what is the typical loan guarantor fee for a partner in a syndication purchase of a commercial property?

Deal is financed with a $3.7 Recourse loan. One owner in the syndication of 15 is willing to personally guarantee the loan, making the loan "non recourse" to the other members in the syndication. What is the typical fee(% of loan balance) to pay each year to this individual as a Guarantor Fee?
In Buying Property - Asked by Bill w. - Apr 16, 2012
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Ron H.
Jupiter, FL

Would need more info to say. The first question is why have the other 14 owners if one is kissing the paper? How much cash is being put up? What are returns from day one if any and what is REASONABLY PROJECTED?

Apr 19, 2012
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Matthew U.
Redondo Beach, CA

First off I am not sure if I am understanding your question. Let me see if I can clear this up a little bit. What you are calling a Guarantor Fee, sounds more like a preferred return. Would such a preferred return be actually paid every year or does it accrue and is paid out of the funds at the end? Also, what other items of control or managment fall on the shoulders of the personal guarantor? Does the personal guarantor also have the largest interest in the syndication? What rights do they have in the decision making? I would assume that the fee is a unique blend between money paid, money accrued and paid at the end, and management rights. If it is hard to come to agreement on one, try to give away something on the other side. For example, if the fee is too high, trade a portion of the fee in exchange for greater rights. Or trade a portion of the fee to be paid each year for a preferred return at the completion of the syndication. Each of these issues has a unique blend of characteristics for which you should consider the positives and negative effects to each party. Good luck this is a complicated one.
Note, the poster of this answer is a trained accountant with experience in contract law and Alumni of the "Big 4 Accounting Firm," Ernst & Young.

Jun 1, 2012
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Matt C.
Newport Beach, CA

I have seen guarantor fees range from a little as 1/2% to 2%, with the average fee being 1% per year of the outstanding balance.

Jun 16, 2015
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