Development Proforma - Modeling City Grants

Based on the most helpful WSO content, here are some pointers for modeling a for-sale ground-up development project involving City grants:

1. Debt and Predevelopment Funding:

   • Model the initial debt drawdown to cover predevelopment costs and 50% of construction.
   • Ensure the debt service (interest payments) is accurately reflected in your cash flow model.

2. Grant Funding:

   • Grants will be received at two milestones: 50% completion and 100% completion.
   • Create a timeline in your model to track construction progress and align grant disbursements with these milestones.

3. Construction Funding:

   • The remaining construction costs will be covered by the grants and lot sales.
   • Ensure that the cash inflows from grants are timed correctly in your model to match the 50% and 100% completion points.

4. Monthly Cash Flows:

   • Break down the construction costs into monthly expenditures.
   • Include the timing of debt drawdowns, grant receipts, and lot sales to ensure accurate monthly cash flow projections.

5. Lot Sales:

   • Model the revenue from lot sales, ensuring it aligns with the construction timeline and sales strategy.
   • Include the timing of lot sales proceeds in your cash flow model to ensure they are available to fund construction as planned.

6. Cash Flow Management:

   • Monitor the cash flow to ensure there are no shortfalls during the construction period.
   • Adjust the timing of expenditures, debt drawdowns, and grant receipts as necessary to maintain positive cash flow.

For more detailed guidance, you might find the following resources on WSO helpful: - Tutorial: Ground-up Development Cashflow: This tutorial provides a basic introduction to modeling cash flows for ground-up development projects. - Real Estate Development Modeling: This thread discusses various aspects of real estate development modeling, including software recommendations and key metrics.

By following these steps and utilizing the resources available on WSO, you should be able to effectively model the cash flows for your development project involving City grants.

Sources: Development vs. Acquisitions, Tutorial: Ground-up Development Cashflow, Real Estate Development Modeling, Tutorial: How to Model a Real Estate Development Construction Loan, How to Convince My Boss to Include Excel Modeling Into the Job?