Landev, an Economic Model for Land Development

Ownership & Distribution of Value

DIST Input:Distribution of values to lenders/partners (%) 620  2
MV[62]Share of project to give to partner (id# = ) ° 620  1
MV[63]Entity id# for partner receiving % of profits ° 620  1

Model outputs include a line called debt free cash flow. Generally, line items above this line are called economic line items, while line items below this line are a function of the financing and ownership structure. All the items below the line relate to debt instruments, preferred returns, or to profit and are assigned to the participants in the financing structure.

Items above the debt free cash flow line reflect the process of creating value which is an important purpose of most land development projects. Items below that line reflect the process of distributing the value created among the financial participants. The sum of the cash distributed line items is the same as the debt free cash flow line, and that is an important check in the model.

Management fees may make this somewhat more complicated, as they are costs above the line while they accrue to entities whose position is reflected below the line. These are provided for in the model.

DIST is an input array which assigns roles to the financial participants to enable investment criteria for each to be determined.

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