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

 

  

Senior Living Project Financing - Continued...

Do you have all the necessary due diligence reports for the phase of capital financing you are seeking to perfect?  What happens if the mini side is the limit of sales you can realistically make over an orderly syndication marketing period?  This page answers some of the structured finance questions all developers and/or owner/operators of senior housing development projects face.

The Rules of the Road are:

Pre-Construction Phase capital financing of a given senior housing project must be tied to specific investment incentives to maximize the odds of success.  The Pre-Construction Phase investment faces too man unknowns to warrant capital investment by any party other than the developer.  Investment incentives (tax cuts and tax breaks, grants, loan guarantees, etc.) provide an alternative means of raising capital while not facing a diminution of the total opportunity.  To make the Pre-Construction Phase capital investment a reality, the Construction Phase capital funding must be "on the table" - meaning the financing commitments are there including the financing that will serve as the Pre-Construction Phase take-out.

Construction Phase capital financing for senior housing development projects can also be tied to investment incentives to maximize success.  Bear in mind that if you go the real estate syndication route, you cannot use the FHA/HUD Loan Insurance programs for your construction and permanent financing.  As with the Pre-Construction Phase capital financing, the Construction Phase capital financing must include the takeout for the Construction Phase (most construction loans provide a permanent loan or mini-perm loan feature that will suffice) so the Construction Phase capital investors can see how they can exit the transaction.

This brings us to our first supposition:

Capital funding requires the senior housing development sponsor to undertake the entirety of the capital financing program in reverse...

Everyone wants to know the order of funding and the order of retirement.  Lenders want to see who is taking them out, the conditions of the takeout and how their (the lender's) interests are being safeguarded.  The commercial real estate syndicate finance approach provides the opportunity to reduce the risk exposure by any and/or all of the following:

Loan-To-Cost Ratio Reduction.

Assignment of Investment Incentives.

Increased Risk Capital.

All of these measures effectively provide the means by which the risk exposure of the lender can be enhanced to the lender's advantage.  This allows the lender to issue the all-important loan commitment that is the key to moving the project beyond the beginning of the Pre-Construction Phase.

Take the time to find out more about what can be done to make your project a financial windfall opportunity.

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! 

 
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