HEEF Real Estate Proposal - University of Missouri (1)

The Harold E. Eisenberg Midwest
Real Estate Challenge 2016
Phoenix Landing Development
Proposal
Ben Beussink, Cole Cameron, Meghan
Carnot, Trent Keal, & Josh Vaslie

Site Analysis
Site A
Site B and
the Berms
Site D

Accessibility and Visibility
Halstead Street -
Approximately 13,200
Vehicles a Day
63rd Street -
Approximately 8,000
Vehicles a Day
Dan Ryan/I-94
Expressway – 3/4th of a
Mile East
CTA Green
Station Half a
Block South

Site A Proposal
Approximately 106
Parking Spots
Available
Over 600 Storage
Units Available
Accommodates Up To
Seven Retail Spaces
Gym Situated on
the Top Floor

Site B and the Berms Proposal
46 Parking Spots
Available
Renovation of the Firehouse into a
Multi-Purpose Facility Productive Food Gardens
Behind the Firehouse
Beautification Gardens on
the Berms
Local Sustainability
Initiatives Supported

Site D Proposal
20,000 Sq. Ft. Structure Suited for a Single,
Large Retail Tenant
Approximately 106 Parking Spots Available
Facing
Halstead Street

Green Healthy
Neighborhoods
Englewood:
Making a
Difference
Chicago
Neighborhoods
2015 – Assets,
Plans, & Trends
Community Objectives

Financial Analysis
Initial Project Costs = $27 million
Total land cost
$5 million
Total Construction Costs
$21 million
Pre-Development Budget
$1 million
Project Valuation = $40 million
Cap Rate: $40 million Discounted NOI + Reversion: $38 million
Value Created = $13 million

Net Operating Income Projections ($ millions)
$3.2 million
$4.5 million
0.0
1.0
2.0
3.0
4.0
5.0
2015 2020 2025 2030 2035 2040
*All figures are based on comparable developments

City of Chicago Return on Investment
TIF investment of $12 million
• $10 million initially
• $2 million for our project
Our development will generate $2.6 million per year
• $2 million in property taxes every year
• $0.6 million in sales taxes every year
Five Year
Payback

$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1 2 3 4 5 6 7 8
Quarters Post Investment
Cumulative Economic Activity Generated Per
Dollar Invested
Economic Analysis
- Over $100 Million
of Economic
Activity Created in
the Proceeding
Two to Three Years
-Over $400 Million
of Economic
Activity Created, in
Perpetuity

Capital Leaving Englewood
-Food and Beverage Stores $22,375,375
-Food Service and Drinking Establishments $10,938,587
-Health and Personal Care Stores $15,656,330
-General Merchandise Stores $45,806,375
-Electronics and Appliance Stores $5,987,950
-Clothing and Clothing Accessories Stores $12,825,559
-Furniture and Home Furnishing Stores $3,959,217
-Miscellaneous Store Retailers $6,535,753
-Sporting Goods, Hobby, Book and Music Stores $4,697,578
-Building Material, Garden Equipment and Supply Dealers $20,643,408
Total Opportunity Dollars $127,234,049
*Greater Englewood CDC & Chicago Metropolitan Committee for Planning

Detroit, Mi. –
Midtown
New Orleans,
La. – Broad
Street
Newark, Nj. –
Hahne & Co.
Building
Economically Comparable Sites

Municipal Incentives
Englewood Mall
TIF
Chicago
Community
Loan Fund
Historic
Incentives

Site Structure
A
1A-Retail/Gym
2A-Storage Facility
B
Firehouse
D
1D-Large retail space
Square
Footage
Per Floor
Stories
Building
Height
(feet)
FAR Setbacks
24,990 2 26 0.64 N/A
17,500 5 50 1.12 N/A
4,500 2 35 0.15 N/A
20,240 1 20 0.36 N/A
Parking
(spaces)
Distance
From
Green
Line (feet)
112
916
930
48 994
96 1,111
Site A
Zoning

Site Structure
A
1A-Retail/Gym
2A-Storage Facility
B
Firehouse
D
1D-Large retail space
Square
Footage
Per Floor
Stories
Building
Height
(feet)
FAR Setbacks
24,990 2 26 0.64 N/A
17,500 5 50 1.12 N/A
4,500 2 35 0.15 N/A
20,240 1 20 0.36 N/A
Parking
(spaces)
Distance
From
Green
Line (feet)
112
916
930
48 994
96 1,111
Site A Site B Site D
Zoning

