Partnerships have always played an important role in real estate development, as in most cases small- and medium-sized developers do not have the necessary human resources and competencies in-house. Furthermore, due to the New Basel Capital Accord (Basel II), equity represents the scarce resource for these developers more than ever. It can be assumed, that the prove of creditworthiness and the acquisition of equity will become the main critical factors for developers within the next years. In order to overcome these fundamental problems, real estate developers frequently form strategic alliances with external investors on company- or projectlevel. Both alternatives bare advantages and disadvantages for the developer. However, only few research exists on the question, which alternative under certain circumstances turns out to be preferable. The paper critically analyses and compares the different alternatives from a developer's point of view. The analysis will presumably be based on transaction cost theory.