Assisted Living Project Construction Loans & Financing - Continued...

Developer Seed Capital.  For the typical assisted living care facility construction loan financing, the developer seed capital is typically $350,000 plus the cost of obtaining site control of the proposed project site.  These funds are subject to withdrawal under certain circumstances (i.e.: if the TIC plan sales provide sufficient additional capital contributions to allow the withdrawal to be acceptable to all parties).  This is one of the primary goals of the Rainmaker approach - get the developer's seed capital back out of the deal as quickly as possible to allow the developer to begin work on the next project development due diligence documentation requirements.

Statutory Investment Incentives.  The project site and the type of development may in fact have a statutory entitlement to certain investment incentives.  Rainmaker focuses on commoditizing those incentives that do not require an application and award process that is subject to regulatory judgment and/or lottery awards as being too risky to warrant spending developer seed capital upon.  Those entitlements that are available by wrote are used to create classes of preferred equity securities that, in turn, are used by the developer to purchase credit enhancement for the benefit of the construction lender or to provide the means for the developer to execute an interest rate buy-down on the construction loan.

Condominium Investment Plan Syndication.  This is not a condominium sales plan created for the purposes of providing housing to the public - quite the contrary.  In this context the condominium plan syndication's chief goal is to provide net proceeds, the sufficiency of which can defray the capital finance expense for the final month of the construction phase.  In addition, the design of the plan must create positive financial investment leverage for the project - meaning that if the condominium plan would be anticipated to provide 13% of the total capital funding, it would be required to do so using less than 13% of the total project space plan and less than 13% of the total revenues.  Only Rainmaker uses a tri-level financial investment leveraging approach to this important program component.

Fractional Tenants-In-Common Commercial Real Estate Ownership Plan Syndication.  This isn't your father's TIC plan, but a defined program element that is critical to the developer's goals of being able to promote additional opportunities as quickly as possible because the TIC plan Rainmaker creates is designed to provide enough sales to close escrow on a construction loan.  If sales continue to accrete the next level is to allow the developer to induce a commercial lender into making a non-recourse construction loan.  If sales then continue to accrete, then there will come a point in time when the sales are sufficient to allow the developer to withdraw the developer's seed capital.

Construction Loan.  The final piece of the capital finance pie is the construction loan.  Once all the other condition precedents have been created, the developer has a legitimate position to advocate for a construction loan to be non-recourse.

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