Have a relationship with the sponsor, they showed me the deal direct 3 months ago even though they were in the process of signing an engagement letter with a broker to raise both the debt and LP equity for the deal.
Fast forward, they still have not found an LP. A few weeks ago, I started part time consulting for a private investment group that has a separate allocation from an investor who has substantial interest in the LP equity for the subject deal. Basically nobody at this group knows how to underwrite equity deals or ground up development, so they are paying me a few bucks to help model deals correctly and potentially source deals. I bill them hourly, no incentive fees or acquisition fees beyond my hourly rate.
The developer has offered to pay me 50% of the equity raise fee they are paying the broker, since they are running out of time and have no other prospects. Basically they are going to amend the equity placement agreement and split it between broker and me. The group I am consulting for is unaware of this, and based on my impression of them, they would likely attempt to scrape part of the fee from me or act like dicks about it. My consulting agreement does not prohibit this, but at the same time, it's enough money to where I could see them making it an issue. They have also raised the point as to why the broker is getting paid when the deal technically came directly from the developer to me.
Developer is willing to work with me, they have already made it clear that the broker (who is fairly established in my market) has been working on the deal for months and actually brought it to them off-market initially, so they want to reward broker and are unwilling to cut them out. That being said, I am trying to figure out best way to get paid without attracting unwanted attention, was thinking maybe have broker collect fee and then pay me out post closing so it's not anywhere on closing statement (side letter agreement etc).
Just curious what others think.
egold70, pure crickets, that's where I come in. Any of these useful?
Fingers crossed that one of those helps you.
Bump
It would be a huge waste of the developer’s social capital to outright alienate the broker... especially because:
(i) he has a binding legally engagement - he can definitely sue them
(ii) he’s fairly established in that market and they’ll never see another deal from him
To the extent that you can get them to amend his existing engagement agreement by all means do it. I suspect it’s fairly unlikely since he originally sold the deal off market to developer and wants to capture his residual.
Have you tried to ask the party you represent to pay you a referral fee of some sort? After all, you found them a great deal. I would imagine they would want to incentivize you to procure future deals for them. Seems like it’s also just the right thing to do.
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