
Proceeds flow through a clear repayment waterfall: senior debt is satisfied first, followed by mezzanine debt, with remaining equity returned to the developer. Because ACM Finance manages both layers, there is a single repayment path and a coordinated discharge process upon exit.
Shortfall funding
Can you fund a shortfall on an existing facility?
Where an active ACM-funded project experiences a shortfall such as rising material costs or a gap between an undrawn facility and the cost-to-complete we can assess additional capital within the existing facility structure.
Note: This applies exclusively to active ACM Finance facilities. We do not provide top-up mezzanine debt for senior facilities held with third-party lenders.
Assessment
What do lenders assess for mezzanine finance?
We evaluate the project's overall fundamentals rather than relying on automated underwriting:
Security
Independent as-is and gross realization (on-completion) valuations.
Feasibility
Total development cost, developer margin, and realistic contingencies.
Market Demand
Suitability of the product for the local buyer demographic and location.
Exit Strategy
A clear, achievable repayment pathway via sales or refinancing.
Delivery Team
The track record of the developer, builder, and consultants, alongside the terms of the building contract.
Required Documentation for Initial Assessment
To review a transaction, we typically require:
If an initial review indicates a project does not meet our parameters, we inform you promptly.
- Project feasibility model
- Valuation report or site purchase details
- Draft or executed building contract / tender schedule
- Planning permit status and approved plans
- Developer track record statement
Audience
Who we work with
Property Developers
across Australia who have viable projects and wish to optimize their cash equity deployment across multiple sites.
Finance Brokers & Introducers
looking to place an entire capital stack with a single manager without coordinating multiple funding sources.
FAQ
Frequently Asked Questions
Mezzanine finance in Australia is provided by non-bank lenders, private credit funds and family offices.
Both instruments rank behind a first mortgage. However, mezzanine finance specifically refers to subordinated debt within a property development's capital stack structured around construction milestones. "Second mortgage" is a broader term that includes general equity release and secondary property loans.
No. We arrange mezzanine debt only alongside senior facilities we manage.
Mezzanine facilities generally range from 12 to 18 months, co-terminating with the senior construction facility so both layers are cleared concurrently at exit.
Not always. We evaluate pre-sales alongside broader market demand, developer equity, and overall exit viability. Select projects proceed with reduced or no pre-sale requirements depending on location and risk profile.
Mezzanine carries higher pricing than senior debt to reflect its second-ranking risk position. We evaluate pricing individually per transaction rather than publishing standardized rate sheets.
We fund property development projects across Australia requiring facilities between $5,000,000 and $100,000,000+.
Talk to us about your capital stack
Send through your project details. We will assess how to structure the senior and mezzanine debt for your site and confirm parameter fit within 48 hours.