Joint Venture Equity for Partially-Entitled Land

Transaction Description:  GSP arranged a $19,000,000 Joint Venture equity investment for the acquisition of a partially-entitled land assemblage. The Los Angeles (Hollywood) California site will be developed with 200 multifamily units and ground floor retail.

Challenge: The client required a JV equity partner who was comfortable closing not only with development risk, but also a planned re-entitlement from its current office and hotel use. The JV equity partner had to be willing to close without debt and wait through the re-entitlement process. As the sponsor does not intend to break-ground for 12 to 15 months, costs are uncertain and the investor is exposed to both capital market and lease-up risk.

Solution: GSP capitalized on its strong equity relationships to secure an institutional investor that understands the client’s business plan; i.e. infill apartment construction in Los Angeles. The investor we selected has similar goals to those of our client; to invest on a programmatic basis, and willing to hold long-term. GSP worked with the client and investor to mitigate and explain the entitlement process, and to substantiate the high pro-forma returns that justify such risks. The purchase closed on terms as negotiated without debt.