Joint Venture (JV)
A joint venture is a structured partnership — usually through an LLC — between an operating partner (the sponsor) and a capital partner (the equity investor) to acquire and operate a specific real estate investment.
What it means
A typical CRE JV pairs a sponsor bringing deal sourcing, underwriting, and operations (with 5–15% of the equity) with a capital partner bringing the remaining 85–95% of equity. The JV agreement (commonly called an LLC operating agreement) governs contributions, distributions, decision rights, and the sponsor's promote.
Promote structures typically give the sponsor a disproportionate share of returns above hurdle rates — for example, 20% of profits above an 8% IRR to investors, 30% above 15%, and so on. The economic waterfall is the core JV negotiation.
Related terms
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