Finance Expert Witness On Capital Markets

In Financing Your Indoor Waterpark Resort in 2010, finance expert witness David J. Sangree, MAI, CPA, ISHC, and Eric B. Hansen, AIA, ISHC write:

The big question for 2010 is as follows: After two years of the frozen tundra in lending, are the capital markets beginning to thaw? Amid a plethora of opinions and sentiments, both positive and negative, where does reality come into play? Yes, the capital markets are beginning to thaw. Some financing has become available and transaction volume has increased, but this has been mainly for distressed properties. There has still not been any movement for new construction lending in 2010, just as there was not any significant new lending in 2009. The bottom line is that financing a new construction hotel and indoor waterpark resort remains extremely difficult.

Due to a lack of confidence in a market that has been ravaged by an economic recession, numerous bank foreclosures, and uncertainty regarding future regulations, lenders have pulled way back on financing new construction projects of all types.

When capital starts to flow again, what will characterize the deal, the deal makers, and the development project itself? This article describes the types of financing that are generally available, the characteristics of the developer, the lender, and the typical indoor waterpark resort development. A discussion of the challenges to obtain financing is followed by suggestions to overcome those obstacles.