All Forum Posts by: Vijay Kurhade

Which all key figures help developers decide on negotiating terms of JV for development(build and sell).

Deal here with one of Landlord is, 52k sq ft plot, Multi Use development possible (Ground + 1 floor parking, 4 floors of commercial space, 14 floors of residential apartments).

Owner is not ready to give up on 55 - 45% JV model (55% for Developer, 45% for Land owner + 1.2 mn USD cash).

Where as out of 4 prospective Developers, no one is ready to be beyond 34%. Its been more than 4 months and its like Who blinks first and no one is ready to give up their stand.

Trying to understand

Which all numbers or metrics help Developers decide on JV terms as well How do Land owners come up with their terms for better ROI.

Which are all the different applicable formulas one needs to learn and ace for real estate investment valuation/financial modeling.

Thanking in advance.

Most RE project finance is either Equity(shares and shareholder loans), Debt or Hybrid(mezzanine finance,  preferred equity).

Suppose a multifamily township development project has LVR or LTV of 60%, 60% debt capital can be raised, how should one model remaining 40% finance such that highest developers margin can be achieved after all the payoffs.

Thanking in advance

Are there any thumb rules or proven industry guidelines on when Horizontal construction makes more sense in terms of returns, branding and when Vertical one does in residential and commercial type of work?

From a real estate developer as well investors point of view, which area ratios or metrics are of importance to judge Marketability as well Salability of a project both in Residential as well Commercial types.

At project conceptualization stage How do Developers decide on Pricing, Financing, Branding strategy?

Does it happen mostly with internal decision making level senior executives Or external consultants like Finance Experts, Valuers, Brokers and Market Trend services data are referred as well consulted?

Hypothetical case,

One of your trusted high value Property Developer client has approached you with planned and approved site plan for prime location project for valuation which will be used for various Financing considerations.

Or

You are an expert valuer with a leading Housing Finance Institute where you are assigned a long term clients planned and approved construction site details.

Submitted Plan allows 100,000 sq feet construction to Developer; but you too have acquired planning expertise over years of experience, and you figure out in reality client can construct 116,000 sq ft.

Will you highlight it to your Client in your valuation report or otherwise?

If yes what will be their Reaction and Action followed?

If No why?

Majority of real estate developers use external funds be it equity/debt as high as 70-90% of total project cost in some cases, even though industry has various risks be it inflation, market conditions, finance, sensitivity but then there are many experts and technological tools, advancements to guide through various stages of project from inception-design-planning to execution and conclusion;

Despite of all this, we keep reading about many developers fail to generate promised returns to lenders, few cases matters even become very sour to litigation, in turn making real estate investing as risky as it was decades ago.

If business uses outside funds which is more available than earlier, what could be top reasons fair amount of projects fail to generate accepted returns(very common in developing countries).

Thanks in advance.

First of all, Wishing every one Merry Xmas and Happy Safe Holidays!

For development project pro-forma of any type residential/commercial/industrial/...., is market trend data referred for financials both cost and earnings, project duration by feasibility experts team; or it is industry experience of Developer who provide this data.

What is industry practice? use market trend data or developers use their own data from experience?

thanks in advance