The Yatt Club

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# The Yatt Club - PowerPoint PPT Presentation

The Yatt Club. A Luxury Condominium project. The Yatt Club – Condominium ASSUMPTIONS : The Building : 200 units @ 1200 SF/ unit = 240,000 SF (Core Factor = 15% (240,000 is 85% of the building Gross SF) Therefore, Gross SF = 240,000/.85 = 282,353 GSF (For simplicity, we will ignore parking.).

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## PowerPoint Slideshow about 'The Yatt Club' - PamelaLan

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The Yatt Club

A Luxury Condominium project

The Yatt Club – CondominiumASSUMPTIONS:The Building:200 units @ 1200 SF/ unit = 240,000 SF(Core Factor = 15% (240,000 is 85% of the building Gross SF)Therefore, Gross SF = 240,000/.85 = 282,353 GSF(For simplicity, we will ignore parking.)

ASSUMPTIONS:

Revenue (Sales) = \$500/SF =

• \$500/SF * 240,000 SF = \$120,000,000
• Sales Concessions (2% of Revenue)

.02* \$120,000,000 = \$ 2,400,000

• Net Revenue: \$117,600,000

Costs:Hard CostsDirect Construction (“bricks & mortar”) \$150/GSF = 150 * 282,353 = \$42,352,950Land Development (infrastructure) (For simplicity, a guess) \$2,000,000LandTO BE DETERMINED

Soft Costs (1)

Architecture & Engineering (5% of Direct & LD)

.05 * \$42,352,950 = \$ 2,117,648

Sales (1.5% for Seller, 2.4% for Buyer of Revenue) .039 * \$117,600,000 = \$4,586,400

Marketing (rule of thumb: 2% of Revenue)

.02 * \$117,600,000 = \$2,352,000

Soft Costs (2)

Finance (assume 70% Loan-to-Value “LTV” or \$82,320,000)Loan Origination (1% of Loan)

.01*\$82,320,000 = \$ 840,000Loan Interest (assume 200 Basis Points > Prime; Prime = 5.00%; therefore, Interest Rate = 7.00%) Assume Loan is outstanding for 2.5 years, but, on average due to construction and sales, estimate only 60% of full balance of \$82,320,000 is outstanding.) 82,320,000*.07*2.5 years*.6 = \$8,643,600

Developer Overhead/Fee (assume 5% of Revenue) .05*\$117,600,000 = \$5,880,000

Profit
• Profit (assume 12.5% of Revenue) .125*\$117,600,000 = \$14,700,000
Residual Land Value (RLV)

RLV = Revenue – Costs – Profit

\$117,600,000 – 68,772,598 – 14,700,000

= \$34,127,402

= \$ 170,637/unit

= \$ 142.20/saleable SF

= \$ 120.87/F.A.R. SF

The Yatt Club

A luxury rental apartment

The Yatt Club – A luxury rental

ASSUMPTIONS:

• The Building: Identical to Condominium scenario
• 200 units @ 1200 SF/ unit = 240,000 SF(Core Factor = 15% (240,000 is 85% of the building Gross SF)Therefore, Gross SF = 240,000/.85 = 282,353 GSF(For simplicity, we will ignore parking.)
ASSUMPTIONS:
• Gross Rental Income or GRI

Expected rate of \$3.00/SF/Month = \$36.00/SF/Year

\$36.00/SF/Year * 240,000 SF = \$8,640,000/Year

• Rental Concessions (2% of Revenue)

.02* \$8,640,000 = \$ 172,800/Year

• Vacancy (4% of GRI)\$345,600/Year
• Effective Gross Incomeor EGI \$ 8,121,600/Year
Expenses

Operating Expenses

Utilities

Real Estate Taxes

Property Management

Insurance

For simplicity, assume 35% of EGI

.35*\$8,121,600 = \$2,842,560

Net Operating Income (NOI)

NOI = EGI – Operating Expenses

NOI = \$8,640,000 – 2,842,560

NOI = \$5,797,440

Value by the Income Approach

Value = NOI/CapitalizationRate

Note: Capitalization (usually “Cap”) rates move inversely to actual value, i.e. as the Cap Rate decreases, the Value increases. Cap Rates are a measure of the predictability (and safety) of future, yearly NOI (or cash flows) measured against other investments of near-absolute certainty (5- and 10-year Treasury Bills). So…

Value (in Oct. 2007) = \$5,797,440/4.50% = \$128,832,000

Value (in Oct. 2008) = \$5,797,440/6.00% = \$ 99,624,000

RLV for Apartment

Oct. 2007 - \$128,832,000 - 68,772,598 – 14,700,000 =

\$ 45,359,402

\$ 226,797/unit

\$ 189.00/rentable SF

Oct. 2008 - \$99,624,000 - 68,772,598 – 14,700,000 =

\$ 16,151,402

\$ 80,757/unit

\$ 67.30/rentable SF

The Yatt Club as Condo…

\$34,127,402

OK, so what can the architect do?
• Location – macro and micro
• Land – amenities and negatives
• Building
• Revenue/Income – not all buildings are created equal
• Cost
• Time