Great Summary on a GP Review of a Syndication

[Chris Seveney]

First, I have not done the full blown analysis on this offering because it was an offering that did not interest me overall- but I want to add the caveat that I have not run numbers and have not formed an opinion that agrees or disagrees with the sponsor. I just wanted to share this as they do a great job of how someone reviews an offering.

(1) m. stanfield on X: "Page 9: Rise48 is taking 28% above an 8 pref. Meaning, you get your money back plus and 8% return on that money before Rise gets a penny. Except, for a group that is only putting in 0.5% of the equity, taking 28% of the promote seems very out of market, to me. One other thing. https://t.co/52mft8cQeH" / X

[Frank Sichelle]

Some investments are difficult to analyze. Others, like this one, are so blatantly bad that the sheer volume of people raising money for them have destroyed the reputation of fund of funds across the entire industry. Everyone should read the entire series of posts on X but to highlight the two largest red flags:

1) They had to raise millions of dollars to fund the operational shortfall of the investment while still falsely claiming to investors a 5% average annual cashflow. That's not cashflow, that's raising investor capital to return investor capital and charging a fee in between.

2) Claiming a low basis of $132k/unit while loading the deal with so many fees and reserves needed to make it not an immediate foreclosure, that the all-in basis is actually $193,952. In other words, the property needs to appreciate 35%+ just for investors to receive their money back. Spoiler: Most real estate was appreciating 3-6% a year during the incredible bull run of 2010-2020.