What syndications have you invested in as an LP (limited partner)?

Question

Have you invested in syndications as an LP (limited partner) in the past 3 years?

Who were the operators / GPs (general partner)?

What asset types did the syndication invest in?

Where were the properties located?

What were your returns on investment during the holding period and then after the property was sold?

How was your experience? Were your returns as projected? Were the properties repositioned and capital returned in a timely manner? Were there any capital calls?

Ian Ippolito · Answer

Just so you know, 3 years is actually considered to be a very short time with syndications (with long-term running 7 to 10 years or more).

So the way you asked your questions, only the most aggressive, nonconservative deals are going to be able to answer them (on things like selling properties after the holding period, capital being returned, properties repositioned).As a conservative investor, I try to avoid those deals like the plague...so I can't answer them.I can also say that I see thousands of deals a  year. And the ones that are having to make emergency capital calls now (and are in trouble) are almost universally the ones that were structured non-converatively. For example they took on (a) floating-rate debt (instead of fixed rate which was more expensive but safer), (b) short-term debt (cheaper but then they ran into refinancing problems) and (c) high levels of debt (to try to juice projected returns rather than conservative levels which aren't as "exciting" to a certain type of investor). Or they invested in office (which is in a downturn), etc.To answer the rest of your question: the majority of mine are either roughly hitting projections, hitting or exceeding. Some areas of real-estate are in a downturn right now...and so valuations are down. Most long-term sponsors know downturns happen periodically and that's why they run for 7-10 years plus (to give time to ride it out, valuations to recover and sell at a better point). So I personally take valuations at a downturn part of the cycle with a grain of salt (similar to people who look at the stock market every day during a downturn and get super stressed out and then become tempted to sell at the worst time possible). As long as the deal is structured conservatively to survive the inevitable downturns...the price after a downturn ends will be higher. And so I feel it's not worth my time to worry about it (as if the downturn price is the "final" price). Others will disagree with this...and that's fine.In my opinion, the key to success in real-estate is not avoiding downturns (which is impossible because no one can accurately predict when and how badly...and trying to time also often results in missing good deals too)...but instead structuring conservatively to *expect them* and be able to hold through them (not lose the property) and get out to the other side. I also use a vintage year strategy (which is similar to dollar cost averaging in the stock market), where I don't invest all my money at once but rather spread it out over multiple vintage years. That way I don't have all my money invested in, say, a 2009 (which was bad), and they average out (with they years before and after which were good). And unlike someone attempting to market time, I would say, still be investing in 2010-2012: which was a once-in-a-generation series of really great vintage years.With sponsors I personally want to see full real estate cycle experience with little to no money lost, conservative leverage, long-term debt, fixed-rate financing, high skin in the game and competitive fees.  Some of the sponsors that I invest in, market under 506B are not allowed to publicly solicit (and are only allowed to work on referral). So if you want more information, then private message me.

Chris Seveney · Answer

Last three years I have exclusively invested in debt funds as I did not trust the experience of some of the other sponsors.

Integrity Mortgage Note Fund - Jamie Bateman

7e Investments - that is mine which I of course invested in.

I also invested in 4 506b's that I do not want to name because I do not want it to be considered advertising on their behalf. Happy to share offline.

For all of the above:

1. No capital calls.

2. No pause in distributions. None of these funds took on debt, so pretty much no risk of capital call

3. No issues.

Note my investment strategy is first and foremost capital preservation. I will take those that project 8-10% all day (as some say the boring investments / those that hit singles and doubles).

The analogy when investing in real estate (VC type investments are very different), is I will stay at 65 MPH in the middle lane with my investments, as those that travel in the left hand lane at 75 MPH at times go faster then go slower, and at the end of the day they may get there a little faster, but it typically is not very noticeable to the person in the middle lane (and sometimes they do not get there faster). But there journey has a lot more variation and they may whip in and out of lanes and go from 75 to 50 and back up again...