DALLAS MIDTOWN PROJECT THE NEW CENTER OF DALLAS
LIVELY, DIVERSE, INTENSE CITIES CONTAIN THE SEEDS OF THEIR OWN REGENERATION. - JANE JACOBS
OBJECTIVES - PROJECT GOALS - SUBJECT PROPERTY - DEVELOPMENT PLAN - FINANCIAL ANALYSIS
PROJECT GOALS
PROJECT GOALS HIGHEST AND BEST USE LEGALLY PERMISSIBLE PHYSICALLY POSSIBLE FINANCIALLY FEASIBLE MAXIMALLY PRODUCTIVE STEP 1 STEP 2 STEP 3 STEP 4 Consider deed restrictions, zoning, building codes and environmental regulations Determine development potential based on topography, access, utilities, soils, and other factors Measure market demand, weigh risk vs. financial returns Compile all previous steps to identify the HBU of the site that will produce the maximum return. 4/24/20 13
PROJECT GOALS MISSION STATEMENT Dallas Midtown will be developed with these items serving as the foundation: - Continued economic development complementary land uses, synergy and development velocity - Increases the quality of life high-density pedestrian friendly development, planned green space, sustainable development - Increase tax base - improve property values, generate additional sales tax revenues 4/24/20 13
SUBJECT PROPERTY
SUBJECT PROPERTY REDEVELOPMENT AREA - Former Valley View Center site - Intersection of IH-635 and Preston Road - Total Acreage: 450 acres - Phase 1 development site: 104 acres
SUBJECT PROPERTY SITE ATTRIBUTES The Dallas Midtown site is characterized by: - Superior site visibility: 248,000 trips per day on IH-635 and nearly 100,000 trips per day on Preston and Alpha - Centralized geographic location in the DFW Metroplex: easy accessibility to surrounding suburbs and places of business - Desirable surrounding-area quality of life and income characteristics: high median income and home value data
SUBJECT PROPERTY SUBMARKET SEGMENTATION 10 Mile Radius 3 Mile Radius Source: ESRI Tapestry Segmentation Database via ArcGIS
OWNER COOPERATION IF YOU WANT TO BE INCREMENTALLY BETTER, BE COMPETITIVE. IF YOU WANT TO BE EXPONENTIALLY BETTER, BE COOPERATIVE. - UNKNOWN - Owner and owner working together towards a mutually-beneficial end by pursuing complementary goals - Owners and the municipality working together on zoning changes, TIF financing, and public safety - Owners and the surrounding citizens working together for create a higher quality of life for all citizens 4/24/20 13
ZONING CHANGES CURRENT ZONING REGIONAL RETAIL - RETAIL, PERSONAL SERVICE, AND OFFICE USES - MAXIMUM BUILDING HEIGHT OF 70 FEET OR 5 STORIES - MAXