A Case Study in Marketing a Real Estate Debt Fund through the Design and Preparation of a Private Placement Memorandum (PPM) and Investor Presentation

Abstract

Private equity-backed real estate debt funds play a crucial role in providing capital to borrowers seeking financing for construction projects. These funds raise capital from investors, deploy it strategically, and actively manage debt investments to generate returns for their limited partners. The appeal lies in the potential for attractive yields and risk management strategies in a complex investment landscape. There are countless potential fund structures to address a range of investment strategies, risk profiles, investor appetites, geographic considerations, and manager experience and deal access. This study delves into the dynamics of capital raising for a real estate debt fund specializing in private construction loans. It covers the essential elements of the Private Placement Memorandum (PPM), including legal disclosures, investment terms, risk factors, and fundspecific details. This research aims to provide a real-world example of a fund designed according to current trends and market terms for use by a real-life investment manager, ProBuilder Financial LLC. The PPM and the associated investor presentation utilize best practices for presenting complex financial information in a clear and concise manner. Bridging theory and practice sheds light on the strategies, risk-reward trade-offs, and market implications associated with this capital-raising channel.