For illustrative purposes, a typical institutional real estate transaction has been outlined below with a capital stack comprised of ~60% debt and ~40% equity. The sponsor (GP) typically partners with an institutional investor (LP) to form a joint venture (JV) to capitalize the equity portion of the capital stack.
The JV may be structured in various ways, but generally consists of the LP contributing 90% of the equity (36% of the total capital stack) and the GP contributing 10% of the equity (4% of the total capital stack).
Clairmont will typically contribute 50%+ of the GPs 10% equity (between 2% to 4% of the total capital stack) and structure its investment to include participation in the GP’s promote.
