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Syndications are the real opportunity in a recession that can beat the odds and senior housing is the industry to do it with...

 

 

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:

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.

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.

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.

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.

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.

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.

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

281.537.1200  

consultants@rainmakermarketing.com

© Copyright, 2009 Rainmaker Marketing Corporation, Inc.  All rights reserved.

 

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...

Read our latest whitepaper on capitalization strategies and commercial real estate syndications that provide developers with a new arsenal of capital finance weapons they can deploy in the middle of this recession.  Click here and download the whitepaper free! 

 

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