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Rainmaker
Marketing Corporation provides hospitality industry due diligence
services (like hotel
& motel project market feasibility studies, financial
feasibility studies and capital
finance plan proposals) in addition to the new fractional real
estate sales syndication of tenant-in-common interests on projects
larger than $2,500,000. Most hotel/motel project market
feasibility studies focus on the requirements necessary to support a
private placement offering of securities and the real estate syndication
aspect of the project is left moot.
What does
this really mean?
It means the
equity syndication component of the hotel (or motel, as the case may be)
project feasibility study is assumed to not be a requirement, leaving
many new developers without sufficient equity financing to move forward,
save those situations where the developer has an angel investor.
We take it
further. Our focus is almost totally devoted to the equity
syndication aspects of every commercial income-producing property
development transaction we are retained to support.
Hotel and motel loans continue to suffer
significant reductions of loan-to-cost ratios because the hospitality
projects have, by and large, suffered through a dearth of institutional
financing and has had to rely upon commercial bank loans. These
loans are providing no more than 70% of the total development budget as
a general rule, so at-risk equity financing is of critical importance to the
single property developer or owner/operator. The problem has been
that most developers - who would develop a property under ideal
conditions - are left at the starting gate because they don't have
access to the equity financing on terms that are anything short of a
rip-off.
Rainmaker's syndication program is designed to allow for an orderly
market opportunity that is based upon a strategy that is completely
focused on timing - the determining factor in all commercial real estate
development projects. The syndication program is designed to
provide financing solutions for all three phases of development - the
pre-construction phase, construction phase and post-construction
operations phase. You have to make the transaction worthwhile, but
not give away the farm. The timing of that shiny new syndication
financing you just put in your pocket is the determining issue.
Investment holding period expectations are no more than three years for
pre-construction and construction phase financings. All
post-construction financings are, by virtue of their timing, an equity
cash-out and the syndication approach is designed with that important
fact in mind.
Every new commercial real estate development project requires capital
financing to bring assets together to complete a business purpose -
acquiring cash flows. Equity is created by virtue of many
different mechanisms that all require some type of operating activity be
undertaken with the business assets. The financing reflects this
with most syndicate investors seeking both short-term and long-term
investment strategies. Development projects can be separated into
specific transactions with investors entering at the pre-construction or
construction phase. As the development progresses, there is a
wind-up of the pre-construction and construction phase investors via the
construction phase syndication financing. This is possible if each
project's initial fractional syndication is a success because the
successful syndication continues to sell fractional units up to the
total development cost of the project.
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