FREQUENTLY ASKED QUESTIONS
A Development Manager 'DM' leads the inception, execution & realisation of a real estate development project on behalf of the project's respective sponsor, shareholders (equity investors) and financiers (debt lenders).
A Development Manager may be self-appointed (if he/she is also the principle development sponsor of a project), appointed by a development sponsor or general partner 'GP' of a scheme (often referred to as 'the developer'), or appointed by limited partner 'LP' equity investors and/or the senior debt finance lender of a development scheme.
The DM holds central responsibility for a) overarching financial, legal, shareholder and community governance and representation for the project, b) originating and defining the scope of a development scheme, c) assembling the resources (land/site, project team and capital) to undertake the project, d) directing and managing the design, usage & town planning of the scheme, e) appointing and overseeing sales & leasing agencies, f) procurement, management & administration of construction and specialist FF&E contracts to build the project, and g) commissioning the completed development, and handing over occupation to end purchasers or lease tenants.
For a private client commissioning the new development or major refurbishment/renovation of their home, they may appoint a Development Manager to represent them in taking overarching lead of their project to ensure it is designed, constructed and finished in accordance to their standards.
An Owner's Agent 'OA' or Owner's Representative 'OR', as sometimes referred, is similar to a Development Manager - and it is not uncommon for the titles to be used interchangeably at times - in that they are appointed to take overarching lead of a project for and on behalf of the project's respective owner and/or shareholders.
The distinction however, is that whilst a Development Manager is generally appointed at the inception of a project, or possibly once a development site has been identified, to lead the project through the development cycle to completion, an Owner's Agent or Representative is often appointed at various stages during a project depending on which stakeholder is instigating the appointment. Another distinction is that whilst a DM generally oversees, governs and administers all aspects and stages of a project, an OA may be appointed to represent the project owner and/or shareholders in a specific capacity or only across specific stages of a project.
For example, if the principle sponsor, owner and 'developer' of the project instigates the appointment of an OA or DM, he will customarily do so either after identifying, securing or acquiring a development site, or perhaps during the design or construction procurement stages of a project. If the appointment of an OA is instigated by a joint venture and/or limited partner equity investor in a development scheme, this will likely occur after a site has been acquired or possibly after the scheme's concept design and planning consents have been obtained. And if the appointment is instigated by a development finance lender, then the OA appointment will likely coincide with the advancing of a developments finance (debt) facility, in which case the OA may only be appointed to oversee and monitor the progress, quality, sales/leasing and accounts of a project in collaboration with a pre-appointed Development Manager.
For a private client commissioning the new development or major refurbishment/renovation of their home, and in the same capacity as they would appoint a Development Manager, a private owner may appoint an Owner's Agent to represent them in taking overarching lead of their project to ensure it is designed, constructed and finished in accordance to their standards.
We are well seasoned in all aspects of real estate development, design, planning, financing, construction, sales and leasing. As such we empower our clients with a wealth of experience, expertise and lessons learned as to how to maximise a private home's value upon completion, or Gross Development Value 'GDV' for development schemes, coupled with 'value engineering' design and construction efficiencies that combine to deliver the highest return on capital invested.
Some ways in which we deliver real-term financial value to clients when appointed as their Development Manger 'DM' or Owner's Agent 'OA' include:
- Sourcing, negotiating & structuring of off-market land/site acquisitions;
- Formation and structuring of land, investment & strategic joint venture partnerships;
- Optimising usage and massing opportunities within town planning frameworks;
- Refining architectural design, space planning & interior design composition to maximise finished value;
- Project branding, pricing & market absorption (sales & leasing) strategy & oversight;
- Value engineering architectural, structural & services design for optimal construction time & cost efficiency;
- Value engineering materials, as well as furniture, fixtures, & equipment 'FF&E' specifications;
- Packaging, tendering, negotiating & structuring of construction + FF&E procurement contracts;
- Active assessment of construction methodology options for maximum time & cost efficiency;
- Monitoring and active assessment of construction programming and trade sequencing;
- Cost management across contract progress claims, plus interrogation & validation of contract change orders;
- Utilising technology to enhance collaboration, communications, documentation & project management.
