Partnering and joint ventures for construction - Revision history

Designing Buildings at 13:42, 6 October 2020

2020-10-06T13:42:07Z

← Older revision		Revision as of 13:42, 6 October 2020
Line 62:		Line 62:
	* Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.		* Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.

−	[[Category:Cost_/_business_planning]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Cost_/_business_planning]]

Editor at 15:25, 9 April 2019

2019-04-09T15:25:36Z

← Older revision		Revision as of 15:25, 9 April 2019
Line 43:		Line 43:
	There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.		There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Consortium.		* Consortium.
Line 53:		Line 51:
	* Overage.		* Overage.
	* Partnering.		* Partnering.
		+	* Partnering charter.
	* PPC 2000.		* PPC 2000.
	* Procurement.		* Procurement.
Line 59:		Line 58:
	* Types of construction organisation.		* Types of construction organisation.

−	=== External links ===	+	= External links =

	* Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.		* Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.

	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]

Editor at 11:58, 19 April 2017

2017-04-19T11:58:18Z

← Older revision		Revision as of 11:58, 19 April 2017
Line 50:		Line 50:
	* Funding options.		* Funding options.
	* Joint venture.		* Joint venture.
		+	* Leaseback.
	* Overage.		* Overage.
	* Partnering.		* Partnering.

Designing Buildings at 10:04, 27 December 2016

2016-12-27T10:04:55Z

← Older revision		Revision as of 10:04, 27 December 2016
Line 1:		Line 1:
−
	Partnering is a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.		Partnering is a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.

−	= ~~'''~~Local authorities~~'''~~ =	+	= Local authorities =

	Local authorities, often the site owner, can enter into partnership arrangements in an effort to regenerate areas or encourage development of difficult sites. Such arrangements give more control to an authority than can be exercised through the planning system. Successfully implemented, such joint ventures can produce unfettered revenue streams that can be used by the authorities for whatever projects they are promoting.		Local authorities, often the site owner, can enter into partnership arrangements in an effort to regenerate areas or encourage development of difficult sites. Such arrangements give more control to an authority than can be exercised through the planning system. Successfully implemented, such joint ventures can produce unfettered revenue streams that can be used by the authorities for whatever projects they are promoting.
Line 12:		Line 11:
	In order to remove letting risk from a project a local authority may enter into a sale and leaseback agreement with a funding organisation and developer guaranteeing rent and so giving certainty about revenues. This is attractive to funding institutions providing the capital for building the development. Generally the local authority is given a 25 year lease with provisions allowing them control over operational sub leases for letting space in a manner that meets its political and economic objectives.		In order to remove letting risk from a project a local authority may enter into a sale and leaseback agreement with a funding organisation and developer guaranteeing rent and so giving certainty about revenues. This is attractive to funding institutions providing the capital for building the development. Generally the local authority is given a 25 year lease with provisions allowing them control over operational sub leases for letting space in a manner that meets its political and economic objectives.

−	= ~~'''~~Ground rents~~'''~~ =	+	= Ground rents =

	Ground rents are usually generated when landowners wish to retain the freehold ownership of a site and retain a share in future financial growth of the developed site. Long leases of as much as 125 years are usually negotiated throughout which a landowner and its successors will be entitled an annual ground rent. Such arrangements allow the landowner a measure of control as to how the site is to be developed.		Ground rents are usually generated when landowners wish to retain the freehold ownership of a site and retain a share in future financial growth of the developed site. Long leases of as much as 125 years are usually negotiated throughout which a landowner and its successors will be entitled an annual ground rent. Such arrangements allow the landowner a measure of control as to how the site is to be developed.
Line 18:		Line 17:
	Ground rents can be calculated by taking the residual value of land as a percentage proportion of development costs (including finance and profit) and applying the percentage to a share of the annual revenue proceeds. In future rent reviews the percentage of the ground rent share remains the same. Thus a landlord shares any rental growth.		Ground rents can be calculated by taking the residual value of land as a percentage proportion of development costs (including finance and profit) and applying the percentage to a share of the annual revenue proceeds. In future rent reviews the percentage of the ground rent share remains the same. Thus a landlord shares any rental growth.

