Real Estate Development Management Firm

Real Estate Development Management Firm

Situation:

The company had over a decade of experience organizing one-off multifamily residential development projects in several markets in the southwest region of the U.S. The firm specialized in site selection, entitlements, feasibility, finance, and oversight of out-of-house construction and property management. Project financing was achieved with “friends and family” equity investors and conventional bank debt that required personal guarantees.

The firm had identified a market niche that was not currently being served by traditional product offerings and wanted to build the capability to test, evaluate and subsequently execute the development of a large volume of projects in multiple markets throughout the Sunbelt region.

Business Challenge:

  • Perform and analyze the necessary product, cost and market research to validate the potential and general feasibility of the new product offering.
  • Develop one or more test projects and evaluate the performance of the test projects through a well-designed series of performance metrics.
  • Develop operational and organizational models that optimize economic potential.
  • Develop a strong product brand and marketing communications plan to promote the product to all appropriate industry partners and consumers.
  • Establish a governance structure and board of directors comprised of deeply experienced professionals in all aspects of this growth enterprise.
  • Identify the key leadership and staffing needs of the enterprise and select, motivate and compensate them appropriately.
  • Organize the necessary financial partners and lenders to enable the firm to achieve a large and rapid scale-up and project roll out program.
  • Institute a continuous monitoring and review process of the product, quality control, customer service, brand integrity and economic performance.

Solution:

The company was reorganized and structured around a region-wide, highly repetitive business execution strategy based upon consumers’ reactions to the test projects and product offering.  Given the “first mover advantage” the company discovered itself to possess, greater emphasis was placed on scaling up operations and brand development.

Over a one-year period, a highly skilled and experienced management team was assembled to guide and oversee all operations and report to the board of directors.

Results:

Over an 18-month period, the firm developed 11 projects in multiple regional markets that achieved a gross IRR in excess of 50% and established a pipeline of future projects for forward delivery of 12-18 new projects per year in multiple markets.

Additionally, it laid the foundation to open future markets and identified key management personnel in each growth market to ensure strong local management control. It also established a network of large-scale private and institutional financial partners to fund equity and debt.