E hedeman presentation 051112

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E hedeman presentation 051112

  1. 1. HUB625 where life happensImage courtesy of: Laura Doran
  2. 2. VISION
  3. 3. VisionImage courtesy of: Laura Doran
  4. 4. SITE CONTEXT
  5. 5. Primary Market AreaLocation Secondary Market Area N
  6. 6. Primary Market AreaLocation Secondary Market Area N
  7. 7. Primary Market AreaLocation Secondary Market Area N
  8. 8. Primary Market AreaLocation Secondary Market Area N
  9. 9. Primary Market AreaLocation Secondary Market Area N
  10. 10. Primary Market AreaLocation Secondary Market Area N
  11. 11. Primary Market AreaLocation Secondary Market Area N
  12. 12. Location HS/C-2-C C-2-A N
  13. 13. Historical Conditions1920’s 1930’s 1968 2003 2016
  14. 14. Demographic Trends SUMMARY 2010 2011 2016 Population 9,505 10,166 11,568 Households 4,328 4,642 5,384 Families 1,751 1,875 2,118 Average Household Size 2.14 2.14 2.11 Owner Occupied Housing Units 2,234 2,331 2,624 Renter Occupied Housing Units 2,094 2,310 2,761 Median Age 33.9 33.8 33.7
  15. 15. Demographic Trends SUMMARY 2010 2011 2016 Population 9,505 10,166 11,568 Households 4,328 4,642 5,384 Younger people in smaller families Families 1,751 1,875 2,118 filling more households, Average Household Size 2.14 2.14 2.11 looking to buy, but primarily to rent. Owner Occupied Housing Units 2,234 2,331 2,624 Renter Occupied Housing Units 2,094 2,310 2,761 Median Age 33.9 33.8 33.7
  16. 16. Psychdemographics LIBERAL 33.6 YEARS OLD OLDER THAN 65 37.7 YEARS OLD 70% BLACKSINGLE PARENTS 12% HISPANICTECH-SAVY 80% BLACK LIVING ALONE MARRIED COUPLES LIVING ALONE MARRIED COUPLES 35.5 YEARS OLD NATURAL/ORGANIC FOODS FOOTBALL $60,191 AMI $43,548 AMI LIVING ALONE PUBLIC TRANSPORTATION LOW FIXED INCOME FAST FOOD WHITE POLITCALLY ACTIVE $34,356 AMI 20% UNEMPLOYMENT NO CAR YOGA PASSES 18.6% UNEMPLOYMENT 32.5 YEARS OLD RENTERS PUBLIC TRANSPORTATION $61,498 AMI SINGLES SINGLES IN-STORE SHOPPING SINGLE PARENT FAMILIES WHITECOLLAR ROOMATES RENTERS NO CAR SOCIAL SECURITY INCOME
  17. 17. Psychdemographics LIBERALTECH-SAVY LIVING ALONE 35.5 YEARS OLD NATURAL/ORGANIC FOODS YOGA PASSES RENTERS SINGLES ROOMATES
  18. 18. Psychdemographics
  19. 19. Residential Market Row houses, older low-rise Population increase, family size decrease Home prices rose 11.2% in April 1,648 units to deliver by 2015 360 H Street, 610 H StreetWalkable urban area that contains all neighborhood amenities MEDIAN RENT Studio $ 1,520 One Bedroom $ 1,550 Two Bedroom $ 2,400 Three Bedroom $ 2,710
  20. 20. Office Market 11 million SF existing in Capitol Hill/NoMa, 681,000 planned Steady employment levels H St Arts District 316 F ST NE Neighborhood Services 12% overall vacancy Gap: Smaller Class B AverageClass Buildings Inventory Vacancy Pipeline Rent A 41 9,093,623 7.8% 681,085 $ 61.13 B 22 2,094,677 3.0% $ 47.75 C 16 474,238 30.0% $ 42.86 Constitution SquareTotal 79 11,662,538 12.0% 681,085 $ 53.63
  21. 21. Retail Gap $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 -$2,000,000
  22. 22. HUB625The Building
  23. 23. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  24. 24. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  25. 25. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  26. 26. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  27. 27. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  28. 28. Program Multifamily Retail Office Total Res Units 146 Multifamily Units- Average Size 716 Multifamily Units NSF 104,592 Retails (NSF) 36382.5 Office NSF 78,698.90 Gross SF 244,238.5 Number of Buildings/Rentable Floors 1/7 Parking Spaces 153 NImage courtesy of: Laura Doran
  29. 29. Target Market
