Overview

There are many interesting variations to how GP Capital can be used, but generally, it consists of funding from a third party into the General Partner/Sponsor of a real estate joint venture in return for which the Investor gets a share of the Sponsor’s Promote. 

We differentiate GP Capital from Sponsor Capital, which is a fund raised by a Sponsor for its share of the necessary transaction capital. Notably, a Sponsor Capital Fund may obviate the need for GP Capital or, depending on various factors, could be used in conjunction with GP Capital.

Our expertise with GP Capital investments is strongly tied to the firm’s deep knowledge and understanding of joint ventures.  GP Capital has an inherent complexity in that (at minimum) there are at least two interlocking joint ventures.  Our seasoned team can “play chess in the future” to forestall potential negative outcomes for a client.

From a business perspective, GP Capital permits both the Sponsor and the Investor to be Overpaid for Risk.

  • The Sponsor is overpaid since it still keeps most of its Promote but with a much smaller investment.
  • The Investor is overpaid since it has the same investment risk as the LP, but its return is juiced with a share of the Promote. 

This is GP Capital at its simplest; however, our Joint Venture partners have developed many creative ways to use it. 


GP Capital HUB

In addition, our Chairman, Bruce Stachenfeld, is spearheading a GP Capital HUB.

Our assessment is that many Investor clients and relationships find GP Capital of great investment interest, and many Sponsors desire to receive it.

We encourage you to contact members of our GP Capital Practice if:

  • You have a desire to invest in GP Capital
  • You need GP Capital
  • You are interested in raising a Sponsor Capital Fund

Notably, investment sizes can range from (roughly) $1M to $50M, ranging from one-off transactions to recapitalizations of significant portfolios. They can also be structured as single joint ventures or more intricate platform-type investments. There is a great deal of flexibility. 

If you are interested, there will be much to discuss, including the optimal structure and ideas we have come up with to augment your being Overpaid for Risk.