LSI 2010 Real Estate Joint Ventures conference materials.pdf

Donald E. Percival of Davis Wright Tremaine LLP Speaker 27: 8
(d)
Valuation based on amount of investment (with or without
imputed return?)
(e) Valuation based on formulas (e.g., multiple of NOI,
revenues, etc.)
3. There are many, many other triggering mechanisms and pricing
methods
II.
VENTURE EXIT STRATEGIES: KEY CONSIDERATIONS
A. Pricing
1. Premium/discount for sale of partial interests? Depends on what
would be sold to third party:
(a)
If price is based on value of entity interests, would reflect
control premium or lack-of-control discount
(b) If price is based on value of underlying assets, does not
reflect premium/discount
2. Is price real or a “trial balloon?” -- Bona fides of the third party
offer price:
(a) Is third party buyer unaffiliated with initiating partner?
(b) All-cash sale vs. barter/exchange
(c)
(d)
(e)
Price as allocated portion of aggregate price for portfolio of
properties
Is sufficient earnest money at risk?
(i) Amount of earnest money (relative to size of
transaction)
(ii) Form of earnest money: Cash or note?
(iii) Is earnest money non-refundable?
(iv) Are seller’s remedies limited to retention of earnest
money if purchaser defaults?
Is buyer’s obligation to close subject to satisfaction of
conditions that are effectively within buyer’s control?
(i) Due diligence
(ii) Financing
(iii) Delivery of “clean” tenant estoppels
(iv) Permitted title exceptions
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Law Seminars International | Real Estate Joint Ventures and Funds | 02/09/10 in Seattle, WA