Investment A: Portfolio of assets cross collateralized by single loan
Investment B: Asset purchased adjacent to one of the assets in investment A - loan on investment A is increased to include investment B but they are treated as separate investments.
With the acquisition of investment B, Investment C is created. Investment C is the ability to develop by parceling the adjacent properties (asset in A and Investment B) and unlocking development potential.
How do you account for this properly in the returns in a fair an accurate way? Thinking about the lack of a cash transaction, and value creation that is going to overstate or understate the returns one way or another between the investments. The loan documents contemplate the future development and are written so that the development land is not collateral.
