Sierra Gateway Logistics Park
Joint venture equity for ground-up Class A logistics development
The Challenge
What the sponsor faced.
A merchant developer held entitlements and a shell building permit on a 1.4M SF Class A logistics park in the Reno-Sparks submarket but had committed only 10% of the required equity. The project was speculative with no pre-leasing, and institutional LP equity for ground-up industrial had pulled back through 2025 as new supply outran absorption. The sponsor needed a partner to fund 90% of the $60M common equity requirement without ceding its promote or day-to-day control.
The Structure
How we structured it.
LP equity of $54M, 90% of the $60M common requirement, against a $150M total development cost, with the sponsor co-investing the remaining $6M as GP. The waterfall ran a 9% preferred return to the LP, a full return of capital, a 50/50 GP catch-up, then an 80/20 split to a 15% LP IRR, a 70/30 split to a 20% LP IRR, and 60/40 thereafter. A $90M construction loan was sized separately at 60% LTC and non-recourse to the LP, so the equity placed sat as pure common capital.
The Outcome
What the sponsor got.
Closed the LP commitment concurrently with the construction loan term sheet. The GP retained its full promote and construction management role, and the LP committed to fund a second phase on the adjacent parcel at the same terms. The park broke ground 45 days after the equity close.
Deal Mechanics
Structural highlights.
$54M LP check, 90% of the common equity requirement
Two-hurdle promote with a GP catch-up
Construction debt at 60% LTC placed separately
More in Sector
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