Assisted Living Consultants - Continued...

Continued from previous page...

The structure of the project feasibility study (as it applies to senior housing assisted living project proposals) developed by Rainmaker is subject to the following considerations:

1. Incremental Equity Gain Segregation.  A ten dollar term that relates to the ways in which commercial income-producing properties create equity seemingly "out of thin air".  The incremental gains occur upon completion of construction and development activities (the third highest incremental gain), the period of time that corresponds to the run up to stabilization of the operating program (the second highest incremental gain) and the time period after construction and development activities have been completed and the property attains its maximum ongoing operational capacity (the highest incremental gain).  These gains can be "tagged" and assigned to specific tranche investors in the real estate finance continuum.  The feasibility study must define this in terms of the expected operating capacity and the expected valuation approach and condition precedents.  This means that there are really two (2) points in which to assign risk tranches in terms of the at-risk equity financing opportunities.

2. Project Financing Opportunities - Development Phases.  Basically, all commercial real estate projects can in fact obtain at-risk equity financing as early as the pre-construction phase.  Our approach is to create an investor syndicate that covers the pre-construction phase or construction phase activities.  Typical commercial underwriting requires these projects to be developed and stabilized within a three (3) year period, or they do not qualify for construction mortgage financing loans - the key to making the leveraged equity investment work.  Each of these pre-construction phase syndications or construction phase syndications (has to be one or the other and is never both) can then be tied to a finite holding period window (obviously, if things go better than planned, the development period is reduced and if unexpected events require more time, then a given syndicate may in fact exceed the three (3) year window - but it is not an intentional event - it is an event that happens after the underwriting has been completed and the project financing provided.  Every development phase syndicate will have a take-out financing syndicate.

3. Take-Out Financing Syndicate.  This syndicate steps into the deal once the project obtains its maximum operating capacity and provides the development/construction syndicate with take-out financing and a finite profit level.  Accordingly, these are the most important syndicates to be formed for a senior housing program.  Syndicates can cover the equity and real property sides of the transaction.