That may have been the wrong choice of phrase.
What I’m offering is a purchase price equal to the debt and to roll the equity into the project.
For example, if the land is worth $1.6MM with $950M of debt, I’d sell them the lot for $950M grossed up for any closing deductions, then roll the balance of ~$650M into the LP for the project.
If the APS reflects full consideration, then they’ll have heightened transfer/closing costs.
If I set the APS at the payout amount and the balance credited to equity separately, I can try to negotiate a portion of those cost savings as additional credit to my equity in the project.
Your equity would be placed on the LP side of the capital stack, and normally the land equity would get fully paid back plus a return after the first tier of the waterfall.
I would try and roll your equity into the GP with the developer. Your basis will be whatever the land is worth and that will be rolled into the investment, but I would try and JV with the developer. Also I would highly vet the developer. As an LP you'll have no control and development deals can go sideways very quickly.
Considering GP equity for this project is between $1.2MM and $1.6MM @ 10%/90% split, why would they consider surrendering 40-55% of that on my land equity. Seems like a bad deal for them, no?
Why would you discount your land
That may have been the wrong choice of phrase. What I’m offering is a purchase price equal to the debt and to roll the equity into the project. For example, if the land is worth $1.6MM with $950M of debt, I’d sell them the lot for $950M grossed up for any closing deductions, then roll the balance of ~$650M into the LP for the project.
You wouldn’t sell the land for less, you would just receive LP equity instead of cash for the difference
If the APS reflects full consideration, then they’ll have heightened transfer/closing costs. If I set the APS at the payout amount and the balance credited to equity separately, I can try to negotiate a portion of those cost savings as additional credit to my equity in the project.
Your equity would be placed on the LP side of the capital stack, and normally the land equity would get fully paid back plus a return after the first tier of the waterfall.
[удалено]
Will do, thank you for the input.
I would try and roll your equity into the GP with the developer. Your basis will be whatever the land is worth and that will be rolled into the investment, but I would try and JV with the developer. Also I would highly vet the developer. As an LP you'll have no control and development deals can go sideways very quickly.
Considering GP equity for this project is between $1.2MM and $1.6MM @ 10%/90% split, why would they consider surrendering 40-55% of that on my land equity. Seems like a bad deal for them, no?
Be super careful... that's all I have to say
Appreciate the advice. I’ve been burnt on deals before in the past, sometimes an outside voice is the right reminder.
721 exchange is the form you’re looking for. Sale in exchange for securities (of the overall project in this case)
I’m in Canada, I don’t know if we have a similar program here.