Commercial Real Estate Investment Syndicates

Have you considered the explosive earnings growth opportunities in commercial real estate investment syndicates?  In the recent past, the vast majority of commercial real estate investment syndicates open to the public have been in existing stabilized income-producing commercial real estate properties.

Now there is a whole new level of participation available to the investing public due to the creation of a new capital market syndication platform (the www.realestateplays.com platform) that offers commercial real estate investors the opportunity to create a higher-yielding retirement investment program that is immune to the ups and downs of the other capital markets, because it uses a modified Dutch Auction approach.  Every new syndication on the platform is offering units in multiples of $25,000.00.

If you are a developer seeking financing, the syndication approach is just too lucrative to not be given financing consideration because the minimum syndication is for $2,500,000 (or 100 $25,000.00 units) to start.  If the syndicate sells the minimum requirement ($2,500,000 or the difference between the total project capital budget and the project mortgage financing, whichever is greater) then the sales continue up to an amount equal to the total project budget plus the assumed profit spread derived from refinancing or selling the property once it is fully stabilized.  If the project involves major construction (and most of them do) then the syndication holding period is limited to three (3) years as a general rule.  This means the sponsor has to get the project constructed, opened, operating and stabilized at its maximum sustainable occupancy rate within three (3) years or it is not (as a rule) eligible for syndication without an even more detailed review by the syndication platform than there would otherwise be if the syndication holding period was less than three (3) years.  Projects that are acquisitions that have already completed all substantive construction operations and are under continuous operation are assumed to have holding periods of 7 to 10 years because the gains are only incremental to the gain of the syndicates that have construction and development operations still pending.

The syndication platform takes the mystery out of investing.  There are three (3) types of syndicates that can be formed on www.realestateplays.com: 

• Pre-Construction Phase Syndicates.  In general, these kinds of syndicates represent the highest level of investment risk because these projects do not as yet have a bankable firm commitment for the construction mortgage financing loan required to complete all activities associated with the acquisition, development and construction of all project assets set forth in the sponsor's business plan.  There are limitations on uses of the syndicate's funds prior to closing on the construction loan.  These projects have, as a general rule, a 3-year holding period in which the sponsor is projecting a gross return to the investors of 150% to 300%.

• Construction Phase Syndicates.  In general, these kinds of syndicates represent slightly less risk than Pre-Construction Phase Syndicates because the sponsor already has a bankable firm commitment for the required construction financing and the syndicate is being formed to plug the equity gap (the difference between the total project capital expense budget and the amount of the construction mortgage loan and any other funding sources).  The expected return is in the range of 150% to 250% for a holding period of no more than three (3) years.

• Post-Construction Phase Syndicates.  In general, these kinds of syndicates would represent the least amount of risk and therefore require an extended holding period (7 to 10 years) in order to create a 250% gross return (or more) for the syndicate investors pursuant to a business plan proposal made by the syndicate sponsor prior to the closing of escrow.

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