Joint Ventures Overview

Since 1962 Katchen Company has partnered with select clientele on various Real Estate projects.

  • Commercial or Residential projects
  • Development from concept or re-development of existing

The components of a successful project are well within the scope of Katchen Company’s capabilities.  Over 50 years of building and strengthening the knowledge and experience base of our Team of professionals aided by the technological advances at our disposal create an ideal atmosphere from which to launch new projects.

  • A Portfolio of Success spanning 50+ years
  • A Dedicated Team of Real Estate Professionals

We purposefully limit the number of projects we are involved with at any given time to ensure quality standards are not compromised for any Joint Venture project.  We require equity partners contribute 20-30% of total development costs to any project.  A portion of this may be value of the land if owned unencumbered.

  • Limited scope
  • Financial resources

Considerations for Joint Ventures

Financial Strategy

  • Leverage; Katchen Company has established strong relationships with lending institutions.  Most will require loans be secured by land, and subordination agreements be executed.  Commercial Developments require specific long term financing and will use a combination of land value and improvements as equity
  • Liquidity; the nature of the commercial project as determined by a feasibility study will dictate liquidity of any Joint Venture.  As commercial projects are usually developed as investment property they will be subject to market conditions present at the completion of the project
  • Yield; recognizing actual yields will depend on structure of the project, Joint Venture agreements and current market conditions, we have determined a minimum of 6% per annum and a 19% overall return over the life of the project based on a reasonable hold period
  • Risk; a high degree of risk is inherent in any Real Estate Investment and subject to market conditions.  In any Joint Venture with Katchen Company you represent that you:    a.  Understand the risks inherent in Real Estate Investment      b. Are financially able to withstand investment losses should they occur   c.   Have determined that Real Estate Investment is suitable for you and  d.  you have carefully considered your financial situation and investment objectives

Development Strategy

Land Owner; as an equity partner will agree to allow adequate time for project development and additionally

  • be fully capable of carrying the property and any debt currently existing until project completion
  • be willing to secure subordination agreements on any property debt and provide same
  • be willing to give partial releases, as necessary, as each phase of the project is completed

Developer; will provide the necessary expertise and support to ensure project success as well as promoting the interests of the land owner by

  • analyzing site and creating concept of development
  • be responsible for signage at the site to promote the project
  • design and engineer site plan
  • promotional packet preparation for zoning and marketing
  • initiate talks with city and/or county about zoning
  • form LLC
  • market, sell and close transaction of the project
  • obtain construction financing
  • bidding and letting of construction contracts
  • manage all financial considerations and project materials
  • distribute funds for expenses
  • obtain permanent financing
  • distribute proceeds

Equity partners will be compensated for their contribution to the LLC in two stages.

  1. First allocation of yearly net proceeds distributed after closing of the books and accountant reconciliation calendar year end.  Yearly net proceeds distribution will give the equity partner a priority distribution of year net profits up to 6% of their total capital contribution.   If yearly net proceeds exceed 6% of total capital distribution, the equity partners and the developer will share in the remainder of the net proceeds equally. (50-50)
  2. Second allocation occurs after the sale of the project and repayment of all outstanding debt associated with the project and prior to the dissolution of the LLC.  Debt payment includes, but is not limited to permanent financing, equity partner’s original capital contribution, operating costs, real estate sales commissions and closing costs.  Net sale proceeds distribution will allow priority distribution of the net sales proceeds up to 19% of total capital distribution with equity partner and developer sharing remainder net sales proceeds equally. (50-50)

Contact us for more information about our Joint Ventures Services.