  30. 30. Program A gym. Not another personal trainingcenter or a boutique gym. Just a place to workout. We need to have morebusinesses that cater to neighborhood needs rather than another restaurant that is filled with people fromelsewhere in the city. There are plentyof places to eat and get drunk already. Tom Aloisia, Near NorthEast Resident
  31. 31. Architecture Design and SustainabilityImage courtesy of: Laura Doran
  32. 32. Architecture Design and Sustainability Brick traditions of Washington, DC Light and modern European design Overlapping volumes highlight uses Street level access to first floor multifamily units Local and sustainable building techniques From predevelopment to operation and beyond Mix of local and national tenants Community Amenities: Gardens, ZipCars Gallery space available for community events and organizations Multifamily units face the existing residential with Green Space in between to sponsor casual interactionsImage courtesy of: Laura Doran
  33. 33. Architecture Design and Sustainability Brick traditions of Washington, DC Light and modern European design Overlapping volumes highlight uses Street level access to first floor multifamily units Local and sustainable building techniques From predevelopment to operation and beyond Mix of local and national tenants Community Amenities: Gardens, ZipCars Gallery space available for community events and organizations Multifamily units face the existing residential with Green Space in between to sponsor casual interactionsImage courtesy of: Laura Doran
  34. 34. FINANCE AND RETURNS
  35. 35. Uses Summary Development Cost Summary Project Cost Total per GSF Land Cost $ 5,286,024 $ 72.00 Hard Costs $ 34,912,925 $ 142.95 Soft Costs $ 9,756,953 $ 39.95 Fees and Administration $ 3,117,990 $ 12.77 Net Development Costs Financing- Interest Expenses, Fees $4,717,779 $19.32 Net Interest Cost $ 2,203,550 $ 9.02 Total Development Costs $59,995,222 $245.64 Land Cost Hard Costs Soft Costs Fees and Administration Financing- Interest Expenses, Fees Net Interest Cost
  36. 36. Sources Summary Summary of Capitalization Equity (35% of Total Cost) $ 9,760,289 at Land Closing $ 1,850,108 at Construction $ 7,910,180 Construction Loan $ 14,690,334 Loan to Cost Ratio 75% Loan Interest (5%) $ (2,203,550.17) Permanent Loan $38,996,894 Loan to Cost Ratio/Loan to Value 75% Interest Rate 5% Amortization 25 years Equity Loan
  37. 37. Ten Year ProForma Predevelopment Construction Lease Up Stabilization Sale YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net Operating Income $ - $ - $ - $ - $ - $ 679,859 $ 7,332,765 $ 7,552,748 $ 7,779,331 $ 8,012,711 $ 6,069,799 Hard Costs $ - $ - $ (15,926,457) $ (18,986,469) $ - $ - $ - $ - $ - $ - $ - Soft Costs $ (623,598) $ (623,598) $ (7,034,563) $ (851,595) $ (623,598) $ (691,584) $ (733,277) $ (755,275) $ (777,933) $ (801,271) $ (606,980) Development Fees $ (480,492) $ (31,180) $ (3,197,322) $ (2,762,450) $ (31,180) $ (92,367) $ - $ - $ - $ - $ - Land Cost $ (5,338,884) $ - $ - $ - $ - $ - $ (1,393,225) $ (1,435,022) $ (1,478,073) $ (1,522,415) $ (1,153,262) Total Development Costs $ (6,442,974) $ (654,778) $ (26,158,342) $ (22,600,515) $ (654,778) $ (783,951) $ - $ - $ - $ - $ 133,545,177 Sale Price $ - $ - $ - $ - $ - $ - $ 5,939,540 $ 6,117,726 $ 6,301,258 $ 6,490,296 $ 138,461,714 Cash Flow Before Debt Service $ (6,442,974) $ (654,778) $ (26,158,342) $ (22,600,515) $ (654,778) $ (104,092) $ $ $ $ (2,776,698) $ (831,751) (2,776,698) (2,776,698) (2,776,698) Total Financing Costs $ (22,355.48) $ (767,889.95) $ (767,889.95) $ (768,660.83) $(2,776,698.48) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (831,751) Loan Proceeds $ 13,196,204 $ 4,407,100 $ 8,814,201 $ 1,469,033 0 0 0 0 0 0 0 Cash Flow After Debt Service $ 6,730,874 $ 3,029,143 $ (18,067,320) $ (21,853,889) $ (3,431,476) $ (2,880,791) $ 3,162,841 $ 3,341,028 $ 3,524,559 $ 3,713,597 $ 137,629,963 DSCR 2.64 2.72 2.80 2.89
