Land Banking Model

The model centers on a portfolio of up to five land tracts, each defined by acreage, cost per acre, entitlement start year and duration, and target sale year. These per-tract inputs drive acquisition cost and the timing of dispositions.

• Appreciation is applied to a weighted-average cost per acre, while the entitlement premium—a one-time uplift for rezoned land—is calculated per tract based on whether that tract’s entitlement has completed. Because raw land produces no operating income, the economics depend entirely on appreciation and the entitlement uplift, offset by years of holding costs such as property tax, insurance, maintenance, and HOA fees.
• The model also sizes a conservative loan facility at a set loan-to-value ratio to part-fund the acquisition.

The calculation flow starts with land acquisition in Year 0, including acquisition costs. Entitlement spend is spread over each tract’s entitlement duration.

• Holding costs accrue annually on acres still held, escalated over time. When a tract sells, gross proceeds equal acres sold times the appreciated raw value per acre times the applicable entitled premium, which is sale-weighted by the proportion of entitled acres sold.
• Selling costs reduce gross proceeds to net proceeds. The model then releases a pro-rata share of total capitalised cost—land, acquisition costs, and entitlement spend—to determine taxable gain, and applies a blended capital-gains tax rate.

Financing interest and commitment fees flow through a debt schedule, and an equity plug funds any cash shortfall each year.

The model outputs a full cash-flow waterfall and a returns summary. The Returns sheet reports unlevered and equity IRR, MOIC, payback year, total equity profit, and profit-on-cost, alongside benchmark checks against target hurdles.

• The Dashboard presents ten KPI cards, a year-by-year summary table, and four trend charts covering acres sold, gross proceeds, portfolio value, and cumulative cash flow. A checks sheet validates that final inventory and debt are zero, all acres are sold, equity profit is positive, LTV stays within the assumption, cash never goes negative, and equity IRR is positive.
• These checks confirm mechanical integrity but do not imply the deal meets its return targets; the model explicitly reports whether it does.

Practically, the model serves as a single-case valuation tool for raw-land banking strategies. It lets users flex key assumptions—appreciation rate, hold period, sales pace, and sales start year—to see how equity IRR responds.

• Two native Excel data tables on the Sensitivity sheet show equity IRR across appreciation versus hold period, and across sales pace versus sales start year. The model does not include scenario toggles or phased acquisitions; all tracts are acquired in Year 0 and sold according to their target sale years.
• It also omits NPV discounting and operating income, reflecting the pure carry-and-dispose nature of land banking. These constraints make it most useful for testing hold-period and exit-timing decisions within a single static case.