Private Placement Securities Offerings & Alternatives

Most experienced commercial real estate developers routinely acquire funding via the private placement securities offering method, wherein; the developer/sponsor (can also be different entities) becomes a securities issuer pursuant to a private placement securities offering subscription process that is not the subject of a general solicitation (hence the term "private placement").  The developer can issue either debt securities, equity securities, hybrids and convertible securities or some derivative thereof.  The private placement offering is usually undertaken with the assistance of a commercial investment banking firm that has enough Qualified Institutional Buyers (or "QIBs" - pronounced "quibs") to syndicate the issue, but the term, "syndication" can mean different things to different people, so it is important to understand the alternatives because they bear directly on the fortunes of the developer/sponsor.

In terms of a securities float, the syndication process is managed by the investment banker.  The investment banker promotes the transaction through the investment banker's own rolodex of QIBs and through obtaining additional sales syndicate support from other investment banking firms to quickly and efficiently close-out the issue.  This takes time, involves a "road show" where the developer/sponsor and investment banker undertake lengthy teleconference presentations and attend presentation meetings for the purposes of qualifying the participation of interested QIBs in your project's securities offering.  This has to be completed in light of state and federal securities regulator requirements.

On the other hand, the real estate sales syndication approach does not require a private placement offering memorandum be drafted and does not require the services of the investment banker.  Rainmaker Marketing Corporation can be your prime commercial real estate investor via the tenants-in-common approach (commonly called a "TIC Plan" - as in "tick plan") and then resell the units to interested buyers on a direct basis.  There will be some units sold for which the developer/sponsor does not receive funds.  These constitutes a measure of cost and profit that Rainmaker Marketing Corporation seeks to make on every syndication transaction.  The syndication approach is probably faster and more to the liking of new commercial real estate developers seeking financing for their first commercial real estate development project.  The Rainmaker Marketing Corporation syndication platform may end up being the most cost-efficient investor syndication available for these projects and developers.

All syndications undertaken by Rainmaker Marketing Corporation must conform to the following:

• The developer/sponsor must own the proposed project site in fee-simple title.

• The total project budget must be greater than $2,500,000.

• The due diligence documentation must be completed and provided for Rainmaker's review and acceptance.

• The entitlements review for local, state and federal investment incentives must be completed.

• The new capital funding plan is created.

• The syndication "goes live" with a 90-day initial window of market exposure.

• Each TIC Plan fractional ownership interest in the syndication plan shall be for $2,500,000.  The total float equals the total budget divided by $25,000.  There are no partial units, but additional units are added to pay Rainmaker's cost and profit expectations, the majority of which, are held in units in Rainmaker's portfolio.

• If the initial 90-day market exposure results in $2,500,000 or more sales, then the developer/sponsor is obligated to take the financing and close.  Syndication sales will continue (if successful) until the entire issue is sold out.

For more information contact Rainmaker and get the complete picture in your mind and get ready for excitement to enter into your project's life.