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Construction
Phase Commercial Real Estate Project Financing - Continued...
Construction
Phase Commercial Real Estate Project Financing discussion continued from
Page 1.
What
activities are not typically financed at the pre-construction phase?
Hereinbelow
we group them into broad categories:
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Zoning.
In almost all cases, institutional investors will automatically
reject any project funding proposal that involves a zoning fight.
Costs for obtaining zoning and permitting necessary to allow
construction to begin are viewed as critical path items.
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Environmental.
If the project proposal requires more than the filing of a complete
Environmental Phase I study, the institutional investor will require
the developer/sponsor to fund the costs associated with
environmental reviews and remediation expenses.
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Site
Control. Site control is a fundamental requirement for
institutional investor consideration. If you don't have
control of the site, you don't have control of your transaction and
institutional investors will drop the proposal without further
consideration.
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Market
Feasibility. The project must have an arm's length market
feasibility study that
substantiates the proposed project and institutional investors will
not fund these costs.
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Financial
Feasibility. The developer/sponsor group is typically required
to complete a pro
forma financial presentation regarding the project's anticipated
operating and non-operating cash flows. Obviously, it would be
very difficult for anyone to judge the merits of a transaction that
has no financial feasibility underpinnings.
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Business
Plan. The developer/sponsor must have a strategic
business plan that clearly demonstrates the efficacy of the
proposed scope of operations and the ability of the
developer/sponsor to provide management and reporting
transparency. Institutional investors will demand to see the
strategic business plan as a condition precedent.
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This discussion continues on Page
3.
About Rainmaker...
Rainmaker Marketing Corporation is the
brainchild of Clint Lovell, a seasoned business finance consultant with
more than 20 years experience. Rainmaker is a B2B consulting firm that was incorporated in 1994 for the
purposes of providing market feasibility studies to businesses
seeking capital financing in the commercial and institutional
markets. Today, Rainmaker Marketing Corporation provides a
comprehensive array of due diligence documentation services for most
major industry groups. Rainmaker Marketing Corporation also
provides syndication management services for fractional commercial
real estate syndicates that can provide mezzanine gap funding for
income-producing commercial property developments as early as the
pre-construction phase. Rainmaker Marketing Corporation serves
clients throughout North America and the Caribbean Basin. Rainmaker
Marketing Corporation, Inc. 15519
Dawnbrook Drive, Houston, Texas 77068
© Copyright,
2009 Rainmaker Marketing Corporation, Inc. All rights
reserved. |
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A
Few Words on Change...
Clint
Lovell, the Managing Principal of Rainmaker, has written a book on the
subject of capitalism and the creation of a new economic society that
ends our reliance on taxation and retires all of our national
debt. The book is called The Fix and you can order an
advance copy now at www.the
fixbookstore.com. Order today and we'll pay your shipping,
saving you some real change. |
What's
New...
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