Rules On 506C for Multifamily Syndications

[Marjeanne Fields]

Hi BP community. We just got a project under contract in Atlanta. This is a large deal so we will be filing a 506C for the syndication on this one.

Just wondering if others have used advertising in the past on their deals. Any tips/ tricks that you found helpful? 

Also looking for more info on the specifics for where you can advertise, and what you can say. Obviously we will be working with an SEC atty on this, but wanted to hear opinions from the community on their experience. 

Thanks in advance!

[Amy Wan]

I usually advise my clients to do 506b unless they have great marketing chops or plan to spend a lot in hiring digital marketing experts. Having worked for a platform that did exclusively 506Cs and having had a lot of clients try to do 506Cs, I've found that my clients haven't been fully happy with the results unless they've been in those situations. That being said, there's actually a lot you can talk about under a 506(b)--the business, for example, your track record--just nothing about the deal itself. But you draw them in with other rhetoric and then intro them to deals. Under a 506(c), you can talk about the deal itself, but of course must refrain from any untruths or exaggerations, and you need to run all the advertising language through your attorney because I find that it usually coming down to exactly what kind of wording you're using. Hope that helps