Joint ventures between operating sponsors and capital partners are the most common structure for institutional real estate investment. Understanding JV economics is essential for both parties.
Key Terms
- Sponsor co-investment requirements
- Preferred returns and hurdle rates
- Promote/carried interest structures
- Major decision rights and day-to-day management
Alignment Considerations
JV structures should align incentives between sponsors and capital partners. Fee structures, promote economics, and governance rights all affect alignment.