Joint Ventures in Hotel and Apartment Building Projects

A real estate joint venture (JV) is an agreement between two or more parties to own or develop a property together, sharing the capital, the work, the profit and the risk. In hotel and apartment projects it usually pairs someone who has the deal or the expertise with someone who has the money.

This guide is for owners, developers and operators looking for a partner. It explains who the partners usually are, how a JV compares with other ways to raise money or exit, the benefits and risks, and how to find and vet a partner. The terms of the agreement itself are covered in our guide to structuring a joint venture.

Who the partners usually are

Most hotel and apartment JVs fall into a few patterns:

• Operating partner and capital partner. A developer, owner or operator finds and runs the project and puts in a smaller share of the equity. A family office, pension fund, private equity fund or wealthy individual supplies most of the equity and takes a more passive role.
• Landowner and developer. An owner contributes land or an existing building, valued at an agreed amount, and a developer contributes the expertise, the financing relationships and often some cash.
• Owner and hotel operator. A property owner partners with a hotel management company or brand-experienced operator who invests alongside and runs the hotel.
• Owner seeking to fund a repositioning. The owner of a tired or underperforming property brings in a partner to pay for renovation in exchange for a share of the improved property, instead of selling.

What makes a good JV is that each side brings something the other lacks, and that both have enough at stake to stay committed when the project hits trouble.

How a JV compares with other options

Ways to raise capital or exit, compared

Option	What you give up	What you keep	Typical fit
Bigger loan or mezzanine debt	Fixed payments and covenants; more risk if income falls	All the ownership and upside	Stable properties with room for more debt
Joint venture with one or a few partners	A share of profits and joint control of major decisions	A share of the upside and usually day-to-day management	Developments, repositionings and larger acquisitions
Syndication to many passive investors	A share of profits; securities-law obligations and investor reporting	Control as sponsor, often with fees and a promote	Sponsors with a track record and a network of investors
Outright sale	The property and all future upside	The sale proceeds now	Owners who want out or cannot fund the next phase

A JV and a syndication are related but different. In a JV the partners are few, they negotiate the terms, and the capital partner usually has real approval rights. In a syndication, a sponsor pools money from many investors who accept the sponsor’s terms and have little say.

Both involve securities law when passive investors are involved. In Nova Scotia, selling an interest to investors requires a prospectus unless an exemption applies, such as the accredited investor, family, friends and business associates, or offering memorandum exemptions under National Instrument 45-106.[1] In the U.S., private offerings commonly rely on Regulation D Rule 506(b) or 506(c).[2] A JV between a few active, sophisticated partners may still need legal advice on whether the interests are securities.

The legal vehicle

In Canada, real estate JVs are commonly held through one of three structures: a limited partnership, a corporation owned by the partners, or co-ownership of the property with a nominee company holding title. In a limited partnership the passive investors are limited partners. Under Nova Scotia’s Limited Partnerships Act, a limited partner does not become liable as a general partner unless it takes part in the control of the business, which is one reason capital partners’ approval rights are drafted carefully.[3] In the U.S., the limited liability company (LLC) is the usual vehicle. The right choice depends on tax, liability and lender requirements; it is a question for your lawyer and accountant.

Benefits and risks

What a joint venture can and cannot do

Pros

• Funds a project you could not finance alone
• Adds expertise: development, hotel operations or capital markets
• Shares losses and the burden of guarantees
• Lets an owner keep a stake instead of selling
• A strong capital partner can make lenders more willing to lend

Cons

• You give up a share of the profit, often a large one
• Major decisions need the partner’s approval
• Disagreements can stall a sale, refinance or capital call
• A partner who cannot fund a capital call can leave the project short
• Unwinding a JV is slow and expensive without clear exit terms

Finding and vetting a partner

How to approach a joint venture

1. Be clear about what you need

   Capital, expertise, a guarantee, an operator, or a combination. The answer decides which kind of partner to approach.

2. Prepare the deal package

   The property, the business plan, the budget, the financing plan and the projected returns, with the assumptions shown.

3. Check the partner’s track record

   Ask for comparable projects, references from past partners and lenders, and evidence the partner can fund its share and any capital calls.

4. Agree the key terms in a term sheet

   Contributions, the profit split, decision rights, capital calls, fees, and exit. Most of the value is decided here, before the lawyers draft the agreement.

5. Bring in lawyers and accountants

   For the legal vehicle, securities-law compliance, tax and the full agreement. Each partner should have its own lawyer.

Sources

1. Rule 45-501: Statutory Liability for Misrepresentations in an Offering Memorandum under Certain Exemptions from the Prospectus Requirement — Nova Scotia Securities Commission, Effective October 7, 2013. Checked 2026-10-12.
2. Exempt offerings — U.S. Securities and Exchange Commission. Checked 2026-10-12.
3. Limited Partnerships Act, R.S.N.S. 1989, c. 259 (section 17) — Nova Scotia House of Assembly. Checked 2026-10-12.