Property syndication

An arrangement in which a sponsor buys one building with capital pooled from a group of passive investors and runs it on their behalf, typically for five to seven years.

Example

Three 25,000 stakes with three sponsors gives exposure to three buildings, against the two hundred a listed trust holds.

Important

There is no market to sell into and no say in the decisions, so the exit is whenever the sponsor sells. The partnership agreement, not the conversation with the sponsor, is what tells you your transfer rights.

Related terms

• Real estate investment trust — A company that owns income-producing property and is usually listed on an exchange, so its shares can be bought and sold like any other share.
• Lock-up period — A contractual period during which you cannot withdraw money from a fund or sell a holding, however much you might want to.
• Liquidity — How quickly and cheaply an asset can be converted to cash without moving its own price.

Lessons that explain it

• Three instruments that happen to share an underlying asset — Owning a building, owning a listed property company and owning a slice of somebody else's deal are not three versions of one investment. They differ in almost everything except the bricks. (10 min)

All 578 terms in the Investing glossary