Direct answer
Management agreement is the asset-lightest possible coliving operator structure. The operator provides branding, ops, sales, and community management; the owner retains the property and bears operating risk. The operator earns a management fee, typically 4-8% of revenue plus an incentive fee on NOI above a threshold.
This structure suits operators that want pure platform exposure (no property risk) and owners that want professional operations without giving up the asset. It's lower-margin per property than master lease (the operator captures less upside) but allows much faster portfolio expansion.
The fee structure has three common variants. **Pure revenue fee** (4-8% of gross revenue), simple, predictable, but creates moral hazard: the operator gets paid even when they're not running NOI well. **Base + incentive** (3-5% base + 15-25% of NOI above a hurdle, typically 25-35% NOI margin), aligns incentives but requires careful hurdle calibration; too low and the operator captures uneconomic upside, too high and they stop trying. **Pure NOI share** (no base, 20-30% of NOI), strongest alignment but operators rarely accept this for new markets because lease-up months kill their cash flow.
For owners, the critical contract terms are: minimum performance standards (occupancy floor, NPS floor, rent comparables), termination rights (typically 12-month notice or for-cause), capex contribution rules (who funds replacement furniture, FF&E refresh, capex repairs), and IP ownership at exit (does the operator brand stay with the property if the contract terminates, or does it walk?). Standard institutional deals have these in writing; smaller operator partnerships often hand-wave them, and that's where post-launch disputes start.
In the field
OYO Life largely operated on management agreements. Common's institutional partnerships used this structure before its US business collapsed in 2024. The structure is dominant in branded-residential hotel-style coliving (lyf, Adagio).
Common pitfalls
- ×Management fee structures that don't align operator and owner incentives, too much base fee creates passive operators.
- ×Performance hurdles set unrealistically high, operators stop investing in the asset.
- ×Termination rights asymmetric, owners frequently retain unilateral termination, leaving operators exposed.
- ×Confusing management agreement economics with master lease economics in operator track-record reporting.
