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ProCash, an Economic Model for Income Properties

DevPlan systems

The point of view underlying the DEVPLAN© systems is that land development is the process where economic resources are brought to bear for purposes of changing the use of land to a higher and better use. Economic activities include land acquisition, site development, vertical construction, off-site or impact requirements, management, marketing, and the establishment of related entities (utility or resident management entities) who will perform certain functions as the developer withdraws. Financing is not part of this economic process. The evaluation of this "economic" land development process is provided for in all DEVPLAN© systems as being on a "debt free basis".

Financing is the process whereby the value created in the development process is distributed among the financial participants. These may include the land developer, developer of income properties, landowner (if he stays in the deal), senior lenders, subordinated lenders, partners, local government, and utility companies and tenant or homeowner associations, and sometimes others. DEVPLAN© systems provide for recognizing the financial requirements and returns to all these entities who participate in the financial structure of the project. Analysis may focus on the position of one participant, but DEVPLAN© systems provide for easily checking the reasonableness of the positions of other participants.

DEVPLAN©

systems include

three software products

.

1) The product called Landev© is used for land development projects (where takeout is primarily through sales). Projects are usually multi-use and staged and usually include income properties in a relatively simple simulation. Landev© includes a rather simple approach to earnings and income tax liability.

2) ProCash© is used for income properties of all sorts, including shopping centers, office and industrial buildings, and housing projects. ProCash© includes capability for reflecting the construction process with construction financing, rent-up, staged equity contributions, bridge loans, and on-going operations with a full array of participations, kickers, ground rent provisions, preferred returns, refinancing, and the recognition of ending liquidation values. Current tax law is built into ProCash©. ProCash© can be used in staged and multi-use projects.

3) The DEVPLAN© Regional Model provides a market research and fiscal impact context for Landev and ProCash as well as serving as a useful tool for public policy.

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