|
home . about . overview . project financing . private equity . securities . alternative funding . history of instruments . contact us PROPHECY FINANCIAL LLC REAL ESTATE PROJECT FUNDING CONSULTANTS |
|
|
Project Development Financing Previous visitors, please note that the financing structure has been altered as of 10/09/09 Under this program, it is possible to finance up to 100% of your project and retain all the equity. Providing that the reserve deposit requirements set forth below are met, there is no maximum funding amount. This financing is entirely non-recourse and the funding can be used for commercial and residential projects. The funding covers both the construction and permanent phases of financing so there are no requirements to seek or pay for additional permanent financing. The program requires a minimum funding amount of $5M USD and a minimum reserve security deposit of 10% of the amount to be funded and can close within 60 to 90 business days from application. For the reserve security deposit, you will be required to place the appropriate funds in an interest bearing bonded account (2.5% to 4.5%) in a financial institution of your choice. You have the choice of placing the reserve deposit in a domestic account (Bank of America or Wells Fargo / Wachovia) or an offshore account (HSBC or Santander). Either way, the account is fully insured and bonded (you will receive a copy of the bond) and is an attractive investment in its own right. You will also be given secure password protected 24/7 online access so that you may manage your loan account at your convenience. The reserve deposit is only required as security during the draw period. You could, therefore, without penalty, withdraw all funds plus accrued interest from the account at any time before the initial funding or at any time after the last draw. Even though this is 100% financing, the lender will take a zero equity interest in your project. Rates for the financing are based on the 90-day LIBOR plus 1% to 4%. The lender charges 5 points and we, as the agent, charge 2 points if we are direct to you and 3 to 4 points if your broker brings the project to us. All points are incorporated into and paid from the first draw. There are absolutely no "up-front" fees involved with this financing. The uses of this financing are broad; however, the financial institution providing the funding has particular interest and expertise in funding projects that fall within the following categories: "green", "humanitarian", “energy”, "real estate", "build-outs", "building refurbishment", "capital equipment" and "film production". Underwriting and due diligence will take place on the company, property, project and principals. A history of funds for the reserve deposit will be required to ensure that they have not been acquired by illegal means. "Working capital" for the project should be no more than 20% of the amount funded and the future (completed) LTV should be 80% or less. The project should show a good projected cash-flow, unless, of course, it is a "sell-through" project.
funding available for
residential and commercial real estate projects golf courses / casinos / gaming centers hotels/motels / resorts (domestic and international) condos / timeshares / fractionals / condotels hospitals / assisted living facilities / nursing homes offices / medical facilities / industrial complexes land (raw / entitled / improved) retail centers (anchored and unanchored) special purpose / mixed use projects oil /energy / coal / refinery projects major motion films
Project Financing Frequently Asked Questions
Q: When must I pay funds for the reserve deposit into the secured account? A: You only need to place funds into the secured account when you have received and accepted the Letter of Understanding / Funding Commitment from the lender and subsequently spoken to and reached a comfort level with the principals of the lending group.
Q: What must I do to get the lenders’ Letter of Understanding / Funding Commitment? A: We need the following from you to submit your application for pre-approval:
We will submit these documents to our preliminary underwriting and screening process. Providing they meet the required criteria they are then submitted into underwriting at the funding source. Upon underwriting approval, the Letter of Understanding / Funding Commitment is issued.
Q: My business has a line of credit with a bank. Would this be sufficient for the required "proof of capability" even though I am probably going to use funds for the secured account from a different source? A: Yes, there is no problem using the line of credit as proof of capability, providing the name on the account is the same as that of the borrowing entity.
Q: Is the bond issued in my name and will it be in the United States? A: Your name or the name of the business entity responsible for the loan will be on the bond. You have the option of a domestic or offshore account, both of which are interest bearing at attractive rates.
Q: Is the secured account an insured account? A: Yes, whether domestic or offshore, the account is both insured and bonded. Your funds are, therefore, likely to be even more secure than where they are currently held.
