All these terms: syndicator, sponsor, operator, promoter...

With whom are you doing business?

This might seem like a simple question. But it can actually be confusing, especially at the beginning. There are lots of names for what can be more or less the same role. There are also some wrinkles that can describe the variations in the role or roles on the "other side" of the deal.

On this site, we typically use the term “syndicators” to refer to the people who put together a deal or a fund for the purpose of a group investment--those typically controlling the GP, or General Partnership, in a syndication. But some people call that same role a “sponsor” or a “promoter” or even an “operator.” Sometimes people use the terms in very precise ways and in other cases, they are just all mushed together conceptually.

Most of the time, these terms are used interchangeably. The people involved are more or less all doing the same thing. The syndicators/promoters/sponsors/operators are the ones setting up the deal by finding the real estate to buy, putting up the initial investment funds to lock down the deal, doing the due diligence to ensure that what the seller says is accurate, working with lawyers and accountants to put documents together for the prospective investors, marketing (within legal limits) the deal to prospective investors like you, closing on the deal, managing the investment, handling the money and getting you your monthly mailbox money, fielding offers to buy the investment, making the key decisions about how to manage and/or when to sell the investment, and getting you your money back to you at the end.

Sometimes it can be a bit more complicated than that. In some instances, different people in the deal can be specialists who do different things. Sometimes, you might be working at the front end with someone who is a “sponsor” of the deal who does not really “operate” the asset once the deal is closed. These people are really just promoters of deals who have networks of investors who look to them to bring forward deals for prospective investment. Others might have no relationship with you at the front end but really be the ones controlling the asset and the decision-making within the deal team. It can be very helpful to try to understand this structure if there are more than one group or a group of individuals involved.

We prefer deals where we know the people involved and can work out exactly who is doing what–sometimes that is easier said than done. The ones to be aware of are cases where you are working with someone at the front end who is really just a salesperson for the deal--and maybe not even a real estate expert.