The 2nd Stage of Development Management
What is involved in the De-Risk phase? Quite a bit actually and can vary from project to project. The key is looking at the outcomes you want to achieve and then work back to the things you need to overcome to get there.
Due Diligence
This is a whole training course on its own and can be very bespoke for each project. That’s why it is critical you have a person who understands not only the industry in which you are investing, but also understands the niche market you are investing in. DO NOT cut your Due Diligence short.
Tenure
Understand not only the ownership structures and legal and financial implications of the entity in which you are investing, but understand the current property tenure and ensure you are clear with all relevant approvals required.
Project Specification
Clearly understand the parameters of what the client believes the project will look like. Ensure your Project Specification is completed before your client goes unconditional on the property. It’s too late after to say “I thought you meant…”
Schematic Planning
Schematic planning will help the client understand the limitations and risks of the particular project. It will highlight planning and infrastructure issues.
Financial structural parameters
Have a clear understanding of the financial structure, Principal Debt, Mezzanine Funding and Equity, and the relevant cost of capital.
