/24-7PressRelease/ - OLNEY, MD, February 12, 2008 - It seems that each week brings one or two new funding programs that are creative and innovative.
This week was no exception, and the one that really jumps out as a fascinating alternative way to finance a project is the 100% PLUS Leaseback Program.
The immediate benefit to the developer or borrower is no equity required in the deal.
To simplify it (and apologies to those who already know this), instead of getting a loan and buying a building, the leaseback lender buys the building, puts the title in the lender's name, and you make the lease payments.
With most conventional funding, you need a percentage of equity in the deal. Cash out of your (or someone else's) pocket.
With Leaseback, you need only make the monthly lease payments to the lender, (the Lessor). No cash up front. 100%.
Of course, you are still responsible for the project development, property maintenance and operation, and subsequent revenue generation through rents.
This Leaseback program allows you to get the building for 100% of the cost, PLUS 100% of the rehab or acquisition and development, plus 30% for Furniture, Fixtures and Equipment (FF&E).
The minimum value of the after-rehabbed or constructed property should be $50MM. The total need can go to $100 Million. The program is designed to facilitate the creation and preservation of capital by minimizing financial exposure, which is typically necessary for the acquisition and expansion of commercial properties.
Where the client already owns the property it is permitted to strip all the equity from it to the extent of its fair market value.
There are no cash-out restrictions based upon the time the property was acquired or the price the client paid for it.
If a client does not already own the property this program may be used for its acquisition.
In fact, it is possible for the program pay for 100% of the purchase price of an existing property or land PLUS 100% of the rehab/construction costs PLUS all the required FF&E.
Thus, a business may benefit from brand new, custom made premises upon which to operate and the certainty of a FIXED PAYMENT for the next 20-YEARS.The client is required to make no payments until the property is ready for business operations to commence. If the client wishes to purchase the property it has the option to do so at its fair market value upon each of the 20-anniversaries of the signing of the initial agreement.
The best projects this can fit are Assisted Living, Hotels, Resorts, Apartments... in other words, a REVENUE GENERATING property.
To learn more, visit http://preconstructioncatalysts.com and download the current funding program list.
About PreConstruction Catalysts, Inc.
PreConstruction Catalysts, Inc. provides facilitation expertise in bringing developers and projects to funding resources. The Company creates an environment of trust with all parties, and establishes the relationships so there is a facilitation along the natural process of funding. Too many transactions fall apart due to misunderstanding, miscommunication, and emotional reactions that can taint the underlying value of the transaction's benefits to each party. PCC helps keep the relationships in balance so they can get to the finish line.
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- apartment, commercial, developers, estate, facilitation, funding, joint, loans, owners, property, real, ventures
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