Syndicating assets under management

[Vassilios Kovanis]

My partner and I have been doing well for the past 8 years developing and repositioning industrial properties using our own capital.

We are now considering scaling up by raising funds through 506 offerings, and studying the different ways to get our foot in the door

The biggest obstacle being our lack of investor relationships and track record as sponsors, we were thinking about syndicating existing, on going deals we currently manage in our portfolio, rather than committing to a large deal we could potentially fail to close.

The rational behind this is that a deal already under management with in place, favorable financing could present a lower risk profile for prospective investors and therefore may make a capital raise cheaper and easier. I realize that raising equity for smaller deals may prove costly and time consuming but it seems an acceptable price to pay to build investor relationships.

Can someone explain how this could work and if the whole thing makes sense?

[Stewart Beal]

The challenge with syndicating a deal you already own would be the investor thinking the valuation you are putting on it is too high, but there is nothing specifically stopping you from trying this and you really have nothing to lose besides the cost of hiring an attorney to put together the syndication paperwork for you.  And you can use that syndication legal work on your next deal if what you are trying doesn't work out   I am currently raising a fund and the legal work cost $30,000.  Keep in mind, raising money is a full time job, so you will need to hire someone to do what you are doing now or vice versa.