|
| | Commercial Real
Estate Construction Loans - Continued...
Most commercial real estate
loans provide for terms that force the developer into the position of -
more or less - working for the bank that makes the loan because of the
cross-collateralization requirement, cross-default requirement and
personal guarantee requirements.
By accepting the terms of the
lender, more often than not, the developer has to pledge all of this
assets - including any future income those assets may generate - to the
lender. The developer becomes a defacto servant of the bank.
The bank decides when the developer can expand, how fast the developer can
grow his/her company and what cash flow the developer will actually be
entitled to receive if the deal works out.
If this is something that you
find unacceptable, then Rainmaker would like to suggest that you consider
your alternatives, including:
 |
Syndications. A
real
estate syndication will provide more cash into the transaction
without necessarily causing an equity dilution. The additional equity capital may entice the lender
to make the loan without a personal guarantee.
|
|
Private Placement
Offering. A private placement offering is sometimes used to
raise additional equity. Rainmaker suggests this route be taken
in cases where there are local, state and/or federal investment
incentives the proposed project may in fact qualify to receive.
By using the incentive as the basis of the transaction, the prospect
for a dilution of the developer's equity ownership interests can be
dramatically reduced, thus increasing the developer's financial
investment leverage far beyond what would otherwise be possible.
Check with a Rainmaker consultant on this issue as an entitlements
review takes a bit of time to fully document.
|
Time to talk to someone who
has some real answers; answers you can use to make your project work for
you. Call Rainmaker today and ask for a free initial consultation
and demand answers.
| |
|
|
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? |
|
