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Well, pretty difficult. There’s lots of moving parts. You’re basically marrying several independent financial models into one mega-model. The permutations and combinations that make it particularly busy are:
- Optionality on developing or selling each individual parcel
- Optionality on, if selling the parcel, buying back the retail component
- Optionality on retaining ownership of part, or all of, the public parking component
- Disparate equity investors with different promote structures across the horizontal and vertical development components
- Optionality on Master Developer as Land Equity contributor to vertical developments
- And more.
While complicated, it’s all doable, and it all starts with a basic framework as shown below. From there it becomes tens of millions of spreadsheet cells which all feed into a Master Cash Flow summary.
How to organize the financial modeling of a major mixed-use real estate development project.
