Trying To Wrap My Mind Around Syndiction

[Brandon Riahi]

We've been trying to branch out and have been looking at alternatives to cash flowing SFRs. One thing we have looked in to is Syndications:

One we came across is for a retail center that is fully leased offering the following terms: 

7% preferred return

11.1% IRR with a proposed 7 year exit

Can anyone explain what this means?

Thanks ahead for your input

Brandon

[Mark Creason]

It means they are offering a 7% return, on the preferred, so if they make 7% cash flow, you would receive that. If they don't, it should accrue. The 11.1% IRR I would expect to mean that you will receive a 11.1% return on the money you have in the project, and that at the end of 7 years, they will sell the property.