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Construction
Phase Commercial Real Estate Project Financing - Continued...
Construction
Phase Commercial Real Estate Project Financing discussion continued from
Page 2.
The financing of commercial real estate development projects and
programs follows a defined path, to wit:
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Pre-Development
Phase Funding. The pre-development phase commences with the
completion of the market study, financial study, zoning/permitting
review, environmental review and obtaining site control for the
proposed project. The funding for these activities is
typically the burden of the developer/sponsor group
exclusively. Institutional investors view the pre-development
phase funding as being strictly the problem for the developer to
fund. |
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Pre-Construction
Phase Funding. The pre-construction phase commences with the
designing of the proposed project and includes all architectural and
engineering studies required to reach a price-lock for the
construction of the proposed project. In most cases,
institutional investors will not fund these activities, so you must
be prepared to at least fund the design and related elements through
the completion of Schematic Phase design and construction
specifications (outline construction specifications). |
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Construction
Phase Funding. Here's where the institutional investor
will jump into the transaction and provide construction financing
and/or equity/preferred equity financing for your project provided
you have all necessary studies and third-party reports required for
closing on the construction loan and commencing development.
Risk management is the big issue here so don't ignore it or you will
just end up getting rejection after rejection. |
| Permanent Capital
Funding. The permanent capital funding plan usually consists
of a permanent mortgage. However; where earnings can be
quickly stabilized above plan targets, the permanent capital funding
plan approach allows for some profit-taking that can be used to buy
out preferred class investors and/or provide some level of cashing
out the sponsor/developer's equity position in the
transaction. Accordingly, this shouldn't be assumed to be just
a mini-perm or perm loan. |
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. |
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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! |
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