What are the reasons syndicators fail

[Bryan Mitchell]

What are the top reasons apartment syndicators fail? Please provide specific examples of those who have failed. Thank you.

[Michael Bishop]

@Bryan Mitchell, the way I see it, you can break down risks of a syndicated deal into 3 pillars.

1. The Deal. Is it conservatively or aggressively underwritten? Are there hidden costs that aren't underwritten to that destroy cash flow? If it's a value-add play, is there enough meat on the bone and are rent premiums at the top or middle of the market (unlikely that they'll be at the bottom)?
2. The Market. Does the market have strong fundamentals? Rent growth, population growth, job growth, occupancy, etc. Is the Operator making conservative or aggressive assumptions based on historic market performance? Is there one major employer that, if they left, would sends jobs and population for the market in a downward spiral? What is the competition like?
3. The Operator. How experienced are they / what is their track record? Do the key partner's skill sets complement each other well? Do they have a background that lends well to successfully syndicating commercial real estate? Are they all over the place with their strategy (i.e. one deal they're doing core plus and the next deal they're doing deep value-add). etc.

This is all high level, and there are a lot more factors to consider for each pillar. That said, if one of these pillars is off the deal can be a total flop.