−	= ~~'''~~Equity partnerships~~'''~~ =	+	= Equity partnerships =

	There are many ways of allocating the returns of a development among participants, reflecting levels of risk and reward. Overage agreements offer a land vendor on housing developments a share in any additional sales revenue beyond a base figure at a time when densities and planning outcomes are uncertain.		There are many ways of allocating the returns of a development among participants, reflecting levels of risk and reward. Overage agreements offer a land vendor on housing developments a share in any additional sales revenue beyond a base figure at a time when densities and planning outcomes are uncertain.

	However, most equity partnerships are governed by slicing arrangements. Examples include:		However, most equity partnerships are governed by slicing arrangements. Examples include:
−	*A four slice of income approach, which involves three equity partners:	+
−	#A first charge as ground rent (landlord).	+	* A four slice of income approach, which involves three equity partners:
−	#The second charge on development cost (funding institution and developer with the funding organisation having first call on development costs).	+
−	#The third charge on development profit (developer).	+	# A first charge as ground rent (landlord).
−	#The fourth charge as a three way split of any additional profit.	+	# The second charge on development cost (funding institution and developer with the funding organisation having first call on development costs).
−	*A three slice of income approach might be employed when the funding institution is not an equity partner but is lending funds on a loan draw down agreement.	+	# The third charge on development profit (developer).
−	#The first charge as ground rent (landlord).	+	# The fourth charge as a three way split of any additional profit.
−	#The second charge on development costs including anticipated profit (developer).	+
−	#The third as a two way split on additional profit.	+	* A three slice of income approach might be employed when the funding institution is not an equity partner but is lending funds on a loan draw down agreement.
−	*A two way slice of income approach might be used when a local authority or landlord carries the major portion of development risk.	+
−	#The first charge on development costs and profit (landlord with incentive fee to developer project manager).	+	# The first charge as ground rent (landlord).
−	#The second charge two ways split incentive arrangement.	+	# The second charge on development costs including anticipated profit (developer).
		+	# The third as a two way split on additional profit.
		+
		+	* A two way slice of income approach might be used when a local authority or landlord carries the major portion of development risk.
		+
		+	# The first charge on development costs and profit (landlord with incentive fee to developer project manager).
		+	# The second charge two ways split incentive arrangement.

	There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.		There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.
Line 41:		Line 46:

	=== Related articles on Designing Buildings Wiki ===		=== Related articles on Designing Buildings Wiki ===
−	*Funding options.	+
−	*Joint venture.	+	* Consortium.
−	*Overage.	+	* Funding options.
−	*Partnering.	+	* Joint venture.
−	*PPC 2000.	+	* Overage.
−	*Procurement.	+	* Partnering.
−	*Property development finance.	+	* PPC 2000.
−	*Special purpose vehicles.	+	* Procurement.
−	*Types of construction organisation.	+	* Property development finance.
		+	* Special purpose vehicles.
		+	* Types of construction organisation.

	=== External links ===		=== External links ===
−	*Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.	+
		+	* Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.

	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]

Designing Buildings at 10:14, 20 March 2015

2015-03-20T10:14:45Z

← Older revision		Revision as of 10:14, 20 March 2015
Line 45:		Line 45:
	*Overage.		*Overage.
	*Partnering.		*Partnering.
		+	*PPC 2000.
	*Procurement.		*Procurement.
	*Property development finance.		*Property development finance.

