PERE Insights – Relationship Problems? Partner Defaults And Other Termination Rights Under Programmatic Real Estate Joint Ventures

'We must be willing to let go of the life we have planned, so as to have the life that is waiting for us.' – E.M. Forster

In the first Alert of two on programmatic joint ventures in European real estate investment, we focused on some key provisions which are designed to establish relationship harmony and alignment between the capital partner and the operating partner. However, market conditions, business conflicts and human nature can all operate to upset the intended balance of interests and one party or another can therefore fail to meet expectations required of it. It is critically important that joint venture agreements provide for resolving disputes which arise as a result and, ideally, for an equitable parting of ways under the circumstances. Setting out a clear position from the outset on defaults and failure in performance is also another way of creating alignment. The key is balancing a sensible amount of management flexibility with necessary checks and