| Real Estate Investment Syndication sounds like a | | | | potential investment, an operating agreement of the |
| strategy that only experienced or advanced real | | | | entity, and some idea of what to expect in the |
| estate professionals would participate in, but besides | | | | investment. No guaranteed rates of returns are |
| the scary words, real estate investment syndication | | | | published, and many warnings of potential risks of |
| is a good way for accredited or sophisticated | | | | loss are given, to alert the investor that there is risk |
| investors to tiptoe into larger investments in a smaller | | | | involved in the investment. The investor would then, |
| way. Now what does all of that mean? First, we | | | | after evaluating the potential risks and returns, if |
| need to define what an accredited investor is and | | | | interested, fill out the Subscription Agreement, and |
| what a sophisticated investor is. Under the securities | | | | return it to the Investment Manager at the firm |
| laws of the Securities and Exchange Commission, | | | | offering the PPM. If accepted into the syndication, |
| Rule 501 of Regulation D, an accredited investor is | | | | the investor would be given the opportunity to |
| someone who has a net worth of $1,000,000 or has | | | | determine his level of financial commitment. In |
| income of $200,000 per year in each of the last two | | | | general, the PPM's are written for a fixed dollar |
| years, or $300,000 with a spouse and a reasonable | | | | amount of a share, for example, a share could be |
| expectation that he/she/they will have similar | | | | $20,000 or $50,000 or even higher or lower. It is |
| incomes in the current year. As Americans have | | | | determined by the PPM. An investor could then |
| grown their incomes and networths, more Americans | | | | determine how many shares he might want to invest |
| have moved into the category of an accredited | | | | in. The money is sent or wire transferred into an |
| investor. It is not required by the SEC for the | | | | escrow account, set up for the PPM. |
| Syndication Manager to verify the legitimacy of an | | | | Once a sufficient amount of shares are gathered, the |
| accredited investor, except that the Investor must fill | | | | investment is made, and the investor is part of the |
| out a standard form indicating he/she/they are an | | | | investment based upon his pro-rata share. For |
| accredited investor. A sophisticated investor is | | | | example, an investor who made a $50,000 |
| possess enough knowledge and experience in finance | | | | investment based upon a $50,000 per share price, |
| and business matters to evaluate the risks and merits | | | | would own 5% of a $1,000,000 investment. Typically, |
| of the investment, or be able to bear the | | | | in syndication, the investor is not able to make any |
| investment's economic risk. | | | | decisions once he is invested, but is informed of a |
| As a way for an accredited investor to participate in | | | | routine basis of the status of the investment. |
| an investment, the offering firm, such as Triumph | | | | Syndication gives the investor a way to become an |
| Capital Partners, must have a PPM (Private Placement | | | | investor on larger properties, and in general, is able to |
| Memorandum) filed with the SEC, and the investor | | | | gather larger returns on a larger property, spread risk |
| must be given a copy of the agreement. The PPM | | | | out more, and gain experience in investing in |
| would give the investor information about the | | | | commercial property. |