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Sale/Leaseback
Project Construction Financing & Alternative Development Funding
Programs - Continued...
Getting
sale/leasebacks to work for you involves an understanding of what else can
be done to finance your project and how the sale/leaseback
new construction project financing programs are contrived and what the
pitfalls are for this type of financing. The key issues to remember
are:
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You
pay a fee to have the review done and this means the REIT has the
power to control your behavior. Once you "get
pregnant", you are less likely to walk away from the negotiating
table, so the negotiations are handicapped and moral hazards may
abound. |
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The
use of working capital is never part of the deal, so you will need to
provide this in your budgeting. |
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The
equity gain created in the property over time by the developer's
continuing operations is lost to the REIT. High leverage comes
with a very high price. |
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The
development fee may or may not be paid. Be careful and
understand what you are getting yourself into as the deal almost
always ends up being the development fee is "credited" and
not paid. |
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If
you have a good project team, then sale/leasebacks work well for
getting started and proving you can deliver. |
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Due
diligence is important. These are publicly-traded companies, so
a complete
due diligence presentation is a must. |
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Sale/Leasebacks
work for continuing operating activity projects. You can use
them for hotels, senior housing, apartments, retail properties and
mixed-use, but not for master-planned communities and tract housing
construction programs. |
For
more information on how to make an application, complete the due diligence
cycle or get your program reviewed, contact a Rainmaker Marketing
Corporation representative today.
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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? |
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