We’re looking at an opportunity to become a co-GP on a multifamily development deal where we’d contribute our land plus some additional equity. The sponsor wants to have the co-GPs split predev costs pari passu before calling the LP capital. They believe that by derisking the deal first we will be able to negotiate better terms with the institutional LP.
How common is this approach? And how do you underwrite the predev costs?
We don’t do much development so this is a first for me.
Appreciate any help!
