505 Congress StreetSouth Boston Re-imagining the Boston Waterfront Canonical & Investment Goals RECREATE, LLC Tim Johnson, Jennifer Balkcom, Scott Nguyen, Arvind Pai, Alison Novak, Charu Singh
Program Mid-range Multifamily & On-Demand Office • Green • Landmark / Showcase • 107 residential units • 19,000 sf office • 70 parking spaces • FAR 4 • Slender residential tower PROGRAM TIMEFRAME
Risk Estimation for Residential Permitting and Lease-up represent the riskiest phases.
Risk Estimation for Commercial Commercial development poses slightly higher lease-up and stabilized risks.
NPV Project does meet NPV rule. • Part of soft cost taken as pre-development costs and compounded to time T(0) = $2.3m • Quarterly construction costs broken out based on construction schedule • Assuming an evenly distributed 12-month lease-up period • Reversion value calculated using Korpacz cap rate for multi-family • Growth rates for rents projected from TWR Boston forecast • NPV: $9.5M, Canonical OCC:31.9%
Ownership Goals ReCreate’s ownership goals are driven by profit… … subject to cost constraints of non-financial returns • Team ownership is based on a LLC structure. • Property ownership is driven by greatest financial benefit • Sell after entitlements? • Sell after building and stabilization. • Sell after building and 10yr operation?
Investment Objectives Triple Bottom Line led by profit. • Pecuniary • Maximize financial return subject to equity and debt cost of capital… • Investor’s Circle: 4-15% pre-tax (9.5%) • KeyBank Equity:15% pre-tax • KeyBank Loan: 6.54%, interest-only, $25k fees • Deutsche Bank: 5.6% • … and cost of non-pecuniary objectives • Non-pecuniary • Green building • Affordable housing • Quality project reputation • Foothold in South Boston • Experience in development
505 Congress Street Q & A