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A RT I C L E
Mezzanine
Mezzanine is a high-risk debt financing. Most commonly, it takes the form of loans and bonds,
often convertible into shares and stocks of financed companies. In the case of real estate, this
type of raising capital involves individual – mostly development – projects.
Financing providers are primarily investment funds and private equity. They are ma-
inly foreign entities, particularly from Anglo-Saxon countries, seeking high returns on
investment. But Polish players are more and more active in this field. Thanks to better
knowledge of the market, they can quickly take decisions to engage in promising pro-
jects. It is noteworthy, that among the banks operating in the Polish market, only mBank
provides this kind of financing.
Mezzanine’s heyday in Europe came in 2006-2007, when the volume of such transactions gre-
atly exceeded EUR 10 billion a year. Currently, the market is slowly recovering, but remains
far from the boom-time levels.
Just a year ago, the cost of this type of financing stood at around 20% a year. As a result of
a large supply of money in the market, an improving economic situation and substantial com-
In search
of financing
–
bonds versus mezzanine
The past 12 months in the real estate market in Poland have been marked by falling interest rates, strong competition
and supply in the credit market, rising prices in the investment market and resumption of suspended development
projects, in particular residential ones. The upturn has also spread to the corporate bond market, where low interest
rates have been stimulating supply and demand for instruments that offer higher interest than bank deposits.
The recovery has also been seen in alternative sources of financing, such as mezzanine. The two methods of raising
funds, previously less popular, are becoming increasingly attractive
