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In today's market, there are
quite a number of issues that must be addressed by the developer's retirement
housing capital funding plan proposal. Most retirement housing capital
funding plan proposals fall far short of the expectations of the institutional
investor market. This means the developer (or owner/operator or sponsor,
as the case may be) typically attempts to make up for these shortcomings by
shotgunning the capital funding plan proposal to every lender the developer can
find.
This may work in some settings,
but the shotgun approach should be avoided at all costs. A better way of
making the capital funding plan
proposal work for the developer is to start with a plan that answers the four
(4) key business deal points that are endemic to the senior housing development
industry:
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Due diligence summary.
A comprehensive due diligence presentation must be available. This is
almost a horse beat down into a rug, but it still comes up again and again
as a deal-killer.
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Capital funding
elements. All sources of funding must be identified and locked
in. Those that are not funding in the near-term have to be accounted
for and ready explanations as to the condition precedent to funding will be.
-
Order of funding & order
of retirement. Everyone wants to know when their money is needed and
when they can expect repayment. Your proposed capital funding
plan must lead everyone home before they will even consider writing a check.
-
Project team. You have
to have a credible project team to support the key areas of property
management operations, development management, construction, design,
engineering and capital finance.
If you are seeking project
financing for a senior living project, then it's time to talk to Rainmaker
Marketing Corporation about a commercial
real estate syndication. A commercial real estate syndication goes
through the same steps (in terms of due diligence) but its applicability is
dead-on and the syndication route provides an added layer of flexibility to your
project's capital stack. It doesn't get much better than the commercial
real estate syndication approach. The syndication approach provides the
following benefits that are not typically found in a private
placement offering of securities:
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Enhanced liquidity.
When you sell your interest is up to you and the commercial real estate
investor market and is a function of sale price, terms and value. You
control all three layers.
-
Exclusivity. Commercial
real estate syndications only become binding if they are successful in
selling out the minimum subscription requirement. All private
placement offerings are done on an exclusive basis. Once you start,
you're married.
-
Timing. The market
controls the timing. This is both good and bad, but it is good overall
because the market (worldwide) is waiting to see the next transaction.
Make your project an attractive investment target and the resulting
fractional sales have the chance to really take hold.
-
Costs. The costs are
typically less because we do not have a private placement offering
memorandum to create (the lawyers typically charge between $25,000 to
$250,000 to draft a private
placement offering memorandum).
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