This guide is general information, not legal, tax or investment advice. Your operating agreement, offering documents, counsel and CPA govern your deal.
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What a PPM is, and what this guide is not
A private placement memorandum (PPM) is the disclosure document for a private securities offering. In a real estate syndication it tells prospective investors what they are buying, who is running it, what it costs them in fees, where the sponsor’s interests differ from theirs, and what can go wrong. It sits beside two other documents: the operating agreement, which governs the entity, and the subscription agreement, which the investor signs to buy in.
This guide explains what goes into a PPM and how the work is split, so you can prepare well and spend counsel’s time on judgement rather than gathering facts. It is not a template or a legal form, and nothing here should be pasted into an offering document. Write your PPM with a securities attorney licensed to advise on your offering.
When Regulation D requires disclosure
Most syndications raise under Rule 506 of Regulation D. Rule 506 itself requires a specific disclosure package in one case only. Under Rule 502(b), if an issuer sells under Rule 506(b) to any purchaser who is not accredited, it must give that purchaser specified information a reasonable time before the sale, and the issuer "is not required to furnish the specified information" to accredited investors. A note to the rule adds that an issuer providing it to non-accredited investors "should consider providing such information to accredited investors as well, in view of the anti-fraud provisions of the federal securities laws."
That note is the real reason sponsors write PPMs in accredited-only deals. The anti-fraud rules reach material misstatements and omissions in every offering, registered or not, and the PPM is the written record of what investors were told. Whether you need one, and how long it should be, is a call to make with counsel.
| Situation | What the rules require | What counsel commonly advises |
|---|---|---|
| 506(b), accredited investors only | No prescribed disclosure document; anti-fraud rules apply | A PPM, or a shorter disclosure document for simple deals |
| 506(b) with any non-accredited investor | Rule 502(b) information, including financial statements, plus a chance to ask questions | A full PPM with the required financial statements |
| 506(c) | All purchasers accredited and verified; no prescribed disclosure document | A PPM, since the deal is marketed publicly |
| Any Rule 506 offering | Written disclosure of pre-2013 bad-actor events under Rule 506(e), if any | Bad-actor questionnaires for covered persons before launch |
What Rule 502(b) asks for
If you admit even one non-accredited investor to a 506(b) offering, the information requirement is substantial. For an issuer that is not an SEC reporting company, Rule 502(b)(2) calls for, to the extent material:
- Non-financial information: if the issuer is eligible for Regulation A, the same kind of information as Part II of Form 1-A (the offering circular); if not, the same kind of information as Part I of the registration statement it would be entitled to use.
- Financial statements: for offerings up to $20,000,000, the information in paragraph (b) of Part F/S of Form 1-A; above $20,000,000, paragraph (c), the Regulation A Tier 2 standard, which calls for audited statements.
- A brief written description of any material written information given to accredited investors but not to the non-accredited purchaser.
- The opportunity to ask questions and receive answers about the terms of the offering, and to obtain additional information needed to verify what you provided.
What a PPM usually contains
There is no mandated table of contents for an accredited-only offering, but real estate PPMs tend to follow a familiar order. The right column is what counsel will ask you for.
| Section | What it covers | What the sponsor supplies |
|---|---|---|
| Cover page and legends | Issuer, securities offered, minimum investment, and legends that the securities are unregistered and restricted | Entity names, offering size, minimum |
| Summary of the offering | The terms in brief: classes, price per unit, pref, splits, term, closing conditions | Your term sheet |
| The property and business plan | Location, physical description, current operations, the plan and its assumptions | OM, rent roll, T-12, capex budget, model |
| Use of proceeds | Where every dollar raised goes: equity, reserves, closing costs, fees | Sources and uses, tied to the closing statement |
| Financing | Loan amount, rate, term, covenants, guarantees, recourse | Loan term sheet or commitment |
| Management | The sponsor, its principals, track record and roles | Bios, prior deals and their results |
| Compensation and fees | Every fee and promote paid to the sponsor or affiliates | Fee schedule from the operating agreement |
| Conflicts of interest | Where the sponsor’s interests differ from investors’ | Affiliates, other deals, related-party services |
| Risk factors | What can go wrong, specific to this deal and generally | Known issues with the property, market and plan |
| Distributions | The waterfall, timing and reserves policy | The waterfall from the operating agreement |
| Tax considerations | Partnership taxation, K-1s, state filings, and the limits of the discussion | Structure; counsel and your CPA draft this |
| Investor suitability and subscription | Who may invest, accreditation, how to subscribe and fund | Exemption chosen, subscription process |
| Transfer restrictions | Why units cannot be freely resold and what approval a transfer needs | Operating agreement terms |
| Exhibits | Operating agreement, subscription agreement, financial statements if required | Final documents |
Risk factors that say something
Generic risk factors ("real estate is illiquid") are needed but not enough. The disclosure that protects you is the one that names the risk your deal actually carries. Give counsel the specifics:
- Floating-rate debt: the rate cap’s strike and expiry, and what happens to cash flow if the cap is not replaced at the same cost.
