mezzanine debt case no.5
A commercial developer had secured a site on the fringe of an established suburb.
The proposal was for a mix of commercial tenancies with residential apartments. The developer had spent a significant amount of time creating value and ‘earning’ equity prior to settlement, including securing the site at a discount to market and obtaining necessary development approvals. Regardless, the senior bank required further cash funding from the developer to proceed with settlement and commence construction.
Focussing on the developer’s track-record, complete feasibility, and recognising the value of the ‘earned’ developer equity, Dorado provided a mezzanine debt facility. The facility had two parts, one to support the project through the settlement stage, and the second to fund the construction stage. As the developer was able to lessen the cash equity contribution to the project, they were also able to progress a second project during the same time period.