Key Statistics

Initial investment

April 2005

Exit Date

October 2005

Revcap Equity Invested

£2.6 million

Case Study: Mezzanine Capital – The Eye, London, UK

Business Plan (at inception)

Assistance for Bee Bee Developments to buy out a financial partner upon practical completion of a newly refurbished and leased office building on High Holborn. The property was let at a low point of the rental market cycle and capital was required to support senior debt during final lease up and lengthy rent free periods. Revcap structured a secured mezzanine position comprising a priority return topped up by the higher of a fixed priority exit fee and a profit share. The business plan involved a relatively passive hold period pending final lease up and rent reviews at the first cycle in 2009.

Business Plan Outturn

Bee Bee decided to take an offer to acquire the property from an institutional fund at a yield of under 5%. The profit share of 30% came into play when it was only regarded as potential upside at underwriting.

Revcap Commentary

Opportunistic exit from good quality asset. Substantial profit earned in a very short period of time as the client decided to take an early exit.