Development is considered a subset of opportunistic real estate and has many moving pieces that cause these projects to be high on the risk profile. These risk factors can include pre-development risk (surveys, permitting, entitlement), vertical construction risk, arranging permanent financing, leasing, hiring property management, and so forth. 

Development deals also don't provide cash flow during the construction phase–only when the property is fully constructed and stabilized can it generate income. On the flip side, development projects often target higher targeted returns than other CRE projects.


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