Entitlement Timeline
Step 1: Hire a Zoning and Land Use Attorney
Step 2: Speak to Englewood Community Groups, Alderman, and the
Chicago Zoning Administration about our proposed development
Step 3: Draft a Site Plan for the Zoning Administrator’s review (§17-
13-0800)
Step 4: Planned Development review and approval process (§17-13-
0600)
Step 5: Make necessary revisions to Site Plan
Step 6: Appeals
Budget: $95,000 Nine Months

Development Phasing
- Total Length of
Construction – 24 to 30
Months
-Site A Storage
Facility
-Interior of Firehouse
-Site B Gardens and
Berm Landscaping
-Approximately 12 to
18 Months
-Site A Retail
Structure
-Site D Structure
-Exterior of
Firehouse
-Approximately 12 to
18 Months
-Gain Entitlements
for Site
-Entitlement Timeline
– Nine Months
Entitlements
Phase 1
Phase 2

Sustainability
Recycled Benches and
Community Gardens
Natural Prairie Grass
Landscaping

Marketing
Groundbreaking
Ceremony
Vet and Assign a
Broker to the
Development
Public Relations
Representative

Summary
Augments and
Supports
Multiple Area
Initiatives
Revitalizes a
Historic
Municipal District
Generates
Millions of
Dollars of
Economic
Activity
Creates Value
for Shareholders

Appendix
Slide Deck
Cover
Site Analysis
Accessibility & Visibility
Site A Proposal
Site B & Berms Proposal
Site D Proposal
Community Objectives
Strategic Partnerships
Financial Analysis
NOI Projections
City of Chicago ROI
Economic Analysis
Capital Leaving Englewood
Comparable Sites
Municipal Incentives
Zoning
Entitlement Timeline
Development Phasing
Sustainability
Marketing
Summary
Thank You
Exhibits
1. Cost of Capital
2. Projected Lease Revenues
3. Development Costs Per Sq. Ft.
4. Cost of Land
5. Pre-Development Budget
6. Discounted Cash Flow Model
7. DCF Key Assumptions
8. City of Chicago ROI
9. Keynes Economic Model
10. Development Summary
11. 2015 TOD Ordinance

Exhibit 1 – Cost of Capital
Target Capital Structure
Debt to Total Capitalization 50.00%
Equity to Total Capitalization 50.00%
Debt to Equity Ratio 100.00%
Cost of Equity
Cost of Equity 15.00%
Cost of Debt
30-day LIBOR 0.41%
Spread 4.00%
Cost of Debt 4.41%
Taxes 20.00%
After Tax Cost of Debt 3.53%
WACC 9.26%

Exhibit 2 – Projected Lease Revenues
Building Sq Ft Rate ($) / SF Source In Service
Storage - A 87,500 18.00 Banner Storage Group J 2017
Retail - A
Suite 101 5,411 21.00 REIS Inc. Comps J 2017
Gym - A 24,977 18.00 Retro Fitness J 2017
Fire House - B 9,000 25.00 REIS Inc. Comps 2018
Gardens - B 87,000 Sprout NOLA
Retail - D 24,000 31.00 REIS Inc. Comps J 2017

Exhibit 3 – Development Costs Per
Square Foot
Parcel Comp/Source Square Feet Comp Sq Ft Comp Cost ($) / Sq Ft Adjusted Cost / Sq Ft Total Cost
Storage Gary Delaney 87,750 70 77 6,756,750
Retail - A In-Line Retail Build 31,670 12,450 185 200 6,334,000
Gym Retail Health Club 41,000 144 200 -
Firehouse Advisors 9,000 18,000 150 2,700,000
Gardens Sprout NOLA - 100,000
Retail - D In-Line Retail Build 24,971 12,450 185 204 5,087,500
Parking Discussion with Advisors 82,166 300,000
Total Construction Costs 21,278,250

Exhibit 4 – Cost of Land
Paid ($) Inferred ($) Additional Allocation ($) Acres
Phoenix Landing - 4,170,909 2,661,871 7.4
Whole Foods 3,100,000 - 1,978,417 5.5
Other - 563,636 359,712 1.0
3,100,000 4,734,545 5,000,000 13.9
Gross Cost ($) Incentives ($) Net Cost ($)
6,832,780 1,991,381 4,841,399
Phoenix Landing Cost of Land

Exhibit 5 – Pre-Development Budget
List of Expenses
Architect Services 276,500$
Municipal Incentives 95,000
Zoning 75,000
Permits 45,750
Signage 150,000
Miscellaneous 100,000
Construction Management 45,000
Insurance 100,000
Legal Fees 90,000
Entitlement Fees 5,000
Total Pre-Develoment Budget 982,250

