Bridge the gap between your senior debt and equity. Clopton Capital provides Australian developers and investors with sophisticated mezzanine financing solutions to maximise leverage, reduce personal capital outlays, and accelerate project delivery.
In the Australian property market, Mezzanine Financing is a form of subordinated debt that sits between your first mortgage (senior debt) and your equity. It is often referred to as “gap funding” or “junior debt.”
While a traditional bank might only lend up to 60% or 65% of a project’s cost, a mezzanine loan can increase your total leverage to 80% or even 90% of the total project cost (LTC). This allows you to retain control of your project without the need for high-cost joint venture partners or diluting your equity.
In recent times, the Australian lending landscape has become more disciplined. With traditional banks tightening their “Loan-to-Value” (LVR) and “Loan-to-Cost” (LTC) ratios, mezzanine debt has become a critical tool for maintaining momentum.
Maximise Returns on Equity (ROE): By using less of your own cash, you significantly boost the percentage return on the capital you do invest.
Preserve Liquidity: Keep your cash reserves available for new acquisitions or unexpected contingencies rather than tying them up in a single asset.
Retain Project Control: Unlike “equity partners,” mezzanine lenders are passive. You maintain decision-making power and 100% of the project’s “upside” profit after the loan is repaid.
Speed of Execution: Private mezzanine lenders in Australia can often issue terms within 48 hours, providing the agility needed for competitive auctions or time-sensitive settlements.
While both sit in the “middle” of the capital stack, they are structured differently in Australia:
| Feature | Mezzanine Financing | Preferred Equity |
| Security | Usually a Second Mortgage or an Equity Pledge. | Contractual right to payment; no mortgage. |
| Priority | Sits above Preferred Equity. | Sits below Mezzanine Debt. |
| Returns | Primarily interest-based (fixed). | Often includes a “hurdle” or profit share. |
| Remedy | Foreclosure on the equity or second mortgage. | Takeover of management/entity control. |
Lending standards for mezzanine finance focus on the “residual value” of the project and the strength of the exit strategy (sale or refinance).
| Feature | Typical Australian Terms |
| Loan Size | 1,000,000 AUD to 50,000,000+ AUD |
| Total Leverage | Up to 85% – 90% LTC (Loan-to-Cost) |
| Interest Rates | Typically 12% to 20% p.a. (higher for construction) |
| Term | 6 months to 36 months (aligned with project exit) |
| Repayment | Interest is usually capitalised or paid at settlement |
| Security | Second mortgage over the property or PPSR charge |
Deal Review: We look at your senior debt offer and identify the exact “gap” that needs filling.
Lender Matching: We connect you with Australian private funds and family offices specialising in subordinated debt.
Capital Stack Integration: We work with your senior lender to ensure a smooth Intercreditor Agreement or “Deed of Priority.”
Funding: Capital is deployed, allowing your project to move to the next phase immediately.
Access flexible capital to bridge the gap between equity and senior loans.
It is the hierarchy of all the money in a deal. Senior debt (bank) is at the bottom (safest), mezzanine is in the middle, and your equity is at the top (first to lose, but highest potential reward).
Because the mezzanine lender is in a “second position.” If the property is sold, the bank gets paid every cent first. The mezzanine lender takes on the risk that there might not be enough left over, so they charge a higher rate for that risk.
Yes. While common for construction, mezzanine is frequently used for land acquisitions—especially when a developer is waiting for Development Approval (DA) and needs to bridge the gap before the main construction facility starts.
In Australia, this is a legal document between the senior lender and the mezzanine lender. it outlines who gets paid first and what happens if a default occurs. We handle the coordination of these documents for you.
Most of our institutional mezzanine programs start at 1,000,000 AUD but we can review smaller deals (750k+ AUD) for strong residential developments in major metros like Sydney, Melbourne, or Brisbane.
