Structuring Funds to Take on Foreign Investors

[Account Closed]

A lot of real estate sponsors want to raise capital from foreign investors, but aren’t sure how to structure it without creating unnecessary tax or regulatory headaches.

That’s where a master-feeder structure can come into play.

Here’s a quick breakdown:

🔹 The Master Fund – This entity holds the actual real estate assets and executes the investment strategy. It's usually a U.S. LLC or LP.

🔹 The Domestic Feeder – U.S. investors put money into this vehicle, which then invests into the master fund. It's typically a Delaware LP or LLC.

🔹 The Offshore Feeder – Non-U.S. investors contribute here (often a Cayman Islands LP or corporate structure). It then invests into the same master fund, so both domestic and foreign investors share exposure to the same portfolio.

This setup helps:

✅ Keep foreign investors outside the U.S. tax net (they avoid direct U.S. tax filing obligations).

✅ Let the fund manager run a single investment strategy rather than two parallel ones.

✅ Maintain a clean SEC filing trail (Form D for the U.S. feeders and master, and disclosure alignment).

It’s a sophisticated structure — but one that opens the door for U.S. sponsors to access global capital while staying compliant and efficient.

If anyone here has looked into accepting foreign investors or has questions about how the master-feeder model works in practice, I’m happy to discuss what I’ve seen work well.

[Chris Seveney]

Having foreign investors for a fund is not fun - accounting / admin nightmare. Unless you are raising millions in foreign money not worth the hassle in my opinion