6. Discounted Cash Flow Model 2016 - 2022
Building Sq Ft Rate ($) / SF 2016 2017 2018 2019 2020 2021 2022
Storage - A 87,500 18.00 - 787,500 1,575,000 1,606,500 1,638,630 1,671,403 1,704,831
Retail - A - - - - - - -
Suite 101 5,411 21.00 - 56,816 113,631 115,904 118,222 120,586 122,998
Suite 102 1,956 22.00 - 21,516 43,032 43,893 44,770 45,666 46,579
Suite 103 3,423 23.00 - 39,365 78,729 80,304 81,910 83,548 85,219
Suite 104 3,912 23.00 - 44,988 89,976 91,776 93,611 95,483 97,393
Suite 105 2,934 23.00 - 33,741 67,482 68,832 70,208 71,612 73,045
Suite 106 2,445 22.00 - 26,895 53,790 54,866 55,963 57,082 58,224
Suite 107 4,890 21.00 - 51,345 102,690 104,744 106,839 108,975 111,155
Gym - A 24,977 18.00 - 224,793 449,586 458,578 467,749 477,104 486,646
Fire House - B 9,000 25.00 - 112,500 225,000 229,500 234,090 238,772 243,547
Gardens - B 87,000 - - - - - - -
Retail - D 24,000 31.00 - 372,000 744,000 758,880 774,058 789,539 805,330
Gross Receipts - 1,771,458 3,542,916 3,613,774 3,686,050 3,759,771 3,834,966
Vacancy Allowance (5%) - (88,573) (177,146) (180,689) (184,302) (187,989) (191,748)
Net Receipts - 1,682,885 3,365,770 3,433,086 3,501,747 3,571,782 3,643,218
Operating Expenses
Building Improvements - - - 50,000 51,000 52,020 53,060
Broker Commissions - 289,882 - - - - 357,635
Property Management - 50,487 100,973 102,993 105,052 107,153 109,297
Pre-Development Budget 982,250 - - - - - -
Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total Operating Expenses 1,057,250 415,368 175,973 227,993 231,052 234,173 594,992
Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226
Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226
Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Property Value (13,215,625) 15,843,961 39,872,464 40,063,663 40,883,686 41,720,110 38,102,819
Present Value of NOI (1,057,250) 1,160,050 2,671,830 2,457,024 2,294,730 2,143,137 1,791,367
Exhibit 6 – Discounted Cash Flow Model

Storage - A 87,500 18.00 1,738,927 1,773,706 1,809,180 1,845,364 1,882,271 1,919,916 1,958,315
Retail - A - - - - - - -
Suite 101 5,411 21.00 125,458 127,967 130,526 133,137 135,800 138,516 141,286
Suite 102 1,956 22.00 47,511 48,461 49,430 50,419 51,427 52,456 53,505
Suite 103 3,423 23.00 86,923 88,662 90,435 92,244 94,088 95,970 97,890
Suite 104 3,912 23.00 99,341 101,328 103,354 105,421 107,530 109,680 111,874
Suite 105 2,934 23.00 74,506 75,996 77,516 79,066 80,647 82,260 83,905
Suite 106 2,445 22.00 59,389 60,576 61,788 63,024 64,284 65,570 66,881
Suite 107 4,890 21.00 113,378 115,646 117,959 120,318 122,724 125,179 127,682
Gym - A 24,977 18.00 496,379 506,307 516,433 526,762 537,297 548,043 559,004
Fire House - B 9,000 25.00 248,418 253,387 258,454 263,623 268,896 274,274 279,759
Gardens - B 87,000 - - - - - - -
Retail - D 24,000 31.00 821,436 837,865 854,622 871,715 889,149 906,932 925,070
Gross Receipts 3,911,666 3,989,899 4,069,697 4,151,091 4,234,113 4,318,795 4,405,171
Vacancy Allowance (5%) (195,583) (199,495) (203,485) (207,555) (211,706) (215,940) (220,259)
Net Receipts 3,716,082 3,790,404 3,866,212 3,943,536 4,022,407 4,102,855 4,184,912
Operating Expenses
Building Improvements 54,122 55,204 56,308 57,434 58,583 59,755 60,950
Broker Commissions - - - - 394,858 - -
Property Management 111,482 113,712 115,986 118,306 120,672 123,086 125,547
Pre-Development Budget - - - - - - -
Total Operating Expenses 240,604 243,916 247,294 250,740 649,114 257,840 261,497
Net Operating Income 3,475,478 3,546,488 3,618,918 3,692,796 3,373,293 3,845,015 3,923,415
Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Property Value 43,443,477 44,331,097 45,236,469 46,159,948 42,166,167 48,062,685 49,042,689
Present Value of NOI 1,869,282 1,745,749 1,630,365 1,522,595 1,272,935 1,327,923 1,240,115

