I put $60k into a medical office LP and read the wrong document
Writing this for people at the stage I was at, so I'll define things as I go.
LP means limited partner. You give a sponsor money, they buy and run the building, you get a share of the cash and no control. The deal was a 38,000 sf medical outpatient building leased 82% to one multi-specialty physician group, six years of term left, sold to investors as defensive income. I asked for the private placement memorandum, the PPM, and read it carefully. What I did not read carefully was the lease itself, which was in a data room I had access to the whole time.
That lease permitted assignment to an acquiring entity without landlord consent. Month nine, the physician group was bought by a larger system. Month fourteen the system gave notice it would consolidate into its own campus at expiration and stopped discussing renewal. The lender's loan documents required cash to sit in a controlled account once occupancy projections fell below a threshold, so distributions stopped. Month nineteen there was a capital call, meaning the sponsor asked partners for more money, and if you didn't pay your ownership percentage shrank. I paid $11k. The building sold in year three and I got back about $34k of the $71k I'd put in.
The tenant never missed rent. Nothing defaulted. The building went from one tenant with credit to one tenant that had somewhere better to be.
What I'd do differently. Read the actual leases, specifically consent to assignment, renewal options and any termination rights, before I read the sponsor's summary of them. And ask the sponsor in writing what happens to distributions if the lender starts sweeping cash.