The above list is obviously not exhaustive, and does not include the immeasurable benefit clients yield in the form of reduced opportunity cost in not having to focus large volumes of time and energy away from their primary businesses, jobs, investments, etc. Nor does it account for the value of reduced stress, risk and uncertainty in not having a dedicated DM or AO at your project's helm advocating and protecting your interests through every stage of the project cycle.
By leveraging Keystone as a strategic property development partner and PERE asset manager, investors can effectively create their own PERE investment division for themselves and, if applicable, their LPs. In partnership with Keystone, investors receive a turnkey investment experience, whilst realising the 15%+ IRR yields on capital that we target for every development or repositioning project we originate.
Few private or professional investors, including asset managers, have specialist investment management capability in real estate development or repositioning. And understandably so, for property development, and in-turn Private Equity Real Estate 'PERE' investment origination, assembly and execution is a specialist discipline with a steep learning curve.
Furthermore, as real estate is typically driven by micro-market dynamics (supply/demand, employment, schooling, transport links, lifestyle amenities, etc.) that are relatively uncorrelated to other asset classes or investment markets, which offers a unique opportunity to originate investments that can predictably deliver above average risk-adjusted returns. To us, allocating investment to PERE has a sound place in the capital growth segment of any well rounded investment portfolio.
Investing in unique, non-correlated, and risk-mitigated PERE investments in partnership with Keystone offers a valuable compliment to the common investment allocation strategy of focussing only on passive low yield broad market investments, such as allocating to fund managers and hedge funds that focus on either a) speculative listed equities trading across publicly listed company exchanges, b) passive income generating investments in corporate or government bonds, c) private equity strategies across corporate mergers & acquisitions or management & leveraged buyouts (MBOs/LBOs), or d) alternative investments into opportunistic lending funds, renewable energies, commercial real estate investment trusts (REITs), and e) speculative venture capital investments.
If you are a private HNW or sophisticated investor who has interest to partner with us in developing properties then we would love to connect with you.
As client side Owner's Agents & Development Managers, we provide private home owners a way to enjoy the design and development process of their home; whilst importantly, confidently claiming their role in the project leadership team and ensuring they are actively represented in the management of their project.
For private clients looking to renovate their existing home or have a new home designed and built, it is important to understand that the three most important roles on any significant development or construction project are 1) the architect (as the architectural design not only shapes the 'look and feel' of a home, it also guides the structural, services and landscape design elements, as well as overall construction cost of a project); 2) the project manager of the main building contractors (being responsible for coordinating day-to-day technical construction of the project); and 3) the owner of the project (being responsible for directing and managing the overall design, finances & construction of their project, as well as ensuring that the project team are being utilised to maximum potential in delivering their new home on time, budget and to the quality standards required).
However, more often than not, the owner, understandably, lacks experience, confidence, awareness, and or inclination to take up their role, despite being bing arguably the most important member of the project team. Instead, abdicating the role and leaving the project to function with only the architect and construction contractor steering the ship.
The consequences of this, invariably result in design inefficiencies, increased construction costs, conflicts of interest between the architect and builder in delivering the best outcomes according to the client's interests, and even delays due to complacency or leniencies with regard to scheduling conflicts between other projects that the architect and builder may be working on together.
Bottom line is that if the owner of a project is not actively leading their project and team then the risk of adverse consequences across cost, time and quality increase.
Just as the shareholder (ie. owner's) board of a company know that a strong CEO is imperative to realising the full potential of the product design, manufacturing, sales & marketing and administrative teams of a business, so to do shrewd project owners recognise the value in installing an Owner's Agent, or 'project CEO' if you will, to realise the full potential of their new home.
