UNDERSTANDING RESYNDICATION IN REAL ESTATE: A SIMPLE GUIDE
WHAT EXACTLY IS RESYNDICATION IN REAL ESTATE & WHY IS IT IMPORTANT IN KEEPING AFFORDABLE HOUSING AFFORDABLE?
HAVE YOU EVER WONDERED HOW AFFORDABLE HOUSING PROJECTS STAY AFFORDABLE AND WELL-MAINTAINED OVER THE YEARS? ONE KEY PART OF THE PROCESS IS CALLED RESYNDICATION. LET’S BREAK DOWN WHAT RESYNDICATION MEANS IN REAL ESTATE AND WHY IT’S IMPORTANT.
WHAT IS RESYNDICATION IN REAL ESTATE?
IN REAL ESTATE, RESYNDICATION IS THE PROCESS OF RESTRUCTURING AND REFINANCING AN EXISTING REAL ESTATE INVESTMENT. THIS IS COMMONLY DONE WITH AFFORDABLE HOUSING OR COMMERCIAL PROPERTIES. ESSENTIALLY, IT INVOLVES CREATING A NEW INVESTMENT GROUP TO TAKE OVER THE PROPERTY, BRINGING IN FRESH NEW CAPITAL AND RESOURCES TO IMPROVE AND MAINTAIN IT.
WHY RESYNDICATE IN REAL ESTATE?
EXTEND AFFORDABILITY: MANY AFFORDABLE HOUSING PROJECTS ARE INITIALLY FUNDED WITH SPECIAL TAX CREDITS AND FINANCIAL INCENTIVES THAT LAST FOR A CERTAIN PERIOD, USUALLY 15 YEARS. ONCE THESE BENEFITS EXPIRE, RESYNDICATION HELPS SECURE NEW FUNDING, ENSURING THE HOUSING REMAINS AFFORDABLE FOR LONGER.
PROPERTY IMPROVEMENTS: OVER TIME, PROPERTIES NEED MAINTENANCE AND UPGRADES. RESYNDICATION PROVIDES THE NECESSARY FUNDS TO RENOVATE AND ENHANCE THE PROPERTY, KEEPING IT IN GOOD CONDITION FOR RESIDENTS.
NEW INVESTMENT OPPORTUNITIES: RESYNDICATION OPENS THE DOOR FOR NEW INVESTORS TO PARTICIPATE IN THE PROJECT. IT ALSO GIVES EXISTING INVESTORS A CHANCE TO REINVEST, POTENTIALLY INCREASING THEIR RETURNS WITH THE NEW FINANCIAL STRUCTURE.
HOW DOES RESYNDICATION IN REAL ESTATE WORK?
INITIAL FUNDING: A REAL ESTATE PROJECT, LIKE AN AFFORDABLE HOUSING DEVELOPMENT, IS INITIALLY FUNDED BY A GROUP OF INVESTORS WHO POOL THEIR RESOURCES TOGETHER.
OPERATIONAL PERIOD: DURING THIS TIME, THE PROPERTY IS MANAGED, AND INVESTORS RECEIVE RETURNS BASED ON ITS PERFORMANCE. THIS PERIOD OFTEN LASTS ABOUT 15 YEARS FOR PROJECTS INVOLVING LOW-INCOME HOUSING TAX CREDITS (LIHTCS).
RESYNDICATION: AFTER THE INITIAL PERIOD, THE PROPERTY IS RESTRUCTURED FINANCIALLY. A NEW SYNDICATE OF INVESTORS IS FORMED, WHICH MAY INCLUDE BOTH NEW AND EXISTING INVESTORS. THIS NEW GROUP BRINGS IN FRESH CAPITAL, OFTEN SECURED THROUGH NEW TAX CREDITS AND FINANCING OPTIONS.
CONTINUED OPERATIONS AND IMPROVEMENTS: THE FUNDS FROM RESYNDICATION ARE USED TO UPGRADE AND MAINTAIN THE PROPERTY, ENSURING IT REMAINS A VALUABLE ASSET FOR THE COMMUNITY AND A PROFITABLE INVESTMENT.
BENEFITS OF RESYNDICATION
FOR RESIDENTS: ENSURES CONTINUED AFFORDABILITY AND IMPROVES LIVING CONDITIONS THROUGH PROPERTY UPGRADES.
FOR INVESTORS: PROVIDES A RENEWED OPPORTUNITY TO INVEST AND POTENTIALLY EARN HIGHER RETURNS.
FOR COMMUNITIES: KEEPS HOUSING AFFORDABLE AND WELL-MAINTAINED, CONTRIBUTING TO COMMUNITY STABILITY AND GROWTH.
OTHER TYPES OF REAL ESTATE RESYNDICATION
COMMERCIAL REAL ESTATE RESYNDICATION
PURPOSE: TO REFINANCE AND UPGRADE COMMERCIAL PROPERTIES TO ENHANCE VALUE AND RETURNS.
OFFICE BUILDINGS: RESYNDICATION CAN BE USED TO BRING IN NEW INVESTORS FOR RENOVATIONS, TENANT IMPROVEMENTS, AND MODERNIZATION OF OFFICE SPACES.
RETAIL CENTERS: RESTRUCTURING THE INVESTMENT IN SHOPPING MALLS OR RETAIL CENTERS TO FUND RENOVATIONS, ATTRACT NEW TENANTS, AND IMPROVE THE OVERALL PROPERTY VALUE.
INDUSTRIAL PROPERTIES: RESYNDICATION FOR INDUSTRIAL PROPERTIES MAY FOCUS ON UPGRADING FACILITIES TO MEET NEW INDUSTRY STANDARDS OR EXPANDING TO ACCOMMODATE GROWING BUSINESS NEEDS.
MIXED-USE PROPERTY RESYNDICATION
PURPOSE: TO REFINANCE AND ENHANCE PROPERTIES THAT COMBINE RESIDENTIAL, COMMERCIAL, AND SOMETIMES INDUSTRIAL SPACES.
URBAN REDEVELOPMENT PROJECTS: RESYNDICATING MIXED-USE DEVELOPMENTS IN URBAN AREAS TO SUPPORT COMMUNITY REVITALIZATION, IMPROVE INFRASTRUCTURE, AND ATTRACT NEW BUSINESSES AND RESIDENTS.
HISTORICAL PROPERTY RESYNDICATION
PURPOSE: TO PRESERVE AND RESTORE HISTORIC BUILDINGS WHILE MAKING THEM FUNCTIONAL FOR MODERN USE.
HISTORIC TAX CREDITS: USING HISTORIC PRESERVATION TAX CREDITS TO RESYNDICATE PROPERTIES, ENSURING THEY ARE MAINTAINED ACCORDING TO PRESERVATION STANDARDS WHILE BEING ADAPTED FOR CURRENT USE.
MULTI-FAMILY RESIDENTIAL RESYNDICATION
PURPOSE: TO MAINTAIN AND IMPROVE APARTMENT COMPLEXES AND OTHER MULTI-FAMILY HOUSING UNITS.
MARKET-RATE APARTMENTS: RESYNDICATING MARKET-RATE PROPERTIES TO FUND RENOVATIONS, IMPROVE AMENITIES, AND INCREASE RENTAL INCOME.
WORKFORCE HOUSING: FOCUSING ON AFFORDABLE UNITS FOR MIDDLE-INCOME FAMILIES, ENSURING THESE PROPERTIES REMAIN ACCESSIBLE AND WELL-MAINTAINED.
