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The
advent of condo-hotels has led to the creation of hotel
real estate investment syndicates that have, by and large, invested
from the point of commencement of construction phase operations. RealEstatePlays
(an affiliate of Rainmaker Marketing Corporation) has created a whole new syndication
channel for the benefit of commercial
real estate development project financings and programs having a
total development cost of more than $2,500,000. Historically, the
expected investment for most hotel real estate investment syndicates has
been well in excess of $10,000,000, so the syndicate floor would seem to
be well-supported. The reasoning is as follows:
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Market-Based
Response. The syndication program provides investors with the
coveted wireless access. The per unit price is always $25,000
for new development projects. This low sales contract
premium gives the developer exposure to the widest possible investor
base.
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Greater Investment
Leverage. The syndication program provides the
developer/sponsor with the opportunity to increase financial
investment leverage by providing syndication opportunities in the
pre-construction phase, as well as the construction and
post-construction operating phase.
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Non-Recourse Mortgage
Financing. The syndication program can be used to increase
equity contributions to a point where the construction and mini-perm
loan lender will provide the mortgage financing for construction and
initial operations stabilization on a non-recourse basis.
The syndication is
based upon some fundamental due diligence tenets and a syndication
requirement that the proposed project site must be owned by the
sponsor/seller in fee-simple estate and be ready to transfer title into
a tenants-in-common fractional ownership plan that is equal to the total
estimated costs of developing the hotel (or condo-hotel, as the case may
be) with an assumed syndication sell out by the end of the construction
period.
The syndication program isn't a substitute for lack of due diligence documentation; far
from it. The Rainmaker approach is to demand that each developer
provide the same level of due
diligence documentation of the proposed project as would be the case
for a private
placement offering of equity securities to be sold into the
institutional investor marketplace. These standards serve the
interests of all parties and the consistent application of them will
create long-term market stability - the key ingredient by which all
parties' interests are served.
The due diligence
documentation requirements are listed based upon phase, to wit:
Rainmaker Marketing
Corporation can work with you from concept through stabilization by
offering solutions and consulting support for developers seeking
pre-construction phase, construction phase and/or post-construction
phase capital funding requirements within a single, ordered market
portal.
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