Retail: shopping malls, strip malls, and other retail storefronts.

Residential: houses, apartment buildings, townhouses, and vacation houses.

Commercial: office buildings and skyscrapers.

Industrial: consist of everything from industrial warehouses.

Mixed-Use: a combination of any of the above categories into a single project.

Land value risk: land acquisition costs and the risk that the value of acquired land changes due to market circumstances.

Land exploitation risk: the risk mainly related to environmental issues.

Planning permit risk: the risk that nu usable planning permit is received or that this process takes longer than expected. This risk also applies to other municipal approvals/permits, such as commercial licenses. Whether or not grants are obtained is also included in this risk.

Construction risk: this regards pricing, design, quality and possible delays.

Revenue risk: there are many factors that influences revenues. These include yields, rent levels, sales price levels, inflitation and interest rate levels, demand and supply.

Revenue risk: there are many factors that influences revenues. These include yields, rent levels, sales price levels, inflitation and interest rate levels, demand and supply.

Duration risk: the duration is a consequence of other risks. It can impact interest costs, but can also cause other problems, such as claims from tenants if the agreed opening date of a shopping centre is not met. A delay could also mean that the project has to face adverse market circumstances.

Political risk: the risk that the project encounters problems due to a change in government regulations, etc.

Partner risk: the risk that a partner in the project cannot meet its obligations or disagree on the way forward

Legal risk: this covers a broad area of topics; possible objections against changes in zoning, liability risks or contracts which have not been drawn up correctly. It also concerns the risk of not obtaining the required permits and the risks involved with buying existing companies to acquire land positions. Tax risk is also included in the legal risk.

Risk assessments: Research is essential in assessing virtually all kinds of risks. Important research areas will include; Forecast of yield development, Allocation strategy, Investor demand, Occupiers and consumer demand. (Due diligence check into partners financial position is included).

Phasing: By adequately phasing projects, the steps taken are smaller, with possible exits following each phase.

Contracts: many risks can be mitigated by carefully drawn up contracts. It is therefore essential that our legal department is involved, either directly or indirectly by instructing local lawyers. Regarding construction risk it is crucial to use controlled pricingmechanisms when entering into construction contracts. Therefore, it is preferred to have a fixed price contract to the largest possible extent. Depending on the project, flexibility might be needed to achieve the best price possible or to allow for tenant demands, design changes et. All projects are insured in in line with insurance policies. Furthermore, the quality of partner agreements (clauses on the decision process and exit possibilities) are (or will be) highlighted.

Cost calculations: A development appraisal consist of assumptions which become more certain in the course of the project. The risk of surprises and wrong assumptions made during the process need to be mitigated by meticulous calculations. These will be made during the development process as the design will evolve toward final specifications and will have to take into account inflation levels, price increases as a result of increasing demand etc. Where necessary, these should be verified externally. .

Pre-lease/-sales: In order to ‘test’ the market of end-users before entering into the commitment to actual starting of construction of a project, a certain rate of pre-letting or pre-selling is required. It’s also the ambition to enter other major commitments (a.o land purchase) conditional upon these market-tests. In addition to demonstrating the market appetite this will reduce the amount at risk as well, since pre-leasing/selling locks in part of the revenues.

Timing payments: in the case of costs it is preferred to pay as late as possible, whereas in the case of revenues it is preferred to receive these as early as possible. Next to the obvious advantage of lower interest costs, this strategy provides control in case of possible disputes, relating to for example contracts. Furthermore, it is preferable to keep the level of spending in the development phase to such a level that a real go/no-go decision before the start of the construction phase is still possible.

Portfolio diversification

Risk assessments: Research is essential in assessing virtually all kinds of risks. Important research areas will include; Forecast of yield development, Allocation strategy, Investor demand, Occupiers and consumer demand. (Due diligence check into partners financial position is included).

Maximum Investment at Risk at the portfolio level

Current commitments minus secured revenues (and collaterals) will never exceed pre-specified limits on amounts at the portfolio level.

Restrictions regarding strategic land positions

Strategic land positions concern land/buildings without sufficient rental income and not yet zoned for new development functions. At the portfolio level the following limits are in place; the total investment in strategic land positions should not exceed a pre-specified limit on amounts, strategic land will only be purchased for the purpose of residential or retail development, the maximum tenure of strategic land positions is restricted in line with the pre-specified policy (for example, differentiation between mature and growth countries.

To diversify the risk the average tenure of holding the land for strategic purposes should be roughly spread over a pre-defined number of years which should be monitored via periodic reporting.