...
Table of ContentsI.     Executive OverviewII.    EconomicsIII.   Site Plan and ArchitectureIV.    MarketV.     Articles an...
Midtown Group, LLCI.   Executive Overview
 The West End, Edwards, CO Project Overview‐   The  West  End  is  a  fully  designed  and entitled  (zoned and platted) v...
  Workforce  Housing‐  It  is  important  to  note  that  Eagle  County  is  very  motivated  to  see  this  project succe...
  Commercial‐ We have seen strong demand for the commercial space since early this year.   Vacancy is still  low  in  Edwa...
Midtown Group, LLCII.   Economics
The West End ‐ Edwards, CO                                                                 Phased Project Return Analysis ...
Midtown Group, LLC III. Site Plan & Architecture    (All entitlements are approvedand vested rights have been granted)
Section III : Site Plan and ArchitectureSite Plan:             PHASE 3 – BLDG 2                                        PHA...
Renderings of Edwards:                 The view from Highway 6, this will be the main entrance to The West End            ...
Rendering of the shopping plaza inside The West EndProperty Photograph:                                                   ...
Midtown Group, LLCIV. Market Information
Section IV : MarketLocation:             The West End Development is located in the central submarket of the Colorado offi...
housing developments emerge, retail developments follow to provide ancillary services,                  driving the market...
Condo Sales as % of Total Sales                                             40% From 2000-2005, the % of sales above $400,...
Commercial                                          Type      Gross                               Property                ...
Compelling        •   Internationally renowned, the Vail Valley has been insulated from the significantCharacteristics    ...
Midtown Group, LLCV.   Articles & Press Releases
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
The west end request for financing   v3.0 12.08
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The west end request for financing v3.0 12.08

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Request for financing package for The West End Project in Edwards, CO. *Facts and figures are outdated and no longer relevant to current market conditions.

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The west end request for financing v3.0 12.08

  1. 1.       Commercial Mixed‐Use Development  Edwards, CO (In the Vail Valley)  Request for Financing or JV Equity    Fully Entitled and Approved Project including Water Rights   Phase 1 – Building 3  Phase 2 – Building 1 Phase 3 – Building 2 26,000 SF Retail  18,000 SF Retail 14,000 SF Retail 26,000 SF Office  20 Workforce Units 58 Market Rate Units52 Workforce Units  55 Market Rate Units       www.TheWestEndEdwards.com  V 3.0 ‐ 12/1/08 
  2. 2. Table of ContentsI. Executive OverviewII. EconomicsIII. Site Plan and ArchitectureIV. MarketV. Articles and Press Releases
  3. 3. Midtown Group, LLCI. Executive Overview
  4. 4.  The West End, Edwards, CO Project Overview‐   The  West  End  is  a  fully  designed  and entitled  (zoned and platted) vertical  mixed  B2‐ PHASE 3  B 1‐ PHASE 2 use  development  on  5.3  acres  in  the commercial  core  of  Edwards,  CO.    The  site is located in the heart of the Vail Valley just 14  miles  west  of  Vail  and  4  miles  west  of Beaver  Creek  along  the  I‐70  corridor.  We have spent the last 3 years assembling the land,  securing  the  entitlements  as  well  as  B3‐ PHASE 1 the raw water for the project.  All of this is complete  and  we  are  poised  to  pull  a building permit and start construction.   We have  agreed  to  an  Initial  Guaranteed Maximum Price (IGMP) with our contractor and 54% of the construction costs have been hard bid with the sub contractors.  With a tentative 2009  start of construction, we anticipate  further  savings  when  the  job  is  bought  out.    Below  is  an  overview  of  the  project  including  a  program  summary  and  total  cost  by  phase  as  well  as  information  about  the  workforce  housing  component  of  the project.         Program Summary‐  Phase  Building   Residential  Retail  Office  Cost  1  3  52 units‐100% workforce  26,000 SF   26,000 SF  $37,700,000  2  1  75 units‐20 workforce, 55 market rate  18,000 SF  n/a  $38,500,000  3  2  58 units‐100% market rate  14,000 SF  n/a  $32,900,000  Total  1, 2, 3  185 Units  58,000 SF  26,000 SF  $109,100,000 A Midtown Group Development  1 12/08 
