I am a development manager with nine years of experience in development management and acquisitions. However, my firm and I have both noticed that I am pretty skilled sourcing capital. Recently, I sourced 9 million of a Co GP investment. I found out last night that they want to move me into an associate VP. Capital markets role. I will have a moderate base of 150 K and a bonus on capital sourced. They are still defining bonus structure. I have no idea what market is for sourcing equity and debt internally without a broker. Should I be getting paid 50 basis points, 100, 250, on equity placed? Should I be receiving fees on Debt directly placed? The group I brought in to the equation also has land sites they would like us to act as the development manager. Should I be participating in these developer fees? And to what extent. Any insight would be super helpful.
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Based on the most helpful WSO content, your situation is quite nuanced, but here are some insights to guide you:
Bonus Structure for Sourcing Capital:
Developer Fees Participation:
Equity Participation:
Market Comparisons:
Negotiation Tips:
This role transition could be a great opportunity to leverage your skills in sourcing capital while ensuring you're fairly compensated for the value you bring.
Sources: Compensation Structure at the mid-management level in Corporate Development / Strategy / Finance, Life at Mega Developers, What separates the good from the great in Private Equity?, What is your compensation in Real Estate Finance?, Is this associate compensation competitive?
That's an interesting question. Theoretically how much would you expect you need to source in a given year? I would think the lower end of your bps range is more accurate. Anything over 1% they would just hire a broker.
I'm at a very small firm and can get up to an additional 20% of the GP depending on how much capital I source for the deal. I also get ~7% of the development fees paid out as a bonus. If you're responsible for the development even in the new role, you should definitely push for part of the fees and maybe 75-100bps on capital raised.
Can you elaborate on what you mean getting 20% of the GP? Do you mean 20% of the promote? Also, what would you expect the base salary to be for what I described with 8 years of buy side experience?
Yes I get little over 30% of the promote as a standard then potentially another 20% depending on how of the capital I source. A base of $225k (+/- $25k) range for 8 YOE sounds fair.
What market are you in? I am in Chicago and I feel like bases here don’t see 200k until 10+ years. (It could just be the time of the cycle and most places are tight on cash). Also, that’s awesome you get 30% or the carry. How senior are you?
I'm on the west coast but we only do small resi deals so the carry isn't all that much on a per deal basis. I have about 5 YOE but I was running my own 1 man dev shop prior to joining which made it a bit easier to negotiate. If you're in Chicago $150k+ base is probably pretty solid if you're getting carry + % of fees as well.
If you’re going to be a broker you should get paid like one. The role you’re about to be in, is common at larger institutional firms that can easily afford a base and bonus similar to acquisitions & asset management folks. However, at a small developer, you have less deals to finance (usually)- you need to find a structure that allows upside when deals close; but bc you are a captive broker - you need to also get paid a normal base and bonus on the years where there is minimal capital to raise
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