We are an LP investor in a portfolio acquisition of six medical office buildings. The GP is an American entity. Are we still subject to FIRPTA? If so, how much are we responsible for, as we will not own the properties outright? Do we have any other options?
Answers
One of the most common mistakes for inward JV investors is not fully vetting out their new partners in the US. We have seen time and time again when foreign investors join hands with new partners and within 6-12 months, the relations become sour due to issues that they did not know of before engaging into the partnership. It is very important to know exactly who you are engaging with and having a clear understanding of the historical experience of the partner, the relations they kept and how the community views them as business people. Take time with the approach and decision. A JV partnership is marriage and do not ever jump into the relationship unless you are 1000% confident it will be a long, mutually profitable relationship.