LLP SPV vs. Fractional Ownership
A neutral, balanced comparison of two popular structures for co-investing in Indian real estate. Understanding the differences is key to making informed decisions.
| Feature | LLP Special Purpose Vehicle (SPV) | Fractional Ownership |
|---|---|---|
| Legal Structure | Investors become partners in a Limited Liability Partnership (LLP). The LLP, a separate legal entity, owns the property. | Investors acquire a direct, registered fractional share in the title of the physical property, becoming co-owners. |
| Asset Ownership | The LLP owns the asset. Partners own an economic interest in the LLP, not the underlying property. | Each investor is a direct part-owner of the property, with their name on the sale deed or equivalent. |
| Risk Segregation | Excellent. Risk is ring-fenced to the single asset within the SPV. Issues in one LLP do not affect others. | Can be complex. While the asset is singular, the liabilities of multiple co-owners can create complications if not managed by a robust legal framework. |
| Governance & Control | Centralized management by a Designated Partner (the Sponsor) as defined in the LLP Agreement. Capital partners have specific voting rights on major decisions. | Typically managed by a platform or a management company. Individual investor control is minimal; decisions are made collectively based on a co-ownership agreement. |
| Investor Liability | Limited to the amount of agreed capital contribution, protecting personal assets. | Can be more complex. As a direct property owner, liability might extend beyond the initial investment unless a specific structure limits it. |
| Liquidity & Transferability | Highly illiquid. Transfer of partnership interest is heavily restricted by the LLP Agreement and requires sponsor consent. | Varies. Some platforms offer a secondary market for selling shares, potentially offering higher (but not guaranteed) liquidity than an LLP. |
| Taxation (High Level) | LLP is a "pass-through" entity for tax purposes. Profits are taxed at the LLP level, and distributions are typically tax-free in the hands of partners. | Income (rent) and capital gains are taxed directly in the hands of each co-owner according to their individual tax status. |
| Ideal For | Active, value-add, or development projects where a Sponsor's expertise is critical (e.g., land aggregation, pre-development, opportunistic deals). | Passive investment in stable, income-generating assets like pre-leased commercial offices or warehouses where management is standardized. |
The LLP structure is fundamentally a partnership model where you co-invest with and rely on a Sponsor to execute a business plan. It's best for projects needing active management or development.
Summary: Suitable for investors prioritizing access to sponsor-led, value-add projects and who are comfortable with active management and illiquidity.
Fractional ownership is a direct ownership model where you buy a slice of a stable, income-producing asset. The focus is on passively collecting your share of the rent.
Summary: Suitable for investors prioritizing passive income from stable assets and who value simplicity and the potential for higher liquidity.
Learn About Our Approach
Blackwall Assets exclusively uses a sponsor-led, LLP SPV structure for its projects. Explore our strategies to understand why this model fits our investment thesis.
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