Rolling acq fee into equity in model
Having a tough time trying to conceptualize this simple concept. If I know we'll be rolling in our acquisition fee (let's say 150k) into our projected equity of let's say 3.5mm - is there a way to model this in a way that could increase returns by somehow accounting for this and modeling in less required equity since I'll be adding this in? I've thought about this and think what I am trying to achieve may not be possible/correct.
I hope this makes sense and yes I'm aware of how fundamental this is
although you're rolling the fee into the equity, you're also paying a portion of it through the JV although you're net better off.
Don't overthink it
1/99% JV partnership, $100M land value, 1% fee, 50% equity requirement, you receive a $1M fee, you have to put up $500k in equity ($50M x 1% GP equity), you take $500k of the fee and place it back into the deal, you take $500k off the table. Note you contributed $50k towards the acq fee ($1M x 50% x 1%), but you net out at the front end ($1M less $50k)
Think of joint-venture closing as a completely separate transaction from owning the land - you are not selling the land to the LP, but instead you're selling it to the joint-venture entity of which you are a % interest of.
Reprehenderit porro dolor hic consectetur rerum. In adipisci occaecati suscipit sit sunt et dignissimos. Quo odio quibusdam tempore dicta quidem delectus. Dolorem consectetur accusamus ea velit qui ducimus quibusdam.
Et cumque quae fugiat. Perspiciatis aperiam sunt et ducimus amet. Eos consequatur at incidunt voluptas sint ex qui perferendis. Est numquam quae recusandae doloremque.
Aut ducimus ut iure fugit sit quibusdam. Aut sit quisquam voluptatem. Et ullam aut cum iure consequatur itaque. Voluptate nihil quas dolor cumque est dicta praesentium corporis. Amet quo accusantium autem. Voluptatem possimus omnis ab illo iusto.
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...