Syndicating
Commercial Real Estate Investments

Understanding a
Private Equity Placement

This article is targeted to the investor that has already
considered that commercial real estate is an investment target to add to their
portfolio.  Commercial real estate has
many advantages, including the opportunity for leverage, cash flow, capital
appreciation and potential tax advantages. All of these factors make commercial
real estate an appealing investment choice. 
However, successful commercial real estate investing, by and large,
requires active and  professional
management techniques.

One investment strategy that includes professional
management is to participate in a syndicated commercial real estate investment
opportunity. Syndicated commercial real estate investments are typically structured
as Limited Liability Partnerships or Limited Liability Companies.  These real estate investments are offered
through Private Placement Offerings (PPO's).  Private Placement Offerings can be used for
any number of business equity investments, including real estate investing

.By way of an example, a syndicated commercial real estate investment
will consist of a Sponsor who forms an entity designed to create limited liability
for the investors. This entity can be a Limited Liability Partnership (LLP) or
a Limited Liability Company (LLC), which will be used to purchase the
prospective property. Each individual investor is provided with freedom from
management contingencies as well as the entity structure provides each of the
investors the significant benefit of limited personal liability.

 The Sponsors are the General Partners of the Limited Liability
Partnership or the Managing Member of the Limited Liability Company. The Sponsor
does the research and analysis work for potential commercial property investments
before choosing the right opportunity to present to syndicated investors. Once the
sponsor has chosen a suitable property, sponsors will complete a thorough due
diligence process that is usually measured against an investment profile and or
return on investment model. Next the sponsor will design the optimal financial
structure by determining the proper mix of debt and equity to achieve return on
investment objectives. The Sponsor will prepare an investment package
containing all of the information to present to prospective investors. The
package of information will usually include a business plan, historical and/or
pro forma financial schedules, market studies and often, general demographic
information which supports the Sponsor's selection of a particular commercial
real estate project. All of this information is selectively compiled into a
Private Placement Memorandum and distributed to qualified accredited investors.

 In order to participate in Private Placement Offerings, an
investor must be accredited according to guidelines set forth by the Securities
and Exchange Commission (SEC). In
order to participate, the syndicated investor prospect must either have a $1
million net worth or an income in excess of $200,000 individually, or $300,000
if married. Investors must complete an investor questionnaire to certify their
qualifications as an accredited investor prior to receiving the Private
Placement Offering Package. Once an investor is qualified and receives the
Private Placement Memorandum, the investor is urged to invest the time
necessary to read and understand the opportunity being presented. If anything
is unclear, the investor should discuss any questions with the Sponsor and
clarify any outstanding matters. Syndicated commercial real estate investments are
generally longer term (five (5) to seven (7) years), hold and resale strategies
and probably illiquid until project resale. 
Investors should be certain about their ability to invest the capital for
the duration of the investment.

 After obtaining a  thorough understanding of the Private
Placement Memorandum and deciding to invest the capital required, the investor is
ready to make the investment. To complete an investment the investor will be
asked to sign either the Partnership Agreement or the Subscription Agreement, the
Purchaser Questionnaire, and the submitting of the funds to the Sponsor. The
Sponsor has the option to either reject the investment and return the funds or
accept the documents and funds as a new investor and move forward with the
objectives of the investment offering.

 After the investment offering period has concluded and the
Sponsor has attained their investment equity target, the Sponsor should proceed
with the purchase and debt financing of the property.   Following
property purchase the investor should receive some type of reporting regarding
the progress of the investment.

 DK Commercial Properties, LLC is a specialty commercial real
estate sponsor group that specializes in the retail commercial property sector
with properties that have long term credit tenant capital leases.  The firm prepares periodic reports (monthly
or quarterly) depending on the transaction. Management of DK Commercial
Properties remains available for phone or email questions to provide additional
detail should an investor require such information. Many syndicated projects
will have a cash flow participation, usually quarterly, for all syndicated
investors.

 As a Sponsor, DK Commercial Properties will typically charge
various fees as well as participate in the profits. DK Commercial Properties
will generally earn a debt placement fee, management fees and a small share in
profits generated from the investment. As the Managing Sponsor, we remain
aligned with the interests of the syndicated investors.

 Syndicated commercial real estate  investing in credit tenant leased property
through a professional sponsor is an excellent method to generate above average
returns without investing in the property management process

.For additional information about Private Placement Offerings
and Credit Tenant commercial real estate property ownership, please contact, DK Commercial Properties at (240) 244-9580

Morris Iles DK Commercial Property Email: dkcommprop@gmail.com LinkedIN: http://www.linkedin.com/in/morrisiles