Key to the Kingdom: CRE Development Equity Financing

The amount of investment capital flowing into the market has included an incredible amount of capital investment in CRE properties in private placement offerings of equity securities in Direct Participation Program transactions.  The demand has reached a crescendo for investment in acquisition financings and now we are running out of product.  That’s where the equity financing for CRE development transactions becomes a real issue that requires a real solution but the developer has to do it in reverse order. … More Key to the Kingdom: CRE Development Equity Financing

The Failure of CRE Investment Loss Mitigation in the Analytics Age

More than $500 billion in CRE loans and investments are expected to be realized this year, worldwide.  That’s an astounding number.  CRE investment loss mitigation practices have not proven to be up to the task (otherwise, the losses would be a lot less, wouldn’t they?).  … More The Failure of CRE Investment Loss Mitigation in the Analytics Age

The Market Test: Why Capital Financing Success is so Elusive

Changes in the market are inevitable and it is just not possible to project market conditions beyond the 2-year window with any amount of certainty that is worth betting investment dollars upon in today’s capital markets.  The reality is that you can’t expect to manage the myriad of market risks by simply conducting a market analysis once a year or once a quarter on an ongoing basis.  If you are going the private placement offering route (i.e.: seeking capital through the broker-dealer market) the compliance requirements of FINRA and the SEC for due diligence demand a whole lot more … More The Market Test: Why Capital Financing Success is so Elusive

Can You Sell Your House To The Bank & A Buyer At The Same Time & Still Own It?

Under the modified entry-fee approach there is a guarantee of access to care but no guarantee of cost containment.  The monthly fee will change over time but the resident gets to remain on the property as care needs change.  This is crucial because the adult children would rather sleep with rattlesnakes than move an elder.  It also creates an incredible profit-taking opportunity because we can use sophisticated capital structuring approaches to the contract structure that give the resident real control over their future estate (i.e.: receiving up to 99% of their entry fee upon leaving the community and the next resident taking possession of their living unit) and giving the developer the opportunity to generate tremendous yields before the property even commences operations.  … More Can You Sell Your House To The Bank & A Buyer At The Same Time & Still Own It?

What Exactly is a Business Plan? Clear the Air on Financing Due Diligence

The key elements of the business plan of operations revolve around the concept of understanding what would likely happen if the promoter (or any other employee of the business) is no longer with the business.  Does the evidence suggest the person stepping into the position will cause the capital investors to suffer a potential loss due to delays or errors in decision-making due to having no clear instructions on what to do or not?  This is the core issue that directly bears on whether execution risk has the potential to be a materially-significant condition precedent to loan/investment loss severity risk or not.  … More What Exactly is a Business Plan? Clear the Air on Financing Due Diligence

An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Real-time market event reporting provides the logical alternative solution to the inherent shortcomings of credit risk management practices that focus on subjective decision-making criteria in light of data pertaining to the conditions and events that would drive detrimental credit outcomes.  In short: you now have the choice of addressing the cause or the effect, which makes better sense to you? … More An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Demystifying Commercial Real Estate Investment Maturity Default Risk

When we approach the commercial real estate maturity default risk assessment the subject property has to demonstrate that both scenarios present a reasonable proposition to sustain both outcomes (i.e.: would be expected to be sold off and would be expected to generate sufficient funds from a refinancing to make the stated return a reality).  The test is understanding the issues that create maturity default risk and how these issues have to be managed and mitigated proactively to prevent investment loss from becoming a painful reality. … More Demystifying Commercial Real Estate Investment Maturity Default Risk