Business concept

Mission and strategy

The overall mission of TK Development is to create added value by developing real property.

The Group operates in the property development and services environments, and specializes in being the creative and result-oriented link between tenants and investors.

Business concept

In collaboration with tenants and investors, TK Development plans and arranges the construction of new buildings, and the expansion and conversion of real property based on tenant needs and investor requirements. The Group develops the projects, which involves letting the premises, concluding contracts with construction companies and subcontractors for the execution of the building works and managing construction.

The Group can develop projects for its own account, with or without advance project sales, and can either finance the projects on its own books or procure staged financing from the buyer in step with project completion (forward funding); see below.

In terms of segments, the Group focuses on the development of shopping centres, superstores and corporate headquarters and related mixed and multifunctional projects as well as housing in Poland. The retail segment will continue to be the Group’s most important segment in the years ahead based on continued expansion of its already extensive network of contacts.

The Group's business model looks as set out below:
 

1. The Group’s primary focus is real property development.

• The Group can develop projects for its own account, with or without advance project sales, and can either finance the projects on its own books or procure staged financing from the buyer in step with project completion, also termed forward funding.
• Projects can also be developed together with business partners during the construction period.

2. The Group can choose to initiate projects with a view to construction and subsequent startup and maturing over a short span of years, such projects typically being classified as investment properties.

• This element in the business model is a natural consequence of the current risk picture, including in particular an investor behaviour, which means that the development process for some projects is not optimally finalized until they have been matured and run in. The portfolio of investment properties generated by this will ensure both a positive operating margin and a positive cash flow, viewed in isolation. After the maturing process, the project returns can be even better documented, and thus higher project selling prices can be obtained.
• Investment properties can be developed either for the Group’s own account or in project development joint ventures with co-investors that wish to participate in both the construction and maturing phases. By entering into joint ventures, the Group will achieve more effective placement of its equity financing of projects under development, better risk spread, and more efficient use of the Group’s staff resources and competencies.
• A project will typically be classified as an investment property prior to construction startup and this classification will be announced to the market. This means that the value of the properties will reflect a market value calculated by using a market-based return requirement in a discounted cashflow model.

The Group utilizes its know-how to encompass both property development and asset management. The Group has mainly outsourced the property management of completed properties, but handles asset management internally.