The Opportunity
A builder client of the Maven team recently expanded his business by partnering with an investment group to create a dedicated development entity. As they began exploring potential projects, they sought guidance that went beyond traditional real estate searches. Their goal was to understand what type of development would perform well in the current market and how to position a project for success from the outset.
The Approach
Rather than throwing all kinds of properties to the developer for them to analyze and vet, the Maven team thought through market demand for specific asset classes, and then from there focused on undervalued properties in the asset classes with the most demand in the market. Stephanie had watched one recent purchaser who bought their industrial parcel of land at a great price, but struggled to develop it. When they finally had their last straw, they put the property onto the market and Stephanie lost no time in bringing this opportunity to the Maven team’s client’s attention. She articulated where that owner was going wrong, and provided such a clear map to profitability that the client secured the property right away.
The Strategy
While in Due Diligence, the Maven team’s market analysis revealed that this 25 acre parcel needed to be divided into 2 to 3-acre industrial parcels because the peak market end-users were looking for 10,000-30,000 SF buildings with OUTSIDE STORAGE which is at a premium throughout the GTA. Assets in that range were experiencing above-average value growth. The partnership moved forward with confidence as the profit margins accounted for the typical municipal planning approval challenges. To close the deal, the client decided to raise equity and so the Maven team introduced 68% of the equity partners to the project while remaining involved in consultations with engineers, urban planners, and municipal officials to ensure the final design aligned with market demand.
The Results
Following confirmation from the municipality that the proposed lot layout could proceed, the development partnership closed on the property. The project forecasted returns of 62% to 105% over a three-year period. Within eighteen months, investor capital was fully returned and 71% of the newly created lots were sold. The remaining lots are positioned for future gains, and the success of this project has since led to additional development opportunities together.
