How hands on are LP’s
What are the differences between firms that invest as limited partners exist. Some people talk about how certain LP’s are hands on and others main function is to allocate capital and keep it moving.
It all depends on the LP.
Most of the time they have “major decisions” meaning they can weigh in on any material decisions for the projects they’re involved in.
The latter is more common by far. But I suppose it depends on the size of the LP
As others have said, depends on the firm. Some will give input on paint colors for unit interiors. Others hit the snooze button after closing. My opinion is that a good LP will retain rights over major decisions but will let their operator run the day-to-day show. Major decisions should be a conversation between both parties. What I’ve found is that LP’s tend to be not great at the day-to-day but usually understand capital markets better than GP’s. So big capital market decisions should be run through the LP. Obviously this depends on the size and sophistication of the GP, and some LP’s just suck.
I am on the LP side in AM at an institutional shop.
We are very heavily involved on a day to day basis.
Awkward question, but do you think that makes you a good partner? What I mean by that is do you think you are able to walk the line in terms of micromanagement (i.e. is your day to day involvement is something you should be doing or is it something you could probably leave up to the GP)? The reason I ask is we're going to start doing more LP equity in developments soon, and I've always struggled with why someone would actually put up with us (we have in-house property and asset management who we'd likely insert into the process) vs a more hands-off LP (Pru, Carlyle, etc. have LP development equity down to a science). If I were a developer who'd built thousands of units or square feet, I just wouldn't want to put up with that unless I really needed the money.
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