Designing Buildings at 08:15, 19 August 2014

2014-08-19T08:15:39Z

← Older revision		Revision as of 08:15, 19 August 2014
Line 42:		Line 42:
	=== Related articles on Designing Buildings Wiki ===		=== Related articles on Designing Buildings Wiki ===
	*Funding options.		*Funding options.
−	*Joint venture.	+	*Joint venture.
		+	*Overage.
	*Partnering.		*Partnering.
	*Procurement.		*Procurement.
Line 53:		Line 54:

	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]
−	~~[[Category:Cost_/_business_planning]]~~
−	~~[[Category:Contracts_/_payment_/_payment]]~~

Designing Buildings: moved Partnering and joint ventures to Partnering and joint ventures for construction

2014-04-04T07:09:14Z

moved Partnering and joint ventures to Partnering and joint ventures for construction

← Older revision

Revision as of 07:09, 4 April 2014

Designing Buildings at 09:13, 2 April 2014

2014-04-02T09:13:30Z

← Older revision		Revision as of 09:13, 2 April 2014
Line 40:		Line 40:
	= Find out more =		= Find out more =

−	Related articles on Designing Buildings Wiki	+	=== Related articles on Designing Buildings Wiki ===
	*Funding options.		*Funding options.
		+	*Joint venture.
	*Partnering.		*Partnering.
	*Procurement.		*Procurement.
	*Property development finance.		*Property development finance.
−	*~~Joint venture~~.	+	*Special purpose vehicles.
		+	*Types of construction organisation.

−	External links	+	=== External links ===
	*Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.		*Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.

Designing Buildings at 08:22, 8 October 2013

2013-10-08T08:22:08Z

← Older revision		Revision as of 08:22, 8 October 2013
Line 1:		Line 1:

−	~~Partnerships are~~ a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.	+	Partnering is a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.

	= '''Local authorities''' =		= '''Local authorities''' =
Line 45:		Line 45:
	*Procurement.		*Procurement.
	*Property development finance.		*Property development finance.
		+	*Joint venture.

	External links		External links

Designing Buildings at 11:20, 25 November 2012

2012-11-25T11:20:22Z

← Older revision		Revision as of 11:20, 25 November 2012
Line 1:		Line 1:
		+
	Partnerships are a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.		Partnerships are a way of sharing risk and reward. This often involves the concept of ground rents in recognition of a landowner’s contribution to the final development value.

−	'''Local authorities'''	+	= '''Local authorities''' =

	Local authorities, often the site owner, can enter into partnership arrangements in an effort to regenerate areas or encourage development of difficult sites. Such arrangements give more control to an authority than can be exercised through the planning system. Successfully implemented, such joint ventures can produce unfettered revenue streams that can be used by the authorities for whatever projects they are promoting.		Local authorities, often the site owner, can enter into partnership arrangements in an effort to regenerate areas or encourage development of difficult sites. Such arrangements give more control to an authority than can be exercised through the planning system. Successfully implemented, such joint ventures can produce unfettered revenue streams that can be used by the authorities for whatever projects they are promoting.
Line 11:		Line 12:
	In order to remove letting risk from a project a local authority may enter into a sale and leaseback agreement with a funding organisation and developer guaranteeing rent and so giving certainty about revenues. This is attractive to funding institutions providing the capital for building the development. Generally the local authority is given a 25 year lease with provisions allowing them control over operational sub leases for letting space in a manner that meets its political and economic objectives.		In order to remove letting risk from a project a local authority may enter into a sale and leaseback agreement with a funding organisation and developer guaranteeing rent and so giving certainty about revenues. This is attractive to funding institutions providing the capital for building the development. Generally the local authority is given a 25 year lease with provisions allowing them control over operational sub leases for letting space in a manner that meets its political and economic objectives.

