| Anyone out and about in public these days has | | | | A limited partnership usually also incorporates a goal of |
| probably noticed a change in his/her respective | | | | dissolution within a specified time period. This is put in |
| community. More homes are sporting for rent or for | | | | place so that investors will hopefully not only gain the |
| sale signs, restaurants are practically empty, and even | | | | return of their investment but also a capital gain. The |
| malls and shopping centers are much for vacant than | | | | drawback to this type of partnership is due to the fact |
| in more recent years. The economy is definitely in a | | | | that there is less of a market for limited partnerships. If |
| pinch and we are all feeling it. | | | | a particular property must be sold, the interest might |
| The real estate market is also experiencing many | | | | have to be discounted less than the value applicable to |
| changes due to this economical recession. Investors | | | | the interest if the partnership is dissolved. |
| are turning to more creative ways of financing than | | | | After two or more individuals or firms have decided to |
| the traditional bank loan. One such method is | | | | move forward with syndication, a limited partnership, |
| syndication. A real estate syndicate is formed in order | | | | usually in the form of a private corporation is |
| to create, sell, and operate a specific real estate | | | | established. A formal agreement is then made. It is |
| investment. This type of union can be established in | | | | best if an attorney draws up the papers and outlines |
| different ways. It may be in the form of a corporation | | | | the guidelines of the agreement. It is vital that the terms |
| or a limited partnership, the latter of the two being the | | | | of this partnership are both well understood and |
| most common. Whereas most syndicates are formed | | | | agreeable to any and all parties involved. The attorney |
| to purchase selected properties, others are set up | | | | can also offer information on any state regulations and |
| without a specific property in mind. These types of | | | | securities laws governing syndicates. Once this |
| partnerships are known as blind pools. They are | | | | agreement has been established, and the partners |
| primarily based on the trust and successful track | | | | have agreed to the said terms, a company is formed |
| record of the general partners. | | | | and its bank account is funded for the purchase of |
| A syndicate is basically a group of people, and in many | | | | capital protection. |
| cases, a group of firms that organize for a particular | | | | As with any investment, a partnership offers both |
| investment. A limited partnership is an inactive partner | | | | benefits and risks to an investor. There is always the |
| that only contributes money to an investment and | | | | possibility that the partnership will go sour. Problems |
| liability of this inactive partner is limited to his/her | | | | with the investment, difficulties and disagreements |
| investment. This limited partner has the advantages of | | | | among the partners should be also be factored into |
| not having to deal with landlord and management | | | | the equation. |
| situations and tax shelter aspects, but is also not | | | | In any case, the possibility of potential risk need not be |
| allowed the benefit of utilizing any tax loss on an | | | | a deterrent to any investor. Investors are offered |
| investment. | | | | protection through such organizations as the Loan |
| Syndication gives the borrower several benefits on a | | | | Syndications and Trading Association (LSTA). This |
| variety of levels. It offers assistance in the obtaining of | | | | nonprofit organization is dedicated to the promotion |
| greater capital, and this can be done in a more efficient | | | | and orderly development of a fair and efficient trading |
| manner. Obtaining greater capital allows for higher | | | | market. It provides for the more liquid and professional |
| quality investments to me made. A syndicated loan | | | | trading of corporate loans originated by commercial |
| also allows an investor the insurance of project | | | | banks and other private lenders. The LSTA also |
| profitability due to more conservative debt loads. | | | | encourages the cooperation and facilitation of just and |
| Investors are more capable of offering buildings with | | | | equitable market policies and practices with firms in |
| superior states of repair and doing so allows for the | | | | respect to loan transactions and related claims. |
| offering of space or property that with more | | | | Whether an investor is financing for working capital, an |
| competitive lease rates. The result of such competitive | | | | expansion project, or a property acquisition, syndication |
| lease rates is lower vacancy rates even during such | | | | offers an alternative method of financing. Syndications |
| times of a recessive economy. By sharing the capital | | | | are an important tool for a variety of professional and |
| requirements and risks, the project indebtedness is | | | | institutional investors. |
| much lower and the cash flow is more positive. | | | | |