In this episode, Wayne talks to Sandhya Seshadri, who has invested as a limited partner, key principal and general partner in over 3000 doors, holding 200 million in assets throughout the United States. She’s been a leader in the equities markets for over 30 years and moved to commercial real estate due to the tax advantages and the ability to uniquely force appreciate each asset become her mission to help others capitalize on all the benefits of real estate investing. Sonya is based in Dallas. She focuses exclusively in the Dallas area.
She will discuss how passive investors can save a deal and avoid potential train wrecks in the current environment, where rising interest rates, insurance costs, and property taxes are creating challenges. The conversation covers topics such as stress testing deals, communication and transparency, private placement memorandum, and evaluating distressed real estate opportunities. Seshadri shares her experiences dealing with a train wreck deal and offers advice on how limited partners can communicate concerns and take actions early to avoid potential pitfalls.
Topics on Today’s Episode:
- Guest introduction: Sandhya Seshadri, an experienced real estate investor.
- Discussion on the challenges faced by real estate investors due to rising interest rates and lack of rate caps.
- Importance of stress testing deals and evaluating property management practices.
- Analysis of failed real estate deals in Houston due to poor underwriting and troubled locations.
- Importance of reading and understanding the Private Placement Memorandum (PPM) for investors.
- Focus on the details of the PPM and operating agreement when a deal is in trouble.
- The significance of transparent communication with the sponsor syndicator.
- Availability of monthly financial reports for investors, providing full transparency.
- Understanding the impact of additional capital raised through a capital call on the deal’s recovery.
- Importance of assessing risks and potential outcomes when evaluating a distressed investment.
- Communicating concerns with the general partners and documenting questions in writing.
- Involving other LPs to add their voice and request a meeting to discuss problems.
- Seeking advice from the syndication lawyer and obtaining original copies of relevant documents.
- Writing a demand letter and requesting a meeting or webinar to get clear answers.
- Assessing the deal and making an informed decision on whether to hold on or exit.
- Considering the runway and potential future distress deals in the decision-making process.
- Sandhya Seshadri’s successful real estate deals that outperformed the S&P 500.
- Importance of being sophisticated and informed as a passive investor.
- Encouragement to be prepared to invest in distressed real estate opportunities and remain vigilant in evaluating investments.
Links and Resources:
Guest Sandhya Seshadri
CREI Partners LLC