−	'''Ground rents'''	+	= '''Ground rents''' =

	Ground rents are usually generated when landowners wish to retain the freehold ownership of a site and retain a share in future financial growth of the developed site. Long leases of as much as 125 years are usually negotiated throughout which a landowner and its successors will be entitled an annual ground rent. Such arrangements allow the landowner a measure of control as to how the site is to be developed.		Ground rents are usually generated when landowners wish to retain the freehold ownership of a site and retain a share in future financial growth of the developed site. Long leases of as much as 125 years are usually negotiated throughout which a landowner and its successors will be entitled an annual ground rent. Such arrangements allow the landowner a measure of control as to how the site is to be developed.
Line 17:		Line 18:
	Ground rents can be calculated by taking the residual value of land as a percentage proportion of development costs (including finance and profit) and applying the percentage to a share of the annual revenue proceeds. In future rent reviews the percentage of the ground rent share remains the same. Thus a landlord shares any rental growth.		Ground rents can be calculated by taking the residual value of land as a percentage proportion of development costs (including finance and profit) and applying the percentage to a share of the annual revenue proceeds. In future rent reviews the percentage of the ground rent share remains the same. Thus a landlord shares any rental growth.

−	'''Equity partnerships'''	+	= '''Equity partnerships''' =

	There are many ways of allocating the returns of a development among participants, reflecting levels of risk and reward. Overage agreements offer a land vendor on housing developments a share in any additional sales revenue beyond a base figure at a time when densities and planning outcomes are uncertain.		There are many ways of allocating the returns of a development among participants, reflecting levels of risk and reward. Overage agreements offer a land vendor on housing developments a share in any additional sales revenue beyond a base figure at a time when densities and planning outcomes are uncertain.

	However, most equity partnerships are governed by slicing arrangements. Examples include:		However, most equity partnerships are governed by slicing arrangements. Examples include:
−
	*A four slice of income approach, which involves three equity partners:		*A four slice of income approach, which involves three equity partners:
−
	#A first charge as ground rent (landlord).		#A first charge as ground rent (landlord).
	#The second charge on development cost (funding institution and developer with the funding organisation having first call on development costs).		#The second charge on development cost (funding institution and developer with the funding organisation having first call on development costs).
	#The third charge on development profit (developer).		#The third charge on development profit (developer).
	#The fourth charge as a three way split of any additional profit.		#The fourth charge as a three way split of any additional profit.
−
	*A three slice of income approach might be employed when the funding institution is not an equity partner but is lending funds on a loan draw down agreement.		*A three slice of income approach might be employed when the funding institution is not an equity partner but is lending funds on a loan draw down agreement.
−
	#The first charge as ground rent (landlord).		#The first charge as ground rent (landlord).
	#The second charge on development costs including anticipated profit (developer).		#The second charge on development costs including anticipated profit (developer).
	#The third as a two way split on additional profit.		#The third as a two way split on additional profit.
−
	*A two way slice of income approach might be used when a local authority or landlord carries the major portion of development risk.		*A two way slice of income approach might be used when a local authority or landlord carries the major portion of development risk.
−
	#The first charge on development costs and profit (landlord with incentive fee to developer project manager).		#The first charge on development costs and profit (landlord with incentive fee to developer project manager).
	#The second charge two ways split incentive arrangement.		#The second charge two ways split incentive arrangement.
Line 43:		Line 38:
	There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.		There are also numerous hybrid arrangements based on shared gain and pain formula making initial negotiations of deals paramount to the outcome for each participant in the development process.

−	= ~~See also~~ =	+	= Find out more =

−	*Procurement.	+	Related articles on Designing Buildings Wiki
	*Funding options.		*Funding options.
−	*~~''Property Development Appraisal and finance, b''y David Isaac, John O’Leary and Mark Daley, published by Palgrave~~.	+	*Partnering.
		+	*Procurement.
	*Property development finance.		*Property development finance.

−	~~<br/>~~	+	External links
−	~~<br/><br/>~~	+	*Property Development Appraisal and finance, by David Isaac, John O’Leary and Mark Daley, published by Palgrave.

	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]
	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]
	[[Category:Contracts_/_payment_/_payment]]		[[Category:Contracts_/_payment_/_payment]]