|
| | Developer's Corner - Information For Sponsors & Developers
Seeking Capital Financing For Commercial Real Estate Projects
If you are a developer, sponsor or founder of a commercial income-producing
real estate development project or acquisition program and you are seeking capital
financing, then this is the place to start your journey. This part of the
web server provides definitive information needed to create and sponsor a
syndication. In
summary, there are three (3) types of syndications that correspond to the three
(3) main stages of the commercial income-producing real property's development:
-
Pre-Construction
Phase Syndications. This syndication is for projects that have not
as yet been constructed and brought online. If you (the Sponsor) have
not as yet obtained a bankable firm commitment for the project's
construction mortgage financing, then your project is automatically placed
in this category. Pre-Construction Phase Syndications are for no more
than three (3) years in duration, so you have to create a business deal that
would be attractive to the investing public based upon them taking the
highest level of risk (comparatively speaking). These investors need
to get in, make their gain and get out with their gain. You have to
offer something that is competitive within the market in order to be
successful. There are also certain rules governing the use of the
syndication net proceeds prior to the closing of the construction mortgage
financing loan escrow.
-
Construction
Phase Syndications. This syndication is for projects that have not
as yet been constructed and brought online to the point where the project
requires no further capital contributions in order to sustain on an ongoing
basis. Your project will be assigned as a Construction Phase
Syndication only if you have a bankable firm commitment for the project's
construction mortgage financing loan from a credible institution and/or
investor. Construction Phase Syndications are for no more than three
(3) years as these opportunities are, by and large, considered more risky
than Post-Construction Phase Syndications (see below) but less risky than
Pre-Construction Phase Syndications (see above). There are no
restrictions on access to funds when a Construction Phase Syndication closes
escrow (this will happen at the same time as the closing of the construction
mortgage financing escrow).
-
Post-Construction
Phase Syndications. This syndication is for projects that do not
include any new construction and/or the construction is almost complete and
the expected results of operations are immediately profitable.
Post-Construction Phase Syndications are for extended holding periods - 7 to
10 years and represent the least amount of investment risk compared to
Construction Phase Syndications and Pre-Construction Phase Syndications
(above). These syndications are intended to create long-term holding
opportunities wherein the investing public receives a cash-on-cash return
that is acceptable (based on capital market conditions at that time) to the
market and include investment entitlements and other tax-advantaged
investment opportunities that boost yields.
Each syndication must
first complete a due diligence review where the Sponsor (or Developer, as the
case may be) submits certain required documents (click
here to see the list) and submits them to the Syndicator (Real Estate Plays
Dot Com, LLC). The Syndicator reviews the documents and approves them
based upon:
-
The completeness
of the documents. Documents that do not incorporate all of the issues
and/or provide enough detail as to the scope and depth of the proposed
development program and (ultimately) the ongoing operations pertaining to
the project that commence once the project has completed construction.
Our goal is to eliminate transactions that have incomplete documents from
being able to be offered for syndication. This is not a warranty or
guarantee of any kind as to the merchantability of the documents and/or the
proposed program's ultimate success (or failure).
-
The structure of
the transaction. The resulting Syndicate cannot be placed at-risk due
to an incomplete and/or unrealistic capital funding plan proposal. The
Syndicator reviews the Sponsor's proposed Capital Funding Plan (see
discussion under Exhibit F-8) to
determine if all required funding elements have been accounted for in the
program. Pre-Construction Phase Syndications do not conform to this
standard, so the Sponsor's access to the net proceeds raised by the
Syndicate is quite limited until such time as a bankable firm commitment for
the construction mortgage financing is obtained and that commitment, plus
the net Syndicate proceeds accounts for 100% of the proposed development
program's budget. If this test is not met, then the transaction is not
approved for syndication.
-
Finally, the
transaction must be for a Syndication having a total budget of no less than
$2,500,000. If your transaction is for less than $2,500,000 then you
cannot pad it and hope to get by because all of the costs are subject to our
proprietary independent cost verification process in cases where this is
suspected.
Now you are ready for
a syndication! Each proposed Syndicate has a 90-day market cycle.
Each unit in the Syndicate is $25,000.00 (USD). If the Syndicate
subscription is sold out, then the Sponsor is obligated to take the financing,
which in no case would be less than $2,300,000.00 (USD - net of Syndicator's
sales profit) and close escrow.
Find out more. Contact us today and get your project moving forward. |
