GP or LP providing repayment guarantee?
In development, it appears that in many JV's, the sponsor (who also provided the principal repayment guaranty), can make a capital call to fund the repayment guaranty. If so, why do LP's want the sponsor to provide this guaranty, when they are probably going to be funding 90-95% of it anyways. Why is non-recourse so heavily preferred over partial recourse (20-25%)? If I'm a sponsor, wouldn't I be willing to do 100% recourse knowing that the LP would have to fund most of it anyways if that ever happened. 100% recourse would allow me to secure a stronger financing rate. I think I'm missing something here and wanted to see if someone could help fill the gaps in my understanding.￼