INVESTING

In Commercial Properties Partnership

Syndication By Invitation

Q&A

– What are the differences between residential and commercial real estate investment?

Commercial Real Estate investment is NOT an entry-level real estate investment, not only because it requires more capital, but also it requires a higher level of knowledge and experience in the real estate market and business. The transaction and the management involve a number of legal financial processes that are more complicated than residential real estate investment. In return, commercial real estate reaps bigger rewards when successful.


– What does it mean by “Time is of the essence”?

While “Time of the essence” is used to express a need for haste in action or response, it is a legal phrase stated in every real estate contract. When the phrase is used in a contract, it places the other party on notice that failure to complete a required performance by a certain date set forth therein will constitute an incurable breach.


– What is Cap Rate?

The capitalization rate, often referred to as the “cap rate”, is a fundamental concept used in the commercial real estate. It is the rate of return on a real estate investment property based on
the income that the property generates or is expected to generate. This metric is used to estimate the investor’s potential return on his or her investment.

The capitalization rate of an investment can be calculated in the following formula:

Capitalization Rate = Net Operating Income / Current Market Value or Acquisition Cost.


– What is Return on Investment? (ROI)

Return on investment is the percentage increase or decrease of an investment over a set period of time. It is calculated by taking the difference between current (or expected) value and original value, divided by original value and expressed in a percentage. This calculation does not consider time value of money.


– What is IRR?

The internal rate of return (IRR) is a method of calculating investment rate of return accounting for the time value of money and investments. 


-What are the different types of commercial leases?

Triple Net NNN, Absolute Triple NNN,  Gross Lease, Full Service, Modified.


–  What is Real Estate Syndication?

Real estate syndication is an effective way for parties to pool their financial and intellectual resources to invest in properties and projects much bigger than they could afford or manage on their own.


– Who are the parties of the syndication?

Syndication consists of two parties: investors who pool their capital & Manager (Sponsor) who participates with intellectual resources and expertise.


How is syndication set up?

The syndication is usually structured as a Limited Liability Company or a Limited Partnership, and comes with built-in protections for all parties.  


-What are the investor’s roles in the syndication?
Investors are passive members, and provide most of the financial equity.


-What are the Manager (Sponsor) roles?
As the manager and operator of the deal, the Sponsor invests the sweat/brain equity, including scouting out the property, thoroughly vetting the property, raising funds, acquiring and managing the investment property’s day-to-day operations, distributing income to investors and marketing the asset when the time comes to sell.


What are the rights of the investor and sponsor?
The rights of the Sponsor and Investors, including rights to distributions, voting rights, and the Sponsor’s rights to fees for managing the investment, are set forth in the LLC Operating Agreement.


-When and how does everyone get paid?
Investors receive their share of the income generated by the investment property on a monthly and quarterly basis, and receives the capital they invested and the net sales proceeds at the time of sale, based on the deal structure set forth in the syndication.


-What are the advantages of  syndication?

Syndication allows investors to

Invest in properties and projects much bigger than they could afford

Access to opportunities that may not be accessible for smaller investors.

Collect passive income plus share of the profits utilizing Sponsor’s knowledge and expertise.

Limit liability risk to original investment amount

Easier to achieve a diversified portfolio with distributed risks

Own a share of commercial real estate but does not require day-to-day management or oversight by the investor.


–   What are Blue Maya Syndications?

Blue Maya Syndications are real estate syndications managed by Blue Maya LLC, and dedicated to halal investment:

100% cash equity investment, no loan is assumed at any stage of the investment.

Invested in properties and projects with tenants/business not engaged in Haram business such as alcohol etc. Sponsor co-invest in the investment. Investor paid 1st.


-What are the investments types Blue Maya LLC target?

Blue Maya targets opportunities in commercial real estate including but not limited to: net leased properties,  sale-leaseback, single tenant, retail, office, multi-tenant, shopping centers. Typical investment price ranges from $2m to $20m +, across USA.


–    How does Blue Maya generate superior returns?

Good deals in private equity real estate are available, but it takes out-of the mainstream thinking to find and profit from them.

Our strategies are time-tested and market-tested, which include but not limited to:

Investment that offers the opportunity to capture value-added

Under-the-Radar opportunities

On & Off-market Opportunities

Income-producing with potential upside (balanced approach)

Turnaround time of 12 – 36 months

Utilizing CCREC simulation of optimization (most likely, pessimistic, & optimistic)

All cash


–  Is there risk in this investment?

Yes, all investments have a degree of risk. And as all accredited investors know, we are required to disclose all risks in private investment offerings.


What is the deal structure of Blue Maya offerings? How are the funds allocated and distributed?

