Everything You Need
to Know Before
You Invest.

A real estate syndication is a private investment structure in which a group of investors pool their capital together to collectively acquire, operate, and eventually sell a real estate asset — typically one that would be too large or complex for any single investor to purchase on their own.

The syndication is organized by a sponsor (also called the General Partner or GP), who identifies the deal, arranges the financing, manages the acquisition process, and oversees the property throughout the investment period. The GP brings the expertise, the relationships, and the operational capacity to execute the deal.

The investors (Limited Partners or LPs) contribute the equity capital. In exchange, they receive an ownership interest in the property and a share of the income and profits generated over the life of the investment. LPs have no management responsibilities — their role is purely passive.

General Partner (GP)

The sponsor and operator of the deal. The GP sources the property, arranges financing, manages operations, and is responsible for executing the investment strategy. The GP typically contributes 5–20% of the equity.

Limited Partner (LP)

A passive investor who contributes equity capital in exchange for an ownership interest and a share of returns. LPs have limited liability — their risk is capped at the amount they invest.

Preferred Return

A minimum annual return that LPs receive before the GP participates in profits. For example, a 5–6% preferred return means LPs receive 5–6% per year on their invested capital before any profit split occurs.

Cash-on-Cash Return

Annual pre-tax cash flow divided by total cash invested. A 5–6% cash-on-cash return means that for every $100,000 invested, you receive $5,000–$6,000 in annual cash distributions.

Equity Multiple

Total distributions received divided by total capital invested. An equity multiple of 1.8x means that for every $1 invested, you receive $1.80 back over the life of the investment.

Waterfall Structure

The order in which profits are distributed. Typically: (1) return of LP capital, (2) LP preferred return, (3) GP catch-up, (4) remaining profits split between GP and LP.

Cap Rate

Net Operating Income divided by purchase price. A higher cap rate generally indicates a higher-yielding property relative to its price. Used to compare properties and assess value.

Value-Add

An investment strategy that targets properties with below-market rents or deferred maintenance, where improvements can increase income and property value. Common in older BC and Alberta walk-up buildings.

Offering Memorandum (OM)

The formal legal document that describes the investment opportunity in detail — the property, the business plan, the financial projections, the risks, and the terms. Required under Canadian securities law.

Hold Period

The expected duration of the investment from acquisition to sale. Foundationz targets a 8-year hold period, though actual timing may vary based on market conditions.

Distributions

Cash payments made to investors from property income. Distributions are typically made quarterly and represent the investor's share of net operating income after expenses and debt service.

Carried Interest

The GP's share of profits above the preferred return. Also called the 'promote.' This is the GP's primary incentive to maximize returns — the GP only earns this if investors are well-compensated first.

In Canada, offering securities to investors — including interests in a real estate syndication — is governed by provincial securities legislation and the Canadian Securities Administrators (CSA). In British Columbia and Alberta, the relevant regulators are the British Columbia Securities Commission (BCSC) and the Alberta Securities Commission (ASC).

Most private real estate syndications in Canada are structured under National Instrument 45-106 (NI 45-106) — Prospectus Exemptions. This regulation allows companies to raise capital from investors without filing a full prospectus, provided they qualify under one of the available exemptions.

Common Exemptions Used

Illiquidity

Your capital is locked up for the duration of the hold period (typically 8 years). There is no secondary market for LP interests. You should only invest capital you can afford to have illiquid for this period.

Market Risk

Property values and rental income can decline due to economic downturns, rising interest rates, or local market conditions. Past performance in BC and Alberta real estate does not guarantee future results.

Execution Risk

The business plan may not be executed as projected. Renovations may cost more or take longer than expected. Rents may not increase as anticipated. Vacancy may be higher than modeled.

Financing Risk

Interest rate increases at refinancing can reduce cash flow and returns. Lenders may impose more restrictive terms than anticipated. In extreme cases, debt covenants could be triggered.

Operator Risk

This is Foundationz's first syndication. While the GP brings relevant experience and expertise, investors should be aware that this is an emerging operator without a long track record of completed deals.

Regulatory Risk

Changes to Canadian tax law, landlord-tenant legislation, or securities regulations could impact the investment. BC and Alberta have active regulatory environments for residential rental properties.