ever happens! It’s called mitigating risk or mitigating the worst-
case scenario. Only after this exercise has been accomplished is
the sponsor ready to ask for the bulk of the capital (debt). If you’re
lucky, the opportunity shows up on your doorstep at this stage
and it’s been adequately vetted. Getting there is the heavy lifting.
THE CLOSING
As if telling the story, presenting the data and finding the check
writer isn’t difficult enough, now you have to make sure that all
of the potential bad “what-ifs” are addressed and documented.
More than likely, all of the equity has been invested in the deal at
closing, and every dollar needed going forward to complete the
business plan is being provided by, and is 100 percent controlled
by, the lender.
Unfortunately, most, if not all, of the following is likely to happen
after closing: cost overruns, the need to reallocate budgeted
dollars between line items or between hard and soft cost,
insufficient contingency and a longer lease-up or stabilization
time frame. A well-documented loan will guide the developer and
the capital partners through all of these potential circumstances,
such that when these “what-ifs” occur, they don’t immediately put
the project/devel oper in default and there is both time and pre-
conceived solutions to address them.
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EB5 INVESTORS M AGAZINE
RELATIONSHIP
This is a relationship business more than a deal business. Good
relationships will always lead to long-term success. Doing
business with people you like and with whom you build trust will
pay off tenfold. Plus, it’s far more pleasant! You will find over time
that the real estate community is very small. This can be both
good and bad as we build our brand, reputation and business.
ALINA MARDESICH
Alina is a broker/advisor with George Smith Partners,
Inc. where she raises debt and equity for commercial
real estate projects throughout the US. Alina has
over 25 years experience in CRE in the areas of new
business development, asset management, loan
workouts and most notably loan originations with over $2.5B funded to
date while employed at Fremont Investment & Loan in the last cycle and
most recently working with Oaktree Capital Management’s Real Estate
Debt Fund. Alina’s well rounded experience also includes managing a $300
million portfolio of distressed loans at US Bank during the downturn as
well as for the Archon Group during the previous recession.