  5. 5.   Workforce  Housing‐  It  is  important  to  note  that  Eagle  County  is  very  motivated  to  see  this  project succeed.    The  West  End  conforms  to  Eagle  County’s  2008  Workforce  Housing  Guidelines  that  require 40% affordable/workforce housing for new projects in unincorporated Eagle County.  Not only has there been significant demand for the units, but over 25% of the units were purchased by institutional buyers (I.E. School District, Fire Department, etc.) for their employees.  The County is committed to help finance the  project  and  has  stated  they  will  backstop  all  remaining  unsold  workforce  units  upon  receipt  of certificate  of  occupancy.    This  is  significant  and  the  details  still  need  to  be  finalized  with  the  Housing Director and Eagle County.   Project Financing‐  Current Debt‐ We currently have a low leverage $6.4M land & entitlement loan on the property.  The loan  is  46%  loan  to  value  based  on  a  revised  appraisal  by  National  Valuation  Consultants  dated November 2008.  The loan matures on March 19, 2009.     Current  Equity‐  The  total  cost  incurred  to  date  is  $17.0M  with  just  over  $10M  of  cash  invested  in  the deal from the ownership group.   New Financing – We are seeking two types of financing:  1. Land & Entitlement Loan‐ This loan will replace the existing bank of America loan that matures  in March 2009.  We are requesting a 12 month term with one 6 month extension and an interest  reserve.    With  the  current  appraised  value  the  loan  should  be  at  approximately  50%  loan  to  value.  2. Construction Loan‐ This loan will be used to complete Phase 1 of the development.     Depending  on the loan to value the construction loan would be in the $25 ‐ $30 million dollar range.  Pre‐sales & Pre‐leasing‐  Residential‐  In  January  2008  we  started  the  residential  pre‐sales  in  earnest  with  a  series  of  kick‐off events, press releases, parties and gatherings.  Due to the high demand for workforce housing in the Vail Valley,  75%  of  the  workforce  housing  units  were  pre‐sold  in  the  first  90  days  of  offering  them  to  the public.    Many  of  the  units  were  purchased  by  institutional  buyers  such  as  the  School  District,  Fire Department,  Cordillera,  local  businesses,  etc.      Late  in  the  summer,  we  experienced  a  fall‐out  of  a portion of our workforce housing buyers due to re‐contracting requirements by HUD and the fact we did not start construction in June as originally communicated.   In February 2008 we released the first group of market rate residential units to the marketplace.  These units  were  also  well  received  and  we  pre‐sold  over  35%  of  the  units  by  early  summer.    Similar  to  the situation with the workforce units and HUD, a portion of the buyers fell out of contract in September.  All  of  the  workforce  and  market  rate  buyers  were  given  the  opportunity  to  convert  their  contracts  to reservations ($5,000 refundable) and many of them have done so.  Once we gain visibility to the start of construction we will re‐launch our marketing efforts and believe the buyers will return.   A Midtown Group Development  2 12/08 
  6. 6.   Commercial‐ We have seen strong demand for the commercial space since early this year.   Vacancy is still  low  in  Edwards  for  retail  and  there  is  a  lack  of  quality  Class  A  office  space  in  the  Vail  Valley  in general.   As of September 2008, we had over 40% of the project committed for retail and office space.  We have seen some of these tenants slow down the process until they see a strong indication that we are starting construction.  The majority of the tenants are local or regional business with sound credit and many have multiple locations in the Vail Valley.     Exit Strategy‐  Scenario 1 Land Sale‐ Sell the land “as is” in 12‐18 months upon the return of normal values in the Vail Valley.  There are no other projects like The West  End in the pipeline and we expect the  value of the entitled land to return to $18M‐$20M or more once the credit markets improve.  