REAL ESTATE FUND FORMATION
The Dilendorf Law Firm advises clients on the establishment and operation of real estate investment funds and all aspects of fund formation, operations, and governance. Our knowledge and expertise in establishing real estate funds includes all facets of US and non-US sponsor representation, including onboarding, tax planning, and guidance after the launch.
In its simplest form, a real estate private equity fund allows the partners involved to raise equity for ongoing real estate investments by utilizing benefits of diversified holdings and buying power to alleviate risk. A sponsor, or general partner, initiates and creates the fund, and requests investors, or limited partners, to provide equity for the partnership. Establishing such a fund involves navigating various regulatory complexities, tax situations and business challenges.
The Dilendorf Law Firm advises established and emerging real estate investment fund managers on all aspects of this process. Our practice is made up of experienced attorneys who have structured numerous real estate funds, utilizing various investment strategies, structures, and jurisdictions.
Our firm will recommend the best ways to diversify and expand funding sources to allow for greater deal flow, resulting in reduced risk exposure and more favorable terms from lenders. When properly executed, the private equity structure of real estate investment funds can provide significant rewards for the sponsor.
Represented a client in connection with tokenizing a $20M real estate lending master feeder fund (US/Cayman), including addressing potential tax implications, application of US securities and investment regulations and worldwide treatment of the fund tokens
Represented a client in connection with the formation of a real estate lending fund in New York
Represented a foreign private fund in connection with the corporate and tax structuring of their investment in commercial real estate project in NYC by utilizing beneficial tax treaty provisions, and combination of debt and equity
Worked with a client on setting-up a $20M tokenized real estate lending master feeder fund (US/Cayman)
Structured investment of Section 1231 gain, generated from the sale of real estate used in trade/business, in a two-tier qualified opportunity fund for purchasing and developing properties in NY
Advised a group of private investors in connection with setting up a qualified opportunity fund for purchasing a $10M development lot
Advised client on structuring and launching “mini-master” private investment fund: utilizing an offshore fund domiciled in the Cayman Islands that invests assets directly into a domestic master fund domiciled in DE
Set up of a real estate fund targeting value-add multifamily assets in growth markets
Advised a client regarding the process of tokenizing a $40M commercial property in the Midwest, addressed applicable securities regulations and token transfer restrictions for US and non-US investors, selected a legal structure for tokenization (LP, SPV, Trustee), guided through the process of underwriting the property interest on a smart contract and issuing legally compliant ERC-20 tokens, and advised regarding the process for verifying the accreditation status of US and non-US investors, KYC/AML checks as well as onshore/offshore banking
Formation and Operation of Real Estate Investment Funds and REITs
The Dilendorf Law Firm represents US sponsors of real estate investment funds, as well as investors from abroad. Our services include fund formation, corporate and tax planning, guidance after the launch, and support for ongoing fund operations.
Real estate investment fund managers, whether first-time sponsors or established industry leaders, trust the Dilendorf Law Firm to configure the best terms and structure for the creation and deployment of capital.
Our cross-disciplinary team consists of real estate attorneys, securities lawyers, and tax specialists who focus on all aspects of real estate fund structuring and lending. These include partnerships, joint ventures, mezzanine lending, real estate equity funds, preferred equity, qualified opportunity zone funds, and REITs.
The real estate experts at the Dilendorf Law Firm have an established reputation for expertly structuring every type of real estate fund to the client’s benefit. Our firm has considerable experience with the formation of real estate funds and vehicles, covering open-ended, closed-ended, variable-priced, and total return driven structures, programmatic joint ventures, and separate accounts.
Our real estate team is familiar with all types of debt funds, equity funds, and global investment strategies, working across all asset classes, including retail, residential, commercial, office, multifamily, hospitality, agricultural, medical, senior living, and undeveloped land.
We partner with clients to help them understand the unique market terms surrounding alternative capitalization strategies and the various opportunistic investment objectives within the real estate market.
Tokenization of Real Estate Funds
Dilendorf Law Firm advises on all aspects of the formation, governance, and operation of tokenized real estate funds. Tokenized real estate funds offer a number of potential benefits as compared to traditional funds.
