Commercial Real Estate Syndication Plans

Creating commercial real estate syndication plans for project development phase funding must now incorporate multiple syndication opportunities that include condominium investment space syndication plans and fractional tenants-in-common commercial real estate syndication plans.  Rainmaker Marketing Corporation uses commercial real estate syndication plans as the basis for allowing the developer to:

1. Initially, the minimum sales target for the syndication plan is to raise sufficient capital to allow the commercial real estate developer to qualify the project for some kind of construction mortgage financing irrespective of the recourse issue and the collateralization issue; then

2. Once the first level sales target has been met, the next minimum sales target for the syndication plan is to raise sufficient capital to allow the commercial real estate developer to induce a commercial lender to provide construction mortgage financing that does not require said developer to accept personal recourse and asset cross-collateralization; then

3. Once the second level sales target has been met, the next minimum sales target for the syndication plans is to raise sufficient capital so as to allow the developer to obtain non-recourse project financing and to allow the developer to withdraw the developer's seed capital from the project before construction is completed; then

4. Once the third level sales target has been met, the final sales goal is to continue syndicate sales and use the net proceeds of financing for the purposes of retiring the construction mortgage financing and other liabilities of the project.  The net result of this process is to continually decrease the investors' exposure to a total loss of investment risk due to foreclosure or bankruptcy.

Rainmaker creates both types of the most common real estate syndication plans:

• Condominium Sales Plans.  No, this isn't a condo plan created for the purposes of selling housing units for the purposes of providing dwellers with housing; this plan is created as a means of raising additional at-risk capital contributions.  Condo plans are subject to certain limitations and therefore should be created on the basis of limiting the scale to an amount equal to the project's capital expense for the final month of the construction phase.

• Fractional Tenants-In-Common Sales Plans.  Tenants-In-Common syndication sales proceeds can be applied as early as the project's pre-construction phase - and that makes TIC plans very important to the developer that is seeking to maximize his/her financial investment leverage.  Unlike condominium sales programs, TIC plans provide developer's with the opportunity to reduce their capital investment in a given project to seed capital only that is subject to the developer withdrawing said seed capital based upon the success of the overall sales program of both plans being put to work in unison.

The totality of this structured fundings approach is to:

• limit the developer's investment to the cost of due diligence documentation (architecture, engineering, environmental, zoning, construction costing, feasibility studies and related costs) together with the cost of obtaining site control.  This will work out to a cost of $300,000 to $500,000 per project.

• increase the developer's overall business opportunity by allowing the developer to re-leverage the developer's seed capital on a more frequent basis than would otherwise be possible if the developer accepted full recourse and asset cross-collateralization requirements.

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