Sponsor fees, service partner fees, and related fees for multi-family real estate developments
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[{"id": "fzv94vv", "text": "There are a lot of moving parts here, but this can happen with the developer doesn't have the equity/risk tolerance to match the required sponsor contribution for the capital raise for a project of that scale. On a $52mm loan, you're looking at like probably 60-65% LTC (at best, pre-COVID). so you need like $20mm in equity. Best I've seen on a sponsor side is 10%, so you'd have to put up $2mm of your own money to raise the remaining $18mm excluding the $5mm land acquisition. So, the original developer ran it through the entitlement process then found a partner with the capital to complete the deal.\n\nIn terms of fees, etc., it depends on the structure. There is no \"one size fits all.\" If I was betting, the original \"developer\" probably got an assignment fee for the entitlement work and maybe a small piece of the backend. Whoever puts the equity in the deal gets the most back out.\n\nEdit: Additional comment after one more read. If the original developer completed the project for the assignee/owner, then he likely fee-developed the project, which is very common given the enormous capital requirements to complete. \n\nFWIW, the \"subsequent sponsor\" is already wildly wealthy.", "replies": [], "depth": 1}]