The Henry Stewart 2007 Masterclass
Property Joint Ventures and Partnerships:
Learning More from More Case Studies
SPEAKERS
Chairman
Julie Meggeson
Director of Joint Ventures
Bank of Scotland
Speakers
Jonathan Cantor
Solicitor
Corporate Real Estate
Nabarro Nathanson
Nick Ellis
Partner
Fladgate Fielder
Martin Hallam
Partner
DLA Piper UK LLP
Stuart Jenkin
Managing Director
Frogmore Property Company Joint Ventures Ltd
Ian Jones
Tax Partner
KPMG LLP
Hugh Lumby
Partner
Ashurst
Robert O’Hare
Property Tax Specialist
Deloitte
Toby Price
SDLT Specialist
Deloitte
Philip D Turner
Partner
Fladgate Fielder Real Estate Funds Group
Case Studies
• A limited partnership established to acquire and manage an office development in the UK
• Non-resident investors form an offshore unit trust to buy, develop and hold property in London and Edinburgh
• Using an offshore unit trust combined with an English Limited Partnership in a real estate joint venture
• Establishing and investing in a multi-venture, multi-investor real estate fund
• Structuring a public-private partnership with equality of involvement – how to successfully bring together a public sector landowner and a private sector partner with access to finance and development skills
• Structuring a joint venture for investment in UK real estate by foreign investors
• A joint venture with an offshore based holding company
• A simple 50:50 joint venture between a private sector property developer and its partners
• A financial joint venture with two types of partners – a finance partner and a developer partner
• A joint venture with a UK local authority or public body
• A joint venture between a group of individuals (acting through a Limited Partnership) and a financial institution formed to acquire investment property held offshore, with equity to be provided by some of the individuals and (together with senior and mezzanine debt) the Financial Institution
• An examination of the creation of a tax efficient real estate fund for a pool of around 600 experienced investors using offshore unit trusts, using the example of three property funds formed by an FSA regulated intermediary
Issues to be covered include
Structural Drivers
• Commercial imperatives
• Target investors (type and jurisdiction)
• Target investments (real estate or indirect and jurisdictions)
• Tax planning – on board from outset
• Funding requirements
• The asset management role
• Areas of potential dispute
• Aligning:
- Objectives
- Decision making
- Business plans and timescales
- Financial controls
- Management structures
- Approaches to communication
- Acceptance of risk
- Entry and exit strategies
- Cultures
Vehicle Types
• Different forms of JV
• Corporate JV
• Contractual JV
• Overseas JVs
• General Partnership
• Limited Partnership (Scottish, English)
• What works in Europe
• Limited Liability Partnership
• Unit Trust
• Geared Lease
• Onshore/offshore
Tax
• Trading/investing
• Transparent/opaque
• SDLT and property transfer taxes
• VAT
• Direct tax efficiency
• Withholding taxes
• Planning gains supplement
• Types of investors
• Issues for REITs
Control Issues
• Participation/co-investment
• Deadlock
• Management locations
• Conflicts
Regulatory Issues
• FSMA
- Regulated activities
- Financial promotion
• Offshore registration/approval processes
• Marketing into other jurisdictions
Exit
• Time
• Control
• Routes/alternatives
Investor Issues
• Corporate governance
• Conflicts of interest
• Exit
• Transfer of interest
• IRR
• Commitment period
• Exclusivity
• Term and termination
• Reserved matters
• Management agreements
• Funding
• Side letters
• Information memorandum
• Carried interest
• Default
Funding
• External debt
• Internal debt
• Drawdown
• Default
• Equity and debt; how much of each
Profit Share
• Sharing method
• Promote/carry
• Management fees
• Overage
• Cost of structure
• Distributions
• Calculation
Fund Creation and Management
• Identifying pools of investors
- Given the nature of the proposed investment, to whom is the sponsor and distributor allowed to market?
- Of that pool who would be interested in an investment of this type?
- How is the marketing to be conducted?
• Selecting advisors
- Who is required?
- What should their place of jurisdiction be?
- What will the funders require?
• Selecting a structure
- What are the aims of the investment?
- What are the tax drivers?
- What does the fund sponsor and distributor need to make its money?
Accounting Issues
• Consolidation
• Balance sheet
Public Sector Issues
• Procurement
• Accounting
• Non-financial benefits