Narrow bank financial model
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docs(financial-model): add Operating Reserve (LPA Section 4.8) to Narrow Bank Financial Model -- the GP-managed working-capital set-aside for current/future expenses, liabilities and commitments, distinct from the equity and debt phases (EN+ES)
@@ -10,7 +10,7 @@ quality: complete short_description: "Two-phase financing discipline of the Direct-Hold Solutions: equity-funded unlevered construction, then First Secured Mortgage Debentures collateralized by the completed buildings." status: stable bcsc_class: current-fact last_edited: 2026-07-11 last_edited: 2026-08-24 editor: pointsav-engineering language_protocol: PROSE-TOPIC source_refs: @@ -49,6 +49,10 @@ As the portfolio enters its stabilized management phase — buildings constructe This deleveraging dynamic is driven by portfolio operations rather than by capital market conditions. The vehicle does not rely on favourable refinancing conditions, asset sales, or new equity raises to reduce its debt burden. The 10% distributable income allocation compounds the deleveraging effect across the full hold period. ## Operating reserve Alongside the equity and debt phases, the general partner sets aside an Operating Reserve — an amount determined, acting reasonably and in good faith, to cover the vehicle's current and future expenses, liabilities, and commitments, including compensation due to the general partner or the Advisor. The general partner's board sets the reserve's size for whatever additional purposes it determines necessary to conduct the partnership's business. The reserve sits apart from the equity raised to fund construction and the debt issued against completed buildings — it is the vehicle's own working-capital buffer, not a third source of project financing. ## Structural consequences The Narrow Bank Financial Model has several structural consequences that distinguish it from conventional commercial real estate financing.