Most investors don’t have the capital to acquire or develop large commercial properties outright. When the opportunity is bigger than your balance sheet, joint venture (JV) equity can bridge the gap.
JV equity, also known as common equity, is the capital injected into a commercial real estate deal to cover the portion of costs that senior lenders won’t finance, often above 70–75% loan-to-value.
Example: A developer acquires land but lacks the funds to complete construction. By partnering with a private equity firm or family office, the developer (operating partner) teams up with the capital source (limited partner) in a joint venture. Both invest capital, share risk, and split returns according to negotiated terms.
Preferred equity sits above JV equity in the capital stack and below senior debt. It carries a higher claim on cash flow and typically yields 9–13% annually. While less risky than common equity, it offers lower upside.
For general partners, JV equity can:
JV equity carries higher risk for limited partners, as they are last in the payment priority. The structure must be carefully negotiated to strike a balance between risk and reward.
Best practices include:
JV equity can be a powerful tool for financing large-scale CRE projects. Its flexibility and upside potential make it attractive for operating partners, but success depends on rigorous planning, transparent partnership terms, and aligned incentives.
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Clearwater is a New York-based national direct lender specializing in C-PACE Financing for Commercial Real Estate, spanning all asset types and geographies across the U.S. We offer low-cost, fixed-rate, long-term loans ideal for new construction or recapitalizations of recently completed projects. Our team of seasoned real estate investment professionals, with extensive expertise in structured finance, crafts tailored solutions that align with the Sponsor’s needs, including hedging away negative arbitrage and flexible prepayment options.
For more information, please visit us at www.c-pace.com or email us at info@c-pace.com.
© Clearwater PACE, LLC 2025. All Rights Reserved.
Clearwater is an institutionally capitalized direct C-PACE lender focused on deploying fast, flexible capital for bold, sustainable projects spanning all asset types and geographies across the U.S.
© Clearwater PACE, LLC 2026. All Rights Reserved.
