	RAINMAKER MARKETING CORPORATION 281.537.1200

Strip Mall Financing - Continued...

Continued from previous page...

RMC has provided commercial real estate developers with consulting solutions for over twenty years that focus on the due diligence documentation process as a means to creating an end-game of a non-recourse construction loan that does not also include a cross-collateral pledge of the developer's other assets. The reasoning here is that developers are really promoters of commercial real estate investment opportunities for the investing-public, so the more project opportunities the developer can effectively, efficiently and responsibly provide, the more likely the developer will be able to grow at the developer's highest sustainable rate and the resulting output will be multiple projects (including strip mall financings) for the investing-public to review and make an investment decision upon.

But you are worried about moral hazards...

Moral hazards - and the potential for creating them in commercial real estate development projects - can be (cet. par.) managed by requiring the developer to remain within a due diligence documentation envelope that has been designed by Rainmaker Marketing Corporation to eliminate the opportunities for moral hazards to enter into mix. This means the budgets for the construction program, the marketing program and the operating program have to be carefully calculated because the penalty for a shortfall falls on the developer (all additional capital requirements being first satisfied out of the development management fee income and other cash flows the developer would be otherwise scheduled to receive) before there is a call for voluntary additional capital contributions to the other equity security holders.

But you are worried about construction cost overruns...

Rainmaker recommends that all new commercial real estate development companies utilize the design/build construction contracting approach because:

	It eliminates second dollar change order cost exposure of the developer and the other stakeholders in the project; and
	It fixes the price of construction to be the responsibility for the contractor to meet (cet. par.) and all cost overruns not specifically approved by the owner (or developer in this case) will be the financial responsibility of the contractor save Acts of God, war, weather delays and related matters; and
	It allows for more efficient budgeting and for some documentation cost savings to be realized in the critical pre-construction phase of the project's development stream.

The end-result is the creation of a protection blanket that allows the developer to seek financing from the investing-public with a higher degree of confidence as to the outcome because the budget and the schedule is being controlled by the party most able to control the construction risk - the contractor.

But what about operations and the specter of watching the working capital evaporate because the developer's plan doesn't work.

This is where it helps to have a strategic partner that specializes in leasing for retail properties who also has a long lead book of tenants and prospective tenants that can be readily recruited for the project's benefit. The key is to manage the pre-leasing program so as to pre-lease the shopping center to the point of break-even/stabilization before construction commences, thus reducing the potential impact on working capital to a very minimal state.

Contact Rainmaker Marketing Corporation and find out what we can do to help you realize your shopping center dreams...

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?

Rainmaker Marketing Corporation can trace its history back all the way to 1989. Incorporated in 1993, Rainmaker Marketing Corporation has evolved over time into a full-service business to business consulting firm. Rainmaker Marketing Corporation’s initial specialization was in issues and documentation needs corresponding to the capital funding cycle for commercial real estate development projects with a primary focus on senior housing and health care related properties. Today, Rainmaker Marketing Corporation serves all types of commercial income-producing property development program financing requests with a combination of feasibility studies, due diligence services, structured finance consulting and a focus on commercial real estate syndication services. Rainmaker Marketing Corporation’s service area includes all of the continental United States, Canada, Mexico and the Caribbean Basin.

281.537.1200

Email: consultants@rainmakermarketing.com

Commercial Real Estate Development Finance, Due Diligence Documentation, Syndication & Project Management Consulting

15519 Dawnbrook Drive, Houston, Texas 77068.