Pretty self explanatory title. List product type of developments you're working one, market tier, investment term, and whether your on LP or GP side.
Product Type: Industrial Spec Development
Market: Primary
Term: 3 year horizon (modeled)
LP side
Waterfall:
10% Pref pro rata,
70 /30% to 15% IRR
60 /40% to 18% RR
50 / 50% Thereafter
Look forward to what others have to say.
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Product Type: Spec Office Development
Market: Secondary, Growth
Term: 6 Year Horizon
GP Side
Waterfall:
10% Pref, Pro Rata
80 / 20 to 18%
60 /40% thereafter
Equity type and relationship status is going to matter a bunch here. Are these institutional investors? Does the GP need credit? Multiple LPs? Who holds the lending relationships? Who is taking the indemnities/recourse? Does the GP have a track record? Does the GP have other sources of equity? Who holds major decision rights? What is the initial equity split? How many deals have been done with them before, are they going to be cross promoted? Will there be a Equity multiple hurdle if time horizon is shorter? And many more all get taken into account on how the waterfall is going to work on top of market terms.
Alright buddy, you don't need to give me the all details to the entire OA and history of the GP/LP relationship.
Just a general overview. Add as much detail as you want.
Sorry if that came off very dickish. I just wouldn't want someone trying to gauge a market JV agreement without those details.
Wouldn't the equity multiple hurdle only make sense for the sponsor, if the time horizon is longer (vs. shorter as you stated)?
Definitely. I have done a few (albeit not within the past year), that the 2nd and 3rd tier have IRR and multiple hurdles (I think 2nd was 15% IRR and 1.4x).
We focus on merchant developments so really only utilize IRR hurdles. Longer lease up = LP benefit
90/10 pari passu to a 10% 65/35 to a 14% 50/50 beyond
Product Type: Hotel Market: Primary Waterfall: 8% pref, 80/20 split
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