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| | Senior Living
Project Financing, Investing, Lending & Fundings...
Senior housing developers
seeking senior living
project financing for a to-be-built senior housing project now have the
option of  funding capital costs using the commercial
real estate sales syndication method. Most developers have no idea
of what the potential impact the syndication approach may ultimately provide
to the senior living project financing paradigm.
Unlike
mezzanine
loans and bridge loans that, for
the most part, are only available once the construction is slated to begin,
in many cases the commercial real estate sales syndication approach can be
introduced as early as the pre-construction phase. This creates the
opportunity for the sponsor (developer and/or owner/operator as the case may
be) to dramatically increase financial investment leverage and reduce the
sponsor's subjective investment risk. Mezzanine loans and bridge loans
increase financial investment leverage for the nascent developer, but will
substantially increase the sponsor's investment risk exposure to an almost
intolerable level resulting in the lender requiring full recourse (joint and
several, personal and corporate) for the entire term of the loan. In
effect, the mezzanine lender and bridge lender are lending you your own
money and charging you for the privilege. This makes you a sucker.
On the other hand, the
commercial real estate syndication approach provides some interesting
benefits you should take notice of, to wit:
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The transaction is about
the income generated and allocated. How you syndicate has nothing
really to do with how you allocate income. The TIC
Plan approach gives you incredible flexibility in financing your
construction program that you just can't find anywhere else. |
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The transaction has a
floor and significant protections for the sponsor/developer. If
the TIC Plan sales program doesn't hit the minimum threshold
requirement, the sponsor walks away owing Rainmaker nothing. |
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The reduction of
subjective investment risks can be accomplished using entitlements - a
structure more attuned to the syndication approach than the lending
approach. |
So, this leads us to the
discussion of timing. When do you need the financing? Has the
project gelled to a point where it can be syndicated in the market or are
too many elements still missing? Do you know? Talk to a
Rainmaker and find out.
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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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