Let's put the WSO RE community's modeling skills to the test. So I am working on a JV investment - where our partner's (the GP) pro rata share of ownership of the investment changes each quarter based on how much equity has been contributed into the investment. The deal is structured similarly to a development deal - so we are contributing equity each quarter and thus the ownership % changes each quarter.
For some odd reason, they requested that we do not send them any distributions for the first couple of quarters of the investment (despite having their pro rata share of ownership in the investment) until now. I am trying to figure out how to model a catch up in distributions - anyone have ideas on how to best model this?
So, first a general point, be sure to read any governing document (like the partnership agreement) to how this is to be handled, don't make assumptions (like on accrued interest or whatever).
In general, I would think you would want to model this in some form of transfers between general operating reserves (cash account) and capital account of partner. You have a cash payment item, and an "earned" item that don't seem to line up as a result of the held distributions. Thus, you just need some extra "accounts" track this. Really this is just an accounting exercise, as you are separating the "deal terms/finance terms" from the "accounting/cash terms", at least that is how I understand it. So, just need some more lines in the model to track such!
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