In July 2007, the land was  appraised  for  $17,250,000  including  entitlements  and  recently  adjusted  down  by  20%  due  to current economic conditions.         Scenario 2 Vertical Construction‐ If the ownership group decides to go vertical, the best way to do this is in  phases.    By  phase  the  residential  units,  whether  they  are  built  for  sale  or  for  rent,  will  be  sold  or leased up respectively, and the residential and commercial will be sold or refinanced upon stabilization.  Repayment of the construction loan will occur through the sale or refinance of the residential units and any remaining balance will be retired through the sale or refinance of the commercial space.   For more information about the project please visit the project website at www.thewestendedwards.com.     A Midtown Group Development  3 12/08 
  7. 7. Midtown Group, LLCII. Economics
  8. 8. The West End ‐ Edwards, CO Phased Project Return Analysis PHASE 1  ‐           PHASE 2 ‐           PHASE 3 ‐           TOTAL PROJECT  Develompment Cost BUILDING 3 BUILDING 1 BUILDING 2 PHASED Land Acquisition $              4,683,357 $              3,269,911 $              3,206,623 $             11,159,891 Design & Consultants                     957,817                  1,207,559                     929,624                  3,095,000 Construction Costs               23,030,872               28,352,121               23,075,551               74,458,543 Soft Costs                  3,485,082                  3,440,669                  2,720,080                  9,645,831 Overhead & Accounting/Reimbursables                  1,375,048                  1,523,431                  1,261,535                  4,160,014 Financing Costs                     896,333                     554,529                     459,199                  1,910,061 Interest Expense                  1,322,728                  1,260,992                  1,147,303                  3,731,023 Mezzanine Financing Cost                  1,175,111                                  ‐                                  ‐                  1,175,111 Total Cost $           36,926,348 $           39,609,213 $           32,799,914 $         109,335,475 Value Analysis Net Sales Proceeds Residential ‐ Workforce Housing Sales Proceeds $             14,077,044 $              7,508,041 $                           ‐ $             21,585,084 Residential ‐ Market Rate Housing Sales Proceeds                                  ‐               36,853,820               42,051,041               78,904,861 Commercial Sales Proceeds & Cashflow               35,527,584               11,917,085                  9,825,644               57,270,313 Total Sales Proceeds                49,604,627                56,278,946                51,876,684            157,760,258 Net Profit $           12,678,279 $           16,669,734 $           19,076,770 $           48,424,783 Return on Cost 34.3% 42.1% 58.2% 44.3% Unlevered Project IRR 40.5% 52.8% 38.2% Senior Interest Rate 8.00% 8.00% 8.00% 8.00% Mezzanine Interest Rate 10.00% N/A N/A 10.00% Notes: 1. Land is shown at original basis and has not been discounted 2. Development Cost ‐ 54% of the construction cost has recently been hard bid 3. Development Cost ‐ Design/Consultants, Site Construction Cost, & Soft Costs are allocated per Building GSF 4. Equity ‐ There is currently $10MM of Equity in the project related to all 3 phases 5. Approximately $3.5MM of Phase 2 and 3 infrastructure cost will be built and paid for in Phase 1, and are not included in the costs above. Assumptions PHASE 1  ‐           PHASE 2 ‐           PHASE 3 ‐           TOTAL PROJECT  Project Size BUILDING 3 BUILDING 1 BUILDING 2 PHASED Site Size ‐ Acres                           2.22                            1.55                            1.52                             5.29 Site Size ‐ Square Feet                       96,703                        67,518                        66,211                      230,432 Building Gross Square Footage                     103,958                      131,064                      100,898                      335,920 Commercial Gross Square Feet 52,000 18,000 14,000                       84,000 Blended Lease Rate (NNN) $40.11   $                     42.00   $                     44.00  Vacancy 5.0% 5.0% 5.0% Cap Rate 6.0% 6.0% 6.0% Residential Workforce Housing Number of Units 52 20 ‐                               72 Avg Price / SF $341.61   $                   346.66   N/A  Market Rate Housing Number of Units ‐                               55                                58                              113 Avg Price / SF N/A  $                   565.00   $                   625.00 Midtown Group ‐ CONFIDENTIAL Version 3.0 12/10/08
