As the real estate market adapts to cost inflation, evolving valuations, and cautious debt underwriting, mezzanine and equity finance have become increasingly important tools for developers and investors looking to fill funding gaps and drive projects forward.
In 2025, traditional senior debt remains available—but often at more conservative leverage levels. The days of high loan-to-value (LTV) terms without intense scrutiny are behind us, especially for complex or speculative schemes. That’s where mezzanine and equity come in.
What Are Mezzanine & Equity Finance?
- Mezzanine finance sits between senior debt and equity. It typically offers borrowers additional leverage – often up to 85% loan-to-cost (LTC) or 75% loan-to-GDV – without giving up ownership. It’s usually secured by a second charge and carries a higher interest rate to reflect the risk.
- Equity finance, by contrast, involves bringing in a capital partner to contribute funds in exchange for a share of ownership and profits. This can help developers or investors move forward with less personal capital committed, but does involve a share of control and returns.
Both are powerful tools when structured strategically.
Why They Matter Right Now
In today’s environment, we’re seeing tightening senior debt criteria due to:
- Ongoing cost inflation in construction
- Conservative valuation assumptions from lenders
- Increased scrutiny around exit routes and market demand
- Evolving planning delays impacting timelines and risk profiles
As a result, the senior lenders that were once willing to provide 65–70% of GDV may now offer less – leaving a funding gap that mezzanine or equity can fill.
At the same time, we’re seeing investor capital re-enter the market, looking for strong risk-adjusted returns in a potentially softening interest rate cycle. This creates fresh opportunity for well-prepared borrowers to access structured capital and move on deals that others can’t.
What We’re Seeing in the Market
At Mortimer Street Capital, we’re actively arranging:
- Mezzanine finance for residential and mixed-use schemes, typically between £500k and £5m
- Equity partnerships for larger development and value-add deals, including JV structuring
- Blended capital stacks that allow developers to reduce personal capital exposure while still retaining control and upside
Deals are being done – but lenders and equity partners want clarity, experience, and structure.
When Does It Make Sense?
Mezzanine and equity solutions are most effective when:
- You have planning certainty but need to boost the capital stack
- You’re scaling across multiple schemes and want to preserve liquidity
- You’re facing a funding shortfall due to rising build costs
- You’ve secured a strong opportunity but need to move fast, ahead of full debt approval
- You want to share risk with an investor while maintaining project momentum
How We Help
We work closely with our clients to:
- Identify suitable capital partners from our active network of mezzanine lenders and equity investors
- Structure funding packages that align with your project returns and exit plans
- Negotiate commercially sensible terms that preserve flexibility and control
- Ensure smooth execution, from term sheet to drawdown
Whether you’re building from the ground up or refinancing a stabilised asset, we bring clarity, speed, and experience to the table.
Final Thought
In a market where capital is more selective, the ability to structure your funding intelligently is a competitive advantage. Mezzanine and equity finance aren’t just fallback options – they’re strategic levers that can unlock deals others leave behind.
Get in touch to discuss how we can support your funding needs.
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Mortimer Street Capital is a specialist real estate debt advisory firm, dedicated to helping property.