All Blue Maya offerings are structured to provide the same allocations and distributions. What changes from investment property to investment property is the maximum amount of offering available per offering.

Allocations:

Blue Maya LLC will co-invest in the investment property along with the investors, together called “Total Equity”.

Distributions:

All cash flow will be distributed 100% to the Total Equity (pro rata to their investment percentage) and 0% to Blue Maya LLC (as Manager) until the Total Equity has received an amount equal to annual return at the rate of 7% cumulative non-compounded preferred return (the “Preferred Rate”). Thereafter, Total Equity will receive split of excess cash flow.

All Net Sales Proceeds will be distributed 100% to the Total Equity (pro rata to their investment percentage) and 0% to Blue Maya LLC (as Manager) until the Total Equity has received an amount equal to their initial capital contributions. Thereafter, Total Equity will receive 50% of excess sales proceeds.


-What is the Preferred Rate?

The preferred rate or “hurdle rate” refers to the threshold return that the investors or equity partners must receive, prior to the Sponsor receiving its promote as compensation of managing the investment.


What is Pari Passu?

Pari Passu, means Equal. This term is used to describe how the preferred return to be paid when the Sponsor co-invest in the syndication deal. “pari-passu preferred return”, means that the sponsor and the investors, i.e. the Total Equity, receive the same preferred return of the invested capital, paid at the same time.


-What happens when cash flow generated from the investment property is not enough to pay the preferred return?
At any given period, if the cash flow from an investment is not enough to pay out the preferred return, the unpaid portion will be accumulated, but not compounded, to the next pay period, until all the preferred return is paid.

For example, when there is a tenancy restructure or tenant improvement needed to attract tenants, the cash flow will first dip, then improve and stabilize, eventually bring value-added opportunity to the investment.


Does Blue Maya charge any Sponsor fees?

No, Blue Maya syndication does NOT charge any of the fees below. These are the saved fees by Blue Maya LLC to their investors. Only performance split is used to compensate Blue Maya, the Sponsor.


What are the common fees to compensate the Manager/Sponsor?

The commonly applicable fees charged in syndication as follow, most the syndication do charge combination of the following fess and performance incentive :

Fund formation fees: 1% – 1.5%
Administration fees: 1% – 2%
Acquisition fees: 2% – 4%
Annual fund management fees: 1%-3% of the gross income, Annual asset management fees: 1% – 2% Etc.

These fees are collected and paid regardless of any performance and prior to investors receiving any return.

Blue Maya Syndication do not charge any fees only get performance incentive.


How does Blue Maya structure benefit investors?

a) Blue Maya co-invests in each investment, i.e. “skin-in-the-game”: This means Blue Maya is in the same boat of risk and reward with the investors to align Manager’s interests with investors’ best interest.

b) Back-end performance split: 100% of the cash flow and net sale proceeds distributions go first to the Total Equity, before Blue Maya, as Manager, gets paid the performance split.

c) Blue Maya LLC eliminates the commonly charged fees such as those stated in the previous question, which in return maximizes investors’ return on their invested funds.

d). Structure that minimizes underperforming risk: since Manager’s performance split is subordinate to that priority return to the equity holders, and Manager co-invests as investor, in the event that the investment underperforms, Manager takes double losses, i.e., lost as investor, and lost any expenses involved in managing the assets which should be recovered from the anticipated performance split. 


-How this structure affects the Sponsor?

The structure motivates the sponsor to outperform the preferred rate in order to recover his managing expenses and realize return on his sweat/brain capital.

The timing of payout to Sponsor is after the payout to investors, this means that expenses of the Sponsor for managing the investment, such as compensation to the team members and administration expenses, were not paid by the investment and will be a loss to the Sponsor if there is no excess cash flow after investor preferred return payout.

The amount of payout to Sponsor depends on the performance. Therefore in the case of under-performing, the Sponsor will not receive any compensation, nor be able to recover any expenses from managing the investment. In the case of outperforming, the Sponsor will get paid, but only after investors receive their part.

the amount of payout is based on performance. Therefore, the expense of the Sponsor and his managing team under the sponsor such as compensation to assets managing team members such as CFA, CCIM, administration is not paid upfront and in the event investment perform less or equal to preferred rate these expenses are the loss on the sponsor not the investor.

Through this structure the investor will have benefited from the difference between acquisition rate and preferred rate.


What are the advantages of participating in Blue Maya syndications?

