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Senior housing developers
seeking senior living
project financing for a to-be-built senior housing project now have the
option of funding capital costs using the commercial
real estate sales syndication method. Most developers have no idea
of what the potential impact the syndication approach may ultimately provide
to the senior living project financing paradigm.
Unlike mezzanine
loans and bridge loans that, for
the most part, are only available once the construction is slated to begin,
in many cases the commercial real estate sales syndication approach can be
introduced as early as the pre-construction phase. This creates the
opportunity for the sponsor (developer and/or owner/operator as the case may
be) to dramatically increase financial investment leverage and reduce the
sponsor's subjective investment risk. Mezzanine loans and bridge loans
increase financial investment leverage for the nascent developer, but will
substantially increase the sponsor's investment risk exposure to an almost
intolerable level resulting in the lender requiring full recourse (joint and
several, personal and corporate) for the entire term of the loan. In
effect, the mezzanine lender and bridge lender are lending you your own
money and charging you for the privilege. This makes you a sucker.
On the other hand, the
commercial real estate syndication approach provides some interesting
benefits you should take notice of, to wit:
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The transaction is about
the income generated and allocated. How you syndicate has nothing
really to do with how you allocate income. The TIC
Plan approach gives you incredible flexibility in financing your
construction program that you just can't find anywhere else.
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The transaction has a
floor and significant protections for the sponsor/developer. If
the TIC Plan sales program doesn't hit the minimum threshold
requirement, the sponsor walks away owing Rainmaker nothing.
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The reduction of
subjective investment risks can be accomplished using entitlements - a
structure more attuned to the syndication approach than the lending
approach.
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The Rainmaker commercial
real estate syndicate approach doesn't require an "application
fee" or "commitment fee" or "wrap fee" or any
other fee for listing. The client must pay all the legal,
organizational and due diligence report costs prior to the listing going
live, but the client will have these costs whether they syndicate or
seek to complete a private
placement offering of securities. The client has to provide
the relevant disclosures and there appears to be no exception to this
rule in any case as these are the demands of the capital markets.
So, this leads us to the
discussion of timing. When do you need the financing? Has the
project gelled to a point where it can be syndicated in the market or are
too many elements still missing? Do you know?
About
Rainmaker Marketing Corporation...
Rainmaker
Marketing Corporation is a consulting firm that focuses on providing the due
diligence services on a business to business (B2B) basis. Rainmaker
Marketing Corporation can trace its roots back to the late '80's and was
formally incorporated in 1994.
Over
the years, Rainmaker Marketing Corporation consultants have completed
hundreds of assignments across the United States (45 states), Mexico, Canada
and the Caribbean Basin. RMC's new construction project due diligence
documentation services have led to the successful development of
income-producing properties valued (in the aggregate) in the billions of
dollars.
Take
a few minutes and learn more about RMC. This website is designed to
provide a wealth of planning information pertaining to the capitalization,
operations, and organizational program tenets today's savvy entrepreneurial
company must embrace for continued growth and success...
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