Stretch senior finance
A single facility at higher leverage, simpler than stacking senior and mezzanine.
What stretch senior finance is
Stretch senior is a single development facility provided at higher leverage than standard senior debt. Instead of arranging a senior loan plus a separate mezzanine tranche from a second lender, the developer takes one larger facility from one lender, reaching around 75 to 80 percent of cost and up to about 70 percent of gross development value.
The appeal is simplicity: one lender, one charge, one set of documents, one drawdown process and no intercreditor negotiation. The trade-off is a blended rate that sits above pure senior debt, reflecting the additional risk the single lender carries higher up the structure.
- Higher leverage from a single lender
- No separate mezzanine tranche to arrange
- One set of legals, no intercreditor deed
- Faster to close than a two-lender stack
Indicative terms
- Loan size£1m to £75m+
- Loan to costUp to 75 to 80%
- Loan to GDVUp to around 70%
- Term12 to 36 months
- RateBlended, above senior; scheme dependent
- Arrangement feeTypically 1.5 to 2.5%
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
Who it suits
- Developers who want higher leverage without a mezzanine lender
- Schemes where speed and simplicity matter
- Borrowers reducing day-one equity on a single facility
Discuss stretch senior finance
A view on fundability within one working day.
How a single stretched facility is put together
Margin assessment
We test whether the scheme's margin supports higher leverage from one lender rather than a senior-plus-mezzanine split.
Single facility terms
We agree one facility to around 75 to 80 percent of cost at a blended rate, with one charge and one set of conditions.
Staged build drawdowns
Funds release against surveyor certificates exactly as with senior debt, but at the higher advance.
Exit
Repaid on sale, letting and refinance, or development exit finance, with no second lender to repay in priority.
When stretch senior is the right call
Stretch senior suits developers who want higher leverage without the cost and time of arranging a mezzanine lender, and schemes whose margin comfortably supports the additional debt. Lenders offering stretch facilities underwrite the scheme more intensively, so a clean appraisal, a strong team and a defensible exit matter more, not less, than on a conservative senior loan.
How far stretch senior lifts leverage
Stretch senior reaches around 75 to 80 percent of total cost and up to about 70 percent of gross development value from a single lender, materially reducing the day-one equity compared with a standard senior facility. That is similar total leverage to a senior-plus-mezzanine stack, delivered in one facility.
Blended rates and fees
Because the single lender is exposed higher up the structure, the blended rate sits above pure senior debt but is set against the saving of a separate mezzanine cost and a second set of legals. Expect an arrangement fee of around 1.5 to 2.5 percent. We compare the all-in cost of stretch senior against a senior-plus-mezzanine alternative before recommending either.
Stretch senior versus senior plus mezzanine
Stretch senior reaches similar total leverage to a senior-plus-mezzanine stack but from one lender in one facility, removing the intercreditor agreement and the second set of legals. That makes it faster and simpler, usually at a blended rate that lands between pure senior and the cost of a separate mezzanine tranche.
Stretch senior finance: common questions
How is stretch senior different from senior plus mezzanine?
Stretch senior reaches similar total leverage to a senior-plus-mezzanine stack but from one lender in one facility. That removes the intercreditor agreement and the second set of legals, making it faster and simpler, usually at a blended rate between the two.
Is stretch senior more expensive than standard senior?
Yes. The single lender is exposed higher up the structure, so the blended rate sits above pure senior debt. Against that you save the separate mezzanine cost and the time and legal expense of arranging two facilities.
How much equity will I still need?
At around 75 to 80 percent of cost, a stretch facility typically leaves a 20 to 25 percent equity requirement, lower than a standard senior loan and similar to a senior-plus-mezzanine structure.
Which lenders offer stretch senior?
A range of debt funds and specialist development lenders offer single stretched facilities. We match the scheme to the desks most comfortable with its sector and leverage.
Discuss stretch senior finance
Send us your scheme and we will come back with a view on fundability and likely terms within one working day.