How to Review a PPM

A Pri­vate Place­ment Mem­o­ran­dum (PPM) is one of the most impor­tant doc­u­ments an investor receives when eval­u­at­ing a DST offer­ing. It explains the prop­er­ty, spon­sor, financ­ing, fees, risks, con­flicts, use of pro­ceeds, and invest­ment struc­ture.

Rather than begin­ning with the pro­ject­ed dis­tri­b­u­tion rate, investors should review the under­ly­ing prop­er­ty, risk fac­tors, spon­sor, sources and uses, financ­ing, fees, prop­er­ty finan­cials, con­flicts of inter­est, and antic­i­pat­ed exit strat­e­gy.

• Prop­er­ty and val­u­a­tion
• Spon­sor and man­age­ment
• Sources and uses of funds
• Debt and financ­ing
• Fees and com­pen­sa­tion
• Risk fac­tors and con­flicts
• Exit assump­tions

Key Point: A PPM should help answer two ques­tions: What am I buy­ing, and what could cause the invest­ment to under­per­form?

Relat­ed DSTNews.org Arti­cles

• The Com­plete White Paper — How to Review a Pri­vate Place­ment Mem­o­ran­dum (PPM) for a Delaware Statu­to­ry Trust

Edu­ca­tion­al use only. This mate­r­i­al is not tax, legal, account­ing, or invest­ment advice. Pri­vate real estate invest­ments involve risk, includ­ing pos­si­ble loss of prin­ci­pal and illiq­uid­i­ty.