A guarantor supports specified obligations; a co-GP shares a partnership role. Compare liability, capital contribution, control and economic participation.
By H Equities. Numerical examples and rate ranges are educational illustrations, not current financing quotes.
Reference: OCC Commercial Real Estate Lending handbook. Actual rights and obligations depend on the transaction documents.
Quick Comparison
Key attributes side by side.
| Attribute | Recourse Guarantor | Co-GP Partner |
|---|---|---|
| Primary role | Supports defined guaranteed obligations | Participates at the general partner level |
| Economics | Determined by a separate agreement, if any | Negotiated ownership, fees, returns or promote |
| Exposure | Scope and triggers of the guarantee | Capital and partnership obligations plus any separate guarantees |
In Depth
A guarantee can cover repayment, completion, carry or specific conduct, depending on the documents. Understand caps, triggers, duration, release conditions and contribution rights among guarantors.
A guarantor does not automatically receive equity ownership or operating authority. Compensation and decision rights require their own agreement.
In Depth
A co-GP arrangement can combine sponsor execution with another partner’s capital and expertise. It requires agreement on contributions, major decisions, reporting, distributions, default and exit.
Being a co-GP does not automatically make a party the guarantor, nor does it automatically satisfy lender requirements. Guarantees must be separately addressed.
Key Differences
Primary role: Supports defined guaranteed obligations; compared with participates at the general partner level.
Economics: Determined by a separate agreement, if any; compared with negotiated ownership, fees, returns or promote.
Exposure: Scope and triggers of the guarantee; compared with capital and partnership obligations plus any separate guarantees.
Decision Guide
Practical scenarios to help you decide.
Going deeper
Create separate schedules for equity contributions, future capital calls, repayment guarantees, completion support and conduct-related liabilities. Identify caps, triggers and release conditions for each. A single label such as partner can conceal materially different obligations.
Discuss who approves budgets, new debt, property sales, material leases and changes to the business plan. A party facing contingent liability may need information and consent rights that a passive investor does not have. Document those rights rather than relying on a title.
Consider transfer, replacement, deadlock and default provisions before one party needs to leave. A sale of a partnership interest does not necessarily release an existing guarantee. Confirm the lender and partnership approvals required for a replacement sponsor or guarantor.
A $2 million co-GP contribution and a $2 million guarantee are not interchangeable. The first is cash invested under a partnership agreement; the second can be a contingent obligation without cash at closing. Whether either satisfies a lender’s requirement depends on that lender’s documents.
All figures in this example are illustrative. They are not a quote, investment return forecast or statement of H Equities terms.
Our Role
H Equities evaluates senior bridge loans, structured capital and equity opportunities. Share the property, existing capital, requested role and timing. Product availability, economics and approval depend on a transaction-specific review.
FAQ
Do not assume that a co-GP proposal includes any guarantee. H Equities publishes a $1 million to $4 million co-GP range, while contributions, governance, economics and any guarantee obligations require a transaction-specific discussion.
Compare net proceeds, total costs, current cash obligations, control rights, downside exposure and the exit. Identify all required approvals and distinguish an indicative proposal from a binding funding commitment.
Related
Tell us about your transaction and we'll help you identify the right financing structure: bridge, mezzanine, preferred equity, or co-GP.