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Due Diligence Documentation "Exhibit F-9"
Funding Program Commitment Letters
The following notes
are provided pertaining to this exhibit:
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What: construction
phase syndications are defined as those syndications wherein the Developer
(or Sponsor, as the case may be) has obtained a bankable firm commitment for
the provision of construction mortgage financing for the proposed
Project. In addition, there are many structures that can be used on a
stand-alone or inclusive basis that provide for different portions of the
project budget at different times. Accordingly, the Developer must
provide the documentation to the Syndicate that demonstrates the proposed
Project's capital funding components.
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When: these
commitments are typically made/obtained at the end of the pre-construction
phase once the lender(s) have had the opportunity to review all of the due
diligence documents the Developer has possession of and then complete the
loan underwriting process (resulting in a commitment letter for an approved
loan).
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Why: parties
can become confused about what constitutes a bankable commitment and what
constitutes everything else. Accordingly, the Syndicate must receive a
copy of all funding commitments for review and due consideration.
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Where: these
documents are in the possession of the Developer/Sponsor as electronic
documents.
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How: the
Developer obtains the commitments from their respective institutions and the
capital funding plan must be predicated upon the in-hand evidence supporting
the funding. This means the Capital Funding Proposal must not
demonstrate any remaining funding gaps that are not otherwise provided for
by the initial syndication through the realestateplays.comsm
syndication platform. To the extent realestateplays.com's can
reasonably ascertain, all construction phase syndications must meet this
test and have no outstanding funding gaps.
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What's important: the
Syndicate wants to be assured that, if the Developer/Sponsor is claiming to
have a bankable funding commitment, the document is not a specimen copy,
draft copy or has not as yet been executed between Developer/Sponsor and the
institution issuing the document. Production of these documents
provides prospective purchasers to expose the Developer's claims to careful
scrutiny regarding the capital finance matters.
For more information, please contact us at 832.659.5009 or via email at info@realestateplays.com.
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