Project Financing Plans

Project financing plans are a core competency with Rainmaker.  We can develop project financing plans in as little as a week (in some cases).  Entitlement reviews at the local, county, state and/or federal levels can take a bit longer, but are usually also ordered by the client based on a quick reference look-up (a one-day review of relevant state and federal titles).  The resulting project financing plan (or "capital funding proposal" as it is sometimes called) can be literally earth-shattering.

The incorporation of multiple layers of entitlement program incentives together with convertible mezzanine loans, "top-coated" construction loans and limited developer capital provide for extraordinary levels of financial investment leverage.

The resulting capital funding proposal isn't limited to just "equity" and "debt".  Consideration has to be given to a wide array of financial incentives that can be applied to a given commercial real estate development financing.  The bottom line - the more thought you put into it the better off you are going to be in terms of how much money everyone will look to you to toss into the pot.  It is important to remember that the primary job of every entrepreneur is the underwriting of the resulting investment.  Plain and simple, "you need 100% of the budget funds up to get started, so whatever percentage isn't being provided by other means, means you will be putting them up."  

This brings us to the discussion of the key areas of the capital funding proposal that you might want to give consideration to:

• Mezzanine Loans.  Straight or convertible, higher earning ratio assets allow for the strategic and judicious use of mezzanine debt.  Prime targets include healthcare, transportation, senior housing and condo hotels that can take advantage of this type of funding in a way that actually enhances the transaction.

• Entitlements.  Planning grants, zero interest loans, rebated taxes, PILOT plans and TIF plans all need to be considered as these future streams of dollars can be discounted to a present value and dumped into the funding pot as cold hard cash that (in certain instances) serves as equity replacement for the developer's account.

• Public Financing.  Tax-exempt or taxable, the project may qualify for enhanced public financing in the form of a bond issuance that may be backed by the property tax base (as in a TIF plan or CDD plan) can also provide not just prime debt, but may be able to be utilized as sub-debt.  In certain circumstances, sub-debt can be utilized as equity replacement for the developer's account.

• Syndication Fundings.  Take advantage of the availability of at-risk equity capital contributions as early as the pre-construction phase of your property's development cycle.  Fractional real estate ownership interest syndications using the very common tenants-in-common approach may provide you with needed equity contributions.  The minimum development budget (or acquisitions budget, as the case may be) is $2.5 million and there is no effective upper limit because every syndication is subject to the market's response.  You get higher financial investment leverage, while you reduce the bankruptcy risk and foreclosure risk.  Find out more.

Everything in moderation and nothing should be dismissed out of hand when it comes to funding the entrepreneur's vision.