  9. 9. Midtown Group, LLC III. Site Plan & Architecture (All entitlements are approvedand vested rights have been granted)
  10. 10. Section III : Site Plan and ArchitectureSite Plan: PHASE 3 – BLDG 2  PHASE 2 – BLDG 1  PHASE 1 – BLDG 3Building Summary: Residential Commercial Workforce Market Rate Retail Space Office Space Phase 1 - Building 3 52 Units - 26,000 SF 26,000 SF Phase 2 - Building 1 20 Units 55 Units 18,000 SF - Phase 3 - Building 2 - 58 Units 14,000 SF - Subtotal 72 Units 113 Units 58,000 SF 26,000 SF TOTAL 185 Units 84,000 SF V 3.0 – 12/1/08
  11. 11. Renderings of Edwards: The view from Highway 6, this will be the main entrance to The West End The view from across the street at Edwards Plaza V 3.0 – 12/1/08
  12. 12. Rendering of the shopping plaza inside The West EndProperty Photograph: V 3.0 – 12/1/08
  13. 13. Midtown Group, LLCIV. Market Information
  14. 14. Section IV : MarketLocation: The West End Development is located in the central submarket of the Colorado office and retail market. Edwards is considered the most desirable community in the Vail Valley based on the county commissioned housing needs assessment and is less than 15 miles to Vail, 5 miles to Beaver Creek, 20 miles to the regional Vail-Eagle Airport and 110 miles to downtown Denver. Geographic Barriers to Entry Land available for development in Eagle County is very limited as the federal government owns 84% of the land in the county. Of the 16% of the county that is in private ownership, approximately 80% is encumbered by steep slopes, flood plains or various other development constraints. As a result, only 3 to 4% of the total land area in Eagle County is actually available for development, and much of this land has already been developed.Market Studies: Numerous studies have been commissioned in the Vail Valley and for the West End specifically. These studies are available at your request and consist of the following: • RRC Associates: Eagle County Needs Assessment 2007 • ULI: Eagle County Colorado, A Regional Approach to Affordable Housing 2006 • Prior & Associates: Housing Market Study for the West End DevelopmentFor Sale Market / Based on the most recently completed Housing Needs Assessment (commissioned byWork Force Eagle County), there is an immediate need for approximately 2,300 residential units.Housing: Using the metrics of the average Eagle County household size of 2.74 persons, at least 11,500 new housing units will be needed over the next two decades. This increase represents a demand for 500 to 600 new housing units per year to service year-round Eagle County residents over this period, excluding any additional housing demand created by the second-home housing market. The community of Edwards is considered the most desirable location to live in Eagle County and the RRC Needs Assessment established that “the additional amounts they are willing to pay for homes in their first choice community are significant – averages $193,000 for homeowners……”. In addition, the RRC Needs Assessment determined that “Edwards is the community most preferred by residents who would like to buy, ….with Vail ranking third among first choice locations.” The influx of wealthy out-of-town buyers has significantly increased the median Eagle County home price. According to the Eagle County Housing Department (ECHD), the county has an estimated shortfall of 3,500 affordable-housing units. The 2002 Eagle County Needs Assessment, conducted by RRC Associates, a Boulder-based market research firm, identified 4,100 households paying more than 30 percent of their household income for housing. RRC Associates adjusted that figure to 4,200 to account for sampling error. Since that needs assessment, 700 affordable units have been built at Miller Ranch, Middle Creek, and Buffalo Ridge. Thus, the identified need of 3,500 affordable units is the difference between the 4,200 households identified in 2002 and the 700 affordable units built since then.Office / Retail Several factors drive Colorado’s residential, retail and office market; including improvedMarket: job and population growth that have under pinned the recovery process and resulted in decreased vacancy and substantial positive absorption. Over the last several years the Eagle County retail market has been thriving, with high absorption rates, decreased vacancy, and relatively low amounts of new supply. As new V 3.0 – 12/1/08
