Value add profit split?

[Peter Lee]

If you had value-add deal which is currently structured at 95/5 equity contribution between LP/GP with a flat 70/30 distribution structure (no waterfall) after debt service. Now if say the GP then contributes 40% of the equity instead of only 5% by raising additional equity on his own how would you say the deal would change?

[Greg Dickerson]

Originally posted by @Peter Lee:

@Greg Dickerson so you would adjust the 70% profit to be split pari passu amongst the non GP- investors regardless of who brought them in?  You don't think since now the GP is supplying almost 50% of the equity they would have more leverage in the deal?

If GP is providing 50% of equity required I would look to place the remaining equity with a preferred return only and no kicker.