Introduction of Company
Sustainable Estates is a small development and investment company that has created a range of refurbishment and new build mixed use schemes. Our company is flexible joint venture that can partner with a big investment or share equity on a project.
Explain the difference between type of finance a do joint venture work
There are several options in this development; which are as follows:
Equity finance is where a third party invests and take a return based on the profit of the scheme(source).
Debt finance is essentially borrowing from bank through the development period (short term loan), sell it off to a bigger company that may be willing to add the development to their portfolio, pay the loan and realised the profit or re-finance after the development using the development capital value as security for mortgage from the bank.
Joint venture is the process of bringing parties together with different interests in order to complete project.
After explaining the following method of funding, choose the best method to use in this development, explain and recommend? A case study in England will be good to support my recommendation.
The best option will be a joint venture with some big property investors to develop and then sell it in return for profit.
Conclusions and recommendations
Is there a viable scheme here which provides the two principle stakeholders: the developer
(Your employer) and the land-owner with a sufficient incentive? Are there any risks to consider such as what would happen if the market derived (and therefore uncontrollable) variables: the rental value and/or the yield changed slightly… would that temper the maximum bid which could prudently be made to acquire Plot T3 and what then would that figure be?