Business model
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A business model proven sustainable in unprecedented market severity
Our strategy, followed consistently for over 15 years by the management team, allows for the cyclical nature of the property industry, thus mitigating the effects of major market fluctuations.
The following are the key elements which, applied rigorously, enabled the Company to emerge in a better position than many of its competitors from the recent severe market conditions.
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1. Low risk financial and funding structure
Development Securities differs from most property companies, having a conservative use of debt. It seldom owns the major projects it is actively developing, although it may, on some schemes, have a modest financial involvement. The Company typically derives project management fees through the development process and a participation in the eventual gain arising to the investors when the project is completed.
We have never believed it is appropriate for a company of our size to accept sole development risk in relation to the complex and substantial development projects in which we are involved. We endeavour to share the majority of development project risk with financial institutions and partners who are the more appropriate long-term investors.
Our funding partners have included:
- Standard Life Investments
- The Prudential Assurance Company
- Legal & General Assurance Society
- Universities Superannuation Scheme Limited
- Aviva Investors
- DEKA Immobilien Investment GmbH
- Commerz Grundbesitz Investmentgesellschaft
- Deutsche Grundbesitz Investmentgesellschaft
- Corpus Sireo Immobilienfonds
2. Large-scale development projects
In our experience, large and complex development projects offer greater profit potential than smaller ones, without necessarily increasing the inherent risk profile.
Our strong track record, including such successful multi-phase developments as PaddingtonCentral, also gives us a competitive advantage when seeking these large-scale projects.
Back to top3. Focus with balance and diversity
In order to provide a sustainable business model through the vagaries of the property and business cycles, we aim to combine opportunities for short-term development gains with a pipeline of multi-phase projects. To ensure focus of effort and expertise we restrict our activities to the United Kingdom, remaining largely within the commercial property market.
Our balanced, diversified business model typically includes examples of:
- Single, prestige office developments
- Multi-phase office developments
- Regional urban regeneration projects
- Retail development projects
- Mixed-use developments
- Residential
4. Investment portfolio
We know that large developments, perhaps lasting through several property cycles, create uneven profits and cash flow.
The Company allocates a significant element of its equity to the ownership of a diverse investment portfolio, consisting of properties spread across the UK, covering retail, office and industrial sectors: this mix is driven by market conditions, availability, stock selection and potential for asset improvement.
The investment portfolio provides a steady and predictable flow of funds, contributing significantly towards central overheads.
Back to top5. Geographic focus
All of our development and investment activity is conducted within the United Kingdom.
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