Strategy•9 min read•December 5, 2022
Real Estate Joint Ventures: Structure and Terms
Understanding joint venture structures between sponsors and capital partners.
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.
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