  38. 38. Retail Tenant RPGSF TI Lease Term Lease Type Bank of America $ 70 $ 45 10 NNN FedEx $ 70 $ 45 10 NNN Balduccis $ 55 $ 70 10 NNN Big Bear $ 70 $ 65 5 NNN True Value $ 55 $ 70 10 NNN Gym $ 50 $ 40 10 NNN Gallery $ 20 $ 15 5 NNN Rental Income $ 1,296,073 PreLeasing Period 18 months Percentage PreLeased 80% Total PreLeased 29,106 SF Stabilization 90% occupancy Monthly Absorption- Post Delivery 3000 SF/mo Mo. Until Stabilization 2 months
  39. 39. RetailStabilized Year One Net Operating Income Leasing Stabilized UPS $ 72,000 $ 73,440 Balduccis $ 270,000 $ 278,100 Bank of America $ 72,000 $ 74,160 True Value $ 270,000 $ 278,100 Big Bear $ 135,000 $ 139,050 Gym $ 416,250 $ 428,738 Gallery Space $ 90,000 $ 92,700 Gross Potential Income $ 1,325,250 $ 1,364,288 Vacancy/Collection Loss $ (66,263) $ (68,214) Gross Revenue $ 1,258,988 $ 1,296,073 Tenant Improvements $ (1,627,500) $ - Leasing Commission $ (420,750) $ - Operating Expenses $ (251,798) $ (259,351) OPEX Reimbursement $ 251,798 $ 259,351 Total Expenses $ (2,048,250) $ - Net Operating Income $ (789,263) $ 1,296,073
  40. 40. Office Tenant RPGSF TI Lease Term Lease Type Major Tenant $ 35 $ 35 10 NNN Minor Tenant $ 40 $ 35 5 NNN Rental Income $ 3,130,937 PreLeasing Period 18 months Percentage PreLeased 60% Total PreLeased 47,219 SF Stabilization 90% occupancy Monthly Absorption- Post Delivery 3000 SF/mo Mo. Until Stabilization 9 months
  41. 41. OfficeStabilized Year One Net Operating Income Leasing Stabilized Gross Potential Income $ 2,951,209 $ 1,461,104 Vacancy/Collection Loss $ (295,121) $ (313,094) Gross Revenue $ 2,656,088 $ 2,817,844 Tenant Improvements $ (2,754,462) $ - Leasing Commission $ (649,266) $ - Operating Expenses $ (531,218) $ (563,569) CAM $ (9,637) $ (10,223) OPEX Reimbursement $ 531,218 $ 563,569 Total Expenses $ (3,413,364) $ (10,223) Net Operating Income $ (757,276) $ 2,807,620
  42. 42. Multi-Family Average Current Description # of Units SF Rental Rate Rent PSF Average Market Unit Studio 82 585 $ 1,755 $ 3.00 One Bed 25 765 $ 2,142 $ 2.80 Two Bed 15 960 $ 2,496 $ 2.60 IZ Units 50% Affordable Units 12 80% Affordable Units 12 Total 146 Rental Income $ 2,853,835 Concessions (1 mo. Free rent) $ (246,020) PreLeasing Period 2 months Total PreLeased 16 units Stabilization 90% occupancy Monthly Absorption- Post Delivery 14 leases/mo. Mo. Until Stabilization 8 Months
  43. 43. MultifamilyStabilized Year One Net Operating Income Leasing Gross Potential Income $ 3,170,928 Vacancy/Collection Loss $ (317,093) Gross Revenue $ 2,853,835 Concessions $ (246,020) Operating Expenses $ (570,767) Insurance $ (36,500) Total Expenses $ (853,287) Net Operating Income $ 2,000,548
  44. 44. Parking Building Cost Stabilized Net Operating Income Total Rent Per Spots Rent Per Spot Year Per Spot Parking Income $ 320,880 Rental Parking 137 $ 200 $ 328,080 $ 17,000.00 ZipCar $ (7,200) Surface parking 13 $ - $ - $ - ZipCar 3 $ (200) $ (7,200) $ 17,000.00 Gross Potential Income $ 313,680Rental Income $ 320,880 Vacancy/Collection Loss $ (31,368) Gross Revenue $ 282,312Required Parking Retail 48 Operating Expenses $ (56,462) Office 44 Residential 61 Total Expenses $ (56,462) Total 153 Net Operating Income $ 225,850