Storage - A 87,500 18.00 1,997,481 2,037,430 2,078,179 2,119,743 2,162,137 2,205,380 2,249,488
Retail - A - - - - - - -
Suite 101 5,411 21.00 144,112 146,994 149,934 152,932 155,991 159,111 162,293
Suite 102 1,956 22.00 54,575 55,666 56,780 57,915 59,074 60,255 61,460
Suite 103 3,423 23.00 99,847 101,844 103,881 105,959 108,078 110,240 112,444
Suite 104 3,912 23.00 114,111 116,394 118,721 121,096 123,518 125,988 128,508
Suite 105 2,934 23.00 85,583 87,295 89,041 90,822 92,638 94,491 96,381
Suite 106 2,445 22.00 68,219 69,583 70,975 72,394 73,842 75,319 76,825
Suite 107 4,890 21.00 130,236 132,840 135,497 138,207 140,971 143,791 146,667
Gym - A 24,977 18.00 570,184 581,587 593,219 605,084 617,185 629,529 642,120
Fire House - B 9,000 25.00 285,354 291,061 296,883 302,820 308,877 315,054 321,355
Gardens - B 87,000 - - - - - - -
Retail - D 24,000 31.00 943,572 962,443 981,692 1,001,326 1,021,353 1,041,780 1,062,615
Gross Receipts 4,493,274 4,583,140 4,674,802 4,768,298 4,863,664 4,960,938 5,060,156
Vacancy Allowance (5%) (224,664) (229,157) (233,740) (238,415) (243,183) (248,047) (253,008)
Net Receipts 4,268,610 4,353,983 4,441,062 4,529,884 4,620,481 4,712,891 4,807,149
Operating Expenses
Building Improvements 62,169 63,412 64,680 65,974 67,293 68,639 70,012
Broker Commissions - - 435,956 - - - -
Property Management 128,058 130,619 133,232 135,897 138,614 141,387 144,214
Pre-Development Budget - - - - - - -
Total Operating Expenses 265,227 269,032 708,868 276,870 280,908 285,026 289,227
Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Property Value 50,042,293 51,061,888 46,652,431 53,162,664 54,244,667 55,348,310 56,474,027
Present Value of NOI 1,158,105 1,081,510 904,338 943,162 880,764 822,488 768,063
PV Reversion 9,600,787
PV Discounted NOI + Value in 2036 38,229,067

Exhibit 7 – DCF Key Assumptions
Vacancy Allowance 5.0%
Broker Commissions 2.0%
Income Tax Rate 20.0%
Maintenance Cost Increase 2.0%
Yearly Rental Rate Increase 2.0%
Property Management (% of EGI) 3.0%
Cap Rate 8.0%
WACC 9.3%

Exhibit 8 – City of Chicago Return on Investment
City TIF Investments
TIF Expenditures - WF 10,000,000
TIF Expenditures - Phoenix 2,000,000
Total City Investment 12,000,000
Total Tax Receipts 2,574,000
Payback Period for Investment (Yrs) 5
Sales Projection
Retail Building - Lot A 1,500,000
Fire House 500,000
Retail Building - Lot D 3,600,000
Total Sales 5,600,000
Sales Tax Rate 10.25%
Sales Tax Receipts 574,000
Property Taxes
Approximate Property Value 40,000,000
Real Estate Tax Rate 5.00%
Real Estate Tax Receipts 2,000,000

Exhibit 9 – Keynes Economic Model

Exhibit 10 – Development Summary
Site Structure
Dimensions
(LxWxH)
(in feet)
Building
Square
Footage
Square
Footage
Per Floor
Stories
Building
Height
(feet)
FAR Setbacks
Parking
Dimensions
(feet)
Parking
(spaces)
Distance
From
Green
Line (feet)
A 78,408 175x55 112
1A-Retail/Gym 255x98x26 49,980 24,990 2 26 0.64 N/A 916
2A-Storage Facility 175x100x50 87,500 17,500 5 50 1.12 N/A 930
B 60,984
Firehouse
Exact
Unknown
9,000 4,500 2 35 0.15 N/A 108x55 48 994
D 56,628
1D-Large retail space 184x110x20 20,240 20,240 1 20 0.36 N/A 202x160 96 1,111

Exhibit 11 – 2015 TOD Ordinance

HEEF Real Estate Proposal - University of Missouri (1)

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