By appointing Keystone as a private development manager or owner's agent to solely represent you, as the risk bearing owner of the project, your best interests are represented and protected at the helm of your project. As your representative charged with overarching project command on your behalf, we answer only to you, and set about managing your project and project team in a manner that allows for zero conflict of interest, whilst maximising collaborative efficiencies across the project team, who are left to focus on the aspects of the project they most enjoy; namely, designers are focussed on design, and builders are focused on building. A win, win win all round!
Whilst architects and professional construction contractors are experts in their respective technical fields, there is inherent conflict of interest and management risk if either, or both, are left to take overall responsibility for a project. Whereas an independent development manager or owner's agent is wholly aligned to you, the project owner, and holds overarching management authority across the entire project.
Architects are most productive, responsive and valuable when focussed on designing a project. This is what they do best and enjoy most; and as many would openly admit, managing, monitoring and administering the planning, construction and financial aspects of a project are at best a necessary evil, and at worst an unwelcome responsibility if placed on their shoulders. Furthermore, some architects have been known to take creative and commercial liberties if left to lead a project; insisting on 'creating' their 'vision', irrespective of whether this may not be in the client's best interests from either a design or financial standpoint. And finally, many architects have close commercial relationships with their preferred panel of builders, often collaborating on multiple projects together. This close-knit relationship may of course have workflow and communication benefits; however, such relationships also present a conflict of interest; and thus risk to the project owner, should either party acts in a manner that is not in the clients best interests (across time delay, compromised design, quality of materials and/or workmanship, or unchecked additional costs, etc.). Under such arrangements, builders have been known to take advantage of a client unchecked because of the leverage they hold over an architect who is dependent on them for multiple projects; and vis a versa, architects have been known to take advantage of a client unchecked because of the leverage they hold over a builder that is dependent on them for multiple projects.
With Keystone appointed as your Development Manager or Owner's Agent opening for conflicts of interest are closed, and collaborating project team members are prevented from taking liberties at the owner's expense.
Importantly, it cannot be stressed enough that for any project, when it comes to our development management or owner's agency fees, we strive to deliver our clients a measurable return on investment that is over and above the value of our service fees. We aim to deliver increased project value and efficiencies that not only offset the entire cost of our services, but result in our clients effectively be paid to engage us.
The cost to appoint Keystone as your Development Manager 'DM' or Owner's Agent 'OA' will be based upon the scale and complexity of your specific project. However, as a general guide 1-4% of the project cost will be an adequate budget, with smaller scale projects learning toward the higher end of the % scale and larger projects the lower end.
And further to the measurable financial returns we deliver, it is important to consider the intangible value we provide across the time, energy, stress and opportunity cost savings our clients enjoy by appointing Keystone to take command of their project on their behalf.
With a responsive service model Keystone flexibly allows professional developers (small, medium & large) to utilise and leverage our capabilities to deliver value to their specific business model and projects. Thus, whatever the scale, use-class focus or structure of developer, Keystone can support professional development businesses and their respective projects across the development cycle of project assembly, design & planning, capitalisation, construction, and realisation.
The scale, structure and experience of professional real estate developers varies greatly; from the lone wolf single project to project residential developer, to the corporate development enterprise undertaking multiple mixed-use schemes concurrently. There is no fixed model or structure when it comes to property development.
Hence, we are equally at home providing portfolio oversight services as the trusted independent eyes and ears of a larger multi-site developer; or augmenting the internal development management and or capital raising capabilities of a growing medium size residential developer; or partnering in joint venture with a smaller or newly formed developer to co-develop projects from inception to realisation.
DEVELOPERS
DEVELOPMENT MANAGEMENT
For developers of residential, commercial, hotel or mixed-use projects, we act as Development Managers & Developer’s Agents to oversee the assembly, execution & realisation of development projects.
INVSTORS
INVESTMENT MANAGEMENT
On an aligned joint venture basis we partner with private, family office & institutional investors with £5M+ of investable equity to undertake PERE projects targeting 15%+ IRR yields on capital.
LAND OWNERS
JV DEVELOPMENT
We partner with private & institutional land owners in joint venture partnership to realise the potential of strategic land holdings through the development of residential and commercial real estate schemes.