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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.  Contact RMC today and take advantage of a free initial consultation.

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?

Rainmaker Marketing Corporation can trace its history back all the way to 1989.  Incorporated in 1993, Rainmaker Marketing Corporation has evolved over time into a full-service business to business consulting firm.  Rainmaker Marketing Corporation’s initial specialization was in issues and documentation needs corresponding to the capital funding cycle for commercial real estate development projects with a primary focus on senior housing and health care related properties.  Today, Rainmaker Marketing Corporation serves all types of commercial income-producing property development program financing requests with a combination of feasibility studies, due diligence services, structured finance consulting and a focus on commercial real estate syndication services.  Rainmaker Marketing Corporation’s service area includes all of the continental United States, Canada, Mexico and the Caribbean Basin.

281.537.1200

Email: consultants@rainmakermarketing.com

Commercial Real Estate Development Finance, Due Diligence Documentation, Syndication & Project Management Consulting

15519 Dawnbrook Drive, Houston, Texas 77068.

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