Transaction Description: GSP successfully arranged $4,700,000 of Joint Venture equity for the ground-up construction of a 45-unit fully entitled transit-oriented apartment development in a prime Southern California infill location.
Challenge: The three sponsor principals are each highly experienced individuals, however this development is the first in a newly formed partnership entity; the venture has no track record.
Solution: GSP approached a wide market of capital sources to identify a strategic programmatic equity partner. GSP worked with the investor to develop a structure with an initial low double digit cumulative preferred return, followed by a single hurdle waterfall, and finally provide the sponsor with 70% of the upside over a 17% IRR. This structure will protect investor downside risk while providing the Sponsors with greater upside potential.