Q: Can I retrieve the deposit funds at any time from the date presented until the date of first funding? A: Yes, you can withdraw all funds from the secured account with all accrued interest and without penalty until the time of the first funding. Also, you can withdraw all of the funds, plus accrued interest, at any time after payment of the last draw of the financing.
Q: I understand that the deposit funds are locked down from the date of the first funding until I receive the final funding. Instead of cashing in my bond at that time with accrued interest can I just use it as the reserve deposit for another loan? A: Yes. If you have another project that you wish to be funded you can use the existing funds, plus accrued account interest, for the reserve deposit; however, your second project will also have to qualify and the same underwriting standards will be applied to it as were applied to your first loan.
Q: Can I structure my project in phases so that I use the same deposit for the first phase as I use for the second phase and so on? A: Yes; however, each phase will be treated like a stand-alone project and will be required to demonstrate that it will, upon completion, have an excellent cash-flow, regardless of whether any other phases of the project are completed.
Q: What happens to the loan at the end of the draw period? A: It automatically rolls over into a 30-year amortized note at the same rate given for the draw period.
Q: Will I have to pay any additional fees at the end of the draw period for the permanent financing? A: No, the loan automatically rolls over into permanent financing at the end of the draw period without additional fees.
Q: I understand that the index on the loan will be the 90-day Libor to which is added a margin of between one and four percent. What determines the margin? A: The margin is determined by the perceived risks of the project by the underwriter during the underwriting process.
Q: I previously lost money paying up-front fees to a financing consultant for a loan that did not fund. Do you charge up-front fees for this financing? A: No, we do not charge any up-front fees for this financing.
Q: What are the criteria for disbursement of funds? A: Projects differ and so the disbursement (draw) schedule supplied by you in the package will be worked out between you and the lender.
Q: If there is real estate in my project will the loan be collateralized by the real estate in addition to the bond during the draw period? A: Yes, the real estate will also be taken as security for the financing. However, whereas the bond is released immediately after the last draw, a lien will remain on the real property until the loan is paid in full.
Q: Am I required to be personally responsible if the loan goes into default? A: No, this is entirely no-recourse financing. The lender could, therefore, only look to the project and could not make you personally responsible.
Q: If I need a lump sum to accommodate the purchase of real estate, which I am then going to rehabilitate in accordance with a draw schedule, can the financing be structured accordingly? A: Yes, the financing can be structured in many different ways. The underwriters assigned to this financing are very experienced and will take time to understand what you wish to accomplish.
Documentation Required for Project Funding
1.) Executive Summary (at least 2 pages) 2.) Business plan (professionally prepared) 3.) Pro-forma income/expense data, forward 5 years minimum (excel format) 4.) Complete construction costs data (excel format) 5.) Balance sheet (Sponsor/Principal Company P&L) 6.) Resume on Principal (Sponsor) with PFS (Personal Financial Statement) 7.) Resume on Development Company 8.) Recent MAI appraisal on property and/or project 9.) Feasibility and marketing studies 10.) Detailed use of funds sheet (excel format) 11.) Comprehensive exit strategy 12.) Current liquidity position of Principal (Sponsor) 13.) Profit potential/rate of return (timing until revenue is generated, timing until profit is available) 14.) Include funding structure desired (draw schedule) and ROI (return on investment) schedule 15.) Include the dollar amount that has been spent on the project to date 16.) Proof of Capability. This should demonstrate the ability to provide the reserve deposit funds from a specific account. This can be in the form of a sanitized bank account statement no more than 30 days old. If necessary, a stock portfolio statement can also be utilized (see below) Please note that it is imperative that we receive a professionally presented and detailed package for your project. All documents must be on full corporate letterhead and emailed in Adobe PDF (or Word) and standard Excel format. No other format will be accepted (jpg, gif, tif, docx, xlsl, etc). Each and every item above MUST be addressed in your package as specified. Please do not send incomplete or partial packages as it will cause your request to be placed on hold until a complete package is received.
