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Duke Giordano
  • Investor
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How to GP in Syndication deals feel about Questionnaire sheets?

Duke Giordano
  • Investor
Posted Jan 25 2020, 03:13

Hello All,

Thanks in advance for your replies.  I am curious to get peoples opinion on both the GP and LP side in syndication deals as to how they feel about receiving a questionnaire sheet from a new prospective LP to get objective info to get to know the Sponsor and the deal?  I would be curios to hear from both GP/Sponsors, as well as, LP who have done this and how it was received.  Do people (GP'S) get offended?  Not respond?  Or do GP/sponsors like this as it indicates a thorough and well thought out LP who understands the risk/implication in a deal and the due diligence on a sponsor required?

I base a large deal of weight as I am sure many LP's do on the sponsor and feel that in addition to either a phone call or a meet up in person, a questionnaire sheet would seem a more efficient way to ask and get answers to common objective questions ahead of time to get an idea on a sponsor.  For those LP feel free to add other questions you think may be important/salient.  

For example:

Sponsor Experience:

  1. How many years have you specifically been a GP in syndication deals? What year did you start?
  2. How many full cycle Syndication deals have you seen through as a GP?
  3. What years were the full cycle Syndication deals sold?
  4. What states were each of this Syndication deals in?
  5. What were the expected vs actual return metrics of those full cycle deals, such as IRR, Equity Multiple, Hold time etc?
  6. How many active current/active syndication deals do you have as a GP? What states are they in?
  7. What asset class to you look at or focus on as a syndicator (Multi-Family, self-storage, mobile home, retail, industrial etc).
  8. What is your strategy as a syndicator (Value add, stabilized etc). What typical Class in relation to multifamily do you focus on (Class A,B,C etc).

Deal Location/Strategy:

  1. Geographic location
  2. Strategy (Value Add etc)
  3. Property Class if Multi-Family (A.B.C)
  4. Number of Units
  5. Number of planned Units Renovations if Value Add? Reno cost per Unit?
  6. Planned Monthly Rent Growth per Unit?
  7. Current Cap Rate? Planned Exit Cap/Reversion Cap Rate?
  8. Planned Hold time?
  9. Current Occupancy rate?
  10. Break Even Occupancy rate of deal once Value add complete?

Deal Loan/Financing:

  1. Type of Loan such as I/O (interest only), flat rate etc.
  2. Is loan a non-recourse Fanni/Freddie?
  3. Length of loan?
  4. Rate on loan?
  5. Is there bridge loan/debt?
  6. What is Loan to Value Ratio (LTV)?
  7. What is Debt Service Coverage Ratio (DSCR)?

Deal Fees:

  1. All GP Fees for deal?
  2. Acquisition Fee and if so %?
  3. Asset Management Fee?
  4. Disposition Fee?
  5. Refinance Fee if Refi Occurs?

Deal Return:

  1. Preferred Return and %?
  2. If Preferred return, when does it start? Is it Cumulative?
  3. Is preferred return given after or before fees such as Asset Mgmt fee (Excluding Acquisition Fee)?
  4. Is preferred return given of or off Capitol? Does Capitol account $ amount change as preferred return given?
  5. Is there a waterfall structure after preferred return and if so what is it? What’s GP/LP split? Is there a ladder of GP/LP Split?
  6. IRR? IRR with Different Hold times such as 3, 4, 5 years?
  7. Partitioned IRR if available?
  8. Equity Multiple?

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