legal considerations of a mixed use project · tara marlow jeremy scott partner head of real estate...
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Legal Considerations of a Mixed Use Project
Tara Marlow Jeremy ScottPartner Head of Real Estate - DubaiHead of Real Estate & Hospitality
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merald Palace Group
Emerald Palace Group
Emerald Palace / Pozniakizhilstroy isthe largest developer of residentialprojects in the Ukraine, and a keydeveloper of residential andcommercial projects in both Russiaand Dubai.
Founded in 1996, the companyworks with world-class architectsand engineers to realise prestigious,high-end developments in some ofthe world's most desirable locations.
Partnering with international luxuryhotel operators such as Kempinski,the company has successfullydelivered 25 master-plannedproperty comprising more than10,000 residential units andspanning over one million squaremetres. Today, we have five newdevelopments under construction,with a further ten at project stage.
MIXED USE DEVELOPMENT SCHEME
Mixed Use Development Scheme
Mixed Use Development Scheme
Mixed Use Development Scheme
Mixed Use Development Scheme
Mixed Use Development Scheme
o Components & Interested Parties
• Hotel (Owner/Operator)
• Serviced Apartments (Owner/Operator/Unit owners)
• Residential Units (Owner/tenants)
• Office Units (Owner/tenants)
• Retail Units (Owner/tenants/Operator)
• Common areas (Owner/Operator/FM Manager)
• Common facilities and infrastructure
(Owner/Operator/FM Manager)
o Title Structuring
• Funding/security considerations
• Ring-fencing liability with use of SPVs
• Off-plans sales in advance (strata titling)
• Owner retained components
• Occupational leases
• Future exit strategy
o Master Planning & Design
• Cohesion of scheme – look & feel
• Development phasing & construction
• Hotel Operator Brand Standards (Hotel/Serviced Apartments v Overall Scheme)
• Timing for handover and occupation / Hotel and Serviced Apartment opening
o Operational independence between components
• Shared areas & facilities
• Facilities management of project
• Access & Control (Developer/FM Service Provider/Hotel Operator)
• Utility charges and metering
• Service charge allocation and recovery
• Future renovation & repairs (Owner Capex v Hotel Operating Expenses v Unit Owner cost)
• Operational disruption and impact on Hotel & Serviced Apartments
Mandatory & Optional Serviced Apartment Rental Pool Scheme
Legal Structure – Serviced Apartment Rental Pool Scheme
Owner Co.
OpCo
Hotel & Serviced Apartment Operator
Serviced Apartment Rental Pool Scheme
Stakeholders and their respective interests
• Who are the Stakeholders and what are their respective interests?
o Project Owner/Developer
o Hotel/Serviced Apartment Operator
o Unit Owners
o Owners Association
o Regulators
What are the Stakeholders respective interests?
• Developer:
o maximise sales price
o enhance own brand value
o streamline asset management of the project
o control FM and service charge costs
o enhance return on investment and future investment value
o owner of retained components
o obligations owed to Operator to retain brand v rights in respect ofserviced apartments within rental pool scheme
o minimise risk and exposure vis a vis breach of obligations by serviced apartment owners
• Operator:
o freedom and control to operate the hotel & serviced apartments in accordance with operating and brand standards
o consistency of other Project components with brand standards
o operational non-interference from Developer and serviced apartment owners
o deal only with Developer and not multiple serviced apartment owners
o ability to implement operational requirements under Management Agreement ie. future refurbishment, signage, brand protection, no competition (no airbnb or short term letting)
• Serviced Apartment owners:
o as investors, want a return
o no involvement in management issues
o obligations as owner and member of Owners Association
o periods for personal use of serviced apartment
o transparency on fees, costs, service charges and allocation among other components of the Project
• Serviced Apartment Building Owners Association
o rights and obligations of OA vis a vis Developer and Operator
o grant of serviced apartment owner proxies to the Developer (as tenant) under the rental pool lease back scheme
o quality of service and facilities management of the Project
o transparency on fees, costs, service charges and allocation among other components of the Project
o insurance protection
• Regulator
o vibrant development and investment market
o fair balance between the rights of the stakeholders balance with consumer protection
o good quality management of completed developments
o transparency on fees, costs and service charges
Balancing the Stakeholder interests
• SPAs and disclosure
o clearly identifying expectations, rights and obligations
• Strata Constitutional Documents
o setting out clear obligations in order to support Operator’s rights and brand standards to prevent loss of brand in the future
• Lease-back arrangements
o ensuring a clear operational arrangement as between the serviced apartment owners (as investors), Developer and Operator
• Planning
o ensuring operational independence so long as Operator brand standards are supported
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Jeremy ScottHead of Real Estate - [email protected]
Tara MarlowPartnerHead of Real Estate & [email protected]
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