A group I started working with about 4 months ago, came to me through one of my other clients. We were briefly introduced during one of their trips to Orlando, we started discussing their active projects. I soon discovered that they were in the process of sourcing funds for a large hospitality project, in Duluth, Georgia.
This was a $38 Million project, in which they had the capability of financing 35% of the equity into the transaction. Therefore, they were looking for a 65% LTV debt stack to begin the planning and permitting process. I told them about a program that not many people were familiar with - industrial revenue bonds.
After several conference calls with the consulting group I connected them with, we managed to secure an 85% LTV revenue bond, that covered everything in project costs including, developer fees, operational costs and contingencies.....yes contingencies! In addition, the bond we managed to create for them had a 28 year term with 2 different call options, one at 10 years, and the other at 18 years. This meant that at those 2 specific points in time, they would be able to pay off the remainder of the "loan", without incurring any penalties.
Revenue bonds are a complex process with many different moving parts. But with the right people involved, it could be a very beneficial option that would prove to bring positive leverage to the borrower and ultimately bring up the IRR.
Feel free to contact me if you would like to learn more about revenue bond structures.