I am acting as a syndicator for gathering accredited and sophisticated investors to form an investment Limited Liability Company (LLC). The investments are focused on distressed commercial income properties, primarily apartments, that have the potential strong margins for created equity and cash flow after repositioning and stabilizing the property with renovations and an improved tenant base with professional property management.
Sometimes, we will perform a special search and acquisition for cash-flowing stabilized properties for private financiers who want cash flow now, rather than waiting for stabilizing a distressed property. For details, please contact us on our support page.
I look for these opportunities, either as a primary syndicator that negotiates and enters into a contract for the property, or I act as a secondary syndicator on opportunities brought to me by other primary syndicators.
Either way, I underwrite the project by performing an analysis of the operating data (historical, actual, and pro-forma projections), and then I structure the proposed financing for my list of accredited investors and sophisticated investors. If the project includes debt financing, then my investors may qualify and guarantee that debt. If the project requires multiple tranches of equity financing, for example senior equity, preferred equity and common equity, then I will calculate the senior financing tranches (above common equity) according to the Time Value of Money (TVM) parameters the same as for debt financing.
The common equity investors receive income and exit strategy before I receive income and exit strategy, according to their percentage ownership and their minimum agreed yields.
Either acting as a primary syndicator or a secondary syndicator, I receive a syndication premium fee paid at closing from the investment funds. As a secondary syndicator, I also receive a percentage of the primary syndication premium fee. As a primary syndicator, I offer a percentage of my syndication premium fee to a secondary syndicator as compensation for delivering investment funds for the project (in addition to whatever fee is charged for the secondary syndication fee).
As a primary syndicator, I receive a percentage of ownership for income and exit strategy that is subordinated to my investors receiving a minimum agreed yield on their investments for income and exit strategy. Senior investment tranches, either debt or preferred equity, are structured for yield and full redemption at project completion from the exit strategy (either sale or refinance). As a primary syndicator, I can offer a portion of my allotment of ownership to a secondary syndicator as compensation for delivering investment funds for the project.
When I “sub syndicate” a project that is offered to me from an independent primary syndicator, I require a percentage of ownership from the primary syndicator’s allotment for equity, income and exit strategy, as well as a percentage from my investors. My allotment from the primary syndicator’s ownership is on a “pari passu” (equal stance) basis with the primary syndicator that is subordinated to the common equity investors receiving their minimum agreed yield.
This arrangement is similar to a “joint venture” between the primary and secondary syndicators. The primary syndicator retains full management control and responsibility as the sponsor of the project. The “joint venture” agreement between the primary syndicator and the secondary syndicator is fully disclosed to all investors before they decide whether to invest.
If you wish for us to work together with this kind of “joint venture” arrangement, then please contact me on the support page by clicking here.