Reit Definitions: Turnkey Project

There are times when REITs will announce that they are going to develop some turnkey projects. However, what are turnkey projects and how are they different from regular projects?

A Turnkey project is one where the property developer does most of the work and thus there is very little that the end buyer needs to do.  Upon completion of the sale, and the the property is ready for immediate use by the buyer. This type of setup comes with its set of advantages and disadvantages.

Advantage:

  • Seller will be in charge of the construction cost.This is especially important when there are cost overruns in developmental projects.
  • Buyers need not have the development expertise that will otherwise be needed to complete the project

Disadvantage

  • Buyers cannot install custom specifications that they may require to carry out their operations.

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