Fall Real Estate Conference 2013 - Jason Elliot
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Fall Real Estate Conference 2013 - Jason Elliot

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  • Good afternoon My name is Jason Elliott and I am a proud alum of the University of Colorado, having earned my MBA from the Leeds School of Business in May of this year. I have twenty years experience in design, development and project management in the residential construction field, and I am currently employed with Shaw Construction – which built the expansion for Folsom Field that we are currently enjoying. Last May I was part of a team of MBA students from CU who competed in – and won – the NAIOP Rocky Mountain Real Estate Challenge. For those of you who don’t know about this event, it is an annual head-to-head competition between CU and DU to present a development vision for a particular property that is both compelling and financially feasible. This year’s competition site was the Boulder Civic Area, and specifically the block bounded by Canyon, Arapahoe, 13th and 14th Streets, an area of town best defined by the Farmer’s Market and the Dushanbe Teahouse. So how do you create a vision that is both compelling AND financially feasible in downtown Boulder? We all know that the demand is there… that part is easy. The challenge is solving the feasibility component when confronted with the multitude of constraints in Boulder – High land basis. Zoning requirements. Building size limitations. Political scrutiny. And to make our project a little more challenging, we needed to solve the riddle of how private capital could be attracted to this project – and earn an acceptable return – when most of the site is publically owned by the City of Boulder. And did I mention that the City has no interest in selling the land? ***click***
  • Our team, which we named Tatonka Development Partners, began with the question: “where do great ideas come from?” Why is Boulder a particularly creative place? Why does it attract creative talent?  ***click***
  • Ideas do not exist in a vacuum Ideas are networks -- Networks of interconnected thoughts,Networks of people -- Collaborating and exchanging small ideas In order to assemble big ideas***click***
  • Creative networks are supported by intersections of activityThe Civic Area is literally at the physical intersection of: Commerce **CLICK**Government **CLICK** Culture **CLICK**Art **CLICK**And leisure **CLICK**…PAUSE, **CLICK**
  • So what does this mean in the greater Context for Boulder? After all, this is an important PUBLIC site. What is the community vision? ***click***
  • To help support the design process, the City Council has endorsed several Guiding Principles for the Civic Area. Of these principles There are three… that are particularly important: **CLICK**Expansion of community assembly activities **CLICK**Enhancement of the Farmers’ Market **CLICK**And Improvement of municipal services **CLICK** 
  • So again… what makes Boulder… Boulder? Boulder is a uniquely Creative place…***click***
  • and it’s small size makes it inherently well-connectedConnectivity is what binds creative networks togetherNot just through a robust transit system…***CLICK***
  • But also through creative spaces that foster relationship networksand facilitate the exchange of ideas***click***
  • So as our world becomesa little bit smaller every dayConnectionsto International networksof intellect and creativity Are becoming more and more important. PAUSEBoulder has long viewed itself as a city on a hill,an example for others to followBy “Thinking globally…***click***
  • ….and acting locally”Our vision is to create a new, vibrant area where the energies of local commerce, government, and arts Can come together in a great public spaceA public space that is not just a local amenity, But also serves as a creative network, an international creative network that fosters interactions with visitors from around the country And around the world.
  • Globally inspired, and locally drivenWe believe The Boulder Civic Area can be a great public stageThat nurturescreativity, and facilitates the development of great ideas***click***
  • And we call our vision…The Boulder International Center***click***
  • SITE VISION SLIDE: Now that I’ve talked about what drives Boulder, I’m going to quickly run through some of the details of our Site Vision… ***click***
  • As we discussed how to create a unified site vision, we always returned to how the Teahouse should serve as the jewel of the site, both physically and thematically… as a gift from one of Boulder’s sister cities, it provides an obvious international theme…***click***
  • As we conducted our market research we discovered that Boulder, despite its reputation as a technology hub, has limited conference space… and that integrating one of Boulder’s keynote intellectual events – The Conference on World Affairs - into our development program made a lot of sense.***click***
  • And of course we have the Farmer’s Market.Our goal from the beginning was to expand the existing market capacity, AND create a permanent indoor market designed to promote and cultivate small local businesses.***click***
  • MAP SLIDE: So here’s our site, and I’ll start by pointing out the Teahouse and the Boulder Museum of Contemporary Art, both of which are landmarked and must stay put. And here we have 13th Street, home of the Farmer’s Market, which may very well be Boulder’s most sacred institution.Our contributions, from north to south, would include:A community events centerA luxury hotelA new municipal officeAnd a new private officeTotal parking – all below grade – would include over 750 spaces.***click***
  • So onto the specifics of our Development Program…***click***
  • First, in order to determine what should be built, it is critically important to understand what the demand drivers will be for this site that will ensure our development program will be successful ***click***
  • We certainly aren’t the first to think about building another hotel in downtown BoulderOverall, there are 21 hotels, totaling just over 2,100 rooms - that’s about half what a city this size could supportAnd downtown, there are only two hotels:TheSt. Julien Hotel and the Boulderado, and as the metrics suggest, they are both doing quite well***click***
  • The office market – as everyone in this room knows – enjoys high demand and limited supplyVacancy – and this figure is from early 2013 – is at 5.9%,Rents are trending upwardsAndlease rates for quality space can exceed $30 per square foot***click***
  • So after poring through our market data, our team determined that a luxury hotel would be best way to attract private capital And to create an economic driver to fund the public uses of the site.***click***
  • Through direct discussions with Hyatt, we determined that the Andaz brand would be an excellent fit for this program… it would combine the ambience of a unique boutique hotel with the financial backing of a national flag.***click***
  • With the hotel serving as the economic driver, we believe the hotel can support the City’s goal to expand community assembly activities… We propose to build the Boulder Community Events Center on the northwest corner of the site…***click***
  • The upper level would house a 20,000 square foot, multi-purpose space suitable for corporate conferences, performance arts, and other cultural events. We believe that having this space – nearly twice the size of any other similar space in Boulder – while directly proximate to the Hyatt Andaz hotel, would see heavy demand.***click***
  • The ground level would house a permanent public market for local produce, meats, cheeses and other goods…Our models for this space include the Pike Place Market in Seattle and The Ferry Plaza Market in San FranciscoA new below-grade parking structure, funded, owned and operated by CAGID, would provide a total of 526 parking spaces beneath the Community Events Center and the Andaz Hotel***click***
  • The south side of the site – which is composed of a handful of small private lots, would serve a new LEED certified office building, providing 4 floors and over 100,000 square feet of Class A, large-floor plate office space to Boulder’s tight office market.A below-grade parking structure would provide 232 parking spaces.***click***
  • This building is designed to provide either small, flexible work environments, or contiguous large-floor plate areas for growing companies – both of these design elements are sorely lacking in Boulder’s current market***click***
  • On the east side of the site along 14th street is the site of a new city-owned office building designed to consolidate the existing nearby municipal services – now spread across three aging buildings. By bringing these city functions into one, modern facility we can help solve a major problem for the City of Boulder.***click***
  • This municipal facility would open out into the Cinema Courtyard…***click***
  • Where terraced seating would enhance the popular outdoor summer cinema… which is currently held in a parking lot***click***
  • So what are the benefits of our development vision?***click***
  • Our economic impact analysis estimates a direct economic output of211 million dollars in Construction activity in the first two years, and then a permanent economic output of over 200 million dollars per yearThis economic activity would support over 2800 permanent jobs,And the City of Boulder could expect to receive over 3 million dollars in construction use tax. Property tax, sales tax, and accommodations tax are estimated to total 1.4 million dollars***click***
  • So how to we pay for it?***click**
  • Globally inspired. . . . The $157 million capital structure for the Boulder International Center uses both public and private investment from domestic and international capital markets. Sources & UsesPublic sources come in 4 forms:A CAGID bond issuanceA Metro District bond issuanceRound 2 Capital Investment Strategy bond issuanceReinvested hotel surface rights proceedsPrivate capital sources includeConventional construction debtPrivate Equity, both sponsor and investorEB-5 preferred equityPrivate DevelopmentOur development team wouldprivately develop and own 2 buildings on the site and will be a fee developer on the remaining publicly owned components.The Private Office will be constructed on 6 parcels of land privately assembled on the south end of the site. We anticipate paying a premium to market to acquire the parcels unencumbered.The Hyatt Andaz Hotel will be built on top of a CAGID parking structure with the surface rights being sold to our development team through a condominium association. The proceeds from the sale will be reinvested to build the Community Events Center.This plan only requires the City to commit previously-approved capital sources and avoids Tax Increment Financing which is why this program is both politically viable and financially feasible.
  • Globally inspired and locally drivenWe propose to build a great public stageA place of creativity where ideas can develop and grow***click***
  • The Boulder International CenterThank you very much for your time, I’d be happy to discuss this concept in greater detail with anybody who might be interested,And of course, please think of Shaw Construction for any of you building projects.Thanks!ReturnsThe return on the privately developed office building is worthy of attracting institutional equity with a property level leveraged return of 22%. Investors will receive a 20% IRR and 2.2 equity multiple with our proposed waterfall structure. The development will yield a 15% cash-on-cash return at stabilization and Tatonka will earn a 35% IRR and 4.0 equity multiple as the general partner.

