How To Raise Bank Debt, Private Senior Debt, Mezzanine And Equity For Commercial Real Estate Development In Vietnam

Vietnam Commercial Real Estate Financing

How To Raise Bank Debt, Private Senior Debt, Mezzanine And Equity For Commercial Real Estate In Vietnam

Financing commercial real estate acquisition or development in Vietnam requires more than approaching a local bank. Sponsors must understand onshore collateral rules, foreign lender limitations, private credit dynamics, and statutory equity thresholds.

Financely structures multi-layer capital stacks for cross-border and emerging market commercial real estate projects. We coordinate bank outreach, private credit engagement, mezzanine structuring, and equity formation under a unified transaction mandate.

Review our execution model on How It Works and our real estate advisory scope on Commercial Real Estate Financing.

1. Raising Bank Debt In Vietnam

Vietnamese banks remain the primary source of senior secured financing. Domestic lenders such as BIDV and Techcombank dominate project lending activity. However, foreign lenders typically cannot take direct security over immovable property without compliant onshore structuring.

Senior bank debt is generally contingent upon:

• Land use rights documentation
• Approved development permits
• Feasibility study and projected cash flows
• Sponsor equity contribution thresholds

For regulatory context, see Hogan Lovells' overview of private credit structuring constraints in Vietnam: Unlocking Private Credit In Vietnam.

2. Private Senior Debt And Direct Lending

Private credit funds across Southeast Asia are expanding exposure to Vietnamese property. These lenders may structure unitranche or flexible senior facilities where banks are constrained by credit allocation rules.

Market analysis of Vietnam's growing private credit sector is discussed by: Singapore Management University – Southeast Asian Private Credit Trends.

Private senior debt often offers:

Faster Execution

Reduced internal approval layers compared to commercial banks.

Flexible Covenants

Customized amortization and draw schedules for development timelines.

Higher Leverage

Ability to extend beyond conservative bank LTV thresholds.

Structured Pricing

Blended yield reflecting risk-adjusted returns.

3. Mezzanine Financing For Development Gaps

Mezzanine debt bridges the gap between senior debt and equity. It is subordinated, carries higher returns, and may include equity participation rights.

General mechanics of mezzanine structures are outlined by: EquityMultiple – Mezzanine Debt Overview.

Mezzanine is typically deployed when:

• Senior lenders cap leverage
• Sponsors seek to reduce immediate equity dilution
• Development timelines delay stabilization cash flow

4. Equity Capital And Joint Venture Structures

Vietnamese property law often requires minimum equity contribution before debt can be secured. Sponsors may structure:

Sponsor Equity

Direct capital from project developers or acquisition vehicles.

Strategic Joint Ventures

Partnerships with local or regional property operators.

Private Equity Funds

Institutional investors targeting emerging market real estate exposure.

Structured Equity

Preferred return structures with defined exit waterfall mechanics.

Integrated Capital Stack Example

Layer Illustrative Allocation
Bank Debt 50–60%
Private Senior Debt 10–20%
Mezzanine 10–15%
Equity 20–30%
Cross-border real estate financing in Vietnam requires careful coordination of legal, regulatory, and security documentation. All capital placements are subject to lender approval and executed agreements.

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Financely operates as a transaction-led capital advisory desk coordinating bank debt, private credit, mezzanine, and equity placements through regulated counterparties where required.