WHAT FAMILY OFFICES NEED TO LOOK FOR IN A JOINT VENTURE REAL ESTATE PARTNER
For many single-family and multifamily offices, there is a desire to invest directly into real estate opportunities rather than a fund or a managed account. The ability to do the proper due diligence for each family office varies based upon the internal resources and experience that the office has available. With the constant requests from real estate companies wanting a family office to invest with them, it is essential for the family office to be able to screen any opportunities efficiently before spending additional time.
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ALIGNMENT OF INTEREST
Although there is no one way a Joint Venture is structured, the typical structure consists of 90% of the equity provided by the family office investors (LPs) and 10% by the operating partner (GP).
SPONSOR EXPERIENCE
The first area that needs to be considered is the joint venture partner's experience. Does the sponsor have experience in similar types of deals, property types and geographic markets of the asset that the JV partner is asking for the family office to consider?
ECONOMIC VIABLITY OF THE INVESTMENT
One of the key tasks with projects, especially during times of real estate being a go-to investment, is to identify whether the proposed investment is feasible and the projections are realistic. Some questions you should evaluate are,
