The lawyers of Davis Wright Tremaine’s real estate and land use practice group have extensive experience structuring joint ventures to acquire, develop, finance, and operate real estate. We routinely use venture entities for the acquisition, development, and operation of a wide range of properties, including office buildings, shopping centers, hotels and resort properties, apartment complexes, residential lot developments, mixed-use assets, and multi-property portfolios with values exceeding $2 billion.
We regularly address issues in the formation of joint ventures, including:
- Selection of venture vehicles to afford limited liability to investors
- Capital contribution conditions and remedies for failure to make additional capital contributions
- Governance, including fiduciary duties, approval rights of non-managing investors, restrictions on competition, and removal/replacement of management
- Cash distribution waterfalls, including preferred returns and a variety of “promote” or other incentive compensation structures tied to performance of a single asset or a portfolio of assets
- Tax issues, including structuring the venture to minimize income taxation, tax allocations among venture owners, taxation of guaranteed payments, avoidance of unrelated business taxable income and compliance with the “fractions rule” for tax-exempt investors, structures to avoid unnecessary transfer taxes, and creation and maintenance of private real estate investment trusts
- Transfer restrictions and exit strategies, including rights of first refusal, buy-sell rights, forced sale rights and the host of challenging issues relating to exit pricing
Our clients include taxable and tax-exempt investors (including pension funds, state sovereign funds, private equity investors and financial institutions), developers, real estate investment advisors, fund sponsors, real estate operating companies, lenders, and hotel operators.
We have worked with many clients (and other parties) to develop deal structures that accomplish the economic goals of the parties, in the most tax-advantageous manner possible, and to offer creative solutions to their particular issues. We also understand and advise our clients on the fiduciary and other duties that play an integral role in venture arrangements, and we structure our deals to provide the maximum protection to our clients. From decades of experience with a wide variety of joint venture structures, we strongly believe in employing a collaborative approach that is intended to efficiently produce a venture structure and venture documents that are clear, practical, fair, and in the interests of all parties. We are proud of the fact that, even when we represent a minority investor during formation of a joint venture, we are often selected by the managing member to represent the venture itself following formation.
Our real estate lawyers collaborate with our tax, finance, and securities lawyers across geographic boundaries and sub-disciplines to assemble a team of the necessary scale and expertise to handle even the largest and most complex real estate joint venture transactions smoothly and efficiently.