Default. It’s the one word no entrepreneur, investor or lender wants to hear. Honest entrepreneurs, investors and lenders all agree that fraud and financial reporting transparency are critical issues that every business must address, but surprisingly enough, we are routinely victimized by fraud in all its ugly forms. In the CRE development industry, invoice phishing … More Default Risk in the Post-COVID World
Senior housing has been one of my lifelong passions. It’s the only business in the world where the only prerequisites to success are liking money and loving the elderly. It’s also the only business in the world where you can readily increase sales by simply increasing quality of service. Development pressure continues to be driven by the aging demographics of our population and this is not going to abate for another 18 to 20 years. Senior housing development financing has become a much more difficult harbor to navigate in recent years, as has all other CRE verticals due to the changing banking regulations … More Senior Housing Development Financing New Frontiers
The reality that is playing out is a huge window of opportunity that has been created for preferred equity and mezzanine loan funding participants in the market, as they have cashed-in to fill the void created by many commercial institutions exiting the market for new construction loans for all but their well-heeled customers. The initial profit-taking bonanza this created for alternative lenders is starting to unwind … More Shooting the Gap: Mezzanine & Preferred Equity Financing for CRE ADC Projects
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
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
Credit risk underwriting has become an extraordinarily complicated process for business lending and investment. Books have been written about it. Banks spend fortunes on trying to manage it. Everyone in finance has been taught the importance of it and yet it remains a pivotal element in the search for the Holy Grail – the reduction of investment/loan loss severity risk. … More The Emperor Clothes: Credit Risk Underwriting
Your operations business plan has to be a living document that is updated each month of operations or you face the reality that you are not being an efficient steward of capital. Updating your operations business plan takes some effort. … More Is Your Business Plan Alive & Well?
Commercial real estate developers and promoters (as well as other businesses) seeking capital financing start the process with a business plan. Sadly, more than 4 out of 5 proposals end in rejection. … More Business Plans: Capital Financing Approval Potential Maximized
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?
One of the most important objectives business have to conquer is obtaining the capital funding that is necessary to grow their business and that requires the production of a feasibility study to determine whether or not the sponsor seeking to promote the capital investment opportunity is making reasonable claims regarding the prospects for the forecast of outcomes to be realized or not, but more importantly to the sponsor/promoter of the investment, whether or not it is likely the deployment of capital by the sponsor/promoter would be reasonably-expected to create the economic outcome the sponsor/promoter requires as a condition precedent to undertaking their business. The feasibility study is prepared by a third-party who – you guessed it – makes a series of empirical assumptions to create the feasibility study. … More What’s The Market Scenario for Your Business?