Regent Quay Residences
Mezzanine finance for a build-to-rent development, subordinate to clearing-bank senior debt under an LMA intercreditor
The Challenge
What the sponsor faced.
A regional build-to-rent developer had a committed clearing-bank development facility in place, sized at 60% of the scheme's £53.5M total development cost, which left a £21.4M equity requirement it did not want to fund in full. The sponsor wanted to keep capital free for a second Greater Manchester scheme and cap its cheque at roughly 20% of cost. It needed subordinate capital that ranked behind the senior facility without disturbing the bank's security.
The Structure
How we structured it.
Mezzanine was advanced as a £10.7M loan to the scheme's HoldCo, secured by a charge over the shares in the PropCo that owns the site and ranking behind the senior facility under an LMA-form intercreditor agreement with cure and purchase rights. Pricing was SONIA-linked with a running coupon and an exit fee, sized to the construction and lease-up profile. The facility lifted last-dollar leverage to 80% of cost, slotting between the £32.1M senior and the sponsor's £10.7M of common equity.
The Outcome
What the sponsor got.
The mezzanine closed alongside the senior facility and cut the sponsor's equity cheque from £21.4M to £10.7M. Because the scheme sits in an SPV, the mezzanine can be taken out on a share sale of the PropCo at stabilisation or on a refinance into long-term investment debt. Practical completion is targeted for 2027.
Deal Mechanics
Structural highlights.
Equity cheque cut from £21.4M to £10.7M, from 40% to 20% of cost
Mezzanine to HoldCo, share charge over PropCo, LMA intercreditor
SONIA-linked pricing, with an SPV structure allowing a share-sale exit
More in Sector
Related multifamily transactions.
Bridge loan for middle market value-add multifamily renovation
Permanent financing for middle market Class A multifamily tower
Newsletter
Market intelligence, straight to your inbox.
Quarterly debt market commentary, capital stack benchmarks, and select transaction highlights. No marketing, no filler.
Have a Similar Situation?
Let's structure your transaction.
Every deal is different. Every structure is built around the business plan. Tell us what you're working on.