Syndication of Investments is on the Rise
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NEWPORT BEACH, CA-An improving market is causing syndication of real estate investments to increase. The uptick has manifested itself this year in the form of newly established LLCs, private REITs and venture funds, according to speakers at a recent Sperry Van Ness broker forum here titled, “OPM (Other People’s Money): Syndicating Commercial Real Estate Investments.”
According to Burton Young, principal and founder of SVN Equities, who gave the first presentation at the forum, his 20-year career has included more than $1 billion in syndicated transactions. His advice? “Work with people that are aligned to your personality and interests, people you like to work with, because the relationships you create with your investors will become lifelong partnerships.”
Young also discussed how the current market is the best time in the cycle to invest in real estate. “The worst is behind us. Our group has not seen this good of a buying opportunity in years.” He added that his firm is seeing deals at a 9 cap rate with 50% upside outside of California, which is where the company’s attention is focused. “This is the time you will look back on and say I should have bought.”
Gene Trowbridge of law firm Trowbridge and Taylor LLP, a Southern California-based firm that specializes in syndicated transactions, spoke next about how to put a commission into the deal while bringing groups of investors together to purchase distressed and REO real estate assets. According to Trowbridge, syndication of commercial real estate can be very lucrative, but is also filled with legal and fiduciary duties.
Trowbridge also went over the new reforms in raising capital for syndicated investments, saying that Congress wants to allow people to invest in real estate, yet protect them from fraudulent activities. Allowing greater advertising should get the public better educated on the options investors have in participating in a group investment. While the final word on the advertising-requirement details isn’t due until the first quarter of 2013, easing regulations on advertising is desired by the commercial real estate industry.
As GlobeSt.com previously reported, the “Hotel Investing Today” panel during last month’s Lodging Conference in Phoenix showed that investors have started to come out of their shells to make deals and look for opportunity. The panel, moderated by Michael Desiato, vice president and group publisher of ALM's Real Estate Media Group, expressed faith in the economy slowly ironing out in the next few years and more deals happening. According to Peter Dannemiller, EVP of Hodges Ward Elliott, “There’s a lot of capital looking to deploy, more being raised through a lot of channels – through public and private REITS, it’s looking for yield, it’s looking for a home. People will finance acquisitions.”
For MORE insights on finance trends, check out Ackman Ziff's "Capital, Fueled by Innovation" home page, which provides Thought Leadership positions on a variety of commercial real estate trends, transactions and movement.
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