Developers constantly seek leverage for their own benefit and the desire for high-LTV financing – even 100% LTV financing for commercial real estate development – of course, comes with a price. The financial partner that provides all of the capital frequently demands all of the resulting capital gain opportunity.
The use of leverage is based upon the regulatory construct that came with the Securities Act of 1933. The Securities Act of 1933 forced entrepreneurs to seek higher levels of debt leverage to offset the capital gain demands of investors due to the fact capital markets access was severely limited by the regulatory framework that evolved.
Today, the changes made to the Securities Act of 1933 pursuant to the JOBS Act of 2012 have had the impact of turning this practice into an expensive exercise of frustration.
The JOBS Act changed the way we value opportunities and this has been further pushed along by the HVCRE lending rules that are part of the Basel III accord. The Basel III HVCRE rules mean that supervised institutions and institutional investors pay a heavy price for extending high-LTV loans and non-recourse commercial real estate development loans. This price frequently leads to distressed asset financing and that requires expert knowledge and experience to navigate.
If you are seeking financial investment leverage, debt is not the way to get it in today’s markets because the attending credit and default risk issues mean you have to collateralize the loan with more than 200% collateral to obtain the financing from a legitimate funding provider.
The way to get it is in using structured risk segregation pools that effectively chop up a commercial real estate development transaction into a series of transactions where the developer profits at every stage and lowers the cost of capital to a level that would make debt leverage appear to be a useless exercise.
The INVIZEN Platform was conceptually designed to support the end-goal of preventing investment losses from being realized on commercial real estate loans and investments.
The INVIZEN Platform design construct offers an end-to-end approach that engages the project or business at whatever life-cycle stage the given project or business may be currently found to be operating within. The INVIZEN Platform is designed to provide a progressive sweep of the entire due diligence spectrum of issues with every review. It starts with the valuation of the transaction opportunity.
Collateral underwriting is important but the reality is that collateral underwriting really only comes into play for EAD calculations and insurance risk mitigation. The value of the opportunity is the real issue and the Verifier Report from INVIZEN directly addresses this issue in terms of determining if the proposed transaction is priced at a discount to market based upon the specific risk profile presented by the project, the project’s business and the project’s market. That’s the Verifier Report.
Market Risk Management
First Look is our real-time market feasibility analysis reporting system for which there is no peer. The next-gen analytics design of First Look provides testing of the empirical assumptions and findings of the market feasibility analysis to determine if a reasonable basis exists for their inclusion and/or use in the resulting report that includes detail you just can’t find anywhere else. That’s the First Look Report.
Financial Risk Assessment Underwriting
Final Check is the crown jewel of the INVIZEN Platform. Final Check provides full capacity risk underwriting, collateral risk underwriting, credit risk underwriting and default risk underwriting financial risk assessment data and findings that is backed by a post-funding monitoring program that prevents the most common causes of credit and default risk events from becoming your loss severity risk realities. That’s Final Check and there is just nothing like it.
The outflow is then matched into our unique credit risk management platform that ties credit risk (again, think hard about managing CECL) and default risk prevention program known as iCREDIT.
This unique system provides real-time forensic auditing of every transaction event and generates an entirely new set of GAAP financial statements for the benefit of all financial partners that can be accessed in real-time.
Financial reporting transparency risk, execution risk, default risk and all of the associated risks are now within the scope of being proactively managed. That’s the INVIZEN approach that makes the difference in everything we do.
We provide opportunities in the form of distressed asset acquisition opportunities for sponsors and developers that meet the specific underwriting standards and requirements of the specific funds and institutions we support.
Our compliance services focus on FINRA (we are a FINRA Compliance Vendor) and supporting broker-dealers, banks (FASB Topic 326 compliance opportunities regarding CECL), credit unions, community banks, advisors, family offices and institutions that are seeking something more than reactive data and mitigation as being the only likely outcome.
INVIZEN is about reaching your peak opportunity efficiency level and having the freedom to focus on transactions that are profitable; transactions that have the likelihood of actually closing.
Clear up your backlog of time-sensitive opportunities.
Reduce your loss reserve calculations.
Turn CECL into a competitive advantage.
Exceed expectations of regulators when it comes to compliance with FINRA, SEC, OCC or the several states.
When you engage with Rainmaker Analytics you are engaging with a team and a system that is designed to make the financial instruments your firm engages in become a matter that is manageable, less frustrating and more profitable.
Your new path forward starts with that first phone call and confidential consultation.