Commercial Real Estate Syndications and Funds
After nearly $3 billion in offerings, our team has unparalleled experience with deal structures, waterfalls, and management fees to help maximize profits for you and your investors.
What’s the difference between a Commercial Real Estate Syndication and a Fund?
A commercial real estate syndicate is typically formed to purchase, operate, and eventually dispose of a specific, pre-identified property. A real estate fund is generally formed to purchase and operate multiple properties, based on a business plan for the fund. A real estate fund is the hardest way to raise capital as investors often want to see that the fund has already acquired assets before they decide to invest.
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Our team has unparalleled experience with deal structures, waterfalls, and management fees to help maximize profits for you and your investors.
Frequently Asked Questions
What is a real estate fund of funds?
A fund of funds is a fund that is formed to invest in someone else’s offering. For example, someone has a small group of investors who would like to pool their money in a limited liability company (LLC), and then that LLC would make an investment as a single investor in someone else’s offering. The fund of funds does not generally have control over the real estate, leaving that to the operator they invested with.
Is a real estate fund a good investment?
A real estate fund can be a good investment, as long as the fund managers know what they are doing. This means the fund managers should have a long track record of having successfully purchasing, owning and selling several properties, similar in type to those the fund plans to acquire.
What is a REIT fund?
A real estate investment trust (REIT) is really just a tax designation that allows a corporation that raises capital from private investors to buy real estate to be treated as a pass-through entity, like an LLC. For a corporation to maintain its tax designation as a REIT, it must at all times have at least 100 investors, and it must distribute 90% of its profits annually. If it fails in either of these respects, it can lose its tax benefits and get double taxed like any other corporation. There are also additional reporting obligations associated with REITs. REITS typically can’t offer the same returns that private offerings can, because of these additional management and reporting obligations. Most real estate entrepreneurs simply use a limited liability company that gives them the pass through tax benefits of a REIT, without the additional regulatory requirements associated with a REIT.
How do I set up a real estate fund?
The process of setting up a real estate fund starts with assembling a fund management team with significant experience with the same asset classes your fund will acquire. You should determine your business plan for the fund – what will it buy, how long will it own individual properties, what is the geographic location of the properties it will acquire; how long will it accept new investors and acquire properties and when and how will it wind down. Most funds have an investment period and a liquidation period; you need to specify these timeframes so investors understand how long you will have their money, and what has to happen before they will see a return. Once you have an idea of your fund’s business plan, its objectives, and your team members, you are ready to hire an experienced corporate securities attorney to guide you on an appropriate securities exemption and draft the offering documents for you.