Co-Investing in your firm's investments?
I'm assuming that if this is possible, it would be more feasible and likely at smaller shops. Do many shops out there allow you to co-invest on acquisition or development deals whether you are at a small REPE or development shop?
If so, how many years in would you say it would take to be able to do that. Yes, I'm aware the min. investment could also be fairly high.
I work at a smaller shop. My company doesn't offer a 401k or really any retirement benefits, but they do allow me to invest on the GP side of all our deals. I've been able to invest in our deals since the day I started. I'm still pretty early in my career so the amount I'm investing is pretty small relative to the size of these deals. It's better than nothing, but certainly not as good as receiving carry on these deals.
I'm in the same boat as pickle. Also in a smaller shop where analysts have the ability to co-invest in any of the deals our senior guys are personally investing in.
what kind of deals?
The best shops give their developers, acquisition managers, etc.. a percentage of acquisition or developments fees and include them in the promote for out performance beyond certain hurdles.
If your consistently delivering strong yields and making your investors/company a ton of money, shouldn't they share a small slice of the pie?
I co-invest in private placements. Mind you I'm in Canada, not too sure what its like in the States
A little different but I know at my MM sometimes people will put their own money into private placement deals.
We are encouraged to invest in the deals. Our firm has been working with HNW investors for 25+ years and we have a fairly high minimum investment, but for employees of the firm there is no minimum investment. You can invest as small as you'd like (within reason where it's not pointless obviously).
How big is your firm? What type of shop/strategy?
Family office, around 15 people total. Currently, have just shy of $500MM AUM after a major round of dispositions. We've done over $1.5BB & 2.5MM SQFT of projects over the last 25 years. At heart, we are a ground-up retail/MF/Mixed use firm that also targets value-add retail/MF. Lately, we've switched our acquisitions strategy to focus more on the value-add stuff vs ground up due to the lack of capital for development/rise in construction costs/land prices.
I worked in portfolio management(PM) at 50B+ firm in the past and now I'm in Real Estate (RE), doing both investment and development opportunities. In PM, I had a classic/regular bonus (according to contribution and good shots of my team..blabla), but I could put my pension plan for a reduced management fee (not even 50bps) to any of the funds we were managing and I could also add more money with a certain minimum amount around 50K, if my memory serves me right... In RE, my first year I had a regular bonus as a % of my contribution and blabla..now I get a % of various dev. fee in development deal and a % XYZ other fee and bonus in an acquisition. Obv, this % depends on the seniority of the analyst/associate/VP etc..It's actually really nice and it really motivates you to find good ops.
Hope this helps, D
We were discussing this week at my firm, highly leveraged oilfield service company, that if we undergo a restructuring we might receive a 1099 for debt forgiveness and that'll be the banks "final fuck you". Is that something to consider when co-investing and if so, how do you mitigate the risk as an undercapitalized employee?
I co-invest with my firm. Virtually all my colleagues do. It's considered an incentive for better performance. I'd say it's unique of my firm.
Seeking Alpha- thanks for the details. How much time all-in did it take to get to that level/structure of compensation with your shop? And your employer is both a developer and acquisition company?
If you don't mind my asking, what exact percentages are you getting in those areas, and can you roll those fees etc into an equity percentage in any of the opportunities?
@ut_ameris
Sorry for the delay, I was not tagged for some reason
Took 2/3 years but we're a small investment team,
I was able to cut at associate level with all the VPs from the other departments (privileges from being in the investment/ development team
Yes we do both acquisitions and development investments mostly minor positions with larger investors good way to secure dev fee and management fee
My positions are consolidated on all kind of investments we do here..can't cherry pick
I put in money and they add extra shares 20% if we stay 5 years, what is nice is that I initially came in at cost in some development that were going to open soon thus collecting profit right away without the development timing better personal IRR.
On a deal per deal basis we sometimes have closing bonuses but it is somehow arbitrary
For those of you that are co-investing along side your GPs, are you on the same promote structure? e.g. if waterfall structure for a deal is pari passu to 8, 80-20 to 12 and 60-40 thereafter, is your money being treated the same as the GP/managing member?
Question: What typical terms do you see if you're offered to coinvest? Do you go in with all the other LP's or do you also get a share of a promote?
Also do you typically have a vesting period? Only asking because we are doing an offering and the operating agreement calls for automatic expulsion of anyone who ever leaves the firm and the most they get back is their Capital Account Value or $10 if it's all been returned. Seems like a shitty deal to me.
Wrong topic.
I invest in our company deals. The payout structure is different depending on whether the deal is a ground-up development deal or an acquisition by the company. On the products we develop, the hold period is 180-200 days with an overall return of 25%- backed by an investment grade credit-rated tenant. The return on equity for our acquisitions varies.
Co-investment opportunities at your fund (Originally Posted: 08/26/2016)
I work at a VC/PE fund at an associate level. My partners are open to creating some sort of co-investment opportunity as a way for the non-partners to have skin in the game. We raise new funds pretty regularly and have a new one that will close in a few months, so it seems feasible.
I'm like to learn about what these programs look like at other firms so I can have some structures and comps to propose to them.
Do you have co-invest at your fund, or something similar? How is it structured, what sort of vehicle is it (if not direct as an LP), is it leveraged or matched, what are the tax implications, do they offer it out of 401ks or anything like that, etc.
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