Legacy Family Developer and Contractor - JV Partnerships
We're a long-time contractor and developer in U.S. We do our own deals with no outside capital. Sometimes take out construction loans from banks or hard money lenders.
We're now getting to a scale where we can do larger ground up developments. We have a ton of local knowledge and development infrastructure. We want more equity capital.
Would large institutions work with us? We can add a lot of value but not sure if they work with family shops often.
If you have a track record and a defined market you definitely can. I would connect with brokers who help raise institutional equity and they can help curate your pitch. Only thing I would caution is if you are used to only investing your own money you have no boss. Once you bring equity you'll have reporting requirements and someone to answer to.
Thanks. What kinds of reporting requirements are typical? Is it more stringent than regular debt financings?
Absolutely. The question will be more do you want to deal with the bullshit and the lawyer fees that come with dealing with big corporate JV partners.
My former shop had three main equity partners - the first was a money manager for very old money European families, the second was a family office for the family who used to own the news station and newspaper in a flyover city back when that was big business, and the third was Carlyle. Each had their strengths and weaknesses, and while I absolutely adored the guys I worked with at Carlyle, their legal fees on both the front end and the backend were easily 3x what they should have been. The other two? Minimal reporting, easy relationship, and hundreds of thousands of dollars didn't go to overpriced attorneys. And mind you, Carlyle is one of the easier "big boys" to work with. Some will have you spending more of your time doing reporting than developing.
There are a lot of family offices that want to invest in real estate at the JV level. You won't find them on an online list somewhere or talked about on message boards like these, but I have a feeling you can find 1-2 that may be interested in an experienced shop, with a track record, that can self perform.
Interesting. So even with big players like Carlyle you think they'd work with us? What are they mostly looking for in JV deals?
Not trying to be glib here - but they're looking for reliable partners, a solid business plan, and the opportunity to make money.
I don't work for them so I don't know their specific fund strategies at this time, but "making money" is usually a good bet. If you shop around a good deal and have a good track record, you'll get bites.
I can add some color- I have helped 3 family offices raise institutional capital (raised ~20mm). Depending on your track record, getting interest from equity partners shouldn't be too tricky. As long as your current deals match your track record in scope, you should be able to attract some decent investment. Let me know if you want to chat.
Thanks for some reason it's not letting me DM you. Can you DM me?
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