All Forum Posts by: Shan Jinesh

Quote from @Barry Ruby:

The "Chip" that you have to play in the Equity Position of the deal is tied directly to 2 things:

1.  The Net Equity you hold in the land, and

2.  The % your Net Equity has in relationship to total project Equity

For example: If your Net Equity in the land is $1,000,000 and Total Project Equity is $2,000,000, your land contribution as Equity "buys" a 50% position in the total equity position of the Project.

Let me know if you need any additional clarity on this or if you have any other questions.

Thanks for a quick reply.  On the initial call, they were going through about 2 to 3 different options.  We will know more about those options later this week, in writing.

for the example you used, if the land was 1M and total project was 4M.  What comes out better between the two options below? 

1.  50/50 partnership, where the new company finances anything over 2+ million.

2.  Roughly 25/75 partnership, where the builder brings more equity. And once the project is finished, the final percentages are determined based on total project cost.

Both companies are in it for long term growth, which would mean that we would collect rent and distribute the earnings until we decide to put it in the market. 

 
I guess my question boils down what’s better a 50/5 partnership from the get go or a variable one depending on end project cost.  This builder has the capability to build the entire project without needing outside capital or bank loans.

A developer, with big grocery chain, reached out and wants to build in the land that my company owns.  Instead of selling the land, we wanted to enter into a strategic partnership.  Currently waiting on the different options they might have for us.  Has anyone here dealt with something like this?  Providing the land as equity in a partnership?  What should I look forward too? Any pitfalls?