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Our client is a Property Investment Company that wished to partner with a Property Development Company within a Joint Venture vehicle relating to the financing, development, and ultimate sale of a commercial site. The challenge was to ensure adequate protection, security, and reward for the client within the Joint Venture vehicle in return for their finance and expertise whilst maintaining cordial relations with the Developer.
The challenges to be addressed included:
1. Identifying the appropriate Joint Venture structure for the development either by way of a Co-Operation Agreement, Limited Liability Partnership, a Limited or Unlimited Partnership or a Limited Company.
2. Creating a suite of Investment Documents which whilst protecting the client’s investment would also be acceptable to the Developer.
3. Limiting the client’s financial exposure to the sum negotiated by carefully defining the initial investment sum and linking further stage payments to Architects Certificates with a maximum sum defined.
4. Identifying the investment sums, the payment stages and negative and positive controls which would need to be included within the Investment Documents.
1. Having reviewed the potential structures identifying that the most appropriate vehicle for the development was a Joint Venture Limited Company.
2. Preparing a Facility Agreement, Investment Agreement and amending the Articles of Association of the Joint Venture vehicle to provide sufficient protection to our client whilst remaining acceptable to the Developer.
3. Negotiating and drafting the final form of Investment Documents with the Developer, the Developer’s solicitors, and existing Funders to incorporate limits on the client’s investment, staged payments on Architect’s Certificates within the Facility Agreement, negative and positive controls in favour of the client within the Investment Agreement and amended Articles together with Fixed and Floating security in favour of the client over the development site itself and the Joint Venture company.
4. Facilitating the initial investment into the Joint Venture vehicle and subscription for shares together with the amendment of the Articles and execution of the Investment Agreement. Completing the transfer of the development site to the Joint Venture vehicle and perfecting the agreed security in favour of the client
By the creation of a Joint Venture vehicle which was acceptable to all parties our client was able to respond quickly and take advantage of the investment opportunity to facilitate the successful development and ultimate sale of the development site and creating a template for use in future investments between the client and the Developer.
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