- A maturity inside the hold period, and what the plan assumes about refinancing.
- Concentration: a single tenant, employer or submarket that drives occupancy.
- The business plan itself: renovation premiums not yet achieved, lease-up assumptions, construction cost exposure.
- Property taxes reassessed at the purchase price, and insurance costs in your region.
- Capital calls: whether investors can be asked for more money, and what happens if they decline.
- The sponsor: key-person risk, other deals competing for its time, and any past deal that lost money.
Use of proceeds, fees and conflicts
Investors read the fees and the sources and uses more closely than any other pages. Every number must match the operating agreement, the model and the closing statement. A fictional example of a sources and uses table for a $20,500,000 acquisition:
| Line | Amount |
|---|---|
| Senior loan | $13,000,000 |
| Investor equity raised | $7,500,000 |
| Total sources | $20,500,000 |
| Purchase price | $18,000,000 |
| Closing costs and loan fees | $540,000 |
| Acquisition fee to sponsor (2%) | $360,000 |
| Capex reserve | $1,200,000 |
| Operating and interest reserves | $400,000 |
| Total uses | $20,500,000 |
Fee and conflict disclosures that hold up
When the sponsor or an affiliate is paid, say how much, when, and on what base:
- Acquisition, asset-management, construction-management, financing, refinance and disposition fees, each with its base (purchase price, equity, revenue, loan amount) and timing.
- The promote and any GP catch-up, described the way the operating agreement computes them.
- Affiliated property management or brokerage, with the rate and how it compares to a third party.
- Who pays organisational and offering costs, including legal fees for the PPM itself.
- Other deals the sponsor runs that may compete for tenants, buyers or the principals’ time.
Who does what: sponsor and counsel
The split matters because counsel’s time is the expensive part. The sponsor owns the facts; counsel owns the legal structure and the wording.
| Task | Sponsor | Securities counsel |
|---|---|---|
| Deal facts, model and term sheet | Prepares and stands behind them | Reviews for consistency |
| Choice of exemption (506(b) or 506(c)) | Decides, on counsel’s advice | Advises on the consequences |
| Entity structure and operating agreement | Gives commercial terms | Drafts |
| PPM narrative, risk factors, conflicts | Supplies facts and reviews drafts | Drafts and finalises |
| Tax discussion | Coordinates with the CPA | Drafts with tax counsel |
| Subscription agreement and questionnaire | Reviews the investor experience | Drafts |
| Form D and state notice filings | Provides investor states and dates | Often files, or reviews your filing |
| Marketing materials | Drafts the deck and deal page | Reviews for consistency with the PPM |
Timeline and cost
Both depend on the structure, the firm and how ready your facts are. One securities firm, Moschetti Law, publishes 2026 ranges of $12,000–$25,000+ for a Regulation D package from specialist firms, $20,000–$40,000+ for fund, parallel or offshore structures, and $50,000–$75,000+ for large-firm engagements, and says investor-ready documents are possible about two weeks after kickoff when the client responds quickly. Those are a law firm’s published figures, not a survey; quotes vary widely.
In practice a single-asset deal often takes a few weeks from a signed engagement letter to final documents, and longer when the structure, the waterfall or the financing is still moving. You cut both time and cost by arriving with a final term sheet, a final model and a clean data room.
Form D and state notice filings
Under Rule 503, an issuer relying on Rule 506 must file a notice on Form D with the SEC no later than 15 calendar days after the first sale in the offering; if that day falls on a weekend or holiday, the deadline moves to the next business day. File amendments to correct material mistakes and to reflect certain changes, and annually while the offering continues.
Most states also require a notice filing and fee when a resident invests, on their own timetable. Track each investor’s state from the subscription so nothing is missed.
Mistakes to avoid
These come up again and again in sponsor documents:
- A deck, deal page or email that promises more than the PPM discloses, or shows different target returns.
- Fees in the PPM that do not match the operating agreement.
- Projections without their assumptions, or without saying they are projections.
- Boilerplate risk factors that miss the deal’s real risk, such as a loan maturing during the hold.
- Material changes after launch (a new lender, a price cut, a delayed close) without a supplement to investors.
- Accepting a non-accredited investor in a 506(b) deal without the Rule 502(b) information.
- Reusing a PPM from a past deal and leaving the old property’s facts in it.
Primary sources
Read the rules themselves, not summaries of them. Every link below is to the SEC or to the Code of Federal Regulations at Cornell’s Legal Information Institute.