Expanding joint venture development business.

Erecting a new building or redeveloping any site in New York can be a daunting task. Property owners with an underutilized parcel of land might want to build something else on their site but may not have the capacity or the experience to take on the burden alone.

They could, however, enter into a joint venture with another company to convert their asset into a more valuable property.

Developers that have a proven history of successfully constructing properties for and with others can be excellent partners.

Companies turn to another owner/developer for a number of reasons. An important reason a company would partner with another entity to construct a building is that the other developer may have a specific expertise in constructing a particular type of property. Two owner/developers may choose to work on a project together simply because of capacity issues on the part of one of the partners. These companies may have other projects on their plate, creating a circumstance where it is better not to spread their own internal resources too thinly.

Real estate owners with properties, capital and limited experience in development may also turn to another developer with a history of successfully constructing buildings.

The partner wants to know the project to be built will be constructed by a company that has the reputation and capability to bring it on line on time and on budget. Often a lender will provide more advantageous financing terms to borrowers that have an experienced developer on the team.

The capital sources funding a new building also have a vested interest in tapping a proven developer. For a pension fund putting money into a project, or a bank providing a loan, there is a great deal of comfort knowing that the building is being constructed by a development team with the history and credibility to carry off the project successfully. Many churches own property, often located in desirable areas, that may no longer have congregations that can financially support the operational and capital needs of the church. When these congregations merge, the religions organizations often find it difficult to dispose of or redevelop these properties on their own. A joint venture can provide an immediate cash infusion as well as an ongoing stake in an income-producing property by contributing the land to the partnership.

Rose Associates has been developing residential and commercial properties in the New York area for the past 80 years for its own account and in joint ventures. The company's focus on building long-term relationships has convinced many of its partners in previous deals to continue working with Rose Associates on other projects. The company is currently developing several properties of its own and in joint ventures. It also has a number of fee development projects under way to use its expertise for other like-minded owners.

Although there are many ways to structure a joint venture, Rose Associates would not only contribute equity but will also assume some of the risk, help provide guarantees and shoulder some of the work load along with its partner. Generally, the other partner would contribute the property to the venture. Development involves far more than simply constructing a building. The process entails everything from assembling the project team, arranging construction and permanent financing, securing entitlements and permits, feasibility analyses, designing the building, bidding the contracts, overseeing construction of the building and marketing the final product.

The joint-venture partners are typically involved every step of the way in making mutual overall decisions about the property and the process.

As an example, The Metropolis was developed as a joint venture with The Benenson Capital Co. The partners built the 50-story, 360-unit, high-end rental apartment building at 150 East 44th St. Benenson had access to the land on which The Metropolis was built but did not want to construct the residential tower on its own.

The joint venture allowed the two companies to combine their knowledge, assets, talents and financial strength to bring The Metropolis project on line and on budget.

New York is a notoriously difficult market in which to develop new buildings, whether they are residential or commercial. Joint-venture development arrangements help land owners maximize experience and resources to develop projects efficiently.

EDWARD T. LAGRASSA MANAGER, COMMERCIAL BUSINESS DEVELOPMENT, ROSE ASSOCIATES INC.