Access Financing for Your
Fractional Real Estate Development
There’s no doubt about it…
The nearly world-wide credit crunch and generally difficult economic times that started in 2008 have put a damper on the plans of many fractional developers.
Fractional consultants responded in various ways to these financial challenges:
- Some just moaned and groaned about the shortage of financing and advised shuttering one’s business or limiting it to all-cash buyers.
- Others suggested that developers self-fund their projects and “take back paper.”
- Still others, noting sagely that they had seen this before, counseled developers to simply hunker down on the sidelines and wait patiently for the economy magically to turn itself around. Then, they will be in an ideal position to reap the profits from pent-up market demand.
David, a creative and not very patient fellow, took a markedly different approach.
Where most saw only insurmountable barriers, David envisioned a way to overcome obstacles and create attractive win-win opportunities for bankers and fractional developers alike.
Leafing through his “golden rolodex,” David got in touch with Wall Street contacts he had made over the years.
He told everyone who would listen to him about the extraordinary profit potential in the fractional vacation home industry.
David spent the good part of an entire year cultivating sources and educating them in the rewarding opportunities in fractional real estate development, an emerging industry segment that few Wall Street banking institutions knew very well.
He spent considerable time, in particular, educating a contact in New York at UBS, a 150-year-old multi-national financing institution.
As a result, he succeeded in engaging an advisory group within UBS that has expressed interest in making available financing to qualified resort and urban fractional developments world-wide.
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In a January 2, 2011 press release, David states, “Despite the tight credit of the recent past, this year brings hope that financial spigots may be starting to loosen. I am delighted to be working with an advisory group at UBS to generate and evaluate candidates for fractional developer and purchaser financing in major global resort and urban destinations.”
He continues, “The financing interest expressed by UBS demonstrates that there may be reason for optimism among qualified developers of well-conceived fractional projects. UBS is of the opinion that the economic recovery, ‘though still fragile, continues to trend in a gradually positive direction.’”
“Since the fundamental benefits of fractional real estate ownership remain unchanged,” he concludes, “expectations for future growth are robust. The availability of institutional capital to fuel renewed expansion of sound fractional developments is therefore encouraging and quite well-timed.”
Some Financing Institutions Where
David Has Closed Transactions
David has successfully raised equity and debt financing for developers as well as purchaser financing from The Royal Bank of Canada, Textron Financial Corporation, Silver Portal Capital, the Rutland Savings Bank, the Independent Bank of Michigan and McDonald and Company (subsequently acquired by Key Bank), among others.
How David Helps Real Estate Developers Secure Financing
As a result of his experience, David is quite familiar with the information funding sources require. He knows the financial and operational data they want to see. He knows what items their check lists contain. He knows how to answer bankers’ due diligence questions even before they ask them.
David knows how important it is to present a well-conceived business plan with an itemized operating budget, sound economic projections and an experienced team capable of executing the plan. This is what bankers must evaluate in order to have the confidence they need to finance a fractional real estate development.
David is currently involved in financing opportunities in Russia.