The Structure of a Real Estate Syndication Deal Explained
Real estate syndications are powerful investment vehicles—but to many first-time investors, the structure can feel complex at first glance. How are profits shared? What fees are involved? Who makes the decisions? And what happens at the end of the deal?
At Assemble Capital, we specialize in offering accredited investors access to strategically structured syndication opportunities across Los Angeles—providing high-quality developments with clearly defined roles, rights, and returns.
In this guide, we’ll break down how a typical real estate syndication deal is structured, so you can invest with confidence.
The Two Main Roles in a Syndication Deal
1. General Partner (GP) – “The Sponsor”
Also known as the syndicator or sponsor, the GP is responsible for:
Finding and underwriting the deal
Structuring financing and legal entities
Managing the project from acquisition through exit
Handling all communications and distributions to investors
Assemble Capital acts as the GP in all of our deals, bringing deep market expertise, development experience, and execution discipline.
2. Limited Partners (LPs) – “The Investors”
These are the passive investors who contribute capital to the deal in exchange for a share of the returns. LPs have:
Limited liability (their risk is capped at their investment)
No decision-making responsibility
Access to ongoing performance updates, distributions, and final profits
The Investment Entity
Most syndications are structured as a Limited Liability Company (LLC) or Limited Partnership (LP) created specifically for the project. This is often called a single-purpose entity (SPE).
Each investor owns membership interests (or shares) in this entity, which in turn owns the real estate asset. This structure provides:
Legal protection
Clear ownership and voting rights
A vehicle for managing capital contributions, distributions, and tax reporting
Capital Stack: Equity vs. Debt
Syndicated real estate deals typically include both equity (from investors and sponsors) and debt (from lenders or financial institutions).
Equity: Provided by the LPs and GP. LPs usually fund 80–95% of the equity; the GP contributes 5–20%.
Debt: Secured through traditional bank financing, construction loans, or bridge loans. This typically covers 60–75% of the project cost.
Assemble Capital carefully balances each deal’s capital stack to minimize risk and protect investor equity while maximizing leveraged returns.
Profit Distribution & Return Waterfalls
One of the most important features of a syndication deal is how profits are split between the GP and LPs. This is typically handled through a waterfall structure, which lays out the order in which profits are distributed.
Here’s how a common waterfall might look:
1. Return of Capital
LPs receive their initial investment back first, before any profits are shared.
2. Preferred Return
LPs receive a fixed annual return (commonly 6–10%) before the GP participates in any additional profit.
3. Profit Split (After Preferred Return)
Once preferred returns are paid, remaining profits are split between LPs and the GP, often on a 70/30 or 80/20 basis, with LPs receiving the larger share.
4. Performance Incentives (Optional)
If the project exceeds target IRR or equity multiple benchmarks, the GP may receive a larger share—called a promote—as an incentive for outperforming.
Project Lifecycle: From Start to Exit
Every syndication deal follows a clear lifecycle, typically broken down into these phases:
Acquisition – Site selection, underwriting, capital raise
Development / Execution – Construction, renovation, stabilization
Cash Flow – Rental income or refinancing, with potential for interim distributions
Exit – Sale or refinance; return of capital and final profits
Project timelines can range from 12 months (for flips) to 5–7 years (for new construction or value-add holds).
How Assemble Capital Structures for Long-Term Success
At Assemble Capital, our syndication structures are designed to:
Protect investor capital
Align interests between GPs and LPs
Optimize tax efficiency
Provide transparency at every stage
We structure each deal around achievable risk-adjusted returns and clear exit timelines—often targeting asymmetric return opportunities with downside protection and outsized upside potential.
Considering a Syndication? Know the Structure First.
Syndications can be incredibly rewarding—but only when the structure is clear, fair, and aligned. If you're an accredited investor evaluating new opportunities, understanding how the deal is built is just as important as what it's building.
