Expert: Terrence Cullen - 8/20/2008

Question
I am developing a 500,000 sf power and entertainment center in Los Angeles. I am looking at providing a management fee against my gross income.  What is the usual % for centers of this size that would be accepetd by the lending industry.

Answer
Usually management contracts for commercial deals range anywhere from 2% to 6% with the median number the most prevalent. I have done deals as low as 2.5 and as high as 6.
 The size of the property would most likely dictate the low end of the spectrum but a current contract and comparables would be necessary for their underwriters.
  Keep in mind that underwriting is very conservative in this economic environment and lenders will err to caution on all line items.  
  Have you identified a lender? Let me know if I can be of any more service.

  When you put your proforma together, I would gladly look it over. I have some sources for financing if you need them.