|
|
|
Commercial Real
Estate Development Financing - Fractional Syndication Funding...
The
commercial
real estate development financing market continues to evolve and
change as the expectations and goals of developers and investors
change. Today, commercial real estate development financing
includes:
 |
Construction
loans secured by a mortgage tied to the commercial real estate
development loan (the mainstay funding product for the commercial real
estate industry); and
|
|
Private
placement offerings of equity, preferred equity and/or convertible
securities to provide both equity and debt capital subject to an
exemption under the Securities Act of 1933 and usually for
institutional investors and/or hedge funds. For the vast
majority of commercial real estate developers seeking commercial real
estate development financing, the investment banking route presents
costs and risks that do not make it a competitive consideration in
your plans. If you are seeking 100% non-recourse financing
through the EB-5 joint-venture program, click here for more information; and
|
|
Real
estate syndications to provide equity funding for projects seeking
to qualify for a construction loan, or to replace construction loans
altogether (100% cash financing). Syndications may
be available for funding as early as the pre-construction phase and as
late as the date that stabilized operational capacity is attained.
The goals of the commercial real estate fractional syndication sales
program that uses the classic zero-coupon structured approach provides
are: (1) the syndicate financing does not require an equity dilution
hit; and (2) the syndicate financing does not require a cross-default,
cross-collateralization or joint and several recourse pledge; and (3)
the syndicate financing allows the developer to obtain commercial bank
financing on a non-recourse basis; and (4) the syndicate financing
allows the developer to receive a refund of their seed capital while
the project is still in its pre-construction phase.
|
Each approach
has its own risks and rewards that require careful consideration prior to
creating the final capital
funding plan proposal for the project.
Rainmaker's
approach is to:
|
First,
review all entitlements
to determine the availability of investment incentives that are
authorized pursuant to a local, state and/or federal statute.
These entitlements can be contrived to create an annuity based solely
upon the entitlement and not upon the real property or business
prospects of the underlying project; then
|
|
Next, the
capital funding plan is analyzed (best-case, middle-case, worst-case
scenarios) to determine how the entitlements can best be employed for
the benefit of the project, the lender, the investors and the
developer; then
|
|
The
syndication due diligence program gets a final review and the syndication
can then move forward. The syndication approach focuses on the
zero-coupon approach that eliminates the imputed interest carrying costs,
but allows the syndicate members to receive higher-yielding cash-on-cash
returns (as high as 25% per annum for holding periods of 7 years!) that are
guaranteed and the guarantee has a very high likelihood of being
satisfied. |
About Rainmaker...
Rainmaker Marketing Corporation is the
brainchild of Clint Lovell, a seasoned business finance consultant with
more than 20 years experience. Rainmaker is a B2B consulting firm that was incorporated in 1994 for the
purposes of providing market feasibility studies to businesses
seeking capital financing in the commercial and institutional
markets. Today, Rainmaker Marketing Corporation provides a
comprehensive array of due diligence documentation services for most
major industry groups. Rainmaker Marketing Corporation also
provides syndication management services for fractional commercial
real estate syndicates that can provide mezzanine gap funding for
income-producing commercial property developments as early as the
pre-construction phase. Rainmaker Marketing Corporation serves
clients throughout North America and the Caribbean Basin. Rainmaker
Marketing Corporation, Inc. 15519
Dawnbrook Drive, Houston, Texas 77068
© Copyright,
2009 Rainmaker Marketing Corporation, Inc. All rights
reserved. |
|
|
A
Few Words on Change...
Clint
Lovell, the Managing Principal of Rainmaker, has written a book on the
subject of capitalism and the creation of a new economic society that
ends our reliance on taxation and retires all of our national
debt. The book is called The Fix and you can order an
advance copy now at www.the
fixbookstore.com. Order today and we'll pay your shipping,
saving you some real change. |
|
What's
New...
Read
our latest whitepaper on capitalization strategies and commercial real
estate syndications that provide developers with a new arsenal of
capital finance weapons they can deploy in the middle of this
recession. Click here and download the whitepaper
free! |
|
