Deal Structure

Deal structure refers to the legal and financial framework of a commercial real estate transaction. In investments involving multiple investors, partners, or real estate firms, the deal structure defines each party’s roles, responsibilities, rights, and economic interests.

A commercial real estate deal structure typically addresses:

• Property management responsibilities
   
• Cash flow distribution and profit splits
   
• Debt and loan obligation responsibility
   
• Risk allocation and financial liability
   
• Ownership percentages and control rights
   

Understanding deal structure is critical for real estate investors because it directly impacts risk exposure, cash flow, and long-term returns. A clearly defined and well-aligned deal structure helps ensure transparency, accountability, and investor confidence throughout the life of the investment.

Before committing capital, investors should carefully evaluate the deal structure to understand how profits are generated, how decisions are made, and how financial performance affects their returns.

A clear deal structure ensures everyone understands their rights, responsibilities, and potential returns, preventing disputes and aligning incentives for a successful investment.