What legal structure works best for industrial JVs in Canada?

Limited liability companies are the preferred structure for industrial real estate joint ventures in 2026 because they provide liability protection and tax flow-through without corporate-level taxation. Limited partnerships are also used when capital partners need to be passive investors.

What is a waterfall distribution in a real estate JV?

A waterfall distribution is the sequence in which cash flows are allocated among partners. It typically runs: return of capital, preferred return of 6 to 10 percent, a general partner catch-up, and then a final profit split such as 80/20 or 70/30 between capital partner and sponsor.

How do partners exit an industrial real estate joint venture?

Partners exit through a buy-sell clause, a right of first refusal, a full asset sale, or a buyout. Rights of first refusal should provide 30 to 60 days for the remaining partner to arrange financing. All exit mechanisms should be defined in the original JV agreement with clear valuation methodology.

What are the most common reasons GTA industrial JVs fail?

Most joint ventures fail due to vague governance provisions, misaligned expectations on hold period or capital contributions, and inadequate dispute resolution mechanisms. Non-cash valuation disputes and personal guarantee conflicts are also frequent sources of partnership breakdown.

Do lenders require personal guarantees in industrial JV financing?

Yes. Canadian lenders frequently require joint and several liability and personal guarantees from all principals in an industrial JV. Partners should negotiate compensation for carrying greater credit exposure, and the JV agreement should clearly address guarantee obligations and the conditions for their release.

May 16, 2026

How to structure joint ventures in industrial real estate

By Michael Law · Industrial Real Estate Broker, Lennard Commercial Realty

Unlock the secrets of how to structure joint ventures in industrial real estate. Navigate risks and maximize profits with our comprehensive guide.

About Michael Law

Managing Partner and Industrial Real Estate Broker at Lennard Commercial Realty. Representing tenants and landlords across Toronto and the GTA for 15+ years.

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How to structure joint ventures in industrial real estate

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