Lender and Investor Packages
Investors are interested in making money. Lenders are more interested in not losing money. Therefore, the emphasis of each package must reflect the particular audience.
In their drive to avoid losing money, lenders are prone to focus on the past, "Prove why it won't be the same as the past!"
Platitudes about better management and similar promises don't carry much weight with Institutional Lenders after the bitter lessons of the 1980s. The science of real estate, as opposed to the art of the deal, is now what impresses them most.
Proposals must be astute, highly disciplined and sophisticated in order to be believable. Furthermore, only detailed financial models will move them from interest to engagement, loaning the money you need.
Making money is what drives investors to be more interested in the future, "Show us how it'll be better in the future."
They're particularly interested in value created, cash flow, and future resale value. As with lenders, investors have come to place more importance on "the numbers," than the personality or track record of the developer or owner. Each and every proposal must stand on its own merits.
Only detailed cash flow models on a lease by lease or unit by unit sales basis will convince investors of a sophisticated marketing plan, making the project worth considering.
We can design, write, produce and present proposals to all parties, including investors, lenders or brokers.
Even though the source material is from the same financial models, and although the headings may have the same title, the emphasis and editorial content changes according to the audience.
For example, the headings of an Investor Package might have the following titles:
Even though the editorial content of a Lender Package will be vastly different, the headings might be very similar:
Once the original proposal has been submitted there is a second and third phase yet to complete: the second phase is interacting with lenders and investors on the financials; submitting ARGUS data files, explaining the rollover strategy and similar facets of the cash flow models.
The third and final phase is loan documentation, especially for the Permanent Mortgage which is an involved and time consuming process. At Cunningham Advisors, we're experienced in all phases of this process.
Both objectives must be accomplished: We've got to prove how investors will make money and lenders won't lose any - the basis for which are outstanding cash flow and financial models. Do them right in the first place and lender and investor packages will fall into place.
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