The new SEC final rule changes (Release No. 33-10884) provides a new opportunity path for businesses and commercial real estate developers to access early stage capital financing using a laddered approach to attracting capital as early as the Schematic Design Phase.
Use the Ladder
The new securities rules and regulatory changes provide the opportunity to utilize a laddered capital financing process to the fullest advantage of a CRE new construction project. By utilizing advanced risk segregation in combination with the new registration-exemption limits on Regulation CF and Regulation A securities offerings, developers have the opportunity to construct attractive securities offerings and conduct general solicitations under strict rules and requirements.
What’s So Attractive?
CRE new construction projects present defined phases of activities – site acquisition, pre-construction, construction, launch and then stabilization. These defined phases can be used to represent defined risk pools where each successive pool (or step up the ladder) represents potential decreases in risk and increases in profit-taking opportunities for public investors and the developer.
Rules, Rules & More Rules…
There are definitive rules and procedures you have to follow in the new normal of the markets created by the SEC rule. Even things as esoteric as business plans are now subject to being submitted to the SEC, so sound legal advice is a must, strong due diligence documentation, and independent confirmation of the material facts make for the ingredients that lead to the top of the ladder.