Setting up successful joint ventures with institutional capital:

Joint ventures (JV) between asset managers and institutional investors remain one of the most effective structures for deploying capital at scale while aligning expertise, risk and return.

When structured well, a JV can provide asset managers with the flexibility to execute their strategy efficiently, while giving institutional capital the governance, visibility and protections it requires.

In more recent years in the real estate world, institutional capital has taken a growing interest in owning the operating platform as well as the underlying real estate, and so many joint ventures now sit squarely in operational real estate — where returns are driven not only by the underlying property, but by the operating model that sits on top of it.

Joint ventures and institutional capital examples

Some prime examples come from the private equity investors, who are used to scaling business and maximising operational efficiency. In 2020, Blackstone acquired IQ Student Accommodation from Goldman Sachs for £4.7bn.

Since then, there have been some other notably large platform transactions such as: Brookfield’s sale of Student Roost to GIC and Greystar in 2022 for £3.3bn (which included over 23,000 rooms), and Blackstone’s EUR21bn recapitalisation of Mileway (comprising over 1,700 logistics assets across Europe).

In the last year there have been a clear acceleration of platform level transactions, for example:

• Goldman Sachs acquired Urban Campus, a co-living and co-working real estate provider with a EUR550m commitment to develop PBSA across France;
• Greystar acquired Native Communities from Ares;
• Quadreal acquired UNCLE, which comprises 6,000 units across the UK and Ireland, from Realstar; and
• Aus Super invested into M7 Real Estate, taking a stake alongside Oxford Properties, with commitment to accelerate the platform’s growth.

In logistics and residential sectors such as purpose built student accommodation (PBSA), build-to-rent, urban logistics or multi let industrial , value is increasingly shaped by leasing velocity, customer experience, data, on‑site teams, pricing capability and brand strength rather than just yield compression, capex execution or just timing of the market.

As returns have been squeezed on owning real estate assets alone, institutional capital is increasingly looking beyond traditional asset-level joint ventures and toward establishing platform JVs, by teaming up with real estate developers who have the expertise. These structures are designed to aggregate assets over time through a standalone platform.

Importantly, these arrangements often include the investor taking a direct stake in the operating company (OpCo) as well as the property holding vehicles (PropCos), recognising that the platform itself can become independently valuable.

Having established and supported a number of real estate joint ventures, we see similar themes arising. The most successful JVs are those that are carefully designed at the outset with a clear understanding of how decisions will be made, how fees will crystallise, and how issues will be managed when circumstances change. Below we highlight the key considerations asset managers should be mindful of when setting up a JV with institutional capital.

1. Clearly defined business plans and limits of authority

A well-defined business plan is the foundation of any effective joint venture. Agreeing upfront the investment strategy, asset types, risk profile and decision-making framework helps reduce friction later and allows both parties to operate with confidence.

In practice, a clearly articulated business plan can significantly reduce the number of investor consents required for day‑to‑day execution. Where actions fall within agreed parameters, the JV can proceed efficiently without repeatedly reverting to shareholders for approval. This is particularly important where there is a high turnover of assets or an active development or disposal programme.

Limits of authority are a practical extension of this principle. We have seen JVs operate effectively where acquisition, disposal or development decisions can be taken by the active partner up to a defined financial threshold, with higher‑value or out‑of‑strategy decisions reserved for investor consent. This strikes a balance between control and agility and avoids unnecessary bottlenecks.

2. Promote and development fee mechanics

Promote structures and development fees are often a key commercial driver for asset managers, but they are also one of the most common sources of dispute if not clearly defined. The calculation methodology, timing and conditions for payment should be unambiguous from the outset.

Critical points to address include whether promotes are assessed on an asset‑by‑asset basis or across the portfolio, and what constitutes the relevant trigger event. For example, is the fee payable on practical completion, first letting, or once an asset is fully stabilised? Lack of clarity here can lead to renegotiation attempts at precisely the point when value is being realised.

We also regularly see retention and clawback mechanisms built into promote arrangements, where part of the fee is deferred subject to performance hurdles in subsequent periods. These can be effective alignment tools, but only where the metrics and mechanics are clearly documented.

