Joint Venture and Co-GP Deals: Case Studies from Nashville
Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club
Sponsors, developers and independent operators who want to bring in a co-GP or joint venture partner on their first or next real estate deal.
What you will hear
A 77-unit mixed-use building near downtown Nashville was Meg's first co-GP deal, and it returned a 78% IRR. Meg runs the real estate developer CA South. She told Richard C. Wilson that she got control of the deal first, then interviewed co-GP partners. Her partner signed on the debt and set a high preferred return. She took 100% of the promote after the pref. They are now on their fifth project together.
The webinar also covers fees, deposits and role clarity. Meg keeps her fees to one transparent number and says tying up a parcel often takes at least $100,000. Richard closes with live term sheets of $10 million, $12 million and $3 million. He also encourages people to talk to compliance counsel about how a co-GP structure is set up.
- 1Get control of the deal
- 2Build a deal package
- 3Interview possible co-GP partners
- 4Define roles and fees
- 5Agree preferred return and promote
What to take from this talk
- Control the deal before pitching. Meg got control of each deal and built a package before she interviewed co-GP partners. She says a partner is only interested when there is a real deal to join.
- Pick complementary skills, not similar ones. Meg advises choosing partners whose skills differ from yours. Her capital partner stayed removed from day-to-day work, which felt more like an LP relationship.
- Define roles and fees up front. Meg names her biggest early mistake as unclear roles. She found the work fell on her when something was not getting done, so she now spells out who handles investor reporting and who is paid for what.
- Know how a promote works. The investor usually takes a preferred return first. Meg gave 8% as an example, which is $80,000 a year per million invested. The back end profit is then split, with the money often taking at least half, in Meg's experience.
- Think bigger and stay focused. Meg's experience is that a $10 million check size can be easier to place than a small deal that needs syndicating. She stays with one market, Nashville, and a few product types.
In their words
"You want to choose partners with complementary skill sets, not someone with a similar skill set."
"I don't think investors appreciate it when you have an acquisition fee, and then a project management fee, a development fee, a disposition fee and a closing fee."
"Do I want to be the sole owner of one $10 million deal, or do I want to own, you know, 30 or 40% of $100 million in deals?."
Facts and figures
- Meg's first co-GP deal was a 77-unit residential mixed-use building near downtown Nashville with a $9 million capital need. It returned a 78% IRR.
- In Meg's industrial deal, the partner provides the debt and equity, the developer fee is split, and the LP capital earns a 7% preferred return.
- Meg's firm has 12 deals, and five of them used a co-GP structure. She and her first partner have about $125 million of projects together.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around co-GP structure terms, licensing and registration questions and promote and fee terms. Do not use AI to write your own legal agreements.
Related questions
- How do I find a joint venture equity partner?Start by naming your bottleneck, whether that is deal flow, investor access or deal setup.
- How do I structure a JV between a sponsor and capital partner?Start with who does what.
- How should I split ownership with a money partner?Start with a preferred return for the money partner, then split the back end profit.
Questions about this video
What is a promote in a co-GP deal?
Meg describes the promote as the back end profit after the investor receives a preferred return. In her experience the money often wants at least half of it, and the rest is split among the sponsor and partners. Terms vary by deal.
How much money do you need to tie up a deal?
Meg says that in her experience, tying up a parcel worth several million dollars often takes $100,000 or more. It can come from friends and family or be split with a co-GP you already know. She also suggests asking for around 120 days of due diligence.
When does a co-GP structure fit?
Richard says a co-GP tends to fit when someone sources the deal, adds value and helps oversee it. He suggests people talk to their compliance counsel about how to set this up.
Put this into practice with the waterfall calculator. See all co-gp and joint venture deals resources.
