Actual - Real Estate

Contrary to the belief of some, a real estate syndicate has nothing at all to do with Don Corleone. Take it from me – or my name is not Luigi.

The real estate investment market is becoming more and more complex and, as a result, the

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

traditional boundaries between different investment activities are changing. If someone is interested in buying or selling an interest in land, he generally seeks help from a real estate expert. If someone wants to buy or sell a common sto

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

k, he seeks the services of a securities expert. During the past decade there has been a growth of new forms of investment vehicles, the most common of which are known as ‘syndicates’. Syndicates are used in conjunction with many types of a

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

sets including real estate, R & D, purchase and management of hotels and motels, oil and gas exploration, livestock and agricultural development to name a few. Specifically as it refers to real estate syndicates, in its simplest definition

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

his term is applied to any form of organization which allows two or more investors to participate in the ownership of an interest in real estate.

In the syndicate, the real estate asset is divided into two or more ‘investment units’ which

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

re acquired by the individual investors. It is important to realize that the investment unit refers to the particular asset that is acquired by the investors, and not the underlying real property itself. The precise nature of the investment

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

unit will depend on the form of the syndicate. In essence, investment units represent a fractionalized ownership of one or more interests in real property rather than direct ownership of an entire interest. While real estate syndicates are

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

formed for a variety of reasons, the typical reason is to create a tax shelter. At the base of the syndicate is the relationship among investors. In all real estate syndicates there is some form of contract specifying the relationship inter

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

urring between the individual investors and the underlying interest in real property.

Despite the multitude of forms, the structure of a real estate syndicate is invariably based upon one of the following six legal relationships: co-owners

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ip, divided ownership, corporation, trust, general partnership and limited partnership. In addition, there are three central participants, or sets of participants, as follows:

[ ] the syndicator or promoter who creates the

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

yndicate in the first place;

[ ] the syndicate manager who manages the syndication and who, often times, is the promoter as well;

[ ] the investors who purchase the investment units.

Moreover, a number of other experts

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

are used that are unrelated to the syndication, such as managers, appraisers, builders, leasing agents and mortgage lenders. In some cases the syndicator may buy the property before creating the syndicate organization. In other cases, the s

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ndicate investment units may be marketed before the real property is acquired.

The allocation of profits and expenses is typical of the real estate industry. For instance, there are ‘front-end’ fees to cover initial expenses for the format

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

on of the syndicate such as:

[ ] mark-up profit on lands sold to the syndicate by the syndicator, if he advanced the initial capital to purchase real estate.

[ ] Real estate commissions on sales to the syndicate by the syndicator.

[

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

Percentage of the initial funds raised by the syndicator.

[ ] Fees for services rendered.

[ ] Fees for guarantees, such as cash-flow guarantees or construction guarantees.

As to the return and liquidity, each investor is entitled

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

o the proportionate share of all leases, rents, resale of the syndicate interests in land and, of course, each investor will have to consider different tax shelter possibilities offered by the six different legal organizations of syndicates

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

. Last but not least, liquidity is an essential factor from an investors perspective, in that investors may want to transfer investment units or portion thereof to someone else at a later date.

There are at times situations wherein a direc

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ownership in land is neither beneficial nor convenient, and an indirect ownership by way of investment units may be more appropriate. Likewise, as it is the case more and more with large hotel consortiums, original capitalization is done b

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

selling ‘interest shares’ – the equivalent of investment units – to private investors, with the balance of the initial funding obtained by institutional lenders and secured by the real property. Nowadays syndicators have gone as far as ra

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

sing money in the stock market by selling futures stocks of edifications to come, typically large high-rise and residential towers that cluster the downtown core of practically every metropolis in North America.

Luigi Frascati

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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