Home  |  About Us  |  Search  | FAQ  | Contact Us
Commercial Financing
Obtaining Capital
Instant Site Analysis
Competition Surveys
Due Diligence Services
Pro Forma Statements
Syndication Programs
Capital Funding Plans
Senior Housing
Get a Negotiator
Tax Credit Financing
SEO Internet Marketing
EB-5 Private Placements
Past Assignments
Table of Contents		  

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

 

  

Pre-Construction Phase Project Financing...

Obtaining pre-construction phase project financing in the institutional market is no cake-walk; outside of the EB-5 non-recourse joint-venture private placement program approach and we recommend consideration be given to selling real property interests (via a qualified real estate syndication plan).  In most cases, qualified institutional buyers (the "life-blood" of institutional investment funding - "QIBs") are not going to provide pre-construction phase project financing because the pre-construction phase has too many intrinsic risk elements that haven't been properly "nailed down" by the developer/sponsor group, so the exposure is (therefore) too high.  Rainmaker Marketing Corporation receives a lot of phone inquiries relating to the golden question of, "where does the equity financing come from?"  Every project sponsor and/or developer seeks to make those pre-development phase dollars go further and create the kind of financial investment leverage that is essential to the complete capital funding plan of today's commercial real estate project.  The syndication approach provides the tools to allow the developer (in certain cases) to access non-recourse construction financing by increasing the equity capital to an amount sufficient to induce the lender to make the loan on a non-recourse basis.

The answer lies in a multiple prong type of approach that requires pain-staking due diligence be completed regarding all aspects of the capital funding cycle.  One of the most intriguing methods of attracting institutional investor support is to tie the institutional investor's investment to some type of entitlement that does not require the project to be materially successful over the long-term operating window in order for the institutional investor to cash in on their investment.  Examples of this include:

Grants - a pending grant can be assigned to the institutional investor as the investor's compensation guarantee.  This allows the investor to step outside the deal even when things don't look quite as rosy as you forecasted.  However, this doesn't exactly fix the issue as the direct results is, more or less, the same as "stealing from Peter to pay Paul".

Zero-Coupon Structured Syndicates - the most likely candidate for providing non-recourse pre-construction phase financing is the zero-coupon structured fractional ownership commercial real estate syndicate, because:

The zero-coupon approach provides medium term financing (typically, a 7-year holding period) so it is "patient capital" that allows the developer enough of a margin of operations to complete development, commence operations and stabilize the property before retiring the syndicate's position.

The zero-coupon approach provides the opportunity for the developer to demand (and get) a waiver of the dreaded recourse (joint and several liability) and cross pledges associated with the development mortgage loan funding by suppressing the LTV Ratio to a point where the lender can be induced to make the mortgage loan on a non-recourse basis.

The zero-coupon approach can be used to provide enough at-risk capital so as to allow the developer to withdraw the developer's seed capital and still qualify the project for non-recourse mortgage financing.  The key goal here is to allow the developer to take the developer's seed capital stock and immediately use it to commence the due diligence investigation process for the next project and market.  Rainmaker Marketing Corporation's approach focuses on creating the conditions precedent to the classic "bootstrap rollout" and this is the ultimate goal of every commercial income-producing property developer.

This discussion continues on the following page.

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

281.537.1200  

consultants@rainmakermarketing.com

© Copyright, 2009 Rainmaker Marketing Corporation, Inc.  All rights reserved.

  

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! 

 
Home  |  About Us  |  Search  | FAQ  | Contact Us