My firm owns a great site we plan on developing into a mixed use/MF/retail project.
It's garnered a lot of unsolicited JV/purchase offers from big name firms who can obviously execute well.
I see the value in bringing on a partner, selling half our equity, and maybe getting shortchanged on the land contribution in return for better execution and no balance sheet risk (they would be the GP). Doubt many of these firms would settle for less than half the equity.
However, the project could completely launch my firm into the stratosphere if we can pull it off ourselves. We have a good team/architect/GC, and just enough equity/cashflow for the construction loan.
Our background is in retail development, so this would be our first MF project. What would you do? If you did involve a JV partner, how would you proceed to ensure you retain as much equity as possible in the deal?
To me, it really depends on how well established your firm is. What's your track record executing this type of project? If this deal blows up, does that take you under (old adage: never do a deal that, if fails, would be your last)?
The resources that a track record and experience will bring are well worth it, IMO. Think unit mix, unit layouts, finishes that resonate with the market, etc. You could go at it yourself and execute well, but if you miss the mark, it hurts. This sounds like an opportunity to split your risk and learn on someone else's dime.
In terms of "launching into the stratosphere", I'm sure you can negotiate shared branding as part of the JV. Partnering with the right shop might even buy you a lot of credibility.
Why would it not do so as a JV? From a marketing and PR standpoint, it shouldn't matter all THAT much that it's a joint venture, as long as you and your potential partner are on the same page about who gets the press.
If you don't know MF development, then bringing in a partner is a great idea. It'll be an enormous help and may end up saving your bacon, not only on execution but when it comes to going to the capital markets to ask a lender or LP to give you money to build a project you have zero experience with.
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