I have a consultant who is really interested in moving their office to Downtown South. The 2024 timeframe worked perfect for their lease too.
1 Like
Any project starts today are for 18-24 months out……not the current climate.
Granted Cost of Funds is high compared to 9 months ago BUT KANE is not using traditional financing.
2 Likes
I’m fully aware of how it works. That said I’d bet dollars to donuts a speculative office building does not break ground at Downtown South in 2023.
Mmmm. What kind of donuts?
10 Likes
Will take the donut bet. Bet they break ground before summer
4 Likes
I have heard this before, and that this is what allowed them to keep on building at NH east during the great recession. Their projects never seem to sit in limbo indefinitely waiting for financing. It’s:
- Propose
- Get approvals
- Maybe wait in line behind a few other Kane developments already in progress
- Build
What exactly is different about their financing compared with most developers that makes a Kane development basically a sure thing, while other developments are never certain until the foundations have been dug and the crane is being assembled?
8 Likes
Yeah because Kame when through North Jills during 2009 Recession and build through 2012 the first phase. I wonder what he has in his chops.
1 Like
Kane & “big league” developers have large institutions, private equity, & large personal investors who are searching for yield & alternative places to invest their capital. Often they don’t require “monthly payments” like traditional financing with traditional commercial lending banks.
The hurdles requires for traditional financing can be a pain in the ass. Banks are so highly regulated the hurdles a developer has to jump thru can be prohibitive….especially in markets like today where short term cash flows may not cover the debt service.
For PE & wealthy investors; they don’t need “$2485.00” every month. They can simply defer cash flows in exchange for higher capital appreciation percentages.
In short; its easier to make money when you have money. Its also easier to invest & there is a much larger pool of capital available to developers like Kane with much MUCH more flexible repayment terms than say, your car loan or home mortgage…or even rental property.
13 Likes
What’s the wager? Loser has to do a tik tok dance in front of the construction site?
That makes a lot of sense. I guess it’s sort of a corporate analogue to how rich people just get even richer by using their own stocks, debt etc. as a way to leverage even more money over time without actually putting in labor for it:
2 Likes
Yep I’m willing to bet that a lot of his investors buy a share of the project that they assume (base on past record) will give them a much better return than a loan. Based on that investment would make it easier to go to banks and get a much better deal that you an I if need a little more money. And you wonder how the very rich get to be supper rich. It’s because they are able to make these investments that most people would consider a very risky bet.
2 Likes
this is the way every developer big and small finances their projects, nothing new or anything that’s makes them different 
No, this is not the way ‘every developer’ finances their projects. Most smaller developers use traditional lending means OR they can raise capital via ‘friends & family’. The way developers like John Kane can operate is very different just simply on the scale at which they can raise funds. JP Morgan is not funding a 4500 s/f adaptive reuse project or a house flip. Koch is not funding such a project because they need scale (ie: hundreds of millions to yield the return they want). Small deals are not worth it for them.
I guarantee you the investment terms & flexility of invested capital is quite different in addition to availability of capital to Kane compared to me or you.
3 Likes
Once upon a time Kane was a small developer.
3 Likes
funny enough, I have been around developers directly and indirectly for almost 30yrs, I have helped them source debt and equity and it has been the same scenario all along. Developers are not going to take a chance with small deals that won’t give them their ROI. Kane, just like any other guy has to go raise equity before they can source their debt. Kane will own very small percentages(single digits) in every deal then charge a development fee in millions of dollar to their equity partner. They will make their money once that projects sells and through their development fees.
3 Likes
Speaking of mass timber office buildings, hopefully ours will come out as well as this beauty in London:
2 Likes
Not anymore….so he no longer has to deal with First Horizon National bank of america Fargo chase & people
i worked in some of his health clubs. early on i think it was a shopping center in wilmingotn and greenville which he put ftiness centers in…later imperial center near page road.
Creditworthiness, namely having equity investment partners (biggest is FCP) who have pledged capital in advance of the approvals. Because they have a great track record of delivering, they basically have access to a blank checkbook of other people’s money ready to spend. Younger firms have to get approvals first, then do a whole “Shark Tank” routine to sell equity + borrow debt to realize those approvals.
Kane’s takeover of Merge Capital’s Park City South project is an example of this. Merge had a huge plan that they got entitled, but didn’t have capacity to execute on. Kane had lots of money sitting around that needed to be spent; I suspect that they raised Opportunity Zone investments for Downtown South and soon realized that was going to get stalled. So they swooped in and wrote checks to take over PCS.
11 Likes
Business Journal is saying “work is about to commence”. Can’t read the article but sounds encouraging.
10 Likes