Primary Objectives Our lender, a licensed and registered US non-bank financial institution, is constantly seeking to lend funds to new projects. All project types will be considered that yield job creation in the US, add liquidity in the US economy and/or solve problems such as clean water, alternative energy, build "Green" etc. Our lender seeks projects they can feel good about funding, developers with whom they can feel confident working with and solid projects that contain long term profitability. Requirements Project owners are preferred to have at least some form of equity or "skin-in-the-game" available as demonstrated equity. Any project owner that can demonstrate equity is considered more qualified than one that can't. Our lender will look for 10% liquidity from the owner available for the project security deposit. This amount is placed into a bank deposit account and fully refunded back to the project owner once the draw schedule has been completed or for a minimum period of twelve months whichever is longer. Candidates must be able to allocate their project security deposit into a bonded and insured account yielding the project owner 2.5% to 4.5% interest. If the project security deposit is equal to or greater than $1M, the project owners name will be added to the bond insuring the account and guaranteeing the safety of the deposit which will create a contractual and fiduciary relationship for the project owner with an AA rated US bonding corporation. Procedures Submit the above documentation and once qualified, a Letter of Understanding / Funding Commitment will be issued with potential terms within two to three weeks. The principal will then be placed in front of the Fund Manager and if the project terms are met based on the Letter of Understanding / Funding Commitment, the contract will be issued, the deposit will be placed and the funding typically starts in 30-60 days. NOTICE: Due to the proprietary and sensitive nature of information regarding our private corporate lender, we provide limited information on our project financing via web and mass distribution. All sensitive information is reserved for clients who have viable projects and have demonstrated genuine interest and the financial ability to pursue the funding options we have. The lending principals prefer to speak directly to the project principals regarding specific financing information only after they have established interest in the project and approved them to move forward.
Stock Portfolio Financing Program
The Stock Portfolio Financing Program provides financing of 50%-60% of the current value of a stock portfolio. The minimum loan amount is $250,000 and there is no maximum. There is a minimum term of 12 months and the loan can be rolled over on a 2 year basis. Payments are interest only throughout the term. Stock value must be more than $3 per share. The interest rate is currently set at 30-day Libor plus 1.5%. A total of 3 points are charged at closing by the lender and we, as agents will require 2 points if used in collaboration with our project financing and 3 points if not. If your broker brings us the deal please add a point. There are no "up-front" fees or other fees of any kind. Closing can take place in as little as 7 to10 business days. There is no credit score requirement - in fact a credit report is not even run. The financing is entirely non recourse to the borrower and is secured only against the stock portfolio. The borrower does not have to show income, employment or assets. The borrower retains sole ownership of the stock portfolio and continues to receive dividends and other income. There is no restriction of the use of the financing which may be applied for business or non-business purposes. Management of the portfolio account will be required to be handled by the bank providing the financing. Examples: 1) An individual has a stock portfolio of $3M in value. He utilizes our Stock Portfolio Financing Program and obtains financing of $1.5M, which is used to buy a house with that purchase price. Thus within 7-10 business days, he has, without a credit check, verification of employment or income, obtained financing, at a rate of Libor plus 1.5%, for 100% of the purchase price of his new home, which he now owns free and clear. His stock portfolio continues to appreciate in value, the income from which is more than sufficient to pay for the loan. 2) A corporation has a stock portfolio of $10M. It wishes to finance a project but cannot find suitable financing at an appropriate rate. It can utilize our Stock Portfolio Financing Program to secure a loan of $5M which can then be applied as the 10% security deposit necessary to facilitate our Project Financing Program resulting in $50M of funding.
The Stock Portfolio Financing Program can also be utilized to provide the reserve deposit for the 100% Project Financing Program
All rights reserved, 2007-2009 Prophecy Financial LLC, Sandy Hook, Connecticut, USA This document is for
informational purposes only and is not a solicitation for the purchase or sale
of any securities, nor a solicitation of investment funds or placement. This
document does not represent the policies of any bank or financial institution,
is not intended as a confirmation of any transaction, and does not consist of
any legal, securities or tax related advice.
|
|
|