Programmatic JV - Advisory/Placement Fees
If a capital markets team at JLL/Eastdil/etc. arranges a programmatic JV for a sponsor how do the fees work?
Generally, equity placement fees are capitalized and paid upon the closing of an equity commitment on a single asset transaction.
What have you guys seen for programmatic JVs? What if we never do a deal with the capital partner that is sourced for us?
Perhaps a success fee + 2.50 bps per deal level capitalization moving forward? Trying to understand what is standard practice here.
Usually there is the initial placement fee for the first deal that is higher and then a lower fee for all subsequent deals. This first del will usually have the subsequent fee laid out in it.
For entity level deals, I’ve seen 3.0% of committed capital, paid as its drawn down.
For programmatic JVs, it’s 3.0% for initial portfolio and 0.5-1.0% for subsequent deals. But people hate this and will negotiate it down as much as possible so I highly doubt you will get anything close to 2.5% on subsequent deals. We’ve done one where it’s like 0.5% for any deal consummated within two years of closing of the initial portfolio so there’s a time limit to it too
If the programmatic JV has a defined size, meaning the LP commits to funding a certain dollar amount to the GP for future deals, then you could get a flat fee as equity is drawn down, same as the entity level deal structure.
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