Multifamily Housing Bridge Loans, Mezzanine Loans & Alternative Financing Programs - Continued...

Tenants-In-Common ("TIC") plan commercial real estate fractional ownership syndicates are a group of real estate investors from the investing-public who commonly own a given commercial income-producing property.  Sales proceeds from TIC plans can be put to work as early as the pre-construction phase and that makes TIC plan syndicates far more valuable than a bridge loan for a multifamily housing development deal.  TIC funds can be programmed to provide for certain prerequisites based upon the realities facing the developer.  These realities boil down to the carrying costs of the project and the development program when the pre-sales program is continually extended because the sales targets are being exceeded.  The developer must provide sufficient seed capital to:

	complete all required due diligence studies - market feasibility, financial feasibility, architectural, environmental, engineering, construction, valuation, operations and site entitlement.
	executed all required services agreements and construction contracts.
	execute all required documents necessary to support the capital financing.
	provide marketing support (advertising and administrative costs) for the fractional TIC plan syndication and condominium association proceeds.

Technically, a bridge loan is employed as a bridge from one commercial property state to another - the most common being a stabilization of the associated operating program of the multifamily property from where it begins (when placed in service) and when it reaches its maximum sustainable operating capacity.  

A mezzanine loan is typically what is used to provide additional project funding that is subordinated to the construction lender's claims on the assets.  The results of this fundamental requirement - because no lender is going to allow a mezzanine loan to be treated pari passu with the construction loan - become apparent when the developer finally realizes that the mezzanine loan is not a non-recourse loan and has a cross-collateralization requirement that effectively tied down all of the developer's assets into a single transaction.  Certainly it is a set of affairs to be avoided by developers seeking to increase their seed capital financing investment leverage.

To learn what we can do to help your financial investment leverage issues, talk to a Rainmaker Marketing Corporation consultant today.  It has to rain, but not everybody has to get wet...