Earnings for large-scale land developers such as Catellus are dependent on a number of factors, such as the amount of money they must invest, how long that money will be outstanding, the complexity of the project and how much risk they are taking on in the redevelopment.
Catellus will invest a good deal of money in the Mueller project, particularly in the early years when major infrastructure must be built in advance of revenue-generating development. And, that money will be at risk for a long period of time.
Beginning in 2002 and extending through 2008, Catellus is currently projected to have invested approximately $30-35 million of its funds in the Mueller project. At the end of the development phase, Catellus is currently expected to recoup that initial investment and earn a 15 percent return on that investment.
This return is consistent with real estate industry standards for projects of this scale, complexity and duration, which range from 15 to 25 percent.