Commercial real estate project equity financing is an area where you can turn to INVIZEN for help in the following areas:
- New construction commercial real estate project equity financing; and
- Acquisition project equity financing; and
- Recapitalization project equity financing; and
- Bankruptcy/foreclosure workout equity financing.
We work with a supporting commercial real estate network of broker-dealers, lenders, private investors, DST sponsors and related finance consulting disciplines to provide an end-to-end solution for commercial real estate project lending, equity financing and post-funding investment performance assurance support to help prevent future bankruptcy events and administrative foreclosure default events for the entire term of the investment period.
If you are a commercial real estate developer or sponsor seeking capital financing for a proposed commercial income-producing property development project, then you need to review the DevPro Developer Support Page program requirements for funding consideration.
New Construction Commercial Real Estate Project Equity Financing
Underwriting reviews provided by INVIZEN for new construction commercial real estate income-producing property proposals is undertaken in light of the requirements of Section 941 of the Dodd-Frank Wall Street Reform Act and include the following component reviews:
- Capacity underwriting. The core of the INVIZEN Real-Time Underwriting (or RTU) program is capacity underwriting. The INVIZEN system utilizes a multi-layered approach that includes a full-scope intended-use analysis of the site and market. The intended-use is then subjected to a comprehensive market and financial feasibility analysis where the market analysis assumptions and conclusions are tested in the resulting financial forecast to determine if a reasonable basis exists for their use and inclusion in the market analysis. The outcome is then modeled to create the Underwritten Effective Gross Income, Underwritten Operating Expenses, Underwritten Net Operating Income and Underwritten Net Cash Flow forecasts that support the entirety of the program model. All of these machinations are undertaken by the INVIZEN program on a real-time basis, thus cutting weeks and weeks off the underwriting schedule and saving considerable sums of money for the client and the capital markets.
- Credit underwriting. Credit underwriting is the biggest potential problem in the entire underwriting process of the capital markets today as subjective criteria such as reputation, character and experience are used to determine whether or not capital should be deployed. The INVIZEN model recognizes the shortcomings of these measures and utilizes a liquidity enforcement approach based upon the premise the INVIZEN system will monitor the ongoing business operations and market opportunity to help ensure there is advance notice of conditions that may lead to reduced revenues before these conditions become critical.
- Default risk underwriting. The business terms of the key contract documents are reviewed in terms of their impact on the resulting financial results of ongoing operations. The focus of the INVIZEN model is to not provide a legal underwriting review, but to focus on whether or not the business terms support the intended business model of the sponsor, and whether or not the sponsor’s representations of facts are supported by third-party sources that are not at conflict with the transaction. Where conflicts-of-interest are found, these are made disclosure items. The default risk underwriting review includes pre-programming for ongoing default risk monitoring in the post-funding operating environment to minimize the potential for an administrative foreclosure. This additional level of service helps provide equity investors with the assurance that independent monitoring will help prevent their investment from becoming an unintended failure.
- Collateral underwriting. Collateral underwriting is the sum-total of the previous three (3) underwriting reviews undertaken by the INVIZEN RTU model approach. In a market economy, collateral value only exists if a future income-generating (i.e.: capacity underwriting) opportunity may be reasonably demonstrated to exist of sufficient magnitude to attract capital investment. Outside collateral really only serves as cold comfort to the CRE investor or lender, otherwise; there would be no such thing as investment loss severity risk. The INVIZEN model focuses on the premise the transaction has to stand on its own two (2) feet because, sooner or later, it may have to do just that.
Once the underwriting program is completed, the resulting project profile goes into our provider network for referral after consultation with the client. The referral will be one of the following:
- Direct to the broker-dealer community for placement.
- Direct to a co-sponsor for a joint-venture negotiation in the case of a marginal developer.
- Direct to a mezzanine lender for a mezzanine financing.
Acquisition Equity Financing
All commercial real estate equity financing transactions are essentially acquisition financing transactions because the new construction program requires an acquisition take-out commitment to maximize the opportunity for the developer to induce equity investors to deploy capital during the critical pre-construction phase of the project’s development cycle. This means the transaction is normalized to be a target for inclusion in aa 1031 exchange investment opportunity, as this is the most logical market for a long-term investment wherein success is critical and can be significantly boosted by virtue of acquiring properties that are newer as opposed to being older. Again, our network of co-sponsors, broker-dealers and related professionals would be made available, as they will be informed the transaction has been subject to an INVIZEN review and is qualified for our asset protection program for the entire term of the investment.
Recapitalization Equity Financing
The INVIZEN system provides the recapitalization opportunity flag and automatically informs the provider network of matching capital financing providers of the pending opportunity. For clients outside of the INVIZEN system seeking recapitalization, we undertake the same underwriting review process and complete the same referral process as a matter of course.
Bankruptcy/Foreclosure Equity Financing
One man’s trash is another man’s treasure. Bankruptcy and foreclosure workouts go through the same underwriting process and the costs are the same because of the INVIZEN technological edge that provides the multiple intended-use development scenario reviews as part of the typical INVIZEN underwriting analysis. This means troubled properties can be re-positioned or redeveloped as the case may require without a tremendous amount of lost time and cost. Again, referral into our provider network is the outcome.
To find out more about what INVIZEN can do for you please contact us at 832.663.9634.