splitting profit interest among vertically integrated sponsor team?
Working on assembling my first real estate development deal. I'm coming at it from an architecture and urban planning background. I'm acting as the project manager/lead and I've assembled a team of partners with general contracting experience and property management experience. In addition to sponsoring the deal, we are self performing the general contracting, and the property management. I'd like to get reimbursed for our expenses in cash, including a reasonable valuation fo my team's time and business operating overhead, but would like to structure the deal such that our profit is realized through the profit interest in the project with a simple waterfall structure. The question we are facing is this: how to spilt the profit interest among our partners? The relative value of the development fee vs the general contracting fee vs the on-going property an asset management fees? In addition, our design team is contributing their profit margin as equity (about 20% of the total design fee). Is a 25% share to each of those four roles/responsibilities appropriate? (Maybe also worth mentioning that we are asking our investors to provide a limited guarantee, and we are offering a guarantor fee to acknowledge/compensate that risk.) Thanks in advance for any insight/feedback!
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