Fractional Dutch Auctions of Commercial Income-Producing Real Estate Properties - TIC Plan Ownership Syndications

Investor's Corner

This portion of the server is devoted to providing the investing-public with information relating to investing in commercial income-producing properties. We'll start with the term, "commercial income-producing properties".

Commercial income-producing properties produce what is, more or less, a rental income that is tied to a specific real estate site and would include certain buildings, structures, furnishings, fixtures and equipment in order to operate and fulfill a business purpose. This website is in business of buying real estate interests from commercial real estate developers (and owner/operators as the case may be) and then re-selling the real estate interests to the investing-public via the fractional tenants-in-common (or tenancy-in-common as it is sometimes called) real estate syndications.

A real estate syndication is the act of putting together enough investors (i.e.: individual and institutional investors) so as to sell-out a given real estate property's ownership interests. The investors contribute cash (referred to as "capital") in exchange for a real property deed that reflects the fractional ownership of the investor out of the total issue. We make it easy by making the sale price of each fractional real estate ownership interest to be $25,000.00 (USD). The number of interests change from one syndication to the next syndication, but the price will always be the same.

Investors who purchase these real property interests are really purchasing real estate via the tenants-in-common (or tenancy-in-common, both being the same thing) fractional ownership interest. The investor who owns and holds these interests is entitled to receive some share of the resulting operating and non-operating cash flows generated by the underlying project. When the investor is ready to move on the investor may sell this interest to anyone on terms agreeable to the current investor and that future buyer.

Our platform makes the whole process simpler because:

The platform acts as a fiduciary and distributes the profits of the enterprise as these profits are generated by the end of a given month of operations. The developer/sponsor has no control over the distribution of profits and can never be in a position to withhold the investor's share from being distributed.
The platform requires that each and every new syndication listing complete a rigorous due diligence process. This means the projects are being pre-screened to eliminate those proposals that have incomplete documentation, have not completed certain development activities and/or proposals that do not seem (in our sole opinion) to be sustainable for whatever reason. This reduces the amount of time investors would otherwise have to spend reviewing the documents, speaking to management, receiving presentation materials and having their questions answered.
The platform restricts the developer/sponsor's access to the net funds of the syndication until such time as the project has a bankable firm construction mortgage financing loan commitment to provide the necessary construction mortgage financing. In the case of acquisitions of existing commercial income-producing properties, the developer/sponsor must have a commitment as a condition of listing. In either case, these loan funds make up the remaining capital required to fully fund the project provided the syndication is a success and provides the projected net funds required to fund the equity gap. The equity gap is the difference between the total project budget and the total amount of the anticipated mortgage financing (be that a construction loan or an acquisition loan).
The platform receives financial data on a bi-weekly basis from the sponsor as to the financial results of operating and non-operating events. This information must be in a form that may be immediately audited if such audit were required. This gives investors financial information every 15 days (instead of every 90 days which is the current public reporting standard for publicly-traded companies).

What's your responsibility?

You are responsible for your decisions. None of the information provided to you in the course of the syndication process is warranted or guaranteed to be accurate and true. You make the ultimate purchase decision based upon certain considerations, the most important of which is the potential rewards and risks you must be willing to bear. Commercial real estate development financing is inherently risky because a good deal of the nature and scope of the business opportunity can only become known after you have already made your investment. There are no guarantees. There are no warranties as to any outcome.

There is a game plan.

Each developer/sponsor seeking financing must provide a schedule of cash flows - a document that says the investors (altogether) will receive "X percent" and "X dollars" for a given month of the program. During development, there are no cash flows. Cash flows happen once operations commence and provided these future operations are profitable. If the developer/sponsor cannot or will not provide the cash flows the developer/sponsor promised (and there is a 90-day grace period) then: the investors can get rid of the developer/sponsor via a 2/3rds majority vote of the investors and enter into a transaction with another developer/sponsor; operate the project themselves; or, sell off the project and distribute the resulting gains and wind-up the business. The investors can also decide to waive the developer/sponsor's default and allow the developer/sponsor to continue operating the project.

All of this means the developer is well aware that the developer must produce the cash flows the developer promised upfront, or face the specter of being cut out of the deal, which the developer will obviously be loathe to allow to happen. In any case, holders of real estate tenants-in-common interests may resell their interests to anyone they choose. We offer a resale listing program to allow you to access the power of the market and resell your interest when the time and offer suits your needs.

All of this happens without worry that your holdings will become worthless overnight. That can only happen on the other public exchanges. This exchange is immune to the tremendous price swings that have nothing to do with the real value of the underlying business.

Send mail to info@realestateplays.com with questions or comments about this web site.

15519 Dawnbrook Drive, Houston, Texas 77068

Telephone: 832.659.5009

Fax: 206.600.5310