Dear Fellow Entrepreneur,

Thank you for the opportunity to present our capital-raising services, specifically to create and manage one or a series of Real Estate Investment Trusts -"REITs". Please take a few minutes to read this area thoroughly, as it outlines the most successful ways to raise capital for privately held REITs, whether you wish to stay private or go public. This discourse explains, in a very basic way, how we assist start-up and early-stage REITs in raising substantial amounts of capital using the techniques of Wall Street investment banks.

Most of our clients have enjoyed success as real estate developers, real estate agents, property management companies and managers of projects capitalized with their own money and limited outside investor funds. Many see a need to reorganize their financial and operational structures as the administrative burdens of managing multiple projects with differing sets of investors are becoming too complicated. Most have now come to the juncture where their track records are very good, and they have earned the right to manage large pools of assets - cash and property. Many are ready to set-up an operation where they can access pools of equity capital quickly to take advantage of opportunities as they arise. Having immediate access to large pools of equity capital relieves the problem of feeling the pressure missing out on great opportunities, because of the need to arrange the financing for each deal separately, as they arise; or worse invest for the sake of investing or just because there's too much cash setting idle, which eventually affects the rate of return performance. If any of these aspects sound like your company's situation, then we have the expertise to assist you in solving this problem and achieving your goals.

Most start-up or early stage REITs organize and capitalize a Management Company first. Some may elect to keep their current real estate development company or property management firm in tact and use current cash flow and or capital to start this process. Others elect to start fresh and form a new company to specifically become the management company. The decision on which course to choose is generally based on a handful of factors. The primary factor being the ability to either fund internally - one would keep the existing company and evolve it or the need to fund from investors known personally - one could offer participating preferred shares (or units for an LLC) that are callable and or convertible into the management company's common shares (or units for an LLC) at a later date.

Depending on the current size of the operation, the Management Company then sets up a Private Real Estate Fund to either remain private or build into a REIT. For most start-up or early stage REIT management companies, it makes sense to start with a Private Real Estate Fund as an LLC and grow its investor base to 100 or more before registering as an actual REIT. This is done, because REITs technically need to be formed as a corporation (it is easy to convert an LLC into a corp.), have at least 100 investors (with no one investor owning more than 9.9% (the 5-50 test) and then file Form 1120 with the IRS to avoid the double taxation of a corporation. Whether your fund remains private as a FUND or you choose to go public as a REIT, we'll continue to use the term REIT to include both types of Real Estate Funds for simplicity's sake.

Once the REIT has been formed, the management company may then contract with each REIT that it creates, to manage the assets of the REIT(s). Generally, raising $500,000 to $1,000,000 in seed capital for the Management Company is sufficient to market and sell the shares of a REIT or two. The Management Company then "Lends" the REIT a portion of the seed capital, to enable the REIT to establish itself as an entity that can qualify for raising capital through the issuance of securities. The Management Company contracts with the REIT for an annual Management Fee of 1% to 3%, with a share in the profits of 20% or so. Once the REIT is capitalized, the Management Company is paid back the loan plus any accrued Fees it may incur.

Incidentally, the true value of a “Tenants In Common” (TIC) deal structure is the availability of the 1031 Tax Deferred Exchange. The 1031 Tax Deferred Exchange holds up if the property is registered as Tenants In Common and is held by one entity, i.e. one property per one entity with a pool of investors. That property is treated as held by one entity for tax purposes, although the interests and distributions are prorated to capital contribution amounts of each investor. In addition, TICs are professionally managed, generally by a Property Mgmt. Co.

A pool of properties on the other hand, such as a REIT or Real Estate Fund, will not qualify for the 1031 Tax Deferred Exchange, but using Financial Architect System™: REIT Producer – Regulation. D™ will work like a charm for producing TIC Investment Deals, as long as one uses either the Growth or Income REIT Template to purchase only One (1) property and register each share or interest-holder as “Tenants In Common”. The Mgmt. Co. Templates will work like a charm as well, as most entrepreneurs will invariably need to form and or capitalize a Mgmt. Co. to handle the volume of administrative work that will be involved in managing “One Property Portfolios” or TICs.”

So, if you have a serious interest in building one or a portfolio of TICs to manage, we suggest you purchase and slightly modify the REIT Producer – Regulation. D™ to build the required securities offering documents needed to pool investor capital.

As former Wall Street financiers, we have many capital sources looking to fund "Quality Deal Flow", primarily investment banks - broker dealers, angel groups, hedge funds and private equity firms. Our job is to create and supply that Quality Deal Flow. If you believe your REIT(s) can become that Quality Deal Flow, then we are interested in discussing a relationship further.

Suffice it to say, there is an unlimited number of ways to seek capital. However, there are only a few ways to capitalize a Private Real Estate Fund and or a REIT with substantial amounts of capital, while maintaining the vast majority of common equity ownership and voting control of the management company of the REIT, as well as, management control over one or a series of REITs.

Clearly, we cannot design or illustrate an optimum capitalization plan for your REIT(s) in a dissertation on a website; however, whether you have been through the capital raising process or not, we are sure that you will appreciate our process.