Fall Real Estate Conference 2013 - Jason Elliot Fall Real Estate Conference 2013 - Jason Elliot Presentation Transcript

  • So where do great ideas come from?
  • Networks
  • Context
  • The Guiding Principles for the Boulder Civic Area Expansion of community assembly activities Enhancement of the Farmers’ Market Improvement of municipal services
  • Creativity
  • Connectivity
  • Thinking globally…
  • …acting locally
  • Globally inspired, locally driven
  • Site Vision
  • Development Program
  • Market Analysis
  • Hotel Market Competition St. Julien Hotel & Spa Hotel Boulderado Metrics Mid-$200 ADRs Near 80% Occupancy Rates
  • Office Market Limited Class A Space 5.9% Vacancy $30+ psf NNN Rents
  • Hotel Sqft & Stats… 214 Rooms
  • Boulder Community Events Center Sqft & Stats… Contiguous 20,000 Sqft Ballroom
  • Private Office Sqft & Stats… LEED Silver, 108,300 Sqft
  • Municipal Office Sqft & Stats… 5 Levels, 80,000 Sqft
  • Economic Impact
  • Economic Impact Analysis Economic Output $218 Million Construction Output $205 Million Annual Output Job Creation 2,850 Jobs Tax Revenues $3.3 Million Construction Use Tax $1.5 Million Annual Property Tax, Sales Tax & Accommodations Tax Revenues
  • Financing Summary
  • Capital Stack Public Sources: CAGID Bond Proceeds Metro District Revenue Bond Proceeds Round 2 Capital Investment Strategy Bond Proceeds Reinvested Hotel Surface Rights Proceeds Private Sources: Conventional Construction Debt Private Equity (GP and LP) EB-5 Preferred Equity
  • Globally inspired, locally driven