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Over the last 10
years, retail property
investment syndicates have continued to evolve. Most retail property
acquisition financing syndicates maxed out the available product of fixed yield
dividend investments that ranged from 7% to 10% per annum (for investors), while
the transaction sponsor walked away with yields approaching 100% per
annum. In fairness to the investing public, it would seem the lion's share
of the equity gains were being captured by sponsors, promoters and developers -
but certainly not the investing public. These commercial real estate
investments have; heretofore, turned out yields comparable to Guaranteed
Investment Contracts ("GICs"). Now
that is all set to change with the emergence of a new capital market platform
designed to allocate profit potential directly to the parties bearing the burden
of these investment risks. The
www.realestateplays.com syndication
platform (the "syndication platform") provides developers, promoters
and sponsors (quite often, all the same entity) with a ready source of project
development financing of at-risk equity contributions. Each new
syndication must be for projects having budgets of no less than $2,500,000 of
which $2,300,000 would be the total net proceeds if the syndication is
successful. There is no upper limit - only what the market will absorb in
an orderly marketing period. For
investors, the proprietary project screening and valuation program approach
ensures that investors receive a fair share of the future profits that is
commensurate with the risks being taken. For this condition to become a reality,
risks and rewards must have a corresponding counter-balance to justify the
distribution. The syndication platform provides a structure that is
designed to assign risks and economic rewards accordingly, with the basic
capitalist economic principles governing all aspects of the syndication program
approach. So, what
should the real "business deal" be that is proposed between sponsors
of income-producing real property developments and the investors of same? In
a perfect world, the idea behind capitalism is that each and every one of us is
expected to act in our own self-interest. This known course of action
allows for an economy to evolve around the market production each of us
contributes from working in certain industries. These project promoters
need capital financing in order to create a future business income, the
sufficiency of which allows for a market return to be paid to the investors (as
a whole - often referred to as "in the aggregate") for their money
risks and the promoter who created the transaction and the resulting operating
business that is expected to be responsible for the production of future income
(again, to be split between promoter and investing public). This allows
for the "classic capitalist promise" to be created:
"...
I - the investor - will give to you - the business promoter - my money as an
investment. In exchange for me - the investor - of having given these
funds over to you - the promoter, you agree to give me the lion's share of the
near-term gains generated by the enterprise, while you shall receive the
lion's share of the long-term gains and equity generated by the business..."
This is the only
approach that can lead to a fair division of the spoils generated by the
business opportunity financed with funds from the investing public. The
syndication platform created a specialized distribution structure that
corresponds to the three (3) types of syndicates that promoters/sponsors of
commercial income-producing real property based businesses can undertake. Click
here for a continuation.
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