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Shojin is an FCA-regulated fractional investing platform enabling global investors to build their wealth from UK-based real estate investment opportunities.

Invest - Products - Mezzanine

Earn secured fixed returns with a mezzanine loan.

Lend to UK property developers to enjoy fixed returns secured by an underlying asset.

What is a Mezzanine loan?

Optimised risks and returns

Mezzanine loans are used by property developers to top up their senior loan and fund their development. By raising mezzanine debt they avoid giving away equity and profit share.


The mezzanine debt sits in the middle of the senior debt and equity in the capital structure. This is an advantageous position for investors who receive an agreed fixed return on their investment while having prioritised security over the asset (referred to as a second charge).  


How does a Shojin mezzanine loan work?

Fixed returns mean more certainty and less risk

Instead of sharing profits with equity partners, property developers favour taking on mezzanine loans that pay a fixed return to investors. By doing so, they they put themselves last in line to take all proceeds after all loans are paid off.


Mezzanine investors take on less risk as they are secured by a 2nd charge against the property and the certainty of a fixed return until their loan is paid out.


Loans are paid back at the end of projects,  typically 12 to 36 months from drawdown.

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Sitting securely in the middle
Mezzanine loans provide a layer of debt funding to fill the gap between the senior debt, typically provided by a bank, and the developer's equity investment.
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A good solution for both parties
By using mezzanine loans, developers can attain potentially higher returns on their projects because it is cheaper than bringing in equity partners. For this they offer security and certainty to mezzanine investors.
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The higher the ratios, the higher the returns
Mezzanine loan ratios range from 75-80% Loan to Gross Development Value (LTGDV) and up to 90-96% Loan to Cost (LTC) which determine the risks and rewards for investors.

Why choose a Shojin mezzanine loan?

Enjoy a fixed return from your next property investment

Protection mechanisms
Shojin’s expertise lies in mitigating risks through protection mechanisms including cost overrun contingencies, first loss buffers and developer personal guarantees.
Zero planning risk
We only fund projects where planning has already been granted, leaving only the construction and sales stages.
Risk / reward profile
Mezzanine sits second in line after the senior lender in the funding structure. With a formal second charge and fixed returns, investors remain secured.
Choose from the following to find out more.
Shojins Capital Stack
Capital stack

The capital stack represents the layers of funding and the order of repayment. First is the senior debt, then mezzanine, followed by preferred equity and finally equity.

  • Value above and below
    The value that sits below the investor is important because this is the amount that needs to get generated and repaid before the investor. The value above is equally crucial because it represents the cushion that investors have before their returns start getting affected.
  • Key ratios
    The position in the capital stack is indicated by the Loan-to-value (LTV), Loan-to-Gross-Development-Value (LTGDV) and Loan-to-cost (LTC), the higher the ratios the higher the risks.
  • Seniority matters
    The position in the stack becomes relevant if a project is not performing and fails to pay out all the funds, from the bottom of the stack upwards. The higher you rank, the more likely your capital and interest will be affected.

Assessing the suitability of a development in a given location is critical to the success of the project. Physical, economic and cultural factors interact with the development's design and purpose, affecting its viability and attractiveness to potential buyers or tenants.

  • Demographics of potential buyers
    The demand for a development is driven by the lifestyle preferences, practical needs, incomes and aspirations of potential residents. Whether located in an urban or rural locale, the development must cater for the requirements of buyers in that area.
  • Amenities
    The availability, quality and proximity of infrastructure, including transportation networks, schools, shopping facilities and employment opportunities play a vital role in determining a development's desirability.
  • Physical characteristics
    The geography of a location, such as terrain, climate, and proximity to natural resources, can impact project feasibility and execution. Extreme weather conditions, geological instability, or environmental regulations can lead to delays, increased costs, or even project abandonment.

To protect investors from individual project risks, protection mechanisms are put in place to secure investors from scenarios that put their investments at risk. They incentivise the developer to repay funds for investors to exit the projects.

  • Charges held with land registry
    A charge is the means by which lenders enforce their rights to property. A first charge entitles the lender repossess and sell the asset to recoup funds first, followed by a second charge which is paid out after the senior lender in priority over the developer’s equity.
  • Personal guarantees
    Borrowers may be asked to provide personal guarantees to make them legally liable to repay the loan. Whilst this is a legitimate way to add further security, it is also a way to keep the borrower focussed on repaying the loan especially if the scheme runs into trouble.
  • Additional security
    This may include cost overrun guarantees, debentures or cross-collateralisation across other assets the developer owns, which in the event of a default, can be repossessed and sold.

The complexity of a construction project impacts the level of risk for investors. This is driven by a combination of factors including intricacy of design, engineering requirements, execution, and management required to successfully complete the project. Fixed-cost contracts and professional advice from surveyors is typically required to manage these risks.

  • Scale of the build
    Larger intricate projects, such as high-rise buildings or sprawling housing developments, tend to be more complex due to the increased scope, logistics, and coordination involved. They typically require structural elements that demand careful engineering and construction expertise.
  • Nature of the site
    Challenging site conditions, such as irregular terrain, poor soil quality, or tight spaces with reduced access, can complicate construction logistics and impact foundation and site preparation.
  • Architectural design and permissions
    Unique, innovative, or intricate architectural designs can lead to complexity in construction, requiring specialised skills, materials, and precision. Likewise, planning conditions dictate specific delivery requirements and adherence to compliance.

Project phase

The stage at which investors come into the project determines the level of risk. Generally, the earlier the investors come into a development project, the more risk they take on as there are more milestones for the developer to hit. There are several categories of phase that should be considered.

