Hotel Development Equity Financing - Tenants-In-Common Syndications

Hotel, motel, hostel...  It doesn't make a difference.  If you are the sponsor of a development program and are seeking to put together a hotel development equity financing package, then Rainmaker Marketing Corporation is a "must" on your list of things to do in order to close on a fat equity financing syndication.  In the recent past, developers seeking hotel development equity financing packages have had to use the private placement offering approach.  In general, the private placement offering approach has not fulfilled its promise because:

• Cost.  The cost of drafting, review and revisions can, in many cases, easily exceed $100,000 - just for the document; never mind the syndication costs.  This is further compounded by a lack of distribution capacity at the lower end of the private placement offering spectrum; and

• Opportunity Dilution.  The private placement offering of securities can only be undertaken by the offering sponsor and licensed investment bankers.  Investment bankers tend to use the same means and methods over and over again to make money.  Whether you make money or not is a nice side benefit, but not a requirement of the deal as far as many investment bankers.  You can find your interests have been diluted to a minority shareholder status in a privately-held company; the worst of all worlds - you are responsible for the outcome, but not able to cash in on the success you generate.  We are changing this fundamental dynamic in favor of the developer/sponsor/promoter interest.

The hospitality industry is in desperate need of an opportunity to create financial investment leverage in every new development program and Rainmaker Marketing Corporation (through its realestateplayssm affiliate) leads the way with a syndication engine specifically designed with the financing of commercial income-producing property development programs firmly in mind.  

The due diligence documentation and disclosures are on par with that of a private placement offering, but our approach to funding the development of hospitality projects creates a unique opportunity for developers:

• The minimum syndication is always $2,500,000 (net proceeds being $2,300,000) or the imputed equity gap, whichever is greater; and

• Developers are free to undertake other financing activities the whole time the syndication is listed on the syndication platform.  If the syndication does not meet the minimum sales target then the developer is not obligated to close escrow and accept the financing; and

• Once the syndicate has been formed (the minimum sales target having been achieved) the sale of syndication units continues until there is no further interest (no sales recorded for 90 consecutive days) or the entire issues is sold-out (syndication sales in-hand equal to the sum of the total project development budget plus the pre-computed profit spread that has accrued in favor of the initial syndication sales participants - those participants who were part of the original syndication); and

• A sell-out results in:

  • Retirement of all mortgage financing loans outstanding; and

  • Retirement of all other liabilities other than the accrued payroll liabilities; and

  • Developer has the condition precedents to operate the emerging business as a monopoly.  (Whether the developer operates the business as a monopoly or not is not within our purview).   

Development funding never looked quite so strong for the hospitality industry.  Get yours today.