Joint Venture Partnerships
KCB typically invests in real estate via joint venture partnerships with sponsors with specific expertise in the asset type and geography of the asset.
KCB has forged successful and durable partnerships, the longest of which has lasted 18 years and many acquisitions. In our experience, a partnership is durable when both sides feel they have gotten a fair deal and decisions are made on a consensual and collegial basis. KCB believes that the keys to a successful partnership include:
- Quality people
- Shared Goals
- Alignment of Interests
- Compromise and Communication
KCB can be creative and flexible in its structure, but a typical structure would be:
- Sponsor manages day-to-day operation of the property subject to KCB approval rights over major decisions and proactive rights to step in if the project is not meeting its goals
- Acquisition fee to sponsor: 1% of purchase price
- Property management fee to sponsor: market for property type and management intensity of asset
- Preferred Return: 10-12% depending on risk
- Carried Interest: 20%-25%, after payment of preferred return and return of capital
- Sponsor equity contribution: meaningful for sponsor, typically 10%-30%.
KCB performs exhaustive due diligence on our joint venture partners, including:
- Track record assessment
- Management assessment
- Detailed background checks (financial and criminal)
- Reference checks
