Whole Loans: Integrated Property Finance Explained

How Does a Whole Loan Work?

Instead of one Senior loans The bank with a separate Mezzanine tranche To combine, a lender – usually a debt fund or an insurance company – represents the entire debt capital requirement: a documentation, a Land charge, one point of contact. Internally, the lender can split the loan into senior and junior part and pass it on; for the borrower it remains a contract. leverage up to 85–90 % are commonLTV), final or with moderate repayment.

Advantages – and cost logic

• Speed and simplicity: no intercreditor negotiation between bank and mezzanine lender, an audit process, a closing.
• Higher leverage: more debt capital than the classic bank loan – less tied Equity.
• Mixed margin: More expensive than the pure senior, cheaper than the separate Senior+Mezzanine structure in total can be – the bill depends on the individual case.
• One risk: the dependence on a lender; quality and reliability of the address count accordingly twice.

Whole Loan or tranche structure? The decision

Whether the Whole Loan or the combination of banking senior and mezzanine is more economical, the concrete comparison decides: weighted total margin, speed, covenant packages, flexibility in partial sales. In time-critical acquisitions and complex projects, the Whole Loan plays to its strengths; in the case of margin-sensitive investment property finance, the separate structure often wins. We bring both variants into the market in parallel and provide the Term Sheets Next to each other – details on the service page Whole loans.