Multifamily syndication - Huge travel expenses by asset manager

[Gova Reddy]

Hello,

I have invested into a multifamily indication through syndication, as a limited partner.

Our general partner lives in a different city. Whenever they travel to the city where the property is in, they are charging all of their travel expenses to the property. They have charged thousands of dollars of their travel expense so far towards property operating expenses. 

My understanding is that this is not a qualified operating expense of the property. Their visits are part of the asset management. Is my understanding correct?

What should we do? How should I proceed?

Thank you 

[Todd Dexheimer]

It sounds like there are some trust and communication issues happening. 

First, can a sponsor include their travel expenses? Yes if that is agreed upon in the PPM. 

Next, the sponsor should be providing detailed financial statements every month or quarter as likely agreed upon. It sounds like this is not happening. If it is not, request detailed financials from the operator. This should be within your right according to the PPM. 

Lastly, if you are questioning the travel expenses, ask for them to provide details on the travel expenses. It is a good thing in my mind that the sponsors are traveling to the property, but if they are staying in the penthouse suite and flying first class on your dime, then I would be questioning that.