b'1. WHAT IS SYNDICATION?A syndicate is defined as a group formed for a common purpose, but the term is most commonly used to describe pooling of financial resources to accomplish a stated goal. Banks syndicate loans when the amount needed to fund a single loan is too much risk for a single bank to take on; entre-preneurs syndicate their companies by selling a portion of their company to private investors who provide the funds needed for the company to grow, or to purchase commercial real estate. A real estate syndicate is a group formed to pool resourcestypically money from investors and sweat equity from the organizersto pur-chase, rehabilitate, operate, and eventually sell real estate. The person who organizes the group and raises the money is the syndi-cator. The syndicator may be an individual or a separate company com-posed of several team members who will collectively manage the syn-dicate. Other commonly used terms for a syndicator include sponsor, manager, promoter, or general partner; however securities regulators use the term issueras in the issuer of securities. We will use the term syndi-cator or issuer as required by the context throughout the rest of this book.In a real estate syndication, the syndicator will typically identify a real estate asset that will yield a sufficient return to pay investors (and the syndicator) from cash flow during operations and a share of equity on refinance or resale. Types of real estate assets commonly targetedfor acquisition by syndicators include existing commercial or multifamily property, single-family properties, self-storage facilities, retail shopping centers, office buildings, mobile home parks, and residential or commer-cial development projects.For non-real estate businesses, you must generally have a concept and a partially implemented business before investors will be interested in investing in you. An idea is not enough, but an idea with a viable business plan that is already being implemented and has generated some interest and sales is a viable company that has value to investors. Syndicatorsmayobtaininstitutionalfinancingforaportionofthe 1'