The Ins and Outs of Structured Joint Venture Financing

Structured joint venture financing is used to finance a number of commercial properties, including hotels, shopping centers, resorts, industrial buildings, and more.

Under a structured joint venture financing contract, two or more parties with similar and goals agree to share risks, rewards, costs and capital associated with the joint venture.  A joint venture is a contractual agreement between parties. Although it appears a lot like a partnership, the fact is that loan is provided for financing a particular project.

It is extremely important that the parties seeking structured joint venture financing trust and respect each other. Without these fundamental factors, the partnership is likely to fail.

In order to maximize the chances of receiving structured joint venture financing, borrowers must demonstrate to lenders that they possess equity to back up the loan. Profits are crucial to any lender. As a borrower, you need to demonstrate that your joint venture business plan has a high profit potential. In addition, borrowers must reveal a comprehensive, detailed business plan, including the cost of the real estate project.

Why structured joint venture financing makes sense

From the perspective of real estate investors, joining together with additional parties can prove to be beneficial in the long run. With multiple investors, your company can gain a competitive advantage. Moreover, it will allow you to explore pursue larger, better opportunities, which were probably not accessible before.  As it’s a temporary arrangement, you will not be committed to it long term.

While a borrower may not be searching for a partner in a real estate project, many recognize the value of a sharing equity in a joint venture as compared to traditional financing.

Generally speaking, a real estate investor should consider reaching out to a lender who can create value for the project. Value refers to effective property management, asset rehabilitation, etc.

In a nutshell, structured joint venture financing increases the cash flow potential for a borrower by including the lender as an additional investor.

Why choose us

Structured joint venture financing is not the right choice for all types of real estate projects. At Global Capital Partners Fund Limited, our certified, experienced staff can help you determine if it makes sense for your project. Contact the senior brokers at GCP today to discuss your financing needs.

As one of the most reputable commercial financing lenders in NYC, we offer tailored solutions to cater to each client’s business needs.

 

 

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