Private Placement Securities Offerings, Reg. D. Exempt...

Most experienced commercial real estate developers routinely acquire funding via the private placement securities offering method, wherein; the developer/sponsor (can also be different entities) becomes a securities issuer pursuant to a private placement securities offering subscription process that is not the subject of a general solicitation (hence the term "private placement").  The developer can issue either debt securities, equity securities, hybrids and convertible securities or some derivative thereof.  The private placement offering is usually undertaken with the assistance of a commercial investment banking firm that has enough Qualified Institutional Buyers (or "QIBs" - pronounced "quibs") to syndicate the issue, but the term, "syndication" can mean different things to different people, so it is important to understand the alternatives because they bear directly on the fortunes of the developer/sponsor.

In terms of a securities float, the syndication process is managed by the investment banker.  The investment banker promotes the transaction through the investment banker's own rolodex of QIBs and through obtaining additional sales syndicate support from other investment banking firms to quickly and efficiently close-out the issue.  This takes time, involves a "road show" where the developer/sponsor and investment banker undertake lengthy teleconference presentations and attend presentation meetings for the purposes of qualifying the participation of interested QIBs in your project's securities offering.  This has to be completed in light of state and federal securities regulator requirements.

On the other hand, the real estate sales syndication approach does not require a private placement offering memorandum be drafted and does not require the services of the investment banker.