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Co-GP Investments

NetLeaseX Capital and its capital partners are looking to make programmatic co-GP investments to support real estate investors and developers, including non-institutional sponsors and even new sponsors who lack financial resources but have deep industry experience, for the following:

  1.  “Shovel-ready” development projects, and
  2.  Value-add opportunistic projects.

In general, NetLeaseX Capital and its co-investors will invest up to 80% of the sponsor’s, or GP, investment.  The sponsor will receive a credit for all funds invested in the project to date towards the sponsor’s portion of the GP investment.  In addition, the sponsor will be required to guaranty repayment of the senior debt and be liable for any nonrecourse carveouts, environmental indemnities and/or completion guaranties.

By maximizing project leverage, sponsors can scale their platforms and assets under management.  In addition to providing co-GP capital, we’re able to access preferred equity and/or senior debt financing for your projects as well.

Program Overview
1. Investment Amount: $500,000 minimum, no maximum
2. Investment Structure: Preferred membership interest in the ownership entity
3. Preferred Return: 10% per annum, cumulative from investment date
4. GP Contribution: Approximately 15% to 20% of the total equity investment for which the sponsor receives the same 10% preferred return as the other members in the LLC and subordinate to and is in a first loss position relative to the preferred equity and co-GP’s interests.
5. Common Interests: The co-GP investor will receive a proportional percentage of the sponsor’s common membership interest in the development entity for a nominal amount, as consideration for their co-GP investment in the sponsor’s project.  For example, if the GP investors would own a 50% of the common membership interest and the co-GP investor invests 50% of the total GP investment, the co-GP investor will own 25% of the common membership interest in the project.  In addition, the co-GP  investor will receive a proportional amount of any fees and costs authorized to be paid to the sponsor in the project.
6. Leverage: Low cost first mortgage debt from a third party lender is needed.  Ideal leverage is 65 to 75%.  We can arrange the senior debt at a very competitive rate and terms if you need help in doing so.
7. Development Entity Distributions:

Net cash flow from the operation and resale of the project will be applied in the following priority:

  1. Pay debt service on any project-related loans;
  2. Pay 10% per annum cumulative preferred return to the preferred equity investor;
  3. Redeem the preferred equity investor’s Class A preferred membership investment;
  4. Pay 10% per annum cumulative preferred return to the co-GP investor;
  5. Redeem the co-GP’s Class B preferred membership investment;
  6. Pay 10% per annum cumulative preferred return to the sponsor;
  7. Redeem the sponsor’s Class C preferred membership investment, and
  8. After all of the preferred membership interests have been redeemed (and all cumulative preferred returns have been paid), all remaining cash flow from the operation and resale of the project will be distributed to the preferred equity investor, co-GP investor and the sponsor as the holders of the common membership interests.
8. Term of Investment: Maximum 5 years
9. Product Types: All real estate types, including land
10. Market: Nationwide
11. Decision Making: Major decisions (e.g. termination of manager, sale, or refinance) require the preferred equity investor’s approval
12. Senior Loan Recourse: The sponsor will be solely responsible for submitting financial statements and any necessary loan recourse and personal guarantees to the senior lender.
13. Preferred Investment Recourse: Non-recourse, except for standard carve-outs. A completion guaranty may be required on development or rehab projects.
14. Closing: Typically, 4 weeks. However, as fast as 10 days from the date of receipt of all requested due diligence items.

If you have any questions about how co-GP works and/or would like to discuss a potential financing, please call us at 513-621-1031 or send us an e-mail summarizing your project.

To discuss your project financing requirements, please contact Ron Zimmerman at (513) 621-1031, via online chat on this website, or email us with your project summary. You can also review our Due Diligence Submission List and Underwriting Loan Guidelines for various property types.

Whitepaper on Raising Preferred Equity
Published:  September 2022
Updated:  October 2024

This white paper guides real estate investors on using preferred equity, mezzanine debt, co-GP capital, and stretch loans to increase leverage and returns. It covers diverse applications and the benefits of working with NetLeaseX Capital.
Read Whitepaper

Strategize with Preferred Equity
The Scotsman Guide | December 2018

This article provides an overview of how preferred equity fits into the capital stack and explores key terms that can be negotiated between sponsors and investors to optimize the structure of these investments.
Read Article | Download Reprint

The Power of Stretch Loans for Family Office Investors

This article explores how commercial real estate investors can secure custom stretch loans from high net worth and family office investors, combining senior debt and preferred equity features to obtain high-leverage, short-term bridge financing with favorable pay rates.
Famcap.com | May 2024
Read Article | Download Reprint

Throw Out A Lifeline
The Scotsman Guide | July 2020
This featured article examines how commercial real estate investors can raise rescue financing to cover losses and mortgage payments during Covid-19, mitigating personal guarantee liability risks associated with potential foreclosures and fire sales.
Read Article | Download Reprint

Ride To The Rescue
The Scotsman Guide | August 2020

Building on "Throw Out A Lifeline," this article explores how rescue financing acts as temporary bridge equity for commercial real estate investors, to be repaid upon market normalization, and discusses various debt and equity structuring options.
Read Article | Download Reprint

NetLeaseX Capital Offers Family Offices Direct Access to Rescue Financing Investments in Real Estate
Famcap.com | October 2023

This article discusses how family offices and other sophisticated real estate investors can access NetLeaseX's platform to freely review pre-screened, "investment-ready" transactions, including rescue financing, preferred equity and co-GP investment opportunities.
Read Article | Download Reprint