Types of real-asset debt

Real-asset debt is not one product. It is a family of facilities, each designed for a different point in the asset lifecycle, and choosing the wrong one is the fastest way to destroy returns.

Senior permanent debt is the workhorse. It is long-term, lowest-cost, and secured against stabilised assets with proven cash flow. It typically funds 50–65% of cost, carries a fixed or swapped rate, and amortises over 15–25 years. Use it when the asset is built, leased and producing predictable cash flow.

Construction or development debt is staged. It draws down against verified milestones, converts to permanent on completion, and usually carries a higher rate plus a ticking fee on undrawn amounts. The underwriting is about the build programme, the contractor and the pre-leasing, not the existing cash flow.

Bridge debt is short, fast and expensive. It exists for situations where speed matters more than price: a time-limited acquisition window, a refinancing gap, or a value-add strategy that needs stabilisation before permanent debt. It is usually 6–24 months, priced at a margin over base, and always requires a defined exit.

Mezzanine fills the gap. It is subordinated, equity-like in pricing (often 12–18% or an equity kicker), and sits between senior debt and common equity. Use it when you need more leverage than senior will provide but do not want to dilute the equity.