CLAIRMONT CAPITAL GROUP

Property-Level GP Co-Investment

Clairmont is a pioneer in the niche asset-level GP co-investment sector, a strategy that aims to provide qualified investors an attractive opportunity to earn meaningful risk-adjusted alpha (“a”) when compared to the institutional Limited Partners (“LPs”) it invests alongside. As Clairmont’s flagship strategy, the firm has successfully managed a series of opportunistic fund vehicles and separate accounts that are exclusively focused on executing GP equity co-investments with tenured, best-in-class sponsor operating partners in cycle-resilient asset classes across the US.

CLAIRMONT CAPITAL GROUP

INVESTMENT ADVANTAGES

Unique Access

Aims to provide investors with unique access to the economic benefits of the GP tranche of the equity capital stack, which is not often available to outside investors

 

Institutional Quality

Seeks to offer investors access to truly institutional quality assets, sponsorship, structuring and capital partners

 

 

Downside Protection

Desires to supply investors with an asymmetric return opportunity through unique structuring that limits downside exposure to returns similar to the institutional LPs it invests alongside

Asymmetric Returns

Provides investors the attractive opportunity to earn alpha or positive return differential when compared to the institutional LPs it invests alongside, while limiting downside exposure to returns similar to those same LPs

Promote Participation

Targets outsized risk-adjusted returns via participation in the GP’s promote, unlocking meaningful alpha, or return spread, when compared to traditional LP returns

Prudent Diversification

Strives to provide prudent diversification by sponsor, limited partner, asset class, vintage, business plan, and geography by leveraging smaller equity commitments in institutional real estate opportunities

Yield & Appreciation

Targets a thoughtful balance of current yield, capital appreciation, and total return

CLAIRMONT CAPITAL GROUP

capital structure

For illustrative purposes, a typical institutional real estate transaction has been outlined below with a capital stack comprised of ~60% debt and ~40% equity. The sponsor (GP) typically partners with an institutional investor (LP) to form a joint venture (JV) to capitalize the equity portion of the capital stack.

The JV may be structured in various ways, but generally consists of the LP contributing 90% of the equity (36% of the total capital stack) and the GP contributing 10% of the equity (4% of the total capital stack).

Clairmont will contribute 50%+ of the GPs 10% equity (between 2% to 4% of the total capital stack) and structure its investment to include participation in the GP’s promote.

CLAIRMONT CAPITAL GROUP

Promote Participation

Clairmont provides investors with unique access to the GP portion of the equity capital stack in institutional real estate transactions. The GP segment of the capital stack as well as its valuable economic benefits are rarely available to outside investors. This access enables Clairmont’s investors to participate in the GP’s disproportionate profit-sharin mechanism, known as the ‘promote.’

The promote acts as additional incentive payable to the GP for exceeding pre-defined performance hurdles over a transaction’s lifecycle. While the GP may only be required to contribute 10% of a transaction’s total equity, it stands to earn a far greater portion of the profits (upwards of 50%) upon successful execution of the business plan.

Clairmont’s ability to structure participation in the GP’s promote creates the potential for its investors to earn significant alpha (“a”), or positive return differential, when compared to the returns of the elite institutional LPs it invests alongside while simultaneously limiting downside exposure to commensurate returns as those same LPs.


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