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| | Commercial Real
Estate Acquisition Loans...
Sourcing
commercial real estate
acquisition loans can be a time-consuming and frustrating process.
Most commercial real  estate acquisition loans are provided by FDIC-insured
institutions and the federal banking system laws have a tremendous impact on
what you can and cannot realistically expect lenders to provide. This
means we have to consider alternative sources of capital and transaction
structures to get the job done because there is no longer a lender of last
resort.
Acquisition financing for
commercial real estate has become an extremely competitive business and the most
sought-after capital investment will always be in the form of joint-venture
equity capital. Today, the big players entering the commercial real estate
finance arena now include:
 | Pension
Plans. Pension plans continue to search for a higher riskless return in
their quest to fund their liabilities and rebalance their portfolios.
The problem of underwriting reviews that take far too long remains a real
issue that makes pension plans worth contacting, but not worth investing an
inordinate amount of time and/or expense in cultivating. |
| Insurance
Companies. Insurance companies are clawing their way back into the
market after having abandoned the market during the great financial debacle
of 2007-2010. Today, the larger (AAA rated) companies are beginning to
provide investment capital for acquisition loans, albeit with very low LTV
ratios. |
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Hedge Funds. The run
and fun in the capital markets is over and there are a lot more funds invested
with the myriad of hedge funds than there are realistic opportunities for
hedge funds to invest these funds in on a short-term and/or rolling basis.
This has caused many fund managers to push the envelope of investment
activities and this has created a strong new level of interest in commercial
real estate, acquisition financing, and related activities. One of the
by-products of this push has been a steady increase in valuations for projects
and properties that effectively destroy the equity yields due to competition.
This raises the specter of renewed investment in development stage projects as
more and more funds compete for fewer and fewer stabilized projects that can
be traded within a reasonable window. |
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Foreign Investors. The
amount of capital available for investment in the United States commercial
real estate markets has never been greater, with more and more foreign
investors (individual and institutional) seeking opportunities and investment
quality as the economies in Europe continue to struggle and capital investment
remains moribund. This condition has also contributed to the dramatic
increase in property valuations and also contributes to the increasing
availability of at-risk capital for development projects across the spectrum.
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Rainmaker
Marketing Corporation is the company to turn to for answers to the hedge fund and foreign
investor due diligence and submittal processes. The key is
understanding the limitations.
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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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