Profession/Title: Chief Financial Officer

Company: KDC

Date of Interview: 10/02/2017

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My third informational interview was conducted with Kim Bonfield, CFO of KDC, a commercial real estate company. From our meeting, I was able to learn more about both Mrs. Bonfield’s experience in real estate and the recent projects that KDC has been working on. Firstly, as CFO, Mrs. Bonfield described that she is in charge of financial reporting, gap audits, tax returns, human resources, financing & loans, and relations with commercial banks. She also graduated from the University of Texas at Arlington with a Bachelor’s Degree in Accounting and a Master’s Degree of Business Administration in Finance. In the beginning, Mrs. Bonfield hadn’t intended to work in real estate, but through her past position at Ernst & Young, she was exposed to many real estate clients, ultimately affecting her decision to enter the real estate world. Prior to joining KDC, she also served as CFO and Partner in charge of fund management at Macfarlan Capital Partners.

During my interview with Mrs. Bonfield, I was very curious about the investment strategy of KDC as many of their clients are operating companies. For example, KDC was the real estate company that developed the new headquarters for Toyota in Plano, TX. This made me wonder how development deals work with both bigger companies and companies as primary clients. Firstly, Mrs. Bonfield explained that KDC specialized primarily in office buildings and workplace environments. They build campuses for a variety of businesses and therefore, they almost always utilize a tenant-first approach, meaning tenants are secured and must sign long-term leases (many of which are 15 to 20 years) upfront before development even begins. This is important because this largely eliminates risk throughout the process so income can be generated immediately after construction. This also means, however, that tenants have a large contribution to how the development will be built because KDC must work with these companies to develop a property that the client actually wants to rent or buy. One thing that confused me, however, was whether or not KDC had the right to ownership of these properties or if clients would purchase the ownership in exchange for a developer fee. Mrs. Bonfield answered my questions by explaining that every single project was a different circumstance and 50% of companies rent the property while the other 50% buys for ownership. She also explained that due to division of labor, KDC ‘s intention is never to hold on to one property for too long because that would mean they’d be responsible for all operating and repair costs, so they usually try to sell properties after a few years.

Furthermore, because Mrs. Bonfield has many years of experience in real estate, I was interested in knowing what she believed was the biggest mistake that developers make. She replied by saying that not enough developers take into account location, space, and the future condition of the location. For instance, because Dallas is constantly expanding with new properties rising each year, many prime locations could be depleted of value from any new development at any given time. Therefore, the rise in other developments around a specific property could pose as a threat to the vitality of that building. In addition, Mrs. Bonfield stated that developers should never start without capitalization in place, meaning it’s much too risky to begin construction on a development without enough funds to distribute across the entire timespan of the project. Moreover, Mrs. Bonfield mentioned that culture is changing as well, which could drastically alter the types of developments that will be lucrative in the future. Millennials are using spaces differently as the younger generations are becoming more connected and collaborative through technology, motivating a rise in apartment properties. This also means that more people are bound to work at home, decreasing the need for central office buildings. The rise of mass transit also alters the fact that office buildings in busy metropolises may no longer need large parking garages.

Ultimately, I learned from Mrs. Bonfield about the way larger commercial real estate companies develop properties for big companies. The process is much longer and the relationship between tenant and developer is much more collaborative. It was very enthralling to see how big development companies ultimately divide labor within its business and work with tenants to create high-end office developments.

Kim Bonfield