Our new JV partner does not want to give out PGs but our lender wants PGs for any 20% shareholder

Discussion in 'General Property Investment Discussion' started by George Birtwell, Sep 22, 2017.

  1. George Birtwell

    George Birtwell New Member

    Can anyone advise us on how to get around the problem of lenders wanting any shareholder over 20% to give personal guarantees. Our new JV partner does not wan to have to give a PG so we need to offer a way around this. Thanks.
     
  2. I presume that your JV is held within a company? What kind of numbers are we talking?
     
  3. Longterminvestor

    Longterminvestor Administrator

    Maybe question how committed they are if unwilling to give guarantees?
     
  4. diyhelp

    diyhelp Active Member

    No investment comes without risk - simple. If your JV partner is not willing to take the risk then personally I would look elsewhere, or like John said, reduce their stake in the JV.
     
  5. George Birtwell

    George Birtwell New Member

    Thanks for your responses. Our JV partner is committed but very wealthy and so certainly does not need to be giving out PGs at their scale. They are keen to support a large growth plan but no appetite for the added risk. We may be able to get someone like Close to do the refurb loan without PGs but we still need a term lender to take on each property afterwards who wouldn't insist on the PGs for 20% or more shareholders. I'd appreciate your ideas..
     
  6. nmb

    nmb Well-Known Member

    "They are keen to support a large growth plan but no appetite for the added risk"

    How are they supporting the growth plan while not accepting the added risk? If they are so wealthy then some limited personal guarantee should not be an issue?
     
  7. nmb

    nmb Well-Known Member

    I am with you now - the 20% level is where the PG kicks in so keep it under - maybe even offer an option to increase their stake in the future - and find the small balance from elsewhere?
     
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