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Mezzanine Loans
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Mezzanine
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Non-Recourse
Commercial Bank Financing. Syndicate
financing is structured to provide sufficient funds to induce a
commercial bank to provide the construction mortgage financing
on a non-recourse basis and with a waiver of the cross-default
and cross-collateralization pledges. You don't have to
wait around while you try to find a bank that will do the deal
on a non-recourse basis - the bank comes to you; and |
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Seed
Capital. Syndicate
financing (using the zero-coupon structure) is designed to allow
the developer to receive a refund of the developer's seed
capital investment while the project is still in the
pre-construction phase. This structure is intended to
satisfy the conditions precedent to undertaking the classic
"bootstrap rollout" wherein; the developer constantly
re-leverages the same seed capital stack in project after
project. This dramatically increases financial investment
leverage for the developer and reduces - by the same measure -
the developer's market risk exposure. |
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Holding
Period. Syndicate financing is medium-term financing, with
the typical holding period (assuming a zero-coupon structure) of
seven (7) years and the imputed interest carry is not
materially-significant to the project.
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Timing
of Use. Syndicate financing is designed to help the
commercial income-producing property developer to stage funding
as early as the pre-construction phase of the project.
This means a whole new level of opportunity is presented for the
developer's benefit. This timing advantage places
mezzanine loans and lenders at-risk and may be used to create an
advantage in the discussion, if nothing else.
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The
reality is that mezzanine loans and bridge loans are not a
"savior" for a project that has a gap to finance, because:
the gap financier knows the situation and will take full advantage
of it. The "fix" for this issue is to create a
syndicate where no single party is in control (while the mezzanine
lender will use the loan review process to their advantage because
they know the clock is ticking on your deal). Any attempts to
control the outcome of the transaction are brought to heel by virtue
of the provisions of the syndication sales agreement and the
realization that other purchasers will readily replace the "800
pound gorilla".
Syndication
financing does have some requirements that you need to clearly
understand:
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Due
Diligence. Nobody is going to "buy a pig in a
poke". Your due diligence burden must be sufficient
to provide independent proof of the materially-significant
claims placed in the syndication sales circular, the advertising
and the sales agreement. If you are unsure what due
diligence documents are required to sustain a pre-construction
phase syndication, click
here and download the checklist. These documents must
be produced at your sole risk and your sole expense.
Syndication financing will not provide the seed capital;
syndication financing will only provide a reimbursement after
all costs have been paid and the reports provide solid
documentary evidence supporting the transaction.
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Advertising
& Marketing. If you want Rainmaker Marketing
Corporation to provide consulting support for the purposes of
organizing, managing and executing the syndication, you will
have to fund the syndicate advertising budget - a sum of no less
than $250,000 to as much as $500,000 - because; nobody is going
to undertake the sales syndication at their own risk and then
turn over the funds to you so you can pay them what amounts to a
commission. Rainmaker Marketing Corporation charges a fee
of $250,000 for providing the support to help you make the
syndication a reality and there is a 10% to 20% ($25,000 to
$50,000) retainer with the balance funded at closing of the
syndication. This fee is charged regardless of the amount
of financing being sought.
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It's
time to get some answers to your project financing needs. If
you are seeking an honest alternative to signing your life away in
order to have the chance to access capital investment, then it is
time to talk to a Rainmaker Marketing Corporation consultant.
About Rainmaker...
Rainmaker Marketing Corporation is the
brainchild of Clint Lovell, a seasoned business finance consultant with
more than 20 years experience. Rainmaker is a B2B consulting firm that was incorporated in 1994 for the
purposes of providing market feasibility studies to businesses
seeking capital financing in the commercial and institutional
markets. Today, Rainmaker Marketing Corporation provides a
comprehensive array of due diligence documentation services for most
major industry groups. Rainmaker Marketing Corporation also
provides syndication management services for fractional commercial
real estate syndicates that can provide mezzanine gap funding for
income-producing commercial property developments as early as the
pre-construction phase. Rainmaker Marketing Corporation serves
clients throughout North America and the Caribbean Basin. Rainmaker
Marketing Corporation, Inc. 15519
Dawnbrook Drive, Houston, Texas 77068
© Copyright,
2009 Rainmaker Marketing Corporation, Inc. All rights
reserved. |
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A
Few Words on Change...
Clint
Lovell, the Managing Principal of Rainmaker, has written a book on the
subject of capitalism and the creation of a new economic society that
ends our reliance on taxation and retires all of our national
debt. The book is called The Fix and you can order an
advance copy now at www.the
fixbookstore.com. Order today and we'll pay your shipping,
saving you some real change. |
What's
New...
Read
our latest whitepaper on capitalization strategies and commercial real
estate syndications that provide developers with a new arsenal of
capital finance weapons they can deploy in the middle of this
recession. Click here and download the whitepaper
free! |
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