Financial modeling - attribution of new “book capital accounts”

In connection with the determination of the new “book capital accounts” attributable to both the sponsor, including the value of its “crystallized” promoted interests, and its investors, the preparation of a complicated financial model that takes into account the so-called “waterfall” provisions of each operating agreement is necessary.In that regard, we prepare a “Hypothetical Liquidation Value” financial model (the “HLV Model”) using appraised values to determine pro-forma capital account balances. The HLV Model consists of, among other things, a cash-flow distribution (or “waterfall”) calculation for each real estate investment to be included in the Roll-Up, performed in strict compliance with the terms of each related operating agreement. Thereafter, we work closely with an independent accounting firm to perform an Agreed-upon Procedures engagement on the HLV Model and related attribution of capital accounts (for the purpose of having the independent accountant provide negative assurance on the information included in the HLV Model). We also participate in discussions with the independent accounting firm, including responding to inquiries.

Financial modeling – operating partnership

The newly formed Operating Partnership, including its real estate investments, constitute an organization under a new financial, treasury management, and operating regime. In connection with that, we prepare a financial model of the pro-forma entities to be included in the Roll-Up (“Financial Model”), including projecting the cash flows of the “new” distribution regime taking into consideration the new capital accounts attributable to investors in the Operating Partnership. We also consult with executive management of the sponsor as to the results of the Financial Model and assist in developing financial policies and strategies for managing the Operating Partnership on a prospective basis, including but not limited to determining an appropriate distribution rate to investors.

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