Memory Care Facility Project Feasibility Studies - Continued...

Continued from previous page...

Rainmaker Marketing Corporation's approach to the financial feasibility issues has to include structured finance services because, in the majority of cases, the developer has sufficient capital to complete the due diligence documentation burden and support any syndication and/or real estate pre-construction marketing program, but not have sufficient funds to induce a lender to close escrow on a construction mortgage financing loan. Developer's consistently misjudge this critical component and push projects forward that cannot meet the necessary tests. Therefore; the next level is to understand the key test issues being related in terms of the structured finance approach that Rainmaker commends to every developer client.

First, all concept phase projects are divided into two (2) groups: those projects that have sufficient capital to complete the due diligence documentation and syndication marketing requirements and those that do not have sufficient capital to complete the due diligence documentation and syndication marketing regimen. Those that don't are eliminated from consideration.

Now the project is ready to head into the structured finance body shop and pick up some speed.

The structured finance approach we are commending to memory care project developers (and/or owner/operators, as the case may be) uses the combination of elements in the capital funding structure to drive the following aforementioned benefits (on previous page. To create these benefits the financial structure Rainmaker Marketing Corporation recommends to developers and owner/operators is as follows:

Entitlement Review. Does the project qualify for any statutory benefits in the form of tax-advantaged investment incentives? If so, these should be converted into an annuity and discounted to the value that corresponds to the pre-construction phase of the project. This leaves the door open for converting it into cash or using it as credit enhancement, increase interest income or top-coat a loan by substituting risk pool players.

Condominium Plan. Can a condominium association plan be created for a portion of the project space? If the answer is yes, then the object is to create a condo plan for investment income purposes only and not necessarily a finite residence per se. State consumer protection laws prevent the proceeds of these sales contracts from being used until what is effectively the bitter end of the construction period (last 45 to 60 days). But having said that, the proceeds would in fact be materially significant if they can provide what amounts to additional at-risk capital financing for the last two (2) months of construction; therefore, institutional buyer condominium plans must be given due consideration.

Fractional Real Estate Syndications. The final leg is the creation of a tenants-in-common ownership structure for the portion of the project that is not part of the condominium ownership association plan. The resulting structure is offered to the investing-public on a fractional syndication basis (each fractional unit being equal to $250,000 in all cases and for a minimum syndication of $7,500,000). The proceeds from a fractional syndication can be applied at the pre-construction phase of the project's development program; that makes fractional syndications a "must have" for each and every commercial real estate development financing.

Call: 281.537.1200

What's New?

Tired of construction loan rejection letters? Rainmaker has come up with a whole new way of funding construction that eliminates the developer's reliance upon high-LTV construction mortgage financings, while creating financial investment leverage greater than 10:1 for the promoters!

All of the information is in our latest white paper. Click here and download a copy and be prepared to be floored!

Email: consultants@rainmakermarketing.com. Address: 15519 Dawnbrook Drive, Houston, Texas 77068. 281.537.1200. Open M-F 9 to 5 (CST).

About Rainmaker Marketing Corporation...

Rainmaker Marketing Corporation, Inc. is a B2B consulting firm built from the ground up by Clint Lovell on the premise of providing market feasibility studies (hence the name Rainmaker Marketing) to the senior housing development industry for projects seeking FHA/HUD-insured financing. Rainmaker started business in 1993, though its roots extend back to 1988. In the intervening years, the depth of services has been enhanced to provide a complete continuum of due diligence documents and consulting services.

Today, Rainmaker has completed literally hundreds upon hundreds of consulting assignments on projects in the housing, health care, retail, commercial office and hospitality industries throughout North America - including projects in 45 of the 50 states, Canada, Mexico and the Caribbean Basin. The resulting reports and consulting services provided by Rainmaker have resulted in billions of dollars in new development. Our clients have included publicly-traded companies, privately-held companies, government bodies and not-for-profit organizations.

When Should You Be Talking To Rainmaker?

If you will be seeking construction financing from a third-party lender (or investor) with whom you do not already enjoy a previous underwriting relationship, then you need to be talking to Rainmaker. If you have insufficient equity or assets necessary to sustain a construction mortgage financing for a new construction project, then you need to be talking to Rainmaker about the alternatives. If you have doubts, Rainmaker is the firm to turn to when it's time to deal with them.