Trending Content
| +48 | Being asked to stay behind and train my replacement | 14 | 17h | |
| +29 | What does REPE actually do? | 8 | 10h | |
| +26 | New Comp Database - Google Form (Now with Data Validation) | 12 | 9h | |
| +25 | Best CRE brokerage firms | 17 | 13h | |
| +24 | Thoughts on joining an early-stage REPE fund | 7 | 4d | |
| +21 | Public Homebuilders | 7 | 3d | |
| +18 | Starting University LP Fund | 3 | 4d | |
| +17 | What would your strategy be? | 14 | 3d | |
| +16 | MSRE/MSRED with no RE experience; Naive to think I’ll land a job afterwards? | 4 | 18h | |
| +16 | UC Berkeley MRED vs Columbia MSRED? | 2 | 2d |
Career Resources
Hey two_cap, I swear if I had a silver banana for every lonely thread I posted too I'd be richer than @compbanker ...
More suggestions...
I hope those threads give you a bit more insight.
So, your use of the term LP is very confusing in this post... LP's pay fees (deducted from returns), they don't charge fees.....
The typical/normal fees you see charged by investment management firms (paid by the LPs/investors) are:
- Acquisition Fees (% of asset value at time of acquisition)
- Asset Mngt Fees (annual % of total asset/fund/investment value)
- Incentive Fees (these are the "promotes" or "carried interest" payouts based on performance guidelines, sometimes in "waterfall" terms)
- Disposition Fees (% of asset value at time of disposition)
Use of these (at all are always present) depends on nature of the fund/vehicle, and often negotiated by each LP (if they are large enough, have enough sway). A really large LP will do an SMA (separately managed account), where the manager agrees to invest a large sum typically at reduced rates according to custom strategy or sidecar to larger one.
Some "smaller" shops that raise from HNWs will add on stuff like "property mngt fees" (even though not actually doing PM...) and debt fees (% of debt placed), but these are pretty uncommon in the big institutional world. Also, there can be sales charges/commissions by placement agents/broker-dealers, those go to the third parties (or internal sales team/BD) but act more like a "load" that skims off the top (just as bad on investor performance of course....).
Thanks, appreciate the detailed response. I did mean LP fees. We were recently raising money on a multifamily development deal, and one of the LPs we were talking to wanted to charge an additional AM fee to the project. Had not seen this before, so wasn't sure how common it was for LP's in deals to receive any/split any fee income with the Sponsor.
Okay... I get what you are asking about.
I'm not day to day active in dealing with equity funds for co-venture/JV funding and thus may not be as up to speed as those are are active. That said, it's not crazy for project specific expenses to be billed to the project, and expenses of the LP entity (which your firm likely has some co-ownership in correct?), seem reasonable. So, perhaps this firm wants to just charge it as fee? If I had to guess this investment mngt firm has a strong separation between their "advisor" entity and the fund and the fee is paid directly to "advisor co" and not "fund co", thus it is profit clear of their structure/terms with their investors. Nothing really wrong with this, but not sure it's common.
That said, on development deals, depending on structure, it's not unheard of for equity investors to sometimes participate in developer's fees. This is usually when they own shares in both the LP entity and the GP entity (sometimes called a co-GP JV), but I guess anything is possible. No real "rules" on this stuff, its all what people can negotiate.
Final point on the terminology..... LP most commonly refers to "Limited Partner" and LPs are the "money" investors into firms (i.e. the pension funds, insurance companies, HNWIs, etc. that invest with firms like Blackstone, KKR, etc.). If you use the term LP in any of those shops it refers to their "client investors" (like if Blackstone hosts an LP conference, they are inviting all those who invest in Blackstone funds for example). LP can also refer to a "Limited Partnership entity", which seems to be how you are using it, but the firm you are dealing with really isn't an LP at all... they are a joint venture partner.... making an investment in to the LP entity likely at some share with your firm as sponsor (like 80/20 or whatever). That is very different context, as your firm (or its principals) are most likely "LPs" in that entity (besides owning the GP entity) as well... thus denoting the two firms as LP and GP is not accurate, and since the investment manager (whom you are referring to as an LP) likely has a lot of control (so much so they want to charge for their asset mgnt lol), they are most definitely not "limited" in any classic sense.
Est et modi animi. Dolore est nostrum enim et. Impedit praesentium sed aliquam et aliquam culpa. Porro quam eius nostrum voluptas nam dolore.
Delectus facilis eum qui et non non. Quis id debitis corrupti quia fugiat. Et repellendus quis voluptatem occaecati impedit. Accusantium doloribus odio distinctio maiores sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...