  • Planning status
    A development project with no planning permission is ultimately a speculative play as it may take longer than expected, or in some cases never come through at all. Whilst if full consented planning or permitted development rights (office to residential conversions) are in place, you know what is being built and the associated value of this.
  • Type of development
    Full construction, conversion or renovation projects all have different levels of risk. If the structure of the building is already existent there are no associated costs uncertainties. Conversion and renovations are simpler to deliver which reduce time and cost risk.
  • Status of development
    Developments take time; there are many items which influence costs and timelines. Coming in at an earlier stage means that tendering, site ramp-up and preliminaries are required which present cost uncertainty. The closer you are to construction completion, costs are determined and it become more about realising the value.
Exit strategy

In order to get repaid and exit a project the value needs to get realised to release cash. This can take the form of the sale of the units or the refinancing of the block in its entirety.

  • Selling individual units
    Selling units is dependent on demand, attractiveness and local competition from similar units in the area. Sales and marketing strategies need to be executed to encourage pre-sales ahead of construction completion and bulk sales to reduce risk.
  • Refinancing to release funds
    Another option available to developers to repay investors is to refinance the entire finished block. A completed development commands a higher value than previously, against which a loan can be raised to repay investors. If the value is sufficient, this is likely a quicker solution than individual sales.
  • Occupancy for asset investments
    For income-generating assets such as student accommodation blocks that depend on occupants, pre-secure locked in tenancies reduce risks. Likewise for commercial assets, established tenants with strong covenants provide stable cashflows which reduce the risks.
Developer capability

A developer’s track record dictates their suitability to take on and deliver a given project. Their team, their financial credentials, capacity and trustworthiness all impact risk.

  • Previous developments
    Past performance is used to assess their ability to handle potential challenges and mitigate risks. Similarly, their reputation can influence the market's perception of the quality and value to attract buyers.
  • Contractor and supplier relations
    Established developers often have built relationships and with reliable contractors and suppliers, and have a strong professional team working for them, reducing the risk of delays or disruptions due to poor workmanship, material shortages or technical failures. Additionally, they need to have the capability to deal with situations where subcontractors and suppliers underperform or go out of business.
  • Financial standing
    A developer’s credit history is an indicator of how their previous developments have performed. Their asset and liabilities statements indicate previous success and ability to cashflow construction between drawdowns, provide personal guarantees and cross collateralise across their other assets to reduce the risks for investors.

Time plays a critical role in property development and has a significant impact on the associated risks. It is usually time, rather than cost, that affects a project’s success and profitability.

  • Market fluctuations
    The longer a project takes to complete, the more susceptible it is to shifts in market conditions and inflation. Changes in housing demand, housing prices, material and labour costs and economic factors can affect the project's viability and potential returns.
  • Financing costs
    Extended project timelines lead to increased financing costs in the form of interest payments. Whilst this might not impact a senior lender’s position, this does reduce the cushion for those further down the repayment chain. Equally, changes in interest rates overtime can increase overall project costs.
  • External factors
    Ove over a prolonged development period, geopolitical events, economic recessions, and unforeseen global disruptions can impact a project's risk profile.


The frequently asked questions and key terminology for investing in Mezzanine loans.

What is a Mezzanine loan? caret-down-light
Shojin Mezzanine loans are investments that are positioned between the senior loan and equity in the funding structure. They provide a fixed, rather than variable, return and are typically secured by a 2nd charge over the underlying asset. As such they are deemed less risky than Equity and more risky than Senior loan investments and provide a rate of return to reflect this.
Why would a developer take out a Mezzanine loan? caret-down-light
Developers seek Mezzanine loans to leverage their equity, access higher loan-to-value ratios, diversify capital sources and fill funding gaps that they aren't able to finance themselves. This enables them to take on previously unavailable projects, scale up with larger projects, and preserve their capital for other ventures. By paying a fixed return to investors, they are able to keep whatever is left over at the end of the project for themselves.
What type of projects require Mezzanine funding? caret-down-light
Mezzanine financing serves as a valuable capital source when developers and investors require additional funds beyond senior debt to cover construction, acquisition, or value-enhancement costs. As such, they are relevant to practically all real estate projects that involve funding.
What are the returns for investors on a Mezzanine loan? caret-down-light
Investors can expect estimated returns of 14-24% per annum on Mezzanine loans depending on the loan-to-value and loan-to-cost ratios and other risk factors associated with a given project.
What is the difference between Mezzanine, Stretched Mezzanine and Preferred Equity loans? caret-down-light
Whilst all three provide a fixed return and are typically secured by a 2nd charge over the underlying asset, the difference between them is related to where the loan sits within the capital stack. As this impacts, risk-return dynamics, the names help investors easily differentiate between projects. Our products have the following criteria: 1) Mezzanine: upto 75% LTGDV / 90% LTC 2) Stretched Mezzanine: upto 75-80% LTGDV / 90-96% LTC 3) Preferred Equity: 80%+ LTGDV / 97% LTC.
What other investors are saying about Shojin.
"Shojin is a trusted property investment platform you want to invest in. I have personally invested in a few of Shojin's projects over the years and am really impressed. "
Nina Norton
Private investor, UK
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Thomas Pellew
Private investor, UK
"The investing process with Shojin was easy, and the staff I dealt with were quick to repond to any queries I had regarding my investment. I will hold my investments and continue to invest via Shojin in the future."
Heather O'Toole
Private investor, New Zealand
"Shojin is a great entry level for alternative investment. The returns are very good and I like the diversification, especially considering the global economic situation."
Ray Ng
Private investor, Hong Kong
"Shojin is a new and easy way to enter the global property market. It's a gateway to making good money from my investments, quickly. I recommend Shojin to all my friends."
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Private investor, Hong Kong