Posted by cam on July 01, 2003 at 21:19:34:
Hanover Financial does not provide 100% LTV financing. They instead place debt at 75-85% and provide cash in exchange for equity participation. Equity participation is not true 100% financing but rather has a JV structure. True 100% financing would be in the form of a mortgage note or notes and where the project stays solely in the borrowers name. Debt/equity deals have a mortgage note for a portion of the funds but also require that the equity participant have ownership rights until certain returns are realized to the equity partner. Once these benchmarks are acchieved and returns paid, the equity partner releases the property via the pre-arranged exit strategy.