Cash-on-Cash Return is a property development finance metric that calculates the annual pre-tax cash income a project generates as a percentage of the actual cash invested by the developer or equity partners. Unlike Return on Investment, it focuses solely on cash flow relative to equity contributions, excluding appreciation or refinancing gains. In UK property development, Cash-on-Cash Return helps assess short-term liquidity performance, which is critical for developers managing multiple active schemes. It is particularly relevant for equity investors who prioritise steady income streams over capital gains during the construction and early operational phases.
This sits beneath Project-Level Profitability, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Average Annual Return on Equity (AAROE), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Cash-on-Cash Return is most commonly encountered in connection with Fixed Return + Profit Share within the property development capital stack.
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