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Adam M.
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Co-GP/JV... Who's on Title?

Adam M.
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Posted Feb 15 2024, 12:03

Howdy BP,

Post pretty much does what is says on the tin: who goes on the title when putting together a Co-GP deal?

I'm guessing it will be probably the LLC that gets formed but if it's an equal split down the middle of GP ownership, does that give both partners the right to say "I own this property in my portfolio"? If a GP has a higher number of shares than the other GP, is it frowned upon for the latter to say they own the property since they are not technically the "primary shareholder"?

Hope I am explaining this clearly but would love to hear from anyone who has put together co-GP deals in the past! 

Many thanks,

A

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Greg Scott
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Greg Scott
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Replied Feb 15 2024, 12:42

Typically the LLC owns the property and what you are calling the GP is the manager of the LLC.

For Schedule of Real Estate Owned (SREO) wherever I'm the syndicator, guarantor or deals where I'm a passive investor are all on the list. I am one of the owners. When talking with staff / residents / others on the properties we operate, I typically say I am the manager of the company that owns XYZ proprerty and that is, in fact, the most correct description.

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Robert Rixer
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Robert Rixer
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Replied Feb 15 2024, 14:21

There's no black and white rule of thumb but if you're on the GP side, no matter the split, I'd say it's fair to claim it in your portfolio. Where I would draw issue is a syndicator claiming properties in their portfolio when they are only a Limited Partner (specifically in marketing material). It's misleading in the very least but I see it more often than you'd think. So long story short, you're good.

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Melanie P.
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Melanie P.
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Replied Feb 16 2024, 18:42

Given that the "portfolio" page is marketing designed to entice investors to invest or raise confidence in your investor acumen it should be accurate. If you're in a deal with another GP the percentage interest should be disclosed. If the transaction didn't take place within your firm, it should be well explained. 

Be who you are and you'll have no problems. That is very hard for many on these pages.

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Chris Seveney
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Chris Seveney
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Replied Feb 16 2024, 19:33

@Adam M.

Typically a new entity is formed to own it and that entity is owned by the two gps

In this day someone who invests in a syndication and is passive will say they own 1,000 doors because they want to sound bigger than they are.

Anyone can say whatever they want one social media and people will believe it

Saw a post from a guru saying they own several thousand homes - I can pretty much guarantee you they do not.

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Adam M.
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Adam M.
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Replied Feb 17 2024, 12:41
Quote from @Greg Scott:

Typically the LLC owns the property and what you are calling the GP is the manager of the LLC.

For Schedule of Real Estate Owned (SREO) wherever I'm the syndicator, guarantor or deals where I'm a passive investor are all on the list. I am one of the owners. When talking with staff / residents / others on the properties we operate, I typically say I am the manager of the company that owns XYZ proprerty and that is, in fact, the most correct description.

 Thanks for the response here @Greg Scott! Interesting-- yes I suppose I was asking about more than one GP in an LLC but good to get clarification on management phrasing, especially when discussing with staff.

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Adam M.
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Adam M.
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Replied Feb 17 2024, 12:42
Quote from @Robert Rixer:

There's no black and white rule of thumb but if you're on the GP side, no matter the split, I'd say it's fair to claim it in your portfolio. Where I would draw issue is a syndicator claiming properties in their portfolio when they are only a Limited Partner (specifically in marketing material). It's misleading in the very least but I see it more often than you'd think. So long story short, you're good.

 Totally agree @Robert Rixer, yes if we were a LP (which we typically are never), we would not deem it appropriate to say so. Thanks for the response here!

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Adam M.
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Adam M.
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Replied Feb 17 2024, 12:45
Quote from @Melanie P.:

Given that the "portfolio" page is marketing designed to entice investors to invest or raise confidence in your investor acumen it should be accurate. If you're in a deal with another GP the percentage interest should be disclosed. If the transaction didn't take place within your firm, it should be well explained. 

Be who you are and you'll have no problems. That is very hard for many on these pages.

@Melanie P. I like the idea of disclosing percentages for clarity. We certainly are sure to disclose our roles clearly but just wanted to get a sense of what is best practice as we have do not have experience with "co-GP" scenarios. Thank you for taking the time to reply! :) 

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Adam M.
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Adam M.
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Replied Feb 17 2024, 12:51
Quote from @Chris Seveney:

@Adam M.

Typically a new entity is formed to own it and that entity is owned by the two gps

In this day someone who invests in a syndication and is passive will say they own 1,000 doors because they want to sound bigger than they are.

Anyone can say whatever they want one social media and people will believe it

Saw a post from a guru saying they own several thousand homes - I can pretty much guarantee you they do not.

Hello Chris, thanks for the response! Yes, sadly we are living in an ostentatious "ownership epidemic". You are not the first to see a "guru" pose alongside an impressive portfolio when really they are loosely involved-- I've even experienced some claiming properties when they are solely the property managers! It's a shame for those that are beginners in our industry and are living in a potemkin village. 

I think I am gathering here from the responses that we are safe to say as a GP we own the property as are the other sponsor, but for additional clarity, disclosing shares in some cases may help bolster tacit understanding of who does how much of what.

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Melanie P.
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Melanie P.
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Replied Feb 17 2024, 19:43

If you make false statements over the computer or telephone about your experience or the performance of your past investments and it induces someone to send you money that is what the government calls "wire fraud."

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Adam M.
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Adam M.
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Replied Feb 17 2024, 19:48
Quote from @Melanie P.:

If you make false statements over the computer or telephone about your experience or the performance of your past investments and it induces someone to send you money that is what the government calls "wire fraud."

 Precisely!

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Melanie P.
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Melanie P.
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Replied Feb 17 2024, 20:06
Quote from @Account Closed:
Quote from @Melanie P.:

If you make false statements over the computer or telephone about your experience or the performance of your past investments and it induces someone to send you money that is what the government calls "wire fraud."

@Melanie P.: I like where you are going with this, but I must know, is that an opinion or is it from a source I can reference? 

 All I can tell you right now is, "stay tuned." 

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Brock Mogensen
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Brock Mogensen
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Replied Feb 19 2024, 07:21

General industry norm is if you are a GP on the deal, you can claim the entire asset on your AUM. That being said, your allocation to net worth/PFS should be calculated based on shares you own in the deal.

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Melanie P.
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Melanie P.
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Replied Feb 23 2024, 21:54
Quote from @Brock Mogensen:

General industry norm is if you are a GP on the deal, you can claim the entire asset on your AUM. That being said, your allocation to net worth/PFS should be calculated based on shares you own in the deal.


 If you're using Assets Under Management in your marketing materials (websites, social media, etc.) the number had better represent actual money/property under YOUR COMPANY'S active management. Inflating AUM by including the whole of something your company only has a 10% investment in related to transactional services at the time of formation/acquisition is a material misrepresentation. 

There is no question that an investor views a fund differently with $500M AUM than a fund with $5M AUM.