Comparing Real Estate Funds: Trion Properties & 37th Parallel

Both Trion and 37th Parallel have been in business since shortly before the Great Recession. Each offers a single fund at a time with the option to invest separately in individual projects if you wish.

Let’s learn more about Trion Properties Multifamily Investment Fund (Trion Fund IV) and 37th Parallel’s Fund II. Some of the information below was found directly on the companies’ websites.

Projected Returns

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Trion’s Fund IV projects annual after-fee returns of 12% to 15% to investors. 37th Parallel’s Fund II Class B shares are targeting a 14% to 17% annual return after fees. They also offer Class A shares targeting 9% returns. Why offer two share classes with different targeted returns? As explained by Dennis Bethel, MD, Principal, Investor Education with 37th Parallel:

“One of the major benefits of income-producing commercial real estate (especially multifamily) is that you can shape your returns between income, equity growth, tax advantages, time-horizon, etc. So, it made sense to provide the ability to more specifically customize the types or return an investor would want.

This is why we launched Fund II with two share classes – Class A and Class B. Note, please review the 37P – Fund II Private Placement Memorandum (PPM) for specific details. Below is just a summary of a few of the relevant terms.

Class A (Current Income) Shares have a 9% annual preferred return, first access to distributable Fund II cash flows, with capped upside. In essence, the portion of the investor’s commitment that’s in Class A shares will receive more income sooner from the fund but will not participate over a 9% annual preferred return.

Class B (Total Return) Shares have a 7% annual preferred return, second access to distributable Fund II cash flows, with full equity growth participation from the portfolio of multifamily assets in the fund at asset/portfolio sale or recapitalization. In essence, the portion of the investors’ commitment that’s in Class B shares will receive lower current income later in the fund life...

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