Distinctive Financing
Hoffman Development Group can best be described as a “turn-key facility solutions provider” with a mission statement to resolve the disconnect between facility needs and creative development and financing. We bring together clients with specific needs and align them with best-in-class resources to deliver facilities that provide the highest and best use and economic value.
Hoffman Development Group develops, builds, and finances commercial real estate projects across the country - delivering quality facilities by utilizing distinctive financing programs that involve structured finance, project finance, balance sheet neutral financing, off balance sheet financing, or public-private partnership financing.
Project Finance
Project Finance is the long-term financing of infrastructure projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors, structured in such a way that it relies solely upon the future cash flows of the completed facility for the repayment of the financing.
Project Finance refers to the funding of projects through a specific financing structure that is often more advantageous than traditional financing methods, accomplished by obtaining independent market reports and feasibility studies to support the project’s financial analysis.
Public-Private Partnerships & Financing
A Public-Private Partnership (PPP or P3) approach for infrastructure procurement is a cooperative arrangement between public and private sector entities with a common long term goal. Within a P3, the public entity (the ‘public partner’) would lease land to an independent Private Non-Profit 501(c)3 Corporation (the ‘private partner’), with the public partner retaining ownership of the land and the private partner having ownership of the facility (the improvements) once completed. The private partner would make ground lease payments to the public partner for the land lease, and the private partner would lease the completed facility back to the client on a long term basis. Either party could operate and manage the facility (public or private partner, directly or indirectly via third party management). At the end of the facilities lease agreement term, the land and improvements would be co-joined and the public partner would own the land and facility ‘free and clear’ with no liens, encumbrances, or indebtedness. The private partner is responsible for obtaining and repaying one hundred percent (100%) of the financing for the total development budget, with no direct development related investment required by the public partner.
Public-Private Partnership = Public Land / Private Construction
Build to Suit – Lease/Leaseback.
Public Entity (municipality, agency, authority, district, school district, educational institution) owns land.
Public Entity leases the land to a Private Entity for construction of a new facility.
Private Entity finances and owns the facility, and leases it back to Public Entity.
Public Entity, via asset reversion at the end of the lease, owns the land and facility free-and-clear of indebtedness.
Key Benefits: Public Land / Private Construction / Lease-Leaseback
A Public-Private Partnership, or ‘P3’, is an alternative approach to infrastructure procurement for medium to large-scale projects.
P3 financing may involve Private Financing, or proceeds from a Municipal Tax-Exempt Private-Activity Bond (‘PAB’) issuance.
The key difference between traditional municipal bond issuance and a PAB issuance is that within a PAB the private entity and not the government is responsible for repaying bondholders.
As part of our P3 proposal, we can offer the option of Private Financing (revenue based) or PAB financing (revenue or non-revenue) - neither of which is a direct obligation of the public partner.
A P3 approach allows the public sector to transfer project design, development, financing, construction, operational, and revenue risk to a private entity.
A P3 vests the private entity with decision-making authority and additional project delivery or revenue risks that the municipality would otherwise assume.
A statutory distinction regarding PAB issuance as an attractive alternative to traditional municipal bond financing is that PAB’s are not subject to issuance caps or restrictions on indebtedness.
Lease payments begin at project completion, from annual budget appropriations.
Long term fixed rate lease payments, fixed lease escalators, below market rates, with no additional cost or taxes to the community.
No profit burden or exit strategies for the investors.
Public-Private Financing – Various Structures
Private Financing (Private Capital) with favorable terms and conditions, and asset reversion.
Non-Profit 501(c)3 as Borrower via the underwriting of Private Activity Bonds, and asset reversion.
Municipal ‘63-20’ Alter-Ego Non-Profit Corporations as Borrower, with asset reversion.