Debt on syndications

[Mike Ball]

Hi BP Community,

I am in the process of learning syndication still and the big question I had was about the debt. Do syndicators take recourse or non-recourse debt? If you take recourse, will the manager personally sign the recourse guaranty?

Can you please suggest some non-recourse lenders active in the space?

[Scott Mac]

Hi Mike,

You're not going to learn as much as you need to know about this through forum questions.

It's a fairly large body of knowledge, and it's a key component of the deal.

But to get you started on this, you can research "key principle" + Fannie Mae.

To answer your question, the debt will most likely be non-recourse except under certain circumstances where it will not be to the syndicator.

They don't hand these loans out like consumer loans though, you need to have a certain net worth and experience requirement or partner with someone who does that will be actively running the investment with you. Meaning they are not available to everyone who wants one with a good credit score and a down payment. Only certain people can get these loans.

To get started here is a link (with a lot of info):  https://multifamily.fanniemae.com/

There are other financing scenarios available from other lenders, but they may end up costing more in some way, or have other restrictions, or increase your risk by their people not understanding how to effectively/timely close a syndication deal loan for you. Fannie Mae seems to have a pretty good track record for these kinds of deals.

Good Luck!