Infrastructure Development
Fortis Groep has extensive experience and knowledge in infrastructure development. With several world projects already completed to the highest satisfaction, Fortis Groep delivers turn-key solutions to its clients.
We design, build and finance all real estate and infrastructure assets such as educational institutions, hospitals, multi/single-unit residential, airport facilities, office buildings, hotels, and resorts, essential to local, state, and federal government agencies as well as corporations that operate healthcare or energy-related facilities.
Romanian Trans Highway
Affordable Housing
Sustainable Homes
City Infrastructure
Turn-Key Solutions
Source of capital is almost non-existent for new development and infrastructure projects government institutions are turning to our innovative solutions to meet their operational needs.
We provide turnkey solutions at costs comparable to traditional financing, but without the red tape and negative covenants associated with bond financing.
We designed the most efficient financial alternatives enabling projects to proceed on a timely and cost-effective basis while allowing the client the ability to retain control over the asset with little investor oversight.
Transaction Structure
- Fortis Groep NV or subsidiaries acquires land from a third party, or acquires or ground-leases land directly from Client, and builds a project to Client specifications under Client direct control and project oversight as desired.
- The transaction is delivered as a complete turnkey development solution.
- The client occupies and operates the asset under a long-term contract as if it were the owner; using our capital to develop, acquire or upgrade the infrastructure asset.
- The client operates the property (or contracts out the operations) and retains all operating profits from the facility. Depending on the financial structure, infrastructure projects are typically operating at a profit while ownership risk and capital risk are transferred to us as a private sector investor.
- The project is fully capitalized by Fortis Groep NV or subsidiaries as private sector investor, but it does not become an actual debt obligation of Client as Client assumes nor guarantees any debt obligation, but rather only enters into a standard real estate contract with investor and owner Fortis Groep NV or subsidiaries.
- At the end of the contractual agreement, the property/asset can revert back to the Client at little to no cost or the Client can continue under the same structure under contract extension options.
- Deal structuring is driven by the particular requirements of Client.
Project Criteria
Transaction sizes ranging from as little as USD $10 million to USD $1 Billion and larger per transaction.
Either existing facilities or new construction projects can be executed, both revenue-generating and non-revenue generating:
- Pipelines/Water Infrastructure
- Office Buildings
- Hospitals
- Universities
- Warehouses/Industrial
- Equipment
- Power plants
- Water treatment facilities
- Transportation
- Waste to Energy Facilities
Benefits
A lease-based private investment transaction offers multiple benefits to the Client in meeting its growing corporate and infrastructure needs.
Competitive cost of funds in line with bond financing.
- Faster and easier than bond financing. We close as quickly as 90 days from the execution of a letter of intent. Furthermore, our contracts contain NO financial covenants or special reporting requirements, resulting in a low-maintenance form of capital that will not constrict the Client’s ability to raise future debt or allocate funds for other needs.
- Finance 100% of asset value. We finance 100% of asset value, versus traditional lending that may offer only 75% of value or bond financing that may have debt service reserve requirements that hold back up to 10% of the proceeds or require excessive underwriting income ratio’s (DSCR’s), which significantly increases the cost of capital.
- No refinancing or interest rate risk. Our contracts never need to be repaid or refinanced. When the initial contract term expires, the Client can exercise its extension options, vacate or repurchase the property, or receive ownership of the property free and clear, depending on how the transaction is structured. Furthermore, because the contractual payments are known in advance and have no typical debt covenants or restrictions, the Client faces no risk of fluctuating interest rates over time.
- Budgeting and balance sheet advantages. Our structures are designed to convert capital budget items into operating budget items, eliminating the need for real estate capital budget expenditures for new construction. They can also convert debt liabilities to operating expenses for accounting treatment, thereby improving capital ratios.
- Many bonds require designated revenue streams to support bond funding. Our structures are designed so that the Client does not need to increase taxes or pledge additional revenue streams.
- Our transaction structure does not impact bonding capacity. The client can use their bonding capacity for additional projects and needs.
- Credit Enhancing. Total debt may be decreased by engaging in this program compared to bond financing, which may, in turn, increase their credit rating.
- Operating Expense, not Capital Budget Payments are made from the operating budget vs. a capital budget outlay.
- Unlock Trapped Equity. A Sale-leaseback can unlock trapped equity in low-yielding and illiquid real estate and infrastructure assets without losing control and use of the asset.
Valuation
We fund 100% of construction costs. FF&E included. Fair Market rate for existing assets
Pricing
Determined by credit profile, the characteristics of the real estate or asset, and the market conditions. Very low and conservative hurdle rate for Return on Investment with a blended debt/equity return.
Structuring
Contract term is typically 20 to 30 years. Contracts can have flat rental payments or increases in rent over time, depending on Client’s structuring preferences. Client retains complete operational control and responsibility for all building repairs, maintenance, operating expenses and real estate taxes, if applicable, through an absolute triple-net lease. Lease payments can be custom tailored to meet budget demand
Land Acquisition / Title
Client can ground lease land or sell land to us, or we can acquire land from a third party. In a ground lease scenario, Client can retain title to property during the lease term.
Financial Risk
We assume the financial liability of the project costs while the Client retains freedom and full control over the asset just as would occur in ownership. The only requirement and obligation of the Client is a lease for real estate assets or an annual contract payment for non-real estate assets. These payments can be considered part of the operating budget instead of long-term liability/debt in most cases, if properly structured.
- This method allows us to build the project for Client without Client having to spend any of its money in advance.
- Our proprietary process of deploying capital is more than just a cost-effective, it is a capital management tool that allows utilities, corporations and municipalities to use and control essential real estate and energy related assets without employing prohibitive amounts of debt and equity capital in an illiquid, asset class.
- The combination of low cost equity, together with more efficient and streamlined leverage strategies, comprise the key components of cost effectively developing, acquiring and controlling energy assets. We are committed to combining those efficiencies with contractual structures that provide immediate lower opportunity costs.
- We can design a transaction to meet both price and opportunity cost expectations including friendly renewal options and purchase options
Sale-Leaseback of Existing Asset
Using our Investment model, more and more multinational corporations and government agencies are monetizing assets in sale-leaseback transactions to raise critically needed capital while retaining control over core assets.
In a sale-leaseback, the Client sells the asset to a private investor for a lump sum price and in most cases is equal to Fair Market Value. Then the agency leases the asset back from the investor for 25 to 30 years. At lease maturity, the asset owner may revert back to the Client.
This is an effective way of raising substantial amounts of inexpensive capital without incurring additional debt or reducing services to the community.
Why Our Proposed Structure?
We provide this program for real estate and infrastructure projects that seek to fast-track essential projects using private investor capital with no cash investment as well as no liability associated with debt or project financing.
We provide turnkey projects with unparalleled service:
- Relationship Focus.
- Personal Attention.
- Experience.
- Quick Decisions.
Our Capital Resources
Using our Investment model, more and more multinational corporations and government agencies are monetizing assets in sale-leaseback transactions to raise critically needed capital while retaining control over core assets.
In a sale-leaseback, the Client sells the asset to a private investor for a lump sum price and in most cases is equal to Fair Market Value. Then the agency leases the asset back from the investor for 25 to 30 years. At lease maturity, the asset owner may revert back to the Client.
This is an effective way of raising substantial amounts of inexpensive capital without incurring additional debt or reducing services to the community.
