Phoenix Associates Land Syndicate (fka PBLSQ)

[Renavatio]

Okay, first of all, bank financing is not that difficult to get. It all just depends on what you are trying to buy. If there is an asset that the bank can lend against, they will give money to just about anyone who is deemed credit worthy up to a certain percentage of the value of that asset. They typically require personal bios of the principals taking out the loan, 2-3 years of personal taxes on the principals, 2-3 years of business taxes on the borrowing entity (not applicable if a newly formed LLC), as well as balance sheets, P&L statements etc if available for the borrowing entity. Of course the bank will ask for appraisals, environmentals, proof of reserves etc if applicable to the deal. Mostly, the bank just wants to see if the deal makes sense and wants proof that the borrowing entity has the liquidity to pay the monthly debt service. So in other words, a man running a lawn business who has his wife set him up on Quickbooks can apply for bank financing. It doesn't take audited financials or SEC attornies or fancy CPAs, though those things help. PBLS can get bank financing if they choose to and they have on certain deals (like the condos). And debt is cheaper than equity...here's a good synopsis that I agree with...

http://www.investopedia.com/university/financialstatements/financialstatements8.asp
"Because the cost of equity is not explicitly displayed on the income statement, whereas the cost of debt (interest expense) is itemized, it is easy to forget that debt is a cheaper source of funding for the company than equity. Debt is cheaper for two reasons. First, because debtors have a prior claim if the company goes bankrupt, debt is safer than equity and therefore warrants investors a lower return; for the company, this translates into an interest rate that is lower than the expected total shareholder return (TSR) on equity. Second, interest paid is tax deductible, and a lower tax bill effectively creates cash for the company."

I'd prefer that PBLS use more debt to finance their acquisitions which is why the shift to preferred shares for acquisitions was welcomed by me to some extent. To me, it's a move in the right direction. Those that talk about the 600lb Preferred Gorilla simply are too ignorant to understand how preferred equities are a great tool for building a business and acquiring assets...and especially how maturing Preferreds are most often simply retired by issuing new ones. It's like re-financing your house and as long as you make your payments, creditors (in this case us) will allow them to keep borrowing.

As far as environmental issues go for acquiring properties, well I guess it's pretty smart of them to have the largest and best environmental risk management firm already buying product from them...http://www.cherokeefund.com/intro.html

Ren