Private syndicates are an ideal structure for investors to pool their funds and participate in larger scale projects which may be out of reach for them as individuals. Whilst the type of structure may vary according to the location and nature of the project, the benefits of using a private syndicate make them equally appealing to large and small investors. Investment levels typically start from US$100,000 and our syndicates run from one to five years depending on the project. Our syndicates are not marketed to the general public and are by invitation only.
A syndicate can be used to undertake different types of projects, including:
- Refurbishment/construction of a property before re-selling
- Acquiring a number of differently priced and located ‘buy and hold’ properties
- Acquiring a substantial property in a prime location
The benefits of a private syndicate can be clearly seen:
- Access to larger scale projects
- Shared ownership of properties means greater risk diversification
- Investment levels to suit individual investors
- Access to professional management
- Fixed time frame
- Clear exit strategy
- Formal agreements to protect investors
- Attractive investment returns
Of course, as with any investment structure or vehicle, there are features of a private syndicate that an investor has to consider:
- They are unregulated
- Early exit is typically only available through sale of that person’s interest to another investor
- No involvement in the day to day management of the syndicate or project
The syndicate is merely the structure that allows investors to participate in a project. Investors should always satisfy themselves that the underlying project is viable and that the party organising the private syndicate has the ability to administer both the syndicate and the project correctly. After all, you will be utilising the skills, knowledge and experience of the syndicate manager so investing with the right manager is important.
If the agreements are structured correctly, disputes between the parties should not occur as the agreements will clearly spell out who is responsible for what, the time frame and exit strategy. We firmly believe that all parties, including ourselves as the syndicate manager, are bound by the agreements they entered into.
Every manager has a slightly different approach to managing a syndicate. We always try to act fairly and in the best interests of all our investors. For example we are not advocates of allowing a majority of the investors in a syndicate to decide to extend the investment time frame and thereby ‘lock in’ a minority who were expecting to exit on a set date. That is not fair on those investors who need their funds at the agreed time. The solution is to sell off one or more of the properties to allow those investors to exit, or find alternative investors to buy out the exiting parties at an agreed price. If this is not possible then the agreements have to be adhered to and the syndicate will end at the agreed time.
There is no reason why investors, particularly those with lower investment sums, should not enjoy the benefits of investing in larger projects, whether they are development or ‘buy and hold’. Nor should they be prevented from owning a share of multiple properties.
With the right syndicate manager, project and structure, private syndicates can be an ideal investment vehicle for both higher and lower investment level investors.