VC Fodder Forums
Home      Members   Calendar   Who's On
Welcome Guest ( Login | Register )
      



Is this nuts....or is it just me?Expand / Collapse
Author
Message
Posted 4/17/2008 10:23:08 AM
BabyFodder

BabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodder

Group: Forum Members
Last Login: 5/21/2008 10:08:54 PM
Posts: 3, Visits: 12
Okay...let me try to describe what is going on here, as 2 of my friends are debating this scenario with me. One of them has been a reasonably successful upscale home builder in the US for over 20 years.

They have a preferential position on the acquisition of some land in the Caribbean (DR). This is due to a multi year relationship with the landowner. Suffice to say, they could buy in to a piece of land at 20-30% less than current market value.

They are looking to develop and build a very high quality townhome and private villa community with a golf course.

Regardless, other than the relationship with the landowner, they have no money. One of them has worked for the last year or so (and probably spent $100K or so) putting together a master plan, meeting with 5-star architects, engineers, water treatment people, real estate sales and marketing companies, etc.

Total project expense is projected at $325-350 million.

Total project income is projected at $450 million.

I have seen the numbers, and agree with these estimates.

Problem is....they need about $30-40 million to get started. Infrastructure, excavation, etc.

Here's the debate....

* my opinion is that they are kidding themselves to think they can raise that type of money, with none of their own invested.

* they feel that since they have a complete presentation, including financial projections and a preferential position on the land, that they will be able to borrow the money from "somewhere". Either a bank loan "guaranteed" by a "backer", or from a "hard money" lender(s). Obviously, they are willing to repay the note inside of 4-5 years, with interest (10% ?)PLUS 30% of the net ($35 million?) to the backer. According to them, they have a "committment" from a NYC hedge fund to do the deal....but no meetings or money has materialized yet (it's been a month).

I say "BS". What do you say?

Post #1099
Posted 4/18/2008 10:35:09 AM
BabyFodder

BabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodderBabyFodder

Group: Forum Members
Last Login: 5/21/2008 10:08:54 PM
Posts: 3, Visits: 12
13 views and no posted replies.....hmmmm.

Any opinions??

Post #1100
« Prev Topic | Next Topic »


Reading This TopicExpand / Collapse
Active Users: 0 (0 guests, 0 members, 0 anonymous members)
No members currently viewing this topic.

PermissionsExpand / Collapse

All times are GMT -6:00, Time now is 12:03am

Powered By InstantForum.NET v4.1.3 © 2008
Execution: 0.156. 11 queries. Compression Enabled.