Fractional Dutch Auctions of Commercial Income-Producing Real Estate Properties - TIC Plan Ownership Syndications

Due Diligence Documentation "Exhibit C-5"

Contractor Bonding Capacity Letter

The following notes are provided pertaining to this exhibit:

What: the bonding capacity of a contractor is important in case the contractor doesn't undertake and manage the construction program per the construction contract and design documents.
When: the bonding capacity is determined at the same time as the construction contract is going through the negotiations phase.
Why: bonding is a way of providing peace-of-mind on construction projects. A bond is a promise of a third-party to pay for any damages arising out of a covered event. Typically, the payment of all vendors and expenses associated with construction is bonded, along with the contractor's performance of all obligations under the contract and a completion bond is provided to guarantee the timely completion of the construction contract.
Where: pre-construction phase once the market feasibility study (see Exhibit C-3) and the pro forma financial statements (see Exhibit C-5) have been prepared.
How: electronic file transfer and review.
What's important: the bonding capacity of the company should show some excess over and above the amount of the construction contract.
This exhibit is not required for syndications of existing properties that do not contemplate any new construction.

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