Historically, commercial real estate development financing success faced some long odds. The recent changes in the securities regulations that have now gone into effect for 2021 provide much needed relief for commercial real estate developers. Tax-advantaged financial structures incorporated into the capital stack provide the means of making the odds even more attractive.
Your Financing Probability of Success is Predicated on Two Factors
The probability of success odds in business financing transactions are driven by how you approach the task of getting out the message to as many prospective investors as possible, together with what that value proposition message actually states to prospects that may induce them to invest.
Getting the Value Proposition Message Out
The most important aspect of controlling the probability of success odds in your favor is being able to get the message out to as many prospective investors as possible, in as short a time as possible, and in a cost-efficient manner. The new regulations allow for broad advertising that includes pre-offering communications and solicitations that dramatically improve the probability of success odds.
Using Tax-Advantaged Structures in Your Value Proposition
The second part is your value proposition. Tax-advantaged structured finance products and approaches provide the basis for boosting the tax-equivalent yield – and these features make the transaction more attractive to institutional investors (who invest in big chunks).