Question for those on the debt / equity side. Have you ever crossed a development proforma with an alarmingly padded General Conditions? I’m talking 2-3% of total project capitalization on a $150m deal. The u/w is very sound otherwise and the deal is quite attractive, however, between General Conditions, a 3.5% Development Fee, and a 2.5% Construction Oversight Fee, it looks like quite a bit for the sponsor.
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Developer here, never seen that before. Our development fee (3%) is our general conditions + profit + guarantee backstop. CM fee usually at 2% of HC. Are they getting a piece of the promote also?
They will share in promote. Keep in mind this is a very large international developer so I would not be surprised if they do have higher than usual overhead.
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