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| | Commercial Real
Estate Construction Loans...
For developers and/or
owner/operators seeking commercial real estate construction loans there is
now a viable alternative to the commercial lender approach that destroys
financial investment  leverage and grossly limits the developer's (or
owner/operator) ability to grow their company. Most commercial real
estate construction loans require the developer personally guarantee
repayment and pledge collateral to the lender equal to as much as 350% of
the loan. You have to ask yourself, "why should I accept this,
as the lender is only going to lend me my own money and charge me a
fee?"
The ugly truth is that
commercial real estate lenders are not in the business of accepting
subjective investment risks in exchange for making a mortgage loan.
All subjective investment risks must be "budgeted" from the resources
of the borrower unless there is a third-party guarantee.
There is now an alternative to
the commercial lender squeeze play - the fractional
real estate ownership syndication of real property interests via the
tenants-in-common (or "TIC") plan approach. The
syndication approach allows the investing public (i.e.: a pre-qualified pool of
accredited investors and qualified institutional buyers) the opportunity to
directly underwrite the deal as if it were any other private
placement offering. The
syndication approach provides the following benefits that may
fundamentally change your prospects for financing the proposed project:
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Increased financial
investment leverage. The structure of the transaction provides
opportunities for developers/sponsors of projects to increase their
financial investment leverage while offering commercial real estate
investors an opportunity to access extraordinary income-producing
assets that offer near-term and long-term real estate investment
opportunities. |
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Increased levels of
control. The TIC Plan leaves the developer (or sponsor, as the
case may be) in control of his/her future growth plans as long as the
developer hits the numbers set forth in the business deal that is
agreed upon prior to the syndication taking place. This means
the goal posts will not move for the lifetime of the transaction. |
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Additional profit-taking
may be possible depending upon the investment entitlements the
proposed project may in fact qualify for at the local, state and/or
federal levels. These incentives can be "commoditized"
and turned into an annuity all their own, thus allowing the
developer/sponsor to to offer additional opportunities to profit from
the transaction without increasing the risks to the syndication
participants. |
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Do
You Know The Secret?
When it comes to commercial real
estate development finance, it doesn't matter whether you need to raise
$5 million or $50 million, the out-of-pocket costs, advance fees and
project due diligence costs will always require the same relative
investment dollars the promoters have to fund. Do you know what
that amount is? Do you know the Secret? |
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