Introduction to OSC

Behind the Door of Real Estate Syndication

 

We empower real estate developers to partner with investors by providing the tools and resources necessary to facilitate capital raising for worthy projects.

 Open Source Capital helps clients syndicated real estate deals thats are funded by accredited investors, pursuant to a Regulation D 506c Securities Offering posted on a private online platform. (ALTMARKETPLACE.com)

Generally, these deals have high risk-adjusted yields because they are sold off-market to sophisticated investors that are looking for better terms than those offered in publicly traded deals.

Before formally launching an Offering, we read the market by informally polling select investors to gauge their appetite for the deal.  Based on these discussions we will launch the Offering at a price we believe will clear the market.

 

The Open Source Capital team has participated in over 210 real estate investments.   We focus on customers building or improving projects, in urban infill markets or underdeveloped parcels within already developed areas. Our Sponsors are typically building or managing “market-appropriate” properties in the respective markets in which they operate.  The Company has identified capital inefficiencies common to these type of projects and to mid-sized developers, and has focused on syndicating preferred equity investments to capitalize on these inefficiencies.

OUR EXPERIENCE

Open Source Capital’s senior management has worked together for over 20 years and has developed an institutional grade infrastructure. The principals, Kyle Meyer and George Henderson, have over 80 years of combined experience in investing, banking, origination and management.  The team focuses its lending activities in markets where we have human assets and a deep intuitive understanding of the market.  The corporate office is located in Fort Lauderdale, FL

OSC’s technical knowledge complements its banking and investment structuring experience for many types of real estate including: low and mid-rise condominiums, apartments, town homes, renovations and single-family homes. To assess risk and appropriately suggest pricing for an application, OSC examines many projects and market factors, including assessing the project’s marketing position, local market and the developer’s track record. OSC brings investors and sponsors together to create attractive transactions where risk and return are well balanced.

 

Hard Hat II

 

Our reputation, expertise, and history of established contacts with banks and developers have generated a strong foundation for new and repeat business. OSC’s experienced underwriting department understands the need for appropriate documentation and efficient processing. An error-free investment file adds value. This benefits both the client and the investor. The complexity of construction lending is well understood by OSC’s professional staff. Our experienced managers ensure applications are thoroughly prepared and documented. This, in turn, ensures sound credit decisions and enhances credit quality. External audits have consistently concluded that our files are thoroughly documented and are of high quality.

Our ability to dream creatively and make those dreams materialize is making Open Source Capital a model for many companies in the future. We realize that changing times often require changing the way in which we do business.

We seek to retain our entrepreneurial spirit, while channeling people with a common cause and capital resources together in ways that will allow us to grow and create wealth for all stakeholders. Moreover, we believe it is vital to the success of our business that our shareholders, officers and associates all be considered partners. There was a time when little was needed to succeed in the real estate business, but this is no longer the case. In today’s world, we need to remain flexible and yet, at the same time, have the scale to gain access to the world’s capital market.

 

Types of Syndications

There are three types of syndications: (1) an underwritten deal, (2) a “best-efforts” syndication, and (3) a “club deal.”

Underwritten deal

An underwritten deal is one for which we guarantee the entire commitment, and then syndicates the equity or debt with other investors.  If we cannot fully subscribe the offering, we will absorb the difference and may later try to sell off units to investors.  Underwritten deals usually require more lucrative fees because we are on the hook if potential investors balk.

 

Best-efforts syndication

A “best-efforts” syndication is one for which we commit to underwrite and market, but leaves the Offering to the vicissitudes of the market. If the deal is undersubscribed, the deal will not close—or may need major revisions to clear the market.

 

Club deal

A “club deal” is a project that is pre-marketed to a group of relationship investors.

The Syndication Process

Before going online, we will outline the  strategy and  our view on the market.  We will prepare an information memo (IM) describing the terms of the transactions. The IM typically will include an executive summary, investment considerations, a list of terms and conditions, an industry overview, and a financial model.

We will solicit informal feedback from potential investors on their appetite for the deal and the price at which they are willing to invest. Once this intelligence has been gathered, we will formally market the deal to potential investors. We distribute most IMs—along with other information that typically contains the following sections:

 

The executive summary will include a description of the issuer, an overview of the transaction and

rationale, sources and uses, and key statistics on the financials.

The list of terms and conditions will be a preliminary term sheet describing the pricing, structure, collateral, covenants, and other terms of the credit (covenants are usually negotiated in detail after the arranger receives investor feedback).

The industry overview will be a description of the company’s industry and competitive position relative to its industry peers.

The financial model will be a detailed model of the issuer’s historical, pro forma, and projected financials including management’s high, low, and base case for the issuer.