Anyone work with Simm Capital Group?

[Paul B Fleming]

Looking at an offer for Affordable housing portfolio, offering 10% dividends and 65% profit splits.

Has anyone worked with Simm Capital group and had any success?

Thank you Paul

[Stuart Udis]

Not sure whether you ultimately invested here and know nothing about Simm Capital but based on what you shared the first question you should be asking Simm Capital is where do the 10% dividends derive from? It's also important to understand the amount of committed capital relative to assets under management (basis, not appraised value). I am often retained to vet syndications on behalf of LP's and a common red flag I come across are syndications where the distributions are merely a return of over raised capital. As an LP you fair far better when any funds distributed are the consequence of real estate activity. Perhaps it lacks the "guaranteed" pitch that might intrigue you, but those pre-determined dividends are great until they stop, and usually that's what happens when new capital is not brought into the deal.  Secondly, who cares what the ownership splits are if the gain can't be realized because the values are propped up/can't meet projections, the sponsor cannot execute on the business plan or the fee structure severely eats into the distributable cash when the realization event actually occurs. Also critical in the analysis is the leverage that's used.  Focus on sponsor track record, understand the fees the sponsor charges and when they are collected and how the the sponsor uses bank leverage. Two sponsors can structure their syndications with identical assets and execute the same way meaning the underlying real estate will perform the same but sponsor A uses 50% bank leverage and invests no capital into the deal whereas sponsor B uses 75% bank leverage and invests 10% of the committed capital. Sponsor B may only offer 40% compared to the Sponsor A 65%, but the LP's in Sponsor B's syndication will fair better because far less capital is required. The same can be true if the fee structures are more advantageous to Sponsor A vs. Sponsor B.  This is what many get tripped up on when they review syndications and I suspect many would make different investment decisions if they didn't focus so narrowly on dividends and ownership interest.