3. Investor consent rights and practical execution

Institutional investors quite rightly seek consent rights over major decisions such as acquisitions, disposals and financings. However, there is a careful balance to be struck between governance and operational efficiency.

In many cases, investors who own a stake in an OpCo for example are already deeply involved at an early stage through investment committees or advisory boards. Requiring additional shareholder consents later in the process can become duplicative and delay execution, particularly where transactions are already effectively agreed in principle.

It is also important to consider how the JV operates if circumstances change. Where one party has veto rights over investments, the documentation should address what happens if capital deployment stalls. In some structures, repeated refusal of qualifying investments can allow the other party to seek alternative funding, preserving momentum without undermining investor protections.

4. Board authority and reserved matters

Where JV parties appoint directors to the vehicle, authority matters must be carefully delineated. Certain decisions may require approval from directors appointed by each party, particularly where they fall outside the agreed business plan.

Typical reserved matters include significant capital expenditure not anticipated in the business plan, material contract amendments, or the commencement or settlement of litigation above an agreed threshold. Clear drafting in this area reduces the risk of deadlock and ensures that genuinely strategic decisions receive the appropriate level of scrutiny.

5. Accounting, reporting and administration

Operational considerations are often underestimated at the structuring stage. Differences in accounting year‑ends, reporting standards or internal approval processes can create unnecessary friction if not addressed upfront. Agreeing reporting timetables, deliverables and funding notice periods early helps ensure the JV operates smoothly in practice.

6. Default provisions and downside protection

While rarely front of mind at the outset, default provisions are a critical part of JV documentation. Once a default becomes final, consequences may include suspension of voting rights, withholding of distributions or forced transfer of the defaulting party’s interest at a discounted value.

Put and call option mechanics are commonly used to provide a clear and enforceable route to resolution. These provisions protect the non‑defaulting party while providing certainty as to outcomes if things do not go to plan.

7. Additional OpCo and platform considerations

Where a JV includes an OpCo stake (or the intention to build a platform capable of standing alone), the documentation typically benefits from additional clarity in a few areas:

a. Scope and standards of the operating mandate
Define precisely what services the OpCo provides (leasing, marketing, property management oversight, ESG delivery, capex project management, customer experience, technology/data, etc.), with clear KPIs and reporting lines.

b. Governance and reserved matters at OpCo level (not just PropCo level)
Traditional JV reserved matters often focus on acquisitions/disposals/financing. Platform JVs typically need a second set of controls around OpCo decisions: senior hires, budget, tech spend, brand strategy, third‑party mandates and related‑party contracting.

c. Economics: separating (and reconciling) fees, promotes and OpCo value
Be explicit about how property-level fees and promotes interact with OpCo profitability (including transfer pricing, cost allocation, and whether fees are set at market). The goal is to avoid double counting — or disputes about where “value” is meant to accrue.

d. Brand/IP ownership and data rights
If the platform brand is part of the value story, ownership and permitted use of trademarks, systems, customer data and analytics capabilities should be clearly documented from day one.

e. Exit routes and valuation mechanics
If the platform is intended to be saleable (or capable of recapitalisation), pre‑agree the routes: sale of assets, sale/IPO of OpCo, third‑party growth capital, or buy/sell options.

Experience matters

Thought must be given to the type and jurisdiction of the structure. A Jersey Unit Trust, a UK REIT and/or Qualified Asset Holding Company have all been used in this context (where the main source of capital is institutional), usually with a Limited Partnership on top to cater for the carried interest provisions and certain bespoke JV arrangements.

With all of these arrangements the key theme is striking a balance between control and flexibility, protection and efficiency, alignment and accountability. We provide full entity support to joint venture platforms, from legal support, entity management, directorships, regulatory and tax compliance, accounting and investor reporting across different asset classes and strategies.

We understand both the institutional investor perspective and the practical realities faced by asset managers executing the strategy on the ground.

Getting the structure right at the outset not only reduces risk but materially improves the day‑to‑day operation of the JV. For asset managers, thoughtful structuring is not a legal formality but a competitive advantage when looking to partner with institutional capital.