Residential Estate Industry Journal 4 - Page 69

FACILITIES MANAGEMENT BANK BALANCE VS LIFESTYLE EBOTSE GOLF AND COUNTRY CLUB OVER THE PAST SEVERAL MONTHS I HAVE ENGAGED EXTENSIVELY WITH RESIDENTS, CONTRACTORS, COMPANIES, CLIENTS, REGULATORS AND OTHERS ON LEVERAGING THE LONG-TERM APPROACH TO CREATING VALUE FOR OWNERS OF PROPERTY WITHIN A RESIDENTIAL DEVELOPMENT, WHILE ENSURING THAT THE LIFESTYLE THEY BOUGHT INTO IS AT THE LEVEL OF FAIR EXPECTANCY. There is nothing inherently wrong with returning capital to shareholders by means of lifestyle investments in a measured fashion, as part of a broader growth strategy. time, but to the company and its long-term owners. Successfully fulfill ing that duty requires that the board engage with a company’s long-term providers of capital, who are the residents. They must resist the pressure of short-term shareholders to extract value from the estate if it would compromise value creation for long- term owners and, most importantly, that they clearly and effectively articulate their strategy for sustainable long-term growth. A board of directors has a tough task in response to the acute pressure to meet short-term financial and lifestyle goals, without the expense of losing long-term value in an economy filled with uncertainty. Indeed, it can be a vital part of a responsible strategy This pressure originates from several sources including that protects the capital already invested with future the proliferation of shareholders seeking immediate return possibilities. returns or savings on contributions, the ever-increasing velocity of capital, a media landscape defined by the It is critical, however, to understand that management 24/7 news cycle of political events, and public sentiment and the board has a duty of care and loyalty, not to that often fails to encourage long-term investment if at every investor who owns property at any moment in the cost of immediate returns and enjoyment. PAGE 67