Deal structure - gut check
1st solo deal with patient / flexible partner. He could take 1/2, 99%, or all of it. Acquisition would be all cash with a financing event in 18-24 months after a rental restriction agreement burns off and we can push rents.

Core+ type return. Plan to hold long term.

How would you structure this? I can go up to about 10% with comfort, but also know my partner would give very generous promote structure. We just want to do deals together and he has more $ than he knows what to do with. 

I’m thinking 1/99 (my 1% as deferred acquisition fee), 8% pref, 80/20 split afterwards. Plus I’d take a 1% AM fee.


What do you think?
[{"id": "f4ovxaz", "text": "That\u2019s your basic structure...", "replies": [], "depth": 1}, {"id": "f4qd86i", "text": "Sounds standard to me.", "replies": [], "depth": 1}, {"id": "f4qmp4w", "text": "I wouldn\u2019t be surprised if he thinks 80/20 is steep after 8% given the equity contribution you\u2019re (not) making.", "replies": [], "depth": 1}, {"id": "f561a4t", "text": "If you can get that 80/20 - go for it. We just raised about $13M from our F&amp;F fund for a $45M acquisition and we are doing 50/50 once the 8% has been achieved. I would put 10% so he knows you really have skin in the game. Will be more likely to accept a more generous promote structure", "replies": [{"id": "f56l3al", "text": "Thanks for the feedback. I\u2019m likely contributing funds from another sale and we\u2019ll have to do a TIC to utilize 1031. In the event I can\u2019t get the first relinquish property sold in time, then I won\u2019t put anything in and just advise. My partner is old and has a shitton of money, so doesn\u2019t really care either way.", "replies": [], "depth": 2}, {"id": "f5urndl", "text": "&gt;If you can get that 80/20 - go for it. We just raised about $13M from our F&amp;F fund for a $45M acquisition and we are doing **50/50 once the 8% has been achieved**\n\nFuuuuuck that's juicy", "replies": [{"id": "f5v4uvd", "text": "We expect to have 2.1M(split 50/50) in excess funds over the 8% hurdle cumulatively after 10 years and will have $13M in excess funds to distribute to both the sponsor and the F&amp;F($6.5M EACH) after projected sale...$44M purchase price. Close next week", "replies": [{"id": "f5ve0yj", "text": "That\u2019s awesome. I figured you had opportunistic returns to justify the split.", "replies": [{"id": "f5veb0a", "text": "We promise 8% returns to our investors. Where else can you get that in real estate? We\u2019ve never missed a distribution. Founder has maybe pumped in his own cash less than 5 times to make sure distribution is met(out of 100 property portfolio)\n\nWe can far away with it because it\u2019s our F&amp;F fund. Institutional money would never fly", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]