- Access to a global pool of capital;
- Increased liquidity;
- Simplified digital management of a significant number of investors via smart contracts;
- Automated and transparent governance, voting and compliance using smart contracts on the blockchain;
- Prompt cryptocurrency operations as an alternative to banking transactions in fiat.
Our fund tokenization services include:
- Developing a fund’s strategy and structure;
- Possible integration of the token issuer into the current structures or creation of a separate tokenized structure for the existing manager;
- Advising on jurisdiction and cross-jurisdictional issues;
- Implementing the chosen trust structure and preparing all the necessary documentation;
- Preparing private offering memorandum and subscription documents;
- Advising on foreign and US investor qualifications;
- Advising on AML/KYC compliance.
Fund token issuers must structure each offering very carefully to take into account various pitfalls presented by securities regulations, AML/KYC requirements and current investment and governance restrictions. Heightened global liquidity may present additional operational complications, for example, with secondary market re-sales and maintaining capitalization tables.
Some of the other major considerations that should be acknowledged and addressed by emerging tokenized fund managers are that security tokens may by subject to limitations on resale, number of investors, investor solicitation and acceptance, tradebility on secondary markets in the US and foreign jurisdictions, etc.
We help our clients efficiently navigate the web of challenges arising throughout the formation, governance, and operation of tokenized funds.
A Competitive Advantage for Global Clients
As global markets continue to expand and contract due to the rapid pace of technology, we partner with clients to explore and embrace the potential of innovative investment funds, guiding them to make a profound and lasting impact. We advise international clients on effective real estate holding structures and the tax consequences connected with the ownership, operation, and transfer of U.S. real property interests.
Our real estate investment advisory is comprised of specialized attorneys who provide innovative tax strategies for our global clients, providing exceptional insights and competitive advantage. Our team understands the complexities and challenges of US securities laws and compliance standards, offering practical, solutions-driven advice to our global clients.
The lawyers at the Dilendorf Firm understand real estate and tax issues that are unique to real estate funds. When appropriate, we incorporate private REITs into real estate fund structures and apply our practical knowledge of the complex rules governing these entities to ensure regulatory compliance.
Our firm represents clients in New York City, state and federal courts in all areas of real estate investing and management, including property valuation, brokerage, and leasing disputes, foreclosures, and commercial contract disputes arising out of COVID-19.
- Introduction to Private Equity Funds
- Private Equity Funds – Formation and Operation
- Closed-End Fund Formation
- Private Equity Demystified – Explanatory Guide
- How to Start a Hedge Fund
- SEC’s Analysis of the Market for Unregistered Securities Offerings
- Tax Treatment of Partnership Funds and Mergers of Investment Companies
- Hedge Fund Basics – IRS Guide
- Opportunities in Private Equity
- Private Equity in the Developing World: Determinants of Transaction Structures
- Hedge Fund Fully Managed by Artificial Intelligence
- Sample Limited Partnership Agreement of the Fund
- Sample Real Estate Fund Formation Agreement
- Private Equity, Venture Capital and Hedge Funds
- Hedge Fund Basics – IRS
- Supporting Innovation Through SEC’s Mission to Facilitate Capital Formation
- Information and Observation on State Venture Capital Programs
- Funds of Funds Arrangments
- Framework for Investor Analysis of Hedge Fund Governance
- Implications of the Growth of Hedge Funds – SEC.gov
- Special Considerations in Forming Private Real Estate Funds
- Sample SEC Filing for ING Global Real Estate Fund
- Sample SEC Filing for Davis Real Estate Fund
- Engaging on Fund Innovation and Cryptocurrency-related Holdings
- Bank Secrecy Act/Anti-Money Laundering – FDIC
- Tokenized Security & Commercial Real Estate – MIT Digital Currency Initiative
- From Initial Coin Offerings to Security Tokens – Stanford Law School
For more information about our Real Estate Fund Formation services,
For more information about our Real Estate Fund Formation services,
please contact Dilendorf Law Firm by sending an email or calling us at 212.457.9797