Real Estate Financial Modeling Tools

CRE Joint Venture Equity Partnership Structure Database Access

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Description

An online resource for learning about dozens of equity joint venture partnership deal structures.

Product Details

A database housing 60+ anonymized equity joint venture partnership structure details for U.S.-based middle market commercial real estate transactions. Data comes from a proprietary REFM Survey with all data points vetted by REFM founder Bruce Kirsch.

Deal structure data provided include:

  • investment type and property type
  • general geography and submarket
  • total transaction dollar size, timeline and projected IRR and multiple on equity
  • total transaction debt financing %
  • number of equity players and % share of investment each
  • sponsor credit, track record and lender contact network depth
  • guaranteed fees and performance-based fee types and amounts
  • loan guaranty, construction shortfall and operating deficit responsibility
  • priority and shares of cash flow distributions
    • return of capital
    • preferred return rate and frequency of compounding
    • promote
  • waterfall tier IRR hurdle rates and equity multiple hurdles
  • any unique split characteristics related to disposition
  • any catch-up or clawback mechanisms.

One of the challenges to both deal sponsors and investors with closing Joint Venture partnerships for individual real estate transactions is getting accurate information as to how other JVs are being consummated. If we knew what structures were actually getting sponsors and investors to team up, then we could be more realistic in our expectations of our counterparty’s requirements, and in our financial analyses, and we could get more JVs done faster and at lower cost.

There are dozens of important facets to every JV: capital contributions, sponsor fees and loan guaranties, operating deficit and/or construction shortfall liabilities, the priority return of capital to the investor, Preferred Returns and residual profit sharing Promotes, just to name a few. And the devil is in the details. The substitution of an “or” in place of an “and” in one of our partnership agreements can mean millions of dollars in profits forfeited or gained.

The questions in the Survey use the context and nomenclature shown in the diagram below to identify the various players involved on the equity side. The diagram shows the existence of, at a minimum, a single partnership structure – that between the Overall Sponsor and the Third Party Investor. If there is a Minority Investor, there is also a separate partnership structure in place between the Sponsor and the Minority Investor (which, collectively, comprise the Overall Sponsor).

crejvdiagram

Overall Sponsor – As shown above, if there is a Minority Investor, the Overall Sponsor comprises both the Sponsor and the Minority Investor. If there is no Minority Investor, the Sponsor is the Overall Sponsor.

Sponsor – The Developer of or Principal investor in the asset.

Minority Investor – The Sponsor’s investment partner, if any. Relative to the Third Party Investor, the Minority Investor provides a minority share of capital.

Third Party Investor – The Majority Investor in the transaction.

Equity Investor Entity – any of Sponsor, Minority Investor and Third Party Investor.

Preferred Return – The priority return on invested capital paid to either just the Third Party Investor, or to both the Third Party Investor and Overall Sponsor. If there is a Minority Investor, the Preferred Return for the Sponsor and Minority Investor’s separate partnership structure is the priority return on invested capital paid to either just the Minority Investor, or to both the Minority Investor and to the Sponsor.

Pari Passu – Distribution of cash flow to the equity partners simultaneously, on a pro-rata basis to (in proportion to) the respective shares of Total Equity Investment at the time of distribution.

Promote – The additional share of net cash flow (profit) paid by the Third Party Investor to the Overall Sponsor above and beyond the Overall Sponsor’s pro-rata share of Total Equity Investment. If there is a Minority Investor, the Promote for the Sponsor and Minority Investor’s separate partnership structure is the additional share of cash flow paid by the Minority Investor to the Sponsor above and beyond the Sponsor’s pro-rata share of Equity Investment between the Sponsor and Minority Investor only.

Internal Rate of Return (IRR) Waterfall – A multi-tier sliding scale cash flow distribution structure that increases the Promote amount as various hurdles for the IRR are exceeded.

Equity Multiple Waterfall – A multi-tier sliding scale cash flow distribution structure that increases the Promote amount as various hurdles for the return on equity multiple are exceeded.

