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Built to suit Print E-mail
Written by Administrator   
Wednesday, 07 December 2005

Build -To-Suit & Design-and-Build Services

www.izproperty.com 's commercial partner – MDM (Management Development & Marketing Co Ltd) www.mdmvietnam.com – can provide corporate clients with efficient, cost effective real estate solutions through Vietnam.

MDM is a leading Real Estate Services Company specialized in leasing industrial, office and commercial buildings throughout Vietnam.

We provide real estate solutions that meet our clients' needs and exceed their expectations. Our combination of over 10 years of direct Vietnam market experience; consistent and timely service; our reputation for quality within the real estate and business community; as well as the caliber of our professional team allow MDM the competitive advantages necessary to provide our clients with the level of service they require in Vietnam. Our services include : -

Site Selection : - If you are contemplating a strategic move to Vietnam, our Site Selection section introduces you to viable locations for your business through a comparison of the advantages and disadvantages of different Vietnam markets.

Build-to-Suit Leases: - Our Build-to-Suit section explains how to lease a facility built to your specifications within a significantly reduced time frame.

Sale-&-Leaseback Services : - This section details our Sale-Leaseback services and illustrates the distinct advantages inherent in taking capital out of existing real estate assets for direct investment in core business activity.

Acquisition Guidelines : - This section explains the criteria utilized toward the Acquisition or Sale Lease-back of real estate assets.

Joint Venture Alliances : – Foreign investors interested in Vietnam's fast developing real estate market are often compelled to invest via JV's at the insistence of most Provincial People's Committees. This section details how we can help either directly or indirectly in arranging suitable local partnerships.

Pro-active Commitment: - MDM clients count on us as their real estate partner in Vietnam. Our clients require corporate level service in Vietnam and we strive to deliver. MDM takes a pro-active approach with our clients and are responsive to their immediate and on-going needs. MDM takes a leadership role and provides a single point of contact throughout the development cycle. During the lease term, we respond to client requests quickly and professionally.

Site Selection

Where to locate a new commercial facility in Vietnam?

In today's global market, commercial, production and distribution facilities must be located to provide maximum efficiency. Facilities must be designed and built to allow for quick product cycles and located to allow product delivery to consumers in the fastest, most cost effective manner. MDM provides our clients with such an opportunity in Vietnam. Real estate requirements are often best determined by several decisive factors : -

a. Efficient location - Based on materials and product logistics as well as site access for operations and workforce.

b. Available infrastructure and tax incentives - The best site may not be the most obvious site. Infrastructure availability plays a key role in Vietnam. The sixty-four different provinces in Vietnam have the authority to offer tax concessions, and these can vary considerably – even within provinces.

c. Highly functional buildings - A well laid out facility offers long-term efficiencies and provides for future expansion opportunities.

d. Financial Efficiencies - Our financing strategies assist companies in maximizing efficiencies by allowing optimal investment in core business activity while maintaining complete operating control of real estate.

MDM is not a landowner. We do not offer one location; rather we show our future tenants the potential sites and markets that serve their needs and place them in the location that best suits their requirements. Some tenants need access to seaports & the rail network, others need to be on the Chinese or Cambodian borders, and others close to the sources of raw materials. No single commercial premises or industrial park can be everything to everyone. As a Vietnamese property development and investment company, we know what is land and properties are available, on what conditions and at what price, thereby enabling MDM to assist you throughout the site selection process and acquire the land in the market that best serves your company's needs. We put your needs first.

The Build To Suit Option

The main challenge for many firms considering setting-up operations in Vietnam is a practical one, since land ownership, sub-leasing, assignment and mortgages remain illegal for foreigners.

The Problem:

Leasing: - As foreign companies in Vietnam expand, merge with others, are acquired or even close down, their local operations or facilities may come onto the market. Consequently, buyers may be able to find perfectly good facilities on the market. While this may present an opportunity for buyers, it should also be seen as a cautionary table to those weighing up the rent versus buy decision. Although leasing may re­duce the amount of capital outlay and allow the firm to move more quickly into operation, in practice finding an existing building of the right size and specification, in the right location that will fit all the needs of a company when converted is not easy. As a result, many firms find the build-to-suit option not only more convenient but their only option.

Build – to – Suit : - The property can be tailor-made to meet exactly the requirements of the company, thus ensuring maximum ef­ficiency and productivity. Available sites are generally more numerous, giving the company greater flexibility in its choice of location. Companies will want to negotiate a good deal on the land and on the construction terms in what is probably a new market for the company. There is also the problem of finding a local contractor that can build to the inter­national requirements they may have, and upon whom they can rely to deliver the premises to specification and on time. Then, as already mentioned, there is still the draw­back that the company is tying up its capital in non-productive industrial real estate : a sector that has a poor second­ary market.

The Solution

Most potential investors in Vietnam are asked to commit to a 40 year, non-transferable lease of land at an industrial park and to pay, up-front or via installments, for the construction of premises. MDM recognise that there is a considerable benefit to a company in not having to tie up its capital in a non-performing asset such as property, which it would prefer to have available to use in its core business. MDM therefore offer our clients a choice of leases with terms of upto 50 years with break-clauses exercisable after as little as 5 years.

As the whole real estate sector in Vietnam grows in complexity, we find we can offer a lot of added value to firms. Apart from the price differential and location, zones have also traditionally been differentiated by the tax concessions that they have been able to offer occupiers. MDM can identify the best locations in the industrial zones, negotiate good land prices and we know the questions to ask. Also firms can feel comfortable that we have the profes­sionalism, government relationships and local expertise to ensure that we meet their deadlines and specifications.

