Risks related to in-sourcing (re) development activities
- Corio in-sources (re)development activities in order to increase the sourcing of product and improve returns. In-sourcing these activities, however, entails the following risks:
- Quality risk: We have in-house experience and knowhow on successful developing quality centres, the risks also relate to the quality of processes management. We manage these risks by attracting sufficient qualified and highly skilled staffing, with again, critical mass of our business unit and market as a precondition to attract and maintain skilled staff.
- Timing risk: Thanks to having (re)development in-house, we are in a good position to manage timing risks in the investment market (difference between yield on cost and value upon completion (market yield)) and in the letting market (forecasted rent vs. rent upon completion). In addition we have in-house research departments that continuously assess the property cycles.
- Funding risk: The timing difference between the investment decision and the funding activity is managed by our funding policy, cash flow management and our development and redevelopment decision making processes.
- Letting risk: New project lettings or an extension carry the risk that we are unable to let the new space. With our in-house leasing expertise Corio is able to adequately manage this risk.
- Corio will cap a construction risk before the actual start of the construction process. Furthermore, licenses or permission risks are usually a precondition in a transaction.