Obtaining non-recourse commercial real estate development financing just got a bit easier. The question we all have is how? What has changed? This year more than $500 billion in CRE loan and investment losses are expected worldwide, so the argument for non-recourse development financing for commercial real estate income-producing properties appears to be vague at best.
The issue is risk…
The history of the CRE market tells us that at some point the LTV ratio will be low enough to induce the lender to make the loan on a non-recourse basis, but that doesn’t really help matters because developers believe that means more equity is required. As the equity requirement goes up, the dilution potential goes up, the yield to the developer goes down and so do the odds of a successful funding outcome. All of this is very frustrating and locks many worthy projects out of the capital markets (more than 4 out of 5 fail to obtain capital). All of this is due to the perceived risk being placed in context of the perceived rewards. Something has to change this dynamic.
The risk dynamic is driven by loss severity risk – the risk that principle investment capital will be lost at some point over the term of the investment. The project may look acceptable or marginal on the date of underwriting and funding, but beyond that nobody knows.
What if you could tell the lender the project funding was being underwritten and protected in a way that virtually eliminated the prospect of a bankruptcy petition from being the outcome of an unforeseen liquidity crisis on an ongoing basis? What if you told the lender (or your equity investors, for that matter) the investment would be re-underwritten each and every month for the entire term of the investment to help ensure the potential for assurance of economic outcome was being maximized and that issues such as market disruptions and administrative foreclosure defaults could be “taken off the table”?
INVIZEN offers the world’s first end-to-end underwriting and real-time monitoring solution that is conceptually designed to prevent a loss of principle investment for the entire term of the investment and provides a unique underwriting approach that helps make this possible. The Real-Time Status Asset Care Protection Program (or “RTS”) is part of this entire end-to-end solution for underwriting and investment performance assurance. It’s fast and very affordable, so if you don’t have it, then the odds of obtaining capital on the terms and conditions you seek are not going to be as good as they could be. It is as simple as that.
The RTS program means the CRE developer can now access the Delaware Statutory Trust (or “DST”) acquisition financing marketplace to obtain the necessary take-out financing source that makes new construction financing so much easier.
Contact INVIZEN today to learn why this can work for you, your lender and your investors so you can reclaim your power and harness your creative energy in ways you never thought possible.
INVIZEN IT represents a quantum leap forward in the CRE finance vertical and you can find out more by calling us at 832.663.9634.