  15. 15. housing developments emerge, retail developments follow to provide ancillary services, driving the market and resulting in positive absorption and rising rental rates. Nearly all of the square footage being built comes online as occupied. The Eagle County retail market is benefiting from a higher than average income percentage as Colorado ranks in the top ten in the country for highest per capita personal income. Incomes in Colorado for 2005 rose 5.1%, which was higher than the national average of a 4.6% increase. The Edwards retail market in the second quarter of 2007 recorded a 3.2% vacancy rate, one of the lowest seen in several years. The Edwards retail market continues to boast a significantly lower vacancy percentage than the national average, which falls between 7 and 8% for all class and product types. Asking lease rates in the Edwards retail market are increasing year after year. Current average asking rents in the Edwards market have already surpassed $38.00 NNN.General Community Base StatisticsDemographics / Eagle County (Vail Valley) Population 52,236Supply & Demand 2015 Projected Eagle County Population 66,113Data: 2007 Eagle County Households 18,924 2007 Percentage of Owner Units 70% 2007 Edwards Population (per 2000 consensus) 8,257 Unincorporated 24,024 Number of Housing Units 29,774 Average Eagle County Household Size 2.74 2007 Demand for Residences 4,446 2007 Supply of Condo/Townhome/Triplex Residences Available 1086 under $400,000 108 $400,000 - $1,000,000 378 $1,000,000 + 600 2007 Undersupply 3,398 Out-of-State Owner Units 49% Out-of-State Condo Owner Units 64% Eagle County Median Household Income $81,100 Eagle County Median Household Income for Owner Residents $90,000 Eagle County Average Household Income $100,000 Condos as a Percentage of Housing Stock 45% Median Sale Price for Residences in Eagle County – 2006 (p. 13) $519,300 Median Sales Price for a Condo in Eagle County 4/07 (p. 89 RNA) $1,050,000 Number of Condo Units sold in 2006 487 Condos as a % of construction between 2000 and 2005 25% Housing Stock valued over $350,000 78.6% Households earning greater than 120% AMI 43% Households that earn over $100,000/yr 47% Eagle County households that earn greater than 140% of AMI and 32% can afford a home costing greater than $334,741 As prices increase the % of out-of-area ownership increases V 3.0 – 12/1/08
  16. 16. Condo Sales as % of Total Sales 40% From 2000-2005, the % of sales above $400,000 has increased to 68% West End Related Statistics 2007 Median Household Income – Edwards $125,832 Residential Condos/Townhomes/Triplexes in the Vail Valley 1,086 Residential Condos/Townhomes/Triplexes in Edwards 478 Number of Condos sold in Valley over past 36 months 1,660 Number of Condos sold in Edwards over past 36 months 154 Number of Condos currently for sale in Valley 592 Number of Condos currently for sale in Edwards 19 Number of condos sold in $350,000 to $650,000 price range 578 Number of units anticipated to come on line in next 24 months 0 Average Sale Price per Square Foot for Condos in Eagle – 2006 $422 Average Sale Price per Square Foot for Condos in Edwards – 2007 $449 Average Sale Price per Square Foot for Deed Restricted Condos in $375 Edwards – 2007Edwards had the majority of the sales in Eagle County greater than $800,000 in 2006 (30%of sales in Eagle County) (p. 54 of needs study).The Colorado Department of Local Affairs, the state agency responsible for demographicprojections, and the ECHD project that over the next two decades the county’s year-roundresident population will grow significantly:• The county’s population is projected to grow by 15,700 year-round residents in the nextdecade from an estimated 49,300 to 65,000 in 2015.• The county’s population is projected to grow by an additional 15,700 year-roundresidents to 80,700 by 2025.The Colorado Department of Local Affairs, the ECHD, and RRC Associates haveprojected significant employment growth over the next two decades as well:• The county’s employment is projected to grow by 18,265 jobs by 2015.