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In the commercial real
estate development finance market, private placement offerings represent
the most common route to funding out capital funding plan proposals for
developers who are not interested in commercial
real estate syndication plans services from Rainmaker.
Most private placement offerings are for debt securities, but equity
floats are becoming more commonplace due to the impact of the Internet on
the syndication process. The net result is a dramatic increase in
the amount of funds raised using the exemption allowed under the
Securities Act of 1933 (15U.S.C.§77a, et. seq). Each new
private placement offering issue requires the issuer (that's you if you're
the developer or sponsor) to provide a
private placement
offering memorandum. This
section of the Rainmaker corporate web server provides some basic answers
to questions regarding the filing requirements, due diligence and
expectations the issuer (that's you) must understand in order to access
and use this powerful tool that accounts for more than half of all capital
funding plan proposal financings in the United States. Links are
used to provide more detailed explanations of certain terms and the
discussion of the issues, risks and limitations of the offering process on
a more in-depth basis. Please bear in mind that there are a variety
of complex legal issues in play that should be the basis of discussion
between the issuer and the issuer's legal counsel. This information
is not legal advice and you should always consult legal counsel regarding
a private placement offering. Commercial
real estate fractional ownership syndications offer a less complicated
route (in most cases). The law
allows for the issuance of debt securities, equity securities or hybrids
such as loan notes that are convertible into equity securities. This
means you can use this process to fund a construction loan, a permanent
loan, a mezzanine loan, a bridge loan, common equity or preferred
equity. If you are selling real property interests (e.g.: funding a TIC
plan) then this process is not the process you should be using. The
due diligence requirements are extensive in nature. Generally
speaking, the more due diligence documentation you provide in the offering
document, the better off you will be because the offering document is
prepared for the issuer's benefit (that's you). For the typical
commercial real estate development financing, you need to provide complete
disclosures pertaining to:
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The securities being offered.
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What
the funds will be used for once the issue is fully subscribed.
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The
issuer's history and legal capacity to enter into the subscription
agreement.
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The
management experience of the officers and keyman managers of the
issuer.
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The
particulars of the proposed project's development, construction,
marketing and operating attributes, requirements and expectations.
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The
third-party due diligence reports that have been prepared in support
of the issue.
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The key contracts,
services agreements and related matters that bear on the issue.
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The
rights and remedies subscribers will have once their investment is
accepted.
For more information
contact Rainmaker.
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