Which zone and option is most appropriate will depend on a myrial of factors dependent on the exact nature and structure of the business. For firms looking to enter the market, obtaining professional advice, such as that provided by MDM, is essential to ensure that the best fit is found for their requirements. What is certainly the case is that as the Vietnam real estate market matures, there is increasing flexibility for foreign invested enterprises to find a location, and the options for firms are getting steadily more attractive.

Services

Our Site Selection and Build-to-Suit Services allow our clients to locate the building they require in the market that best suits their needs in a cost effective and efficient manner. Our Vietnam-wide knowledge and experience brings design and construction professionals together who understand our clients' requirements and offer efficient timely solutions. The result is an integrated team of experts in : -

  • Site selection services; and
  • Property due diligence; and
  • Building design & engineering; and
  • Licencing, site supervision & construction; and
  • Property management.

Time to Market

MDM will develop, re-develop or expand functional, adaptable and well-constructed properties throughout Vietnam. MDM significantly reduces our clients' time-to-market as our systematic approach creates efficiencies that significantly reduce the cost and time associated with locating and leasing a built-to-suit facility in Vietnam.

Site Selection & Design-and-Build

Our ability to provide Site Selection & Design-and-Build solutions allows for a very cost effective and efficient development time-line as the chosen builder may design the building during an on-going site selection process whereby construction starts immediately upon site purchase.

Site Location

MDM will build and lease a facility built to suit our clients' needs anywhere in Vietnam. As MDM does not own any industrial parks or hold any land reserves, we are unencumbered by conflicts of interest produced by land ownership. MDM prefers to purchase functional and efficient sites anywhere in Mexico based exclusively on our clients requirement.

Systematic Approach

Our site selection team works with our clients to educate them on the different available markets and determine the most efficient location based on material sourcing, time to market and labour requirements. In parallel with a site selection search, designers determine the most efficient facility layout based on your current and future needs. Using competitive floor layouts, we cost the design and provide an advantageous lease rate. Based on a signed lease agreement, MDM is ready to purchase and begin construction the moment the correct site has been determined. MDM competitively bids all work utilising Design-Build contractors thereby eliminating the need for separate architectural, engineering and construction services. Our methodology effectively saves time and money or our clients while eliminating potential conflicts between service providers.

The Sale & Leaseback Option

Sale-Leaseback transactions remove capital from real estate without loss of operating control.

Foreign companies cannot buy, mortgage, sub-lease or assign land in Vietnam. When expanding, they are therefore unable to derive any financial use or benefit from their existing real estate assets. MDM is licenced to trade and consult in real estate and can sub-lease legally. Therefore, we can, depending upon the terms existing lease contracts, offer our clients the opportunity to grow their businesses through a straightforward Sale & Leaseback transaction. Our clients can sell their real estate assets to MDM and then lease them back on advantageous terms. This unique arrangement allows corporations to unlock equity held in their real estate while maintaining long-term control of their property. Companies frequently use the capital received from transactions for : -

  • Core business expansion
  • Balance sheet enhancement - (including financial ratios such as debt-to-equity, working capital, return-on-capital, return-on-assets and cash)
  • Liquidity
  • Reduce financial leverage
  • Fund new lines of business
  • Acquisitions
  • Diversification
  • Upgrading assets
  • Capital stock buy-back
  • Buying out a partner
  • As well as other potential uses

For large and small companies alike, MDM has the unique ability to accommodate a companies need to keep pace with increasingly important and strategic international corporate decisions. Our Acquisition Criteria further profiles a typical transaction.

Acquisition Criteria

MDM invests in single-tenant industrial and office properties under long-term, triple-net leases in which the tenant is responsible for maintaining the premises, paying real estate taxes and insuring the buildings. The general transaction criteria is outlined as follows : -

Investment Size: USD$1 million minimum with no maximum.

Investment Type : MDM is primarily interested in acquiring single-tenant industrial, distribution, office and retail properties leased to corporations on a long-term basis. MDM will consider multi-tenant facilities on a selective basis.

Geographic Areas: Established commercial markets throughout Vietnam.

Location : Proximity to available labour markets with suitable access.

Building Spec: “International Standard? quality property.

Transaction Types: Sale & Leaseback transactions

  • Corporate multiple site acquisitions
  • Build-to-Suit projects
  • Existing triple net-leased single building and portfolio acquisitions

Tenant Profile: Single tenant. However, MDM will consider properties with more than one tenant if a single tenant represents a majority of the income.

Tenant Credit : Subject to individual bank debt financing requirements. Lease payments guaranteed at the corporate level.

Requirements : Environmental indemnity and authority approval

  • Property appraisal
  • Property Due Diligence

Joint-Venture Alliances

MDM recognises the value added that a local partner may provide. MDM will joint venture with select local landowners, developers and industrial parks throughout Vietnam in the whole range of property development and investment opportunities, from distribution warehouses to five-star beach resorts. Our joint venture partners are always top players in their local provincial markets and offer the ability to execute local strategies efficiently. They often provide land opportunities as well as clients to lease quality space.

MDM's willingness to collaborate with local partners allows MDM the ability to combine local know-how with our competitive and professional, business orientated advantages. Joint Venture alliances can convert opportunities into high-value investments if they are properly planned, constructed and worded. Joint Venture alliances are frequently the only investment vehicle available to foreign investors interested in exploiting the many and various opportunities that are increasingly becoming available within the cash-starved Vietnamese real estate market, so it is essential that potential foreign investors can feel relaxed with the competence and integrity of any long-term local partner(s). MDM is able to provide such reassurance.


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Last Updated ( Saturday, 14 October 2006 )
 
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