Analyzing the alignment of incentives, control, and economics in development agreements between private developers and mission-driven institutions

Abstract

This thesis examines and analyzes the alignment of incentives, project control, and economics in development agreements between private developers and mission-driven institutions. Mission-driven institutions, such as churches, hospitals and universities, need to compete in their relative industries, and must leverage real estate assets as effectively as possible. In many cases, the best opportunities for underutilized institutional real estate is in the private market. In order to develop institutional real estate for the private market, institutions can partner with private development firms to utilize their knowledge and experience to maximize efficiency through complex development processes and create the best possible product for a given marketplace. This paper reviews existing literature on the topic of institutional-private development partnerships, then explains and analyzes two case studies: The Charles Street Jail, and a Market Rate Student Housing Project. The case studies act as real examples, and are used to examine the issues that can arise due to differences in incentives between private developers and mission-driven institutions, as well as possible ways that organizations can approach such concerns to mitigate associated risks.