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Overcoming Obstacles to Institutional Real Estate Financing. David M. Disick, Esq. Sugarbush Valley, Vermont: Year-Round Resort. Whole Ownership South Village at Sugarbush , Vermont. Telluride, Colorado. Franz Klammer Lodge . Private Residence Club.

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Overcoming Obstacles to Institutional Real Estate Financing


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slide2

SugarbushValley, Vermont:

Year-Round Resort

slide3

Whole Ownership

South Village at Sugarbush, Vermont

slide5

Franz Klammer Lodge

PrivateResidence Club

slide8

A Convincing Business Plan

  • Significant opportunities in Russia
  • American financial community ready to listen
  • Persuade institutions that your project will generate profits at acceptable risk
  • Back up your claims with meticulous financial documentation
slide10

Catch the banker’s Attention—Secure a personal introduction, if needed

  • Open the banker’s door—Arouse the banker’s Interest
  • Get to the negotiating table—Cultivate the banker’s desire to fund you
  • Access the vault—Negotiate successfully so that the banker takes Action on your request
slide12

Call upon your personal and business relationships with bankers

  • Enlist a qualified intermediary to vouch for you and your project
slide14

Present your Executive Summary

  • Money invested to date
  • Amount of money sought
  • Expected duration of the investment
  • Return on investment
  • Basic development facts
  • Facts to support your belief that your development will succeed
slide16

Present your Business Plan

  • Executive summary
  • Nature of project—location, construction type (hotel, apartment, home, etc., ownership type or mixed use),
  • Nearby attractions, preferably year-round
  • Ownership or control of land
slide17

Present your Business Plan Continued…

  • Permit status
  • Amenities to be developed
  • Scope of project--number and type of units, size of units
  • Findings of feasibility study
  • Financial information
slide18

Present your Business Plan Continued…

  • Project cost
  • Estimated sellout time
  • Estimated revenue and timing
  • Projections and projected profit
  • Best-, base- and worst-case scenarios
  • Assumptions on which projections are made
slide19

Present your Business Plan Continued…

  • Members of development team—position, background and track record
  • Marketing and sales plan and monitoring procedures
  • Illustrative material—maps, site plan, drawings, renderings, elevations, floor plans, feasibility studies, etc.
slide21

Some Important Items to Know Before Starting Negotiations

  • Size of financial proposal institutional sources are willing to consider
    • Minimum: US$25 million
  • Projected return on development equity desired
    • Minimum: 25%
  • Profit splits and “waterfall” of distributions—Sequencing of distributions to the capital source and to the developer
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Two ways to structure waterfall of distributions :

    • 100% to financing institution until capital is repaid
    • Ratio of the institution’s investment to developer’s investment
  • Timing expectations:
    • Return of capital: 2-3 years from funding date
    • Return on capital: 3-5 years thereafter
slide23

Additional Considerations for Russian Projects

  • Russian market niche
  • Degree of state/local governmental support
  • Market opportunities afforded by 2014 Winter Olympics
slide24

Case Studies

  • Big Fundraising
  • Boutique Fundraising
  • Challenging Fundraising
  • Foreign Fundraising
slide25

The Bottom Line

Successful financing requires:

  • Understanding how the individual banker will view your project
  • Gaining the banker’s personal confidence
  • Experience with the financial community
  • Meticulous documentation of the essential information relating to your project
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СпасибоHow may we be of assistance to you?Contact us:David M. Disick, Esq.www.TheFractionalConsultant.comArkadiyAmelinwww.fractionalrussia.com