Real Estate
Investment Capital - Project Financings...
If
you have the risk capital to complete the prototypical 
commercial
income-producing property pre-construction phase of development, but are still
faced with the task of completing the real
estate investment capital underwriting process for construction mortgage
financing because of insufficient cash to close a transaction, then you should
speak to a Rainmaker Marketing Corporation consultant because real estate
investment capital is not just debt or equity these days. Far from it; in
point of fact, the advances in communications technology and Internet
connectivity now conspire to provide you with a source of real estate investment
capital that heretofore was only possible by the largest commercial realty
groups in the country - the commercial
real estate syndication.
The
commercial real estate syndication allows the commercial income-producing
property developer the opportunity to raise funds using a negative
arbitrage-based sales and compensation plan for the syndicate. In short,
the developer sells a portion of the property's space inventory to a group of
commercial property purchasers in exchange for cash now and a guaranteed
buy-back that is based on today's price (which is a loss, hence the negative
arbitrage reference) at some point in the future.
Easy
Example:
ABC
company is developing a senior housing property. On average, each living
unit costs $300,000 to build. The developer sells a portion of the
inventory - we'll say 30% for the sake of things - to the syndicate for an
average price of $200,000 a unit on a forward sale contract generating an actual
loss of $100,000 per unit. Seven years from now the developer buys back
the inventory for 150% of what the syndicate paid for today. 150% of
$200,000 = $300,000 - the cost of development today. The bet is that a
property that costs $300,000 today to develop and construct will be worth at
least that much in seven (7) years. Of course it will and that means a
real cash-on-cash average return of 21%+ for each year of the seven year holding
period! Cost to developer for the syndicate? Nothing because
it is an asset amortization; everyone wins in that game every time.
Talk
to a Rainmaker.
