JV Ground up Development Term Sheet

Based on the most helpful WSO content, here are some insights and resources related to JV term sheets, waterfall/promote structures, and equity splits for development deals:

1. Waterfall for Long Term Hold:

   • A user discussed structuring promoted interest waterfalls for development deals with no planned exit. They suggested contemplating a promote based on stabilized yield on cost with multiple tiers.

2. Equity Split Structures:

   • For personal deals, a user shared their experience with structuring equity splits, including thresholds and preferred returns. They emphasized the importance of customizing the structure based on the specific deal and partner contributions.

3. JV Promote Structures and Concepts:

   • A detailed resource was shared from the Real Estate Finance Journal, which dives into promote structures, deal structures, and JV partnerships. This resource is dense but highly informative for understanding return calculations and structuring deals.

4. Waterfall Technical Question:

   • A user preparing for an interview test on JV structures mentioned learning to create a typical pari passu, 4-tier equity waterfall model. They also added a preferred return of capital for LPs, which could be relevant for your term sheet.

5. Waterfall Template:

   • A user provided a waterfall model template for JV development deals, which includes various assumptions and detailed explanations of inputs. This could serve as a useful starting point for structuring your term sheet.

6. GP/LP Structure:

   • Another user shared terms they have seen in the market for LP capital on one-off transactions, including:
     • Acquisition fee: 1% of purchase price
     • Asset management fee: 1.5% of equity
     • Preferred return: 8% yearly with a 70%/30% split between LP and GP
     • Project management fee for value add: 5% of renovation

7. Learning Resources:

   • For those looking to learn more about real estate waterfalls, a user recommended reading the Real Estate Finance Journal and downloading a waterfall model from Adventures in CRE. They highlighted the importance of understanding the concept of a waterfall before diving into the models.

For more detailed examples and templates, you might want to explore the resources mentioned or reach out to other professionals in the WSO community who have experience with similar deals.

Sources: Promote Structure Alternatives, Best way to learn Real Estate Waterfalls?, JV Promote Question, What waterfalls are you seeing in today's market for developments you're working on?, Deal Structure For First Deals