  45. 45. Ten Year ProForma Predevelopment Construction Lease Up Stabilization Sale YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net Operating Income $ - $ - $ - $ - $ - $ 679,859 $ 7,332,765 $ 7,552,748 $ 7,779,331 $ 8,012,711 $ 6,069,799 Hard Costs $ - $ - $ (15,926,457) $ (18,986,469) $ - $ - $ - $ - $ - $ - $ - Soft Costs $ (623,598) $ (623,598) $ (7,034,563) $ (851,595) $ (623,598) $ (691,584) $ (733,277) $ (755,275) $ (777,933) $ (801,271) $ (606,980) Development Fees $ (480,492) $ (31,180) $ (3,197,322) $ (2,762,450) $ (31,180) $ (92,367) $ - $ - $ - $ - $ - Land Cost $ (5,338,884) $ - $ - $ - $ - $ - $ (1,393,225) $ (1,435,022) $ (1,478,073) $ (1,522,415) $ (1,153,262) Total Development Costs $ (6,442,974) $ (654,778) $ (26,158,342) $ (22,600,515) $ (654,778) $ (783,951) $ - $ - $ - $ - $ 133,545,177 Sale Price $ - $ - $ - $ - $ - $ - $ 5,939,540 $ 6,117,726 $ 6,301,258 $ 6,490,296 $ 138,461,714 Cash Flow Before Debt Service $ (6,442,974) $ (654,778) $ (26,158,342) $ (22,600,515) $ (654,778) $ (104,092) $ $ $ $ (2,776,698) $ (831,751) (2,776,698) (2,776,698) (2,776,698) Total Financing Costs $ (22,355.48) $ (767,889.95) $ (767,889.95) $ (768,660.83) $(2,776,698.48) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (2,776,698) $ (831,751) Loan Proceeds $ 13,196,204 $ 4,407,100 $ 8,814,201 $ 1,469,033 0 0 0 0 0 0 0 Cash Flow After Debt Service $ 6,730,874 $ 3,029,143 $ (18,067,320) $ (21,853,889) $ (3,431,476) $ (2,880,791) $ 3,162,841 $ 3,341,028 $ 3,524,559 $ 3,713,597 $ 137,629,963 DSCR 2.64 2.72 2.80 2.89
  46. 46. Exit Strategy CAP RATE Analysis Year 9 NOI Cap Rate 5.75% 6.00% 6.25% NOI $ 8,012,711 $ 8,012,711 $ 8,012,711 Value $ 139,351,489 $ 133,545,177 $ 128,203,370
  47. 47. Development Returns UNLEVERAGED IRR 15.3% LEVERAGED IRR 17.8% LEVERAGED EQUITY MULTIPLIER 3.21 WHOLE $ PROFIT (UNLEV.) $106,695,055 WHOLE $ PROFIT (LEV.) $104,190,808 Leveraged Equity Required $ 47,181,181 Equity Multiplier Leveraged Equity Returned $ 151,371,989 3.208
  48. 48. Construction and Leasing SchedulePre-ConstructionMay 2012 – Sept 2013Due Diligence Groundbreaking Retail PreLeasingPlanning Sitework Office PreLeasingZoning Building Construction Res PreLeasingLand Acquisition Project Delivery Retail LeasingSchematic Design Office LeasingDesign Development Residential LeasingConstruction Documents BrandingPermitting MarketingBidding and Negotiation Tenant Occupancy
  49. 49. Construction and Leasing SchedulePre-Construction ConstructionMay 2012 – Sept 2013 Oct 2013 – June 2015Due Diligence Groundbreaking Retail PreLeasingPlanning Sitework Office PreLeasingZoning Building Construction Res PreLeasingLand Acquisition Project Delivery Retail LeasingSchematic Design Office LeasingDesign Development Residential LeasingConstruction Documents BrandingPermitting MarketingBidding and Negotiation Tenant Occupancy
  50. 50. Construction and Leasing SchedulePre-Construction Construction LeasingMay 2012 – Sept 2013 Oct 2013 – June 2015 Aug 2013– April 2016Due Diligence Groundbreaking Retail PreLeasingPlanning Sitework Office PreLeasingZoning Building Construction Res PreLeasingLand Acquisition Project Delivery Retail LeasingSchematic Design Office LeasingDesign Development Residential LeasingConstruction Documents BrandingPermitting MarketingBidding and Negotiation Tenant Occupancy
  51. 51. Risks
  52. 52. Case Study14th and U Street NW and H Street NE They had tough turns afterthe riots of the 1960s. Now,they are both undergoing a sort of renaissance. At theend of it, they will emerge as the city’s two great jewels. Jose C. Sousa, Planning and Economic Development Office
  53. 53. 14th & U St. NW H St. CorridorCase Study14th and U Street NW and H Street NE They had tough turns afterthe riots of the 1960s. Now,they are both undergoing a sort of renaissance. At theend of it, they will emerge as the city’s two great jewels. Jose C. Sousa, Planning and Economic Development Office
  54. 54. ConclusionImage courtesy of: Laura Doran
  55. 55. Acknowledgements Jon Eisen Rob Wolcheski Laura Doran

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