Joint Venture Deals … Norair Yeretsian

You don’t have all the equity you need or you don’t have the necessary experience and knowledge to put it all together.

You want to diversify the risk inherent in a project or  open up opportunities for your enterprise. 

Money , Experience and Knowledge and the ability to bring it all together for a profitable and successful

conclusion is what Joint Venturing maybe all about.

Historically Joint Ventures ( JV) were popular with major projects were the participants would bring

 their unique skill sets and  come together to accomplish the  large task . A bridge to be built is one example

 or a Sports Stadium ( Sky Dome in Toronto; now called the Rogers Center – home of the Blue Jays baseball team ).

The life timeline of the JV usually ends with the successful completion of the project,

at which point the individual participants would receive their compensation and go their separate ways.

 The CRA ( Canada Revenue Agency) does not recognize the JV as a structure/ organization for tax purposes,

 wherein the individual companies would file for taxation purposes separately based upon their own

 year ends and depreciation of equipment etc.

JV can also be similar to a partnership were two or more companies/persons/corporations partner,

by pooling their resources to acquire real estate or undertake a major project.

In matters of control , no venturer can unilaterally control the venture.

The project’s life is usually limited to a specific project.

All of the income and expenses are assigned to the joint venturers and in turn,

each member is assigned his/ her share of the assets and liabilities.

Each member of the JV calculates their income tax purposes, without regard to the others.

This provides for discretionary decisions concerning personal tax positions.   

As a member in a JV , an undivided interest exists in the project.

 That means that no specific unit or part of a project/property is assigned to , or owned by , a single investor.

This may pose a difficulty if an investor wishes to sell their interest, or use their equity as collateral for financing,

 since it would be challenging for a lender to try to register an interest against a proportionate share of the  JV.

If  the members wished a longer lasting relationship they would formalize the structure into a corporation or

 limited partnership and therefore  could evolve it into a typical syndication .  

We will talk about syndication(s) in future articles…

Envoy Capitol Realty Inc., brokerage            Toronto   / Canada

Buy/Sell/Lease/Manage/Develop/Syndicate — Investments

Norair Yeretsian , broker of  record

Twitter : EnvoyCapRealty

Email : capitalmoves@gmail.com

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Creativity Mother of Invention … Norair Yeretsian

Joint Ventures have been happening for a while now with public to private sector arrangements.

Where each seems to win.

With space and land for development opportunities running out, more inventive and creative ways must be found

and arrangements made. However it is never easy, as this link to a Wall Street Journal article reviews a current challenge in developing a project and the various vested interests raising objectives. http://online.wsj.com/article/SB10001424052748704268104576108212242009734.html?mod=WSJ_RealEstate_MIDDLETopNews

Although public consultation is both required and desired in order to have a successful project.

One party is usually in need of funds ( several million ) the other party comes to the table with funds

and a plan to develop ( add value ) . Build  in a good to great location and sell units or lease units as quickly as possible.

There was a similar situation in Toronto with a downtown parcel of  land ( 2 acres in size ) owned by St. Michael’s at the University of Toronto and a large developer agreed to pay approximately $ 45 million for the opportunity to build. This was extra land the College owned, however they were in a deficit situation as the story goes , and needed money ( several million ) .

The developer  was aggressive in what they wished to build there and the large  number of  units planned.

The community and some city counsellors fought the project. After 4  to 5 extensions to the agreement of purchase and sale along with payments of $ 1 million each for each extension over a four-year period, the developer walked away. Nothing built.

As you drive through your city , you may notice buildings with a variety of  uses ; public – private, to institutions and various government departments partnering and collaborating with private capital or other institutions/ companies ( Reits, Pension Funds, Credit Unions, Banks,Life Insurance Companies and the list goes on …Schools ). Another great example is in North Toronto where a public  high school ; North Toronto recently had their building newly re-built on part of the original property by a developer who re-developed the entire property at their expense and also built and sold out, two Condo towers ( for their profit ) . Everyone wins.

 These groups and their properties combined with residential units and/ or retail uses. More efficient usage of the properties and revenues for the original land owners both upfront  and a continuous stream over the many years to come…

Joint Venturing for  mutual benefit and for the good of  the community going into the future.

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Envoy Capitol Realty Inc., brokerage                Toronto  / Canada

Buy/Sell /Lease/Manage/Develop/Syndicate — Investment

Norair Yeretsian , broker of  record

Email : capitalmoves@gmail.com

Twitter : EnvoyCapRealty

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