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Creating commercial
real estate syndication plans for project development phase funding
must now incorporate multiple syndication opportunities that include
condominium investment space syndication plans and fractional
tenants-in-common commercial real estate syndication plans.
Rainmaker Marketing Corporation uses commercial real estate syndication
plans as the basis for allowing the developer to:
-
Initially,
the minimum sales target for the syndication plan is to raise
sufficient capital to allow the commercial real estate developer to
qualify the project for some kind of construction mortgage
financing irrespective of the recourse issue and the
collateralization issue; then
-
Once
the first level sales target has been met, the next minimum sales
target for the syndication plan is to raise sufficient capital to
allow the commercial real estate developer to induce a commercial
lender to provide construction mortgage financing that does not
require said developer to accept personal recourse and asset
cross-collateralization; then
-
Once
the second level sales target has been met, the next minimum sales
target for the syndication plans is to raise sufficient capital so
as to allow the developer to obtain non-recourse project financing
and to allow the developer to withdraw the developer's seed capital
from the project before construction is completed; then
-
Once
the third level sales target has been met, the final sales goal is
to continue syndicate sales and use the net proceeds of financing
for the purposes of retiring the construction mortgage financing and
other liabilities of the project. The net result of this
process is to continually decrease the investors' exposure to a
total loss of investment risk due to foreclosure or bankruptcy.
Rainmaker
creates both types of the most common real estate syndication plans:
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Condominium
Sales Plans. No, this isn't a condo plan created for the
purposes of selling housing units for the purposes of providing
dwellers with housing; this plan is created as a means of raising
additional at-risk capital contributions. Condo plans are
subject to certain limitations and therefore should be created on
the basis of limiting the scale to an amount equal to the project's
capital expense for the final month of the construction phase.
-
Fractional
Tenants-In-Common Sales Plans. Tenants-In-Common syndication
sales proceeds can be applied as early as the project's
pre-construction phase - and that makes TIC plans very important to
the developer that is seeking to maximize his/her financial
investment leverage. Unlike condominium sales programs, TIC
plans provide developer's with the opportunity to reduce their
capital investment in a given project to seed capital only that is
subject to the developer withdrawing said seed capital based upon
the success of the overall sales program of both plans being put to
work in unison.
The
totality of this structured fundings approach is to:
-
limit
the developer's investment to the cost of due diligence
documentation (architecture, engineering, environmental, zoning,
construction costing, feasibility studies and related costs)
together with the cost of obtaining site control. This will
work out to a cost of $300,000 to $500,000 per project.
-
increase
the developer's overall business opportunity by allowing the
developer to re-leverage the developer's seed capital on a more
frequent basis than would otherwise be possible if the developer
accepted full recourse and asset cross-collateralization
requirements.
Continued
on following page.
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