FMSbonds, Inc. served as placement agent between a developer and private investment fund in the purchase of approximately $68.4 million of reimbursement cash flows.
The investor purchased the Ad Valorem Tax Revenues at a discount rate, generating a substantial upfront payment to the developer.
At the time of sale, the district was comprised of approximately 1,658 taxable properties consisting of single-family homes, single-family developed lots and other commercial properties. The district’s certified assessed value exceeded $1 billion and maintained a five-year history of tax collections exceeding 99% annually.
Purchased cash flows were net of operating expenses and bond debt service associated with the district. The cash flows were based on estimated buildout and growth rates through the life of the district.
Future cash flows were based on conservative growth assumptions, providing the potential to realize increased ROI should the actual growth exceed the baseline model.
Modeled cash flows
FMSbonds initially worked with the developer and modeled future cash flows to be marketed. The firm then prepared a credit packet to market the cash flows to multiple investors.
Once identified, FMSbonds worked diligently to bring both parties together and maintained a continuous line of communication, ensuring the investor received all requested due diligence materials.
FMSbonds also accompanied the investor on a site visit with the developer and provided updated projections based on feedback from both the investor and developer.
FMSbonds’ expertise with land-secured financing provides investors with a clear understanding of the risks and rewards associated with a private purchase of reimbursement cash flows.
Summary:
$68,431,000 Private Sale of Limited Tax Ad Valorem Net Revenue Reimbursement Cash Flows
Texas Special Improvement District
Sale Date: December 27, 2019
Cash Flows Through: FY 2034
2019 Certified AV: $1.011 billion