Best books on RE Private Equity?
So Im working on organizing a real estate private equity deal and its getting a bit more complicated than I think it should be, but I need to understand all possible structures and figure out if what the GP is pitching is unreasonable.
So reading up on some real estate PE books would be great. Which ones are good?
The GP wants to have one LP investor as apparently multiple investors would cause the lending banks to reduce the leverage ratio on the properties (not sure how much in actuality that should matter, if the LP’s are well capitalized), as well they want to structure the deal so the LP gets paid back in full first, then all cash flows and the assets are split 50/50, and to get an interest free loan from the LP so the GP could pay taxes on the phanton income they aren’t actually taking out of the business.
It seems more complicated to me than a waterfall with a traditional structure. I dont love the idea of the LP kicking in anything as a loan to the GP, and I don’t think the potential LPs I know will either. I dont want to present the structure to them until I’m fully comfortable with it as someone arranging this potential deal.
If they look at a first proposal and think “wtf is this?!?” then the odds of them coming back to negotiate are low. I also think 50/50 seems way too generous to the GP. Average LP/GP splits end up being 73/27, per my research. So 50/50 is almost double what a GP would make in an average deal.