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

Additional Issues & Explanations

This page provides amplification of certain due diligence issues and more detailed explanations of specific points.

Issue#1: Review of exhibits.

Answer to Issue #1: Real Estate Plays Dot Com, LLC (the "Syndicator") seeks to create an orderly market for the syndication of real property ownership interests where purchasers can make buying decisions based upon the free transfer of information by a given Project Sponsor.  The review of the due diligence exhibits is conducted for the purposes of determining whether any obvious issues have not been dealt with by the due diligence document set.  Our standards are based upon the principle of material representation.  This principle in law suggests that if the issue has a potential to materially alter the financial results of operations and/or the financial results of non-operating activities, then it needs discussion.  The Syndicator's position is that if the issue creates a change of Net Income of five percent (5.00%) or more for a given reporting period, then the issue requires the Sponsor to provide the supporting information so prospective purchasers can decide for themselves how important the issue may be to their respective buying decisions.

Issue #2: "...an analysis of the due diligence exhibits for the purposes of determining - to a reasonable extent and based upon the materials provided - whether or not the entirety of the Project proposal conforms with the findings and conclusions of the market feasibility analysis report..."  

Answer to Issue #2: by and large, our economy (as well as the global economy) is based upon the principles of classical/laissez-faire capitalism being applied, to one degree or another, to the mercantile trade.  This means the consumers (the end-users) of the local market area to a given Project will decide - by virtue of their spending habits - the winners and losers in each industry and in each marketing area.  This means that a Project proposal's potential for success may be best maximized by aligning the proposed Project with those expectations and requirements the marketing area says are important to their buying decision-making process.  This does not guarantee success, but creates a statistical likelihood that the Project proposal aligned with the findings of the market feasibility study will be, under actual operating conditions, the Project that has the highest likelihood of ongoing success until such time as technology or consumer buying preferences change.

Issue #3: "...an interview with the development team to discern (to a reasonable extent) their relative strengths and weaknesses regarding their respective roles in the proposed Project ..."

Answer to Issue #3: this part of the due diligence review process that takes place prior to a syndication proposal being listed on the site.  The Syndicator's goal is to reasonably determine if the participants have the prerequisite experience to undertake the scope of responsibilities that the proposed Project development program would be expected to require; and, if they are qualified are they ready to move forward with the development without any substantive delay once the syndication is complete and ready to close escrow.

Issue #4: "...a discussion with proposed lenders (where these parties are identified in advance by the Sponsor) as to the viability of a proposed construction mortgage loan financing for the purposes of ascertaining the readiness of a given Project proposal to move forward with construction phase operations..."

Answer to Issue #4: some lenders do not issue bankable commitments for mortgage financing loans on commercial projects.  For instance, if the Sponsor uses the services of an investment banker to raise the mortgage financing loan funds necessary for construction, there would not be a bankable firm commitment - only a certification by the investment banker that the private placement offering of debt financing has sold out all required subscriptions for the transaction and the gap financing to be provided by the syndication would in fact provide sufficient capital so that the sum of the syndication proceeds and private placement offering security sales net proceeds provide for financing all of the proposed Project's construction budget.

Issue #5: "...guarantees of any kind regarding the potential profit a given syndication may or may not provide..."

Answer to Issue #5: there are no guaranteed outcomes, so you are not relieved of the consequences of your decisions.  Instead, you have all of the known information concerning each proposed syndication.  You review all of the information within a time that works for you and ultimately you make the decision whether or not to participate (and buy a unit) or not participate (pass on buying a unit).

Issue #6:"...guarantees regarding the future cash flows a given project may or may not provide..."

Answer to Issue #6: The Syndicator is not the developer, nor will the Syndicator operate the resulting Project if the syndication is in fact successful.  The Project's Sponsor will (ultimately) be responsible for the development and eventual operations of the proposed Project.  The individual purchasers/investors must make the decision to invest based upon their own considerations and the certainty (or lack thereof) of these future cash flows would be one of the things the individual purchasers/investors may wish to consider in the context of the entirety of the proposal.

Issue #7: "...guarantees or warrantees as to the control the Syndicator exercises over syndication Sponsor's - the Syndicator has no control over syndication Sponsors..."

Answer to Issue #7: each syndication proposal is the proposal the syndication Sponsor wishes to make to the investing public - this means the business deal they seek to satisfy is one that only potential purchasers may pass judgment upon.  If the resulting syndication fails, the Project Sponsor must abandon the syndication process and seek another means of financing their project; or, the Project Sponsor must make a new "business deal" (i.e.: change the splits of income that would be divided between the Sponsor and the syndicate investors, in total).

Issue #8: "...marketing securities, advertising the sale of securities, security sales or offers of same regarding any kind of securities. The Syndicator does not and will not offer you securities for sale except by a qualified private placement offering memorandum to those investors that would be considered "accredited investors" or "qualified institutional buyers" pursuant to the Securities Act of 1933 (as amended). In no case will the Syndicator offer purchasers of any tenants-in-common fractional real estate ownership interests the option to purchase any type of security..."

Answer to Issue #8: investments in real estate projects via the tenants-in-common fractional real estate ownership method are not typically considered to be securities and are not traded on any of the public exchanges.  Only debt securities and equity securities are currently publicly-traded.  The investment opportunity set forth herein on realestateplays.com^sm are not securities and no offering of securities shall be made directly and/or indirectly on this web server.

Issue #9: "...investment advice of any kind.  The Syndicator is not an investment advisory firm and will not provide you with investment advice of any kind.  Any notes, memoranda or other written documents generated by the Syndicator is qualified in its entirety to the requirement that you will not be relying upon the Syndicator..."

Answer to Issue #9: the Syndicator doesn't provide investment advice.  We don't provide any kind of advice to prospective purchasers, just the information that we are provided by each syndication Sponsor that is for public consumption.  We provide the reports, you make the decision and everyone lives with the consequences (good and bad) of their decisions.

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15519 Dawnbrook Drive, Houston, Texas 77068

Telephone: 832.659.5009

Fax: 206.600.5310