Normal acquisition fee for a multi ground up development deal
To both equity and developer people, what is a market acquisition fee to the sponsor that you are seeing for ground up new construction deals? I know in value add the percentage is smaller as the purchase is very high, but land prices are usually much much lower so im guessing the percentage amounts are different.

As an example we have a land deal that's 5.7M for the land, with a total dev cost of 97M that will take us 2 years to entitle and 2 years to build. I know we would get a development fee but would expect and Acq fee up front and we're getting really lowballed on the amount. 

In value add I've seen 1-1.5% where on a $60M deal an Acq fee would be 900k.
[{"id": "is8vds5", "text": "For dev deals if we have to resort to brokers no more than 0.5%-1%, ever. You can get into a argument that large deals deserve smaller % payouts because work done from a fixed cost perspective does not validate the nominal increase.", "replies": [{"id": "is8vyhy", "text": ".5%-1% of the 5.7M? I am referring to an acquisition fee to the sponser. Not a sales broker fee", "replies": [{"id": "is8ylx2", "text": "Oh sorry, you\u2019re discussing a development fee that the GP might receive from the LP? Have you not discussed potential promotes? I assume you are the developer?", "replies": [{"id": "isb13vv", "text": "Yes, I was referring to the acquisition fee to the developer which would be separate from these.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "is9x08i", "text": "There should be an acquisition fee on the land cost and then a DM/CM fee (assuming sponsor is managing the development) of between 3-5% of hard and soft costs excluding land, Legal, carry, etc. (On top of any promote or earnout).  Usually, around 4% on soft for development and 4% of hard and soft (Subject to the exclusions mentioned) for construction, but these vary deal to deal based on a number of factors.  That is where the large fees are on development deals, not at acquisition, because that is where the real value getting to the 90M number is added; at stabilization. \n\nIf you have done a lot of legwork on entitlements, design, engineering, etc., occasionally those can be included with the land value to get the initial capitalization on which the acquisition fee is calculated, but it's typically between 50-150bps. Any LP who pays an acquisition fee on future, yet to be performed work/incurred costs, i.e., the 90M number, is a sucker (and any sponsor who expects to get paid that way doesn't know what they are doing).  1-1.5%% sounds right given the relatively low price for the land, as typically the percentage goes down as price goes up by orders of magnitude (as someone else alluded to).", "replies": [{"id": "isast2x", "text": "I should clarify. We usually bring in a capital partner as a co-gp who takes down the land and helps pay pre development costs, usually 90/10 and they usually pay the Acq fee. How would it change then?", "replies": [], "depth": 2}], "depth": 1}, {"id": "isaqhuc", "text": "4-5% on the land as an acq fee. Can be smaller, probably not bigger though. Land acq folks within our development group are commission based and we want them to get as much land as possible for the most part, so they need incentive.\n\nEdit: to be clear, this goes down substantially the higher the land value. On a 10M land deal we might pay 1.5-2%. The commission split is obviously a different story. On a home run deal we usually cap at 4.5%, but every groups different in how aggressive they want to be.", "replies": [{"id": "isasds4", "text": "Is 4-5% the amount an equity group is paying you as the developer, or you're separately paying the Acq guys that?", "replies": [{"id": "isat1mg", "text": "It\u2019s a project level expense that we end up making a part of the deal. So the equity partners would share in their fair part of it. It doesn\u2019t hit as a soft or hard cost, so it\u2019s not being double counted in any development/construction management fees.\n\nEdit: yes, the equity partners would be paying this. We don\u2019t ever request a separate check exclusively for this, it\u2019s just included with the initial capital call. But it\u2019s detailed out in any fund documents/lp agreements.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "isaxg49", "text": "Maybe 5% max and developer a bit more.\n\nWe just brought in a CoGP for 2 projects in TX totalling almost $80mm.\n\nThey'll be signing for the debt and bringing in some equity. \n\nThe developer that was awarded the scenarios / got the RFP is getting 8%.\n\nThe muni is bringing 20% on one plus doing the roads and almost 50% on the other in incentives.\n\n Then we bring in the remaining debt and a C PACE piece.", "replies": [], "depth": 1}]