Anyone familiar with this group out of the DC area? I'm reading through his (Gary Rappaport) latest book, Investing in Retail Properties and I'm on his fee's chapter. Seems like he fee's the shit out of every deal.
And if I read this correctly, they work with an 8% COC pref hurdle, then everything else is split 50/50. Anyone else seeing these terms or is this just given his robust experience?
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I’ve met Gary a couple times. His whole game plan is to hold a property forever and just have a new partner throw some equity in every 10 years. It’s done extremely well for him and he’s an amazing operator so his institutional partners are very happy despite the odd structure at times. For decades Gary used to personally guarantee his loans and is probably guaranteeing a couple hundred mil to low single digit billions.
What do you mean by new partner throw in equity? Are they mimicking a capital event, where a new partner brings equity to the table to buy out existing partners that want out?
Yeah basically that. He’ll have a JV with Group A and once 5-10 years passes and Group A wants out he’ll have Group B pay out Group A and then they’ll be his partner.
He came in as a guest lecturer at Georgetown MSRE while I was there- 2018 ish.
Memorable guy, his philosophy of “never sell” and also seeing how proud of his properties he was made a lot of sense to me, and influenced the deals I do on my own.
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