Finding Sponsors by Looking at SEC Filings – a Tutorial to Find Syndicators

Now it is time to put on your detective hat to find syndicators. All syndicators in the United States are compelled to file their offerings with the Securities and Exchange Commission (SEC). This filing is a Notice of Sale of Unregistered Securities. Looking for these types of filings gives you a starting point for finding syndicators who have experience syndicating at least one project.

You can use the EDGAR database to find new syndications or do your due diligence on the one you do know. The advanced search function of the database gives you access to the full text of electronic filings since 2001.

What I am going to do here is share a process for finding syndicators with whom you can invest.

Go to the EDGAR database.

The link can be found here:

Click the + more search options link.

Enter your search parameters.

From here, click Browse filing types. This will bring up a huge number of options. All we need to do is click the box next to the letter D.

Determine how far back you want to search and enter that date range. You can do a national search or choose a state where the syndication principals offices are or where they incorporated.

Enter the word Commercial in the Document word or phrase box. This will weed out industries that do not relate to commercial real estate.

Click SEARCH. The results will look like this:

For this tutorial, we will be using the filing for Harbour Village 100 LLC. (See note above.) Open the link under Form & File.

Reading the Filing

There are lots of clues to look for when trying to find a multifamily syndication filing. First of all, if the Filing entity/person is a fund, chances are it is not a traditional syndication. In this case, it is a blind fund that may be investing in many properties. You as the investor do not get to choose which properties to invest in. It is up to you to make that decision. Hunt for things that might indicate it is an apartment complex. I chose the example because of the word Village.

When you start reading the document, you want to see who is involved so that you can follow up with your sleuthing skills on Google.

You then need to make sure the syndication is a real estate project. This is listed under the Industry Group section. You want to make sure that the Commercial box under Real Estate is checked.

You then also want to know about the SEC rule this syndication is formed around. 506(b) and 506(c) are the most preferred. Syndicators using 506(b) can accept both sophisticated and accredited investors, while 506(c) can only accept accredited investors. Sponsors usually have a preference for one or the other going forward into future projects.

There will be a breakdown of sophisticated and accredited investors listed by number participating.

You want to make sure that this is an Equity investment. This means that the investors in this filing have an ownership stake and not someone extending debt financing (mortgage).

It is good to make a note of the size of the offering. The higher these numbers go into the millions, the chances are that this was a larger property. A good rule of thumb is to Look for projects where the raise is greater than $1,000,000.

Google It to Find Syndicators

Now that you have found that this syndicator operates commercial real estate, and the other clues align with the type of investment you are looking for, it is time to start looking for them online with the eventual goal of reaching out to them to see if you might be a good fit for investing in future projects of theirs.

With the example above, I put together a search string that I entered into Google. (You might have to get more creative or be more tenacious.)

We see a link (in purple above) that seems like it might be what we are looking for. Like I just said, be tenacious. This part of the process might take you all sorts of directions other than where you want to be. At some point you may have to give up and move to the next filing on the list. If you are lucky, like I was in this example, you might find an Invest with Us button. This will enable you to open up a dialog (on the phone) with the syndicator you just found and learn about them. Good luck!

Rinse and repeat.

Final Thought

There should be at least one person on the syndication team listed in the SEC EDGAR database. If you do not find any of the syndicators within the database, chances are that the syndicator does not have experience. If this is the case, I highly recommend that you think twice about investing your dollars with them.

Once you have found a suitable candidate, go ahead and do a search by company or individual name. You might be lucky enough to bring up a list of many filings, indicating experience. Keep in mind though that each project will have its own LLC in most cases. I think you can take it from here. Go get ‘em.

Helpful Links

SEC EDGAR Database