Real Estate Joint Ventures: Waterfall Structures, Developer Promote, IRR Lookback, Clawback and Catchup

Recording of a 90-minute premium CLE webcast with Q&A

Conducted on Wednesday, January 24, 2018

Recorded event now available

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Program Materials

This CLE video webcast will provide guidance to real estate counsel on the various methods of structuring waterfall provisions and promote payments in real estate joint venture agreements. The panel will also discuss management and governance, transfer rights, capital accounts, guaranty obligations, fee waivers, clawback provisions, and more.

Description

Waterfall provisions governing distributions are a critical component of any real estate joint venture agreement, reflecting the economics of the deal. After investors have received a return of their capital and IRR, promote payments are made to developers/managers. Capital call, fee waiver and guaranty provisions should also be considered in drafting the agreement.

While promote is usually structured on a ‘‘deal-by-deal’’ or a ‘‘whole fund’’ basis, there are a host of variations that enable managers/developers and investors to better align distribution of profits to the joint venture’s goals.

Listen as our authoritative panel of real estate finance practitioners discusses structuring waterfall provisions and promote payments in real estate joint venture agreements as well as management and governance, clawback, fee waiver, and guaranty provisions.

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Outline

  1. Economics of real estate joint ventures
  2. Return of capital, preferred returns, promote interests
  3. “Whole fund” vs. “deal-by-deal” waterfall
  4. Clawback and claw-forward provisions
  5. Capital accounts and tax allocations
  6. Management and governance—major decisions, budget approval, replacement of manager
  7. Transfer rights for developer member, investor member

Benefits

The panel will review these and other key issues:

  • What are the various methods for structuring waterfall provisions and promote?
  • When are capital call provisions, and personal guaranties of JV obligations, appropriate?
  • How do clawback and claw-forward provisions affect distributions?
  • How much management and decision-making authority should be given to the sponsor?
  • What are the different types of capital account allocations?

This is an encore presentation with live Q&A.

Faculty

Kearns, Thomas
Thomas D. Kearns
Partner
Olshan Frome Wolosky

Mr. Kearns is a partner in the real estate department of Olshan Frome Wolosky LLP. He has significant experience in...  |  Read More

Temple, Jeffrey
Jeffrey J. Temple
Partner, Co-Chair- US Real Estate Group
Morrison & Foerster

Mr. Temple represents a broad spectrum of clients in connection with investments in, and the financing, development,...  |  Read More

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