	RAINMAKER MARKETING CORPORATION 281.537.1200

Non-Recourse Senior Housing Construction Loans - Continued...

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Rainmaker Marketing Corporation looked at this set of circumstances and decided to do something about it. The result of our review and analysis is to create a five-point capital financing program approach for senior housing projects (and all other commercial real estate industry development financings) that is intentionally designed to create the conditions precedent to acquiring a non-recourse construction mortgage financing loan for the project's construction and initial pre-stabilization operations capital expense.

The key issues (above) are then exposed to a five-part approach that includes capital funding from:

developer seed capital contributions. These contributions are subject to withdrawal if the project in fact attains a minimum sales threshold via its condominium association sales plan and tenants-in-common fractional real estate sales plan (below).

capital contributions provided by a condominium sales plan. The condo plan's purpose is not to sell housing for personal occupancy, but to provide a convenient means of acquiring the capital financing for the last month of the construction period. The objective here is to increase financial investment leverage - which can only occur if the percentage of space devoted to the condominium sales plan is less than the loan-to-cost ratio of the total capital (e.g: if the condo plan is projected to require 12% of the total project space plan, then the net sales proceeds should be greater than 12%), thus creating positive financial investment leverage for the benefit of the investors and the developer.

The key issues (above) are then exposed to a five-part approach that includes capital funding from:

capital contributions provided by a fractional tenants-in-common commercial real estate syndication for the portion of the remaining project space plan that is not part of the condominium sales plan. Tenants-In-Common ("TIC") plan syndications allow the developer to obtain capital on terms that are not otherwise possible - those terms including the ability to acquire funding as early as the project's pre-construction phase.

statutory entitlements that allow the developer to use some form of a tax-advantaged investment incentive (i.e.: not a benefit that requires an application and award process) to enable the developer to enter the capital markets and purchase credit enhancement for the benefit of the construction lender as an additional inducement to issue the construction loan on a non-recourse basis and/or buy-down the construction loan interest rate.

The final piece is the loan itself, but now we have a basis for projecting a loan that would meet the market-test requirements for making a full-recourse loan that has cross-collateralization requirements into a non-recourse loan by providing an incentive to the lender (the purchase of credit enhancement) and providing additional capital contributions that would allow that to happen.

Bear in mind that senior housing is the only industry where you have the opportunity to sell a portion of your living unit inventory twice: once to the real estate syndicate investors and once to the future entry-fee resident. This powerful difference is what makes the difference between up cycles and down cycles in the general economy. You can move a transaction forward - even in a down economy - and make incredible profits along the way. You just have to plan it right and that's where Rainmaker comes into the picture. Let Rainmaker help you plan a winner.

Do You Know The Secret?

When it comes to commercial real estate development finance, it doesn't matter whether you need to raise $5 million or $50 million, the out-of-pocket costs, advance fees and project due diligence costs will always require the same relative investment dollars the promoters have to fund. Do you know what that amount is? Do you know the Secret?

Rainmaker Marketing Corporation can trace its history back all the way to 1989. Incorporated in 1993, Rainmaker Marketing Corporation has evolved over time into a full-service business to business consulting firm. Rainmaker Marketing Corporation’s initial specialization was in issues and documentation needs corresponding to the capital funding cycle for commercial real estate development projects with a primary focus on senior housing and health care related properties. Today, Rainmaker Marketing Corporation serves all types of commercial income-producing property development program financing requests with a combination of feasibility studies, due diligence services, structured finance consulting and a focus on commercial real estate syndication services. Rainmaker Marketing Corporation’s service area includes all of the continental United States, Canada, Mexico and the Caribbean Basin.

281.537.1200

Email: consultants@rainmakermarketing.com

Commercial Real Estate Development Finance, Due Diligence Documentation, Syndication & Project Management Consulting

15519 Dawnbrook Drive, Houston, Texas 77068.