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In today's market, commercial
real estate construction lenders are setting a whole new level of
hurdles the commercial real estate developer must broach in order to
qualify the project and entice the commercial real estate construction
lender to issue a bankable financing commitment or close the loan. As
with everything else in a market economy, when the costs of acquiring
a commodity become too high (and construction financing is a commodity
and an investment product) then alternative funding programs and
policies can be implemented to meet the demands of the market. Rainmaker's
approach is to utilize the realestateplays.com
syndication platform to provide the alternative financing terms the
market so desperately needs today. In point of fact, the
realestateplays.com syndication approach may be used to replace the
mortgage financing of the proposed project altogether with an equity
product designed to:
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Reduce the amount of
debt capital (loans) that would otherwise be required to fully
capitalize a development-stage commercial income-producing
property.
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Increase the financial
investment leverage the developer (or sponsor, as the case may
be) would potentially enjoy by reducing the long-term capital
financing (the permanent mortgage) required.
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Fill gaps in the
pre-construction phase capital
funding plan and/or construction phase capital funding plan.
There are other specific
terms and conditions that are set forth in the real property purchase
agreement between the developer/seller and the syndicator/buyer.
All syndications are subject to the following general conditions:
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Minimum Syndication:
must be at least $2,500,000.
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Unit Size: each real
property fractional ownership interest in an initial syndication
shall be $25,000.00. This means the initial syndication will
be for not less than 100 units.
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Net Proceeds: each
$25,000 unit provides $23,000 in net syndication proceeds
(excluding units held by the syndication platform).
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Initial Syndications:
syndications may be undertaken at the pre-construction phase,
construction phase or post-construction phase and each initial
syndication shall be a modified Dutch Auction of units to be
offered over an initial 90-day market window. If the
syndication sells at least 100 units, then the
developer/sponsor/seller must close on the financing.
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Follow-On
Syndications: each initial syndication (at the pre-construction or
construction level) that is in fact successful will create a
post-construction phase syndication that serves as the take-out
for the initial syndication. The syndication will continue
until the number of units sold equals the total development cost
of the project (rounded - actual partial amounts must be paid by
the developer).
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Units Held by
Syndication Platform: the syndication platform (Real Estate Plays
Dot Com, LLC) will receive from the developer/sponsor (or
"Seller") seven (7) fractional ownership interest units
upon successfully syndicating the first 100 units of the
syndication. Moving forward, the syndication platform will
receive 7% ownership of all units.
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Developer Cash-Outs:
developers/sponsors cannot cash out until the fully-developed
property is brought online.
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Follow-On Syndication
Schedules: all follow-on syndications continue until the
syndication is completely sold out or the auction listing
continues for any 90 day period without any units being acquired
by investors.
There are additional rules
and issues that must be considered by the developer before a final
decision on the funding objectives of the project have been
made. These issues include legal/organizational matters,
opinions of counsel, distributions plan amendment, type of entities
allowed and operational and development matters and
contracts.
Contact a Rainmaker consultant
today and ask about the alternatives that are available for the savvy
developer.
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