Right Now, If You Knew
When Real Estate Would Come
Back, What Would You Be Doing?

The real estate pendulum is constantly in motion.

In spite of the overlay of the mortgage crisis and the economic recession, the pendulum continues to swing.

How far it travels before it starts the climb back is anyone's guess. But there are few people who are putting the nails into real estate's coffins.

Most of the smart money is still waiting on the sidelines, and there is evidence they are getting ready to jump in soon.

When that happens, the pendulum will have shifted direction, and the problems we have seen will begin to disappear- as will the unique opportunities that are now ripe for the picking.

If history is our teacher, the next swing up will be longer, higher, and farther than ever before. Will you be on board for the ride back up, or will you be left wishing you had acted?

Tough questions, and while no one knows for sure WHEN, most know for sure IT WILL.

PreConstruction Catalysts, Inc. was formed to help real estate developers with good, viable, marketable projects get the funding they need to start designing and building. With most projects taking 2 to 3 years before they are ready to go, the developer today could be in the right place at the right time when the pendulum swings back and real estate is back in favor... maybe hotter than ever.

Because of the funding environment being tough as it is, many developers are looking for money from hedge funds and other sources like private equity funds, etc. to raise the cash needed to move a project off the drawing board.

Each fund or investor typically wants to see some up-front money to cover the costs of doing the necessary due-diligence to determine if they will fund a development.

Because they have been burned by spending time on applications only to have the developer walk away when some legitimate fees are requested, they won't even consider a project.

The problem here is that some of the developers with good projects and no money for fees are shut out. If 1 out of every 10 projects being created is a winner, and that winner is turned away for lack of a small amount of funding, that's a shame for everyone.

The Opportunity:

Most of the investors from hedge funds, private equity, and even some banks, have their reasons (some legitimate, others not) for demanding application fees or due diligence fees.

The average requirement is somewhere around $35,000 or less. Sometimes more.

What if there were a private equity fund that's sole purpose was to provide these fees for the developer in exchange for a small percentage of the project equity?

A Phenomenal Upside Potential

At PCC, we have seen a number of viable, good developer projects die because the developer was down to his last nickel and couldn’t raise the required fees for the lender. If only there was a way for the developer to raise the application fees needed to get the funding process started.

The PCC Private Equity Catalyst Fund Is The Answer.

When a developer has a project that is being facilitated for funding through the PreConstruction Catalysts network of resources, we have an opportunity to evaluate the quality of the project first-hand.

As a result, when we see one that looks worthy to our investors and to us, and there is a shortage of cash to get the funding machinery moving, these projects do not stand a chance.

The Catalyst Fund is being set up to give these projects life with the minimal fees needed in exchange for a small equity position in the project.

What Might Be The Profit Potential?

We'll use a current anonymous project we are working on to illustrate our thinking.

• The Project: A large scale recreation, sports and lodging facility in a under-served area.
  
• The Need: $340,000,000 Total Funding
  
• The Situation: A major developer is interested in taking the project from start to finish, providing its own financing in exchange for a minority equity stake. Additionally, the project is within four months of getting final approvals and entitlements to begin construction.
  
• The Problem: The developer requires initial project review costs to be paid by the sponsor of the project of $20,000. Once they have come in and evaluated the site and market, they are almost certain to sign on as partners and get to work.
  
• The Catalyst Fund: When the Fund has been capitalized, it can pay the $20,000 fee and take a small equity position in the project. As an example, let's use 2% equity.
  
• The value of the project upon completion is estimated at $350,000,000, with a very hefty upside in revenues from hotel, recreational area and waterpark customers.
  
• A 2% equity stake in this company would be valued at somewhere starting at $6 to $7 Million within 24 months, growing from there.
  
  This is from a $20,000 investment to kick start the project.

There are several other projects that have come to us with similar needs and in similar situations. Some of the ones struggling to raise the funding fees include:

·        A manufacturer of a patented concrete based formulation for use in construction homes and buildings that are windproof, fireproof, waterproof, and cost about 30% less to build than traditional stick built home. This company has been accepted into one of our funds (a debt-forgiveness fund from a foundation) but cannot raise the needed $35,000 fee to repackage the business plan into the right format for the investor. An instant demand awaits the construction and operation of a manufacturing plant.

·        A proposal for a very large multi-billion dollar wind-powered energy project using wind turbines to generate electricity in the mid-west US has to raise $35,000 for the same funding source that will allow this project to start.

·        A manufacturer of a specialized wind turbine generator has multiple projects that await funding, and is coordinating with PreConstruction Catalysts to bring the resources needed to move these projects from the drawing board. Each project will need a way to start the funding process with the various costs the lender/investor want to cover due diligence expenses.

·        A indoor water park, sports arena, 5,000+ room hotel and the amenities are planned in a famous city. This project is estimated to cost 5.2 Billion dollars. The funding resources will require an unknown due diligence fee.

·        A 12,500 affordable home community is planned for the up-and-coming Panama region.

·        3 hotels in Warsaw Poland are in processing for funding.

·        3 projects in Mexico are in processing for funding .

·        A fiber optic telecommunications link running North to South Africa is planned pending funding.

·        A water park in Rhode Island is being processed for funding.

·        A water park in Delaware is in the early stages of processing.

Our list of projects that are brought to us grows daily, and currently totals 20-25, each with values $100Million+ (As of Feb 2008). These are in various stages of review and processing. All will need some form of fees to start the lenders and investors.