What is an SPE in Real Estate?

In real estate, an SPE (Special Purpose Entity) is a legal entity—usually a limited liability company (LLC) or limited partnership (LP)—created specifically to isolate financial risk for a single property or transaction.

Key Characteristics of an SPE

• Holds only one asset, such as a commercial building or development project.
• Bankruptcy-remote, meaning it’s structured to protect the asset from the financial troubles of its parent or related entities.
• Commonly used in real estate financing to make the deal more attractive to lenders and investors.
• Helps ensure clean separation of assets and liabilities.

Example

If a real estate firm is building a multifamily complex, it may form an SPE called “123 Main Street LLC” to own and operate that specific property. This shields the parent company and its other assets if that project faces financial issues.