Records index

Geography Market Type Investment Type Property Type
Northeast - U.S. Suburban Ground-Up Development Single Family Houses/Townhouses
Non-U.S. Other urban (non-CBD) Entitlement and Land Development Mixed-Use
Non-U.S. Other urban (non-CBD) Acquisition of a Stabilized Asset Other
Southeast - U.S. Urban Central Business District Ground-Up Development Market Rate Apartments
Pacific - U.S. Suburban Ground-Up Development Resort
Southeast - U.S. Suburban Land Development Only Single Family Houses/Townhouses
Mid-West - U.S. Urban Central Business District Ground-Up Development Market Rate Apartments
Mid-West - U.S. Suburban Ground-Up Development Self-Storage
Mid-Atlantic - U.S. Other urban (non-CBD) Ground-Up Development Mixed-Use
Pacific - U.S. Other urban (non-CBD) Ground-Up Development Hotel
Southwest - U.S. Other urban (non-CBD) Ground-Up Development Condominiums
Mid-West - U.S. Other urban (non-CBD) Value-Add/Repositioning Mixed-Use
Pacific - U.S. Urban Central Business District Value-Add/Repositioning Office
Mid-West - U.S. Suburban Ground-Up Development Single Family Houses/Townhouses
Southeast - U.S. Other urban (non-CBD) Ground-Up Development Market Rate Apartments
Northeast - U.S. Semi-urban transit-oriented Value-Add/Repositioning Market Rate Apartments
Northeast - U.S. Urban Central Business District Value-Add/Repositioning Industrial
Mountain West - U.S. Other urban (non-CBD) Ground-Up Development Industrial
Northeast - U.S. Semi-urban transit-oriented Entitlement and Land Development Market Rate Apartments
Southwest - U.S. Suburban Value-Add/Repositioning Self-Storage
Southeast - U.S. Suburban Value-Add/Repositioning Golf
Southwest - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Northeast - U.S. Semi-urban transit-oriented Acquisition of a Stabilized Asset Office
Southeast - U.S. Suburban Recapitalization Retail
Pacific - U.S. Urban Central Business District Value-Add/Repositioning Office
Southwest - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Northeast - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Southwest - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Southwest - U.S. Urban Central Business District Ground-Up Development Condominiums
Pacific - U.S. Other urban (non-CBD) Entitlement and Land Development Single Family Houses/Townhouses
Southwest - U.S. Urban Central Business District Value-Add/Repositioning Condominiums
Pacific - U.S. Rural Ground-Up Development Single Family Houses/Townhouses
Pacific - U.S. Urban Central Business District Ground-Up Development Condominiums
Northeast - U.S. Suburban Acquisition of a Stabilized Asset Office
Northeast - U.S. Suburban Value-Add/Repositioning Office
Northeast - U.S. Suburban Acquisition of a Stabilized Asset Office
Mid-West - U.S. Other urban (non-CBD) Ground-Up Development Market Rate Apartments
Southwest - U.S. Semi-urban transit-oriented Entitlement and Land Development Market Rate Apartments
Pacific - U.S. Other urban (non-CBD) Ground-Up Development Mixed-Use
Southwest - U.S. Suburban Entitlement and Land Development Single Family Houses/Townhouses
Mid-Atlantic - U.S. Urban Central Business District Value-Add/Repositioning Market Rate Apartments
Southeast - U.S. Suburban Value-Add/Repositioning Resort
Southwest - U.S. Suburban Entitlement and Land Development Single Family Houses/Townhouses
Southeast - U.S. Suburban Ground-Up Development Single Family Houses/Townhouses
Southeast - U.S. Suburban Value-Add/Repositioning Office
Southeast - U.S. Other urban (non-CBD) Acquisition of a Stabilized Asset Affordable Apartments
Mid-Atlantic - U.S. Other urban (non-CBD) Ground-Up Development Mixed-Use
Mountain West - U.S. Suburban Value-Add/Repositioning Industrial
Mid-Atlantic - U.S. Suburban Ground-Up Development Self-Storage
Southwest - U.S. Urban Central Business District Value-Add/Repositioning Affordable Apartments
Northeast - U.S. Suburban Acquisition of a Stabilized Asset Office
Southeast - U.S. Suburban Value-Add/Repositioning Office
Northeast - U.S. Suburban Ground-Up Development Hotel
Mid-Atlantic - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Pacific - U.S. Suburban Ground-Up Development Single Family Houses/Townhouses
Southeast - U.S. Suburban Value-Add/Repositioning Market Rate Apartments
Mid-Atlantic - U.S. Other urban (non-CBD) Value-Add/Repositioning Condominiums
Mid-Atlantic - U.S. Suburban Ground-Up Development Retail
Mid-Atlantic - U.S. Other urban (non-CBD) Value-Add/Repositioning Market Rate Apartments
Mid-Atlantic - U.S. Suburban Value-Add/Repositioning Retail
Mid-Atlantic - U.S. Semi-urban transit-oriented Ground-Up Development Mixed-Use
Mountain West - U.S. Suburban Ground-Up Development Office
Northeast - U.S. Other urban (non-CBD) Value-Add/Repositioning Office
Southwest - U.S. Suburban Ground-Up Development Age Restricted Apartments
Mountain West - U.S. Other urban (non-CBD) Ground-Up Development Other
Northeast - U.S. Semi-urban transit-oriented Ground-Up Development Condominiums
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