The 70% promote, explained without the pitch deck

A joint venture on land is two jobs in one entity. Someone brings the money. Someone runs the deal — the rezoning, the engineering, the utility negotiations, the sale. A promote is how the second job gets paid.

The basic shape

In a typical land JV:

• The LP contributes most or all of the capital.
• The GP contributes some capital, and runs the entitlement and the exit.
• Capital is returned to the LP first, plus a preferred return.
• Profits above that get split — and the GP's share of those profits is the promote.

A 70% promote means the GP keeps 70 cents of every dollar of profit above the preferred return, after LP capital is returned. The LP keeps 30 cents of that upside, having taken most of the capital risk.

Why anyone agrees to that

Because the LP is buying capability, not just a return. Land entitlements are not passive assets. They are a sequence of votes, letters, and negotiations that can take eighteen months and can be lost. A sponsor who has done it twenty times is worth a large share of the upside to a capital partner who has not.

From the GP side, the promote is how you build a track record without needing to raise the entire equity check yourself. The structure is straightforward: GP seat, committed LP capital behind it, 70% promote on profits above the preferred return.

What the promote is not

It is not a fee. Fees get paid whether the deal works or not. A promote pays nothing unless the LP has been made whole plus the preferred return. If the deal exits flat, the GP works for free — which is the point of the structure.

It is also not a guarantee of control. Most JV agreements give the LP some form of approval over budget, sale price, or major decisions. Read those provisions carefully. A GP with a 70% promote and no authority to close a sale on schedule is a caretaker, not a partner.

The four questions to ask before signing

1. What is the preferred return, and is it cumulative? A 10% non-cumulative pref and a 10% compounding cumulative pref are different deals.
2. What is the promote measured against — profit or distributable cash? Profit is calculated at the end. Cash is calculated every distribution.
3. Who controls a sale, and at what price? Get the exact threshold in writing.
4. What happens if the entitlement fails? Who funds the shortfall, who decides to sell at a loss, and how is the loss split.

How this shows up in the real world

On land deals, the capital partner usually wants a dated plan: this rezoning filed by this quarter, this utility agreement by this one, exit by this date. A GP who can present that calendar — and has closed deals on similar calendars before — negotiates a better promote than one who presents a rendering.

If you are new to land and thinking about a JV, start by learning what the GP actually does day to day. The promote is compensation for that work. Understand the work, and the number stops looking arbitrary.