Senior Housing Conduit Loans...

Most senior housing conduit loans that were previously available in the capital markets are drying up because of the problems with the housing market as a whole and the worry the losses in single-family housing will slop over on the senior housing/multifamily market segment.  Rainmaker Marketing Corporation has developed a contingency plan for senior housing developers (and owner/operators) to allow the developers to access non-recourse construction financing - with or without the participation of a senior housing conduit lender.

Rainmaker uses a multi-point structured finance approach:

1. Condominium Investment Plans.  No, we aren't selling condos to the public for them to use as dwellings, we are using the condominium approach as a means of providing additional capital financing for the project.  Most states have strong prohibitions against the developer applying the condominium sales proceeds prior to the completion of construction, however; most states allow the application of sales proceeds as the end-gap financing.  The key to the program is to size the condominium sales syndication plan so as to:

   1. Create positive financial investment leverage.  This is accomplished whenever the financing - as a percentage of the total project budget - is greater than the total portion of the project space plan required to make the financing work (e.g.: if the condominium plan accounts for 13% of the total budget, any amount of the space plan that is less than 13% creates positive investment leverage).

   2. Limit the total financing to an amount that does not exceed the projected capital expense for the last month of the construction phase.  

2. Fractional Tenants-In-Common (TIC) Syndication Plans.  TIC plan transactions are just what the doctor ordered for senior housing projects that need equity financing - in some cases, equity financing as early as the pre-construction phase.  TIC syndications create a deeded interest on a percentage/pro-rata basis.  Every investor gets a deed and a deal; the deal is that the developer pays for all the maintenance, upkeep, insurance and taxes on the units and provides an income split off of what is generated by the project.  The TIC plan syndication is used to create a "risk pool" of investors for the construction phase of the project's rollout (called the "construction risk pool").

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