Syndications are the real opportunity in a recession that can beat the odds and senior housing is the industry to do it with...

Condominium Sales Plans.  No, this isn't a condo plan created for the purposes of selling housing units for the purposes of providing dwellers with housing; this plan is created as a means of raising additional at-risk capital contributions.  Condo plans are subject to certain limitations and therefore should be created on the basis of limiting the scale to an amount equal to the project's capital expense for the final month of the construction phase (this can still be materially-significant to the capital funding plan).

Fractional Tenants-In-Common Sales Plans.  Tenants-In-Common syndication sales proceeds can be applied as early as the project's pre-construction phase - and that makes TIC plans very important to the developer that is seeking to maximize his/her financial investment leverage.  Unlike condominium sales programs, TIC plans provide developer's with the opportunity to reduce their capital investment in a given project to seed capital only that is subject to the developer withdrawing said seed capital based upon the success of the overall sales program of both plans being put to work in unison.

limit the developer's investment to the cost of due diligence documentation (architecture, engineering, environmental, zoning, construction costing, feasibility studies and related costs) together with the cost of obtaining site control.  This will work out to a cost of $300,000 to $500,000 per project.

increase the developer's overall business opportunity by allowing the developer to re-leverage the developer's seed capital on a more frequent basis than would otherwise be possible if the developer accepted full recourse and asset cross-collateralization requirements.

Investment leverage.  The condominium plan is limited to the construction phase capital expenditures for the last month of the construction phase.  The corresponding percentage of the total space plan must be less than the pro-rata contributions the net sales proceeds provide (e.g.: if the condominium sales plan is intended, upon sell-out, to provide 12% of the total project development budget, the corresponding portion of the project space plan required to fulfill the sales goal must be less than 12% of the total space plan).  In some cases, this will require a significant amount of creativity and expertise to achieve (you'll want Rainmaker to create your plan to maximize this opportunity).

Equity Investor Cutoffs.  The condominium plan and the TIC plan approach lend themselves to reducing investor participation to a specific time period and a finite return that is commensurate with the risk accepted by the investors.  In particular, the TIC plan construction pool risk investors can be limited (and are routinely limited) to participating in the construction phase with a second level of TIC syndication plan sales proceeds being used to retire the construction pool risk investors without necessarily decreasing the developer's long-term incremental equity enhancement and investment income sharing.

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