Halal investments (all-cash, halal business/tenant/property);

Real Estate: invest in what you see, underlying assets are bricks;

Investors got paid first. As a result, Blue Maya’s interests are closely aligned with investors—the better an investment performs, the better we all do;

Skin in the game: Blue Maya co-invests money into each of the investments, sharing the profit also sharing the loss;

Focus on a niche market with properties overlooked by other investors, fly under the radar;

Partner with seasoned professionals with excellent credentials and superior track record;

CCIM, CFA, CSM with years of experience

Hands-free investment managed by expertise: Blue Maya invests time and utilize its expertise

in investment management including scouting, strategizing, value adding, transaction handling, due diligence, deal securing, etc;

Minimal costs: lean operation, nominal overhead, minimal expenses, therefore more capital, time and effort spent on the investment rather than administration;

Flexible funding options such as 401k etc;

Short turn around time;

Annual preferred rate with the anticipation of higher IRR;

Ability to benefit and participate in bigger projects with a limited fund;

Utilizing CCREC simulation for investment scenarios covering most likely, pessimistic, optimistic (Networking, value adding, restructuring).


How soon can Blue Maya identify a potential investment?

Blue Maya syndication offerings are ongoing; however, there is no specific time frame to locate an investment opportunity. Opportunity may be around the corner or a few months later. Blue Maya is very actively looking for opportunities with very specific criteria to fit with the parameter of Halal and investment strategy in order to produce impressive returns for investors. Since “Time is of the Essence”, when a good deal is identified, Blue Maya expects investors to be ready to pull the plug as good deals do not stay long.


What properties or projects can I invest in?

Since the timing or capital raising of future properties are unpredictable, Blue Maya has created an Investor Registry list called “The Blue List”.

In essence; this is a First-Come/First-Serve opportunity.

Investors will be provided offering information and the option to invest. All the details of the property, and the specific investment and ownership amounts will be detailed. And, investors are encouraged to do due diligence, utilize any investment and/or tax advisors and ask any questions relative to that project.

Once the investor is provided the opportunity, they can participate, or not.


What are the documents Blue Maya LLC will provide to investors?

The typical documents provided to potential investors include:

1) Offering Memorandum: gives a detailed description of the investment
2) Member Subscription Agreement: to be executed by each Member and to be accepted as a Member of the Company.
3) Contribution Agreement (when is applicable)
3) Accredit investor questionnaire: to be executed by each Member
4) LLC operating agreement
5) Other documents as needed.


Do I have to be Accredited Investor to join?

Yes. Blue Maya syndication opportunities are limited to Accredited investors only. You will need to verify your accreditation prior to investment. The documents will be provided with investor registration information.


 – What are the qualifications required for Accredited Investors ?

An Accredited Investor has a net worth in excess of $1 million, excluding the primary residence, or has had annual individual income in excess of $200,000 or joint income in excess of $300,000 for the last two years.

An entity is an accredited investor if it is a private business development company or an organization with assets exceeding $5 million.

In 2016, the U.S. Congress modified the definition of an accredited investor to include registered brokers and investment advisors. Also, if a person can demonstrate sufficient education or job experience showing his professional knowledge of unregistered securities, he is also considered an accredited investor.


– What is the minimum amount investor can invest?
Blue Maya LLC has set the individual investor minimum at $500,000. On a case-by-case basis,

management reserves the right to change that minimum, in their sole discretion.


What is the maximum share I can buy in an investment?
The maximum share to acquire is the maximum offering of the investment.


If I like the investment presented to me, can I have 100% share and Blue Maya LLC act as Sponsor?

Yes.


–  Can I invest through my LLC, LP, Trust or IRA?

Yes, investors are able to invest through those entities and in self-directed IRA’s.


– Can I use my 401K?

Certain 401k can be used such as the 401k with previous employer.


I have funds in my previous 401k. Can I transfer it to the investment?

Yes. The process to use 401k starts by opening an account for self-directed retirement plan IRA; next, transfer the funds to the IRA account, then invest the funds to the Blue Maya syndication upon identifying the opportunity.


To invest with stocks, options, etc. do I need to do anything?

An Accredited Investor has a net worth in excess of $1 million, excluding the primary residence, or has had annual individual income in excess of $200,000 or joint income in excess of $300,000 for the last two years.

An entity is an accredited investor if it is a private business development company or an organization with assets exceeding $5 million.

Yes, before you commit to investment, make sure to contact your company broker and get the appropriate time frame and process. Some processes may take several weeks and specific process.


Can I use my 1031 exchange?

Yes, funds in your 1031 exchange account can be invested in syndication if they are like-kind investments.


 

For additional questions, detailed information, confidential meeting, and one on one discussion opportunity,

Please contact us at

Phone: (408) 748-7700
or
email: Synd@Corpcrec.om

Thank you!