If you have not been through the process before and have a limited appreciation and understanding of it, then we suggest you educate yourself first, by reading: “The Secrets of Wall Street” – Raising Capital for Start-Up and Early Stage Companies.
 

When it comes to raising capital, there is no simpler way to explain how to effectively raise substantial amounts of capital while maintaining voting control. If you read just the first 2-Chapters of the EBook, it would be time well spent. By doing, so you will be able to make an informed decision if our process is right for your company's capital raising needs. At a minimum, you will save a significant amount of time and money.

The fee structure to the management company for managing the REIT can be a combination of any number of various factors, but the industry norm is as previously mentioned.

When organizing the REITs one should be mindful of industry norms to increase the probability of current capital attainment, as well as setting up each in light of becoming the "Quality Deal Flow" that Wall Street seeks. Separating the types of properties (Income vs. Growth) into specific types of REITs is also an industry norm.

Creating and capitalizing a REIT is also available utilizing the Financial Architect System™. If you do not have the money for our Investment Banking Advisory Services, but do have the time to go through the learning curve, we suggest you start your capital-raising efforts with our REIT Producer - Regulation D Private Placement Producer™ software. Actually, the E-book will enable you to go through the entire securities offering document production and capital-raising process without any out-of-pocket cost to you, but you can save over 200 hours of your time if you purchase the program.   If you do not have the time to go through the learning curve, but do have the money, we will assist you through our full service Investment Banking Advisory Services. Through this service, we offer speed and accuracy. The range of progressive and contingent fees are customized according to the quantity and quality of the information contained in your current business plan or securities offering document.

When making a competitive analysis of our Investment Banking Advisory Services, please be sure to: (a) price the cost of producing pro forma financial projection that are GAAP Compliant; (b) price the cost of producing a marketable deal structure; and (c) price the cost of producing either a Regulation D 506, SCOR, Regulation A/CA(1001) or SB-2 securities offering document.

* Commonwealth Capital Advisors, LLC does not practice law, but it will assist its clients in managing the legal process with the clients’ legal counsel. Securities Offering Documents are prepared for legal counsel review.

** Commonwealth Capital Advisors, LLC does not solicit or sell securities for its clients, but it will assist its clients in managing the capital raising process by assisting in the marketing effort and training bona fide employees of the client firm and or engaging broker dealers to solicit and sell you company’s securities.
 

When taking a company or REIT public, we outsource all legal and accounting (audit) work to qualified securities counsel and SEC compliant accounting firms. We engage in underwriting negotiations with SEC registered broker dealers as lead negotiator. We administer and pay for the entire process, as part of our fee.

Our fiduciary duty lies with our client firms.

We have designed our contingency fee schedule, so we are equally committed with our client firms to a successful capital-raising effort. Our client firms make progressive payments as we perform certain securities offering document production, filing and securities sales training functions and as they raise the capital. Although we cannot take a commission from the sale of securities, our profits from securities offering document production and advisory fees are dependent upon the successful capital raising efforts of our client firms. Our “real” money is made when we take a REIT public. By assisting you in maintaining the vast majority of common equity ownership and voting control of the Management Company, throughout the entire capitalization process, we earn stock, a 3 to 5% fully diluted equity stake in the Management Company, once we take your first REIT public.

We can help your Management Company raise as much capital as necessary for one or more REITs on an “as needed” basis. You may choose to do this through a series of securities offerings to support the creation and operation of an “in-house” Finance Department. Whether privately or publicly held, we can assist your Management Company with the creation and marketing of “in-demand” securities to raise capital.

Clients of Wall Street investment banks use this process. It is a logical progression of steps to ensure that you always maintain a relative position of strength when competing for capital, as well as, the vast majority of equity ownership and voting control. These are the precious elements that most business owners give up too early in the capital raising process. We can cite case study, after case study, of entrepreneurs who have successfully raised capital using various parts of this process because these are the same fundamental processes used on Wall Street. Their successes will not necessarily equate to your success, because without your belief in the logic of the process, dedication and commitment to the effort, the case studies are moot.

If you choose us to represent your Management Company as its Financial Advisor, we will engineer a capitalization plan and a series of securities offerings with marketable deal structures that will give your Management Company and its REIT(s) the highest probability of capital attainment possible. How can we make such a claim? Because our process is simply the Wall Street process, re-engineered for Main Street companies. In addition, if you need an SEC Registered/NASD Member Broker-Dealer to sell your Fund’s securities for you, we can assist you by sponsoring your REIT at the next National Investment Bankers Quarterly Capital Conference.
 

Our seasoned experts offer in-depth experience in business organization, deal structuring, securities offering document production, and capital procurement through the issuance of securities, matching the needs of any business structure in any sector.

We look forward to serving your Management Company as Financial Advisor. If you have an interest in executing our “Investment Banking Advisory Services (IBAS) Agreement”, please send email to support@CCAIntl.com to set a mutually convenient time for a conference call. Sending your business plan, executive summary or outdated private placement memorandum will provide a more efficient use of our time.