• The county’s employment is projected to grow by an additional 18,283 jobs by 2025.Although some of these new employees will continue to live outside the county andcommute from surrounding areas, competitive pressures from surrounding ski resort areasin Summit County (Keystone and Breckenridge), Vail and the restarted oil and gas industryin nearby Garfield County are likely to create more pressure on Eagle County to providefor the housing needs of its future workforce.According to the County Needs Assessment and interviews with local realtors, “..it isestimated that 50 percent of purchasers are second homebuyers. Second homebuyers arestarting to create competition down valley, especially in Avon and Edwards.” 30-40% ofthese buyers are from the Front Range (Denver area). V 3.0 – 12/1/08
  17. 17. Commercial Type Gross Property Rental Rate NotesComparables: SFLeasing Riverwalk Retail 801 $32.00 NNN Edwards Village 2 Retail 1,405 $36.00 NNN Village Center 2 built 1997As of Dec. 2007 Riverwalk - Diamond Retail 733 $32.00 NNN Riverwalk - Quartz Retail 959 $37.50 NNN Edwards Village Center Retail 1,600 $39.00 NNN Built 1997Sales Type Gross Notes Property Price $/SF SFAs of Dec. 2007 Riverwalk – Diamond Office 572 $290,000 $506.99 Under Contract Riverwalk – Garnet Office 895 $400,00 $446.93 Under Contract Riverwalk – Opal Office 1,431 $599,500 $418.94 Under Contract Riverwalk – Quartz Retail 923 $498,000 $539.54 Sold June 07 Edwards Village Center Retail 2,733 $1,463,490 $535.49 Sold Sept 07 Riverwalk – Garnet Retail 1,320 $700,000 $530.30 Sold Oct 06 Riverwalk – Quartz Retail 959 $500,000 $521.38 Sold Aug 07 Riverwalk – Crystal Retail 1,549 $685,000 $442.22 Sold June 06 Riverwalk – Opal Retail 787 $485,000 $616.26 Sold Nov 06Sales Comparables:Market Rate Sq. Price Price Condo Complex Unit # Bed List Price Sold Price Ft. PSF PSFAs of Dec. 2007 Gates @ Beaver Crk N/A 2b/2b 1,300 $1,140,000 $877 N/A N/A Gates @ Beaver Crk N/A 3b/3b 1,900 $1,700,000 $895 N/A N/A Emerald N/A N/A 1,900 N/A N/A $1,100,000 $579 Topaz R204 2b/1.5b 870 $349,000 $401 $391,954 $451 Quartz N/A N/A 1,537 N/A N/A $680,000 $442 Ruby N/A N/A 1,167 $500,000 $429 N/A N/A Ruby 204 1b/1b 1,167 $489,868 $420 $489,868 $420 Amber R319 2b/1.5b 890 $347,000 $390 $347,000 $390 Amber R311 2b/1.5b 924 $369,000 $399 $360,000 $390 Amber R303 2b/1.5b 924 $355,000 $384 $355,000 $384 Red Tail B3 3b/2.5b 1,523 $549,900 $361 $530,000 $348 Stonegate Village 111 2b/2.5b 1,232 $427,000 $347 $427,000 $347Deed Restricted Sq. Price Price Condo Complex Unit # Bed List Price Sold Price Ft. PSF PSFAs of Dec. 2007 Amber R319 2b/1.5b 890 $347,000 $390 $347,000 $390 Amber R204 2b/1.5b 924 $355,000 $384 $355,000 $384 Amber 311 2b/1.5b 924 $369,000 $399 $369,000 $399 Amber 317 2b/2.5b 1196 $425,000 $355 $425,000 $355 Crystal R208 2b/1.5b 830 $335,000 $404 $335,000 $404 Topaz R204 2b/1.5b 870 $349,000 $401 $349,000 $401 V 3.0 – 12/1/08
  18. 18. Compelling • Internationally renowned, the Vail Valley has been insulated from the significantCharacteristics deterioration of residential values experienced by many communities across the United States and remains one of the few U. S. locations with development opportunity. • Real estate sales through the end of 2007 show an 7.5% increase over 2006, with a total dollar volume of $2.96 billion and nearly 2700 transactions. • Significant pent-up demand resulting in growing local, national and international demand in a small geographically constrained community. • Based on numerous housing needs studies and economic reports, Edwards has been identified as the most desirable community to live in the Vail Valley (page 63 of Needs Assessment). • The geographically constrained and environmentally sensitive market limits the potential for over-development and limits the potential for future competing projects. • Vail is currently experiencing a redevelopment renaissance with over $1 Billion of new investment. • The residential component of the West End is designed and priced to meet the highest demand segment of the undersupplied local market • The market has an immediate need for 2,300 residential units • Edwards has the highest median household income in the Vail Valley at $125,000. V 3.0 – 12/1/08
  19. 19. Midtown Group, LLCV. Articles & Press Releases

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