Confidential Developer

Client Situation

A major national medical office developer (Developer) retained Savills Studley to assist the company with the arrangement of a mezzanine capital line of credit for its development platform. The Developer looked to meet a growing business demand by expanding. To ensure a successful expansion, the Developer sought a capital partner to provide an aggregate of $250 million of capital over a five year term.

Consideration Analysis

The Savills Studley team first assessed the growing business pipeline to compile a competitive investment portfolio. The analysis highlighted that the Developer pipeline consisted primarily of on-campus buildings averaging approximately 100,000 square feet, with substantial pre-leasing by investment-grade-rated not-for-profit hospital systems.

While the Developer hoped to secure a capital source for 90% of the required equity above the construction loan, the capital source would have no ownership interest or participation in any value creation associated with the buildings. In turn, the Developer was willing to pay a current yield on capital invested and, upon completion of the development project, the Developer would take out the mezzanine provider with permanent financing proceeds.


Savills Studley successfully established a capital partner to provide 90% of the required equity above the construction debt, structured as mezzanine debt at a low double-digit coupon rate, providing the Developer up to $50 million in mezzanine capital per year. In addition to approximately 13% IRR inclusive of origination fees, the capital remains outstanding for a minimum of two years prior to repayment and the Developer retains sole ownership of each project.

Summary Information

  • Property: Various, USA
  • Transaction Size: $250 Million
  • Transaction Type: Mezzanine Line of Credit
  • Service Line: Healthcare