We are likely to enter a deal with a U.S. developer for a series of student housing projects in the Southeast. We feel very confident about the viability and potential return on these projects. However, we are a bit hesitant because this is our first JV deal with a U.S. group. What are some mistakes made by international groups in JV deals with U.S. developers that we need to be sure to avoid?
Answers
Your question is a good one. Ownership of an interest in a joint venture means you will have to live with the terms you have agreed to in the venture document. Who is the managing member? What are the major decisions? What happens if you cannot agree on an important matter? Who is responsible for keeping filings current and filing tax returns? You need a good lawyer with experience in joint ventures to give you advice. That would be my first step.
Not knowing or doing appropriate due diligence on their JV partner, which could cover a myriad of problems.