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Living Facility Mezzanine Loans & Alternative Financing Programs For New
Construction - Continued...
Continued
from previous page...
Rainmaker
Marketing Corporation realized this was going to only be fixed by a consulting firm that focused on
the financial consequences of the financing and the alternatives that may
be used to dictate a different set of outcomes or terms. Our analysis
found the capital finance structure of a given transaction is where the entire
war would be won or lost. We created a 5-point plan to help senior housing
developers (including independent living facility developers):
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Developer
Contributions & Advances. This capital is used differently than has been the norm
for the past 25 years. Today, we use it to complete all due diligence
activities (market, finance, operations, construction, land development,
engineering, design and entitlement) and market their own equity syndication
that results from the program. The clear benefit being the creation
of the circumstances that would allow the developer to withdraw the
developer's capital and obtain non-recourse financing. Developer
contributions become developer advances.
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Entitlements
Financing. Does the project qualify for the bonus depreciation expense
allowance? What about LIHTC? Enterprise zone credits? What
about New Markets Tax Credits? We focus on those investment incentives
that are authorized under statue and not subject to an application,
allocation and award process (too risky and most award cycles take too long). Because
these benefits do not vest until the project is placed in service, the
utility is limited to purchasing credit enhancement for the construction
loan and/or buying down the interest rate.
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Condominium
Investment Plan. A portion of the units (or portion of the
overall space plan) are segregated into a condominium plan - not
for the purposes of selling housing to the public to occupy, but
rather the sale of condominium spaces for the purposes of
creating commercial real estate investment opportunities.
The goal with the condominium plan is to provide net sales equal
to the total capital expense of the last 45 to 60 days.
This application reduces the construction mortgage financing
loan's loan-to-cost ratio and makes it even more appealing to
the lender.
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Fractional
Tenants-In-Common Real Estate Syndications. These
syndicates are used strictly for creating commercial real estate
investment opportunities for the investing-public while
providing financing to the project as early as the
pre-construction phase. This is your big gun. It's
less costly to syndicate than a private placement offering and
the proceeds are made to be readily available with only a few
common-sense restrictions. Now you can access enough
equity to induce a commercial lender into making the
construction loan on a non-recourse basis.
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Construction
Mortgage Financing Loan. The final piece is a
lower-than-market loan-to-cost ratio construction loan that can
be non-recourse to the developer.
Now
you have connected a transaction where the developer can obtain
incredibly high financial investment leverage - greater than 100%
per annum.
All
this from one consulting source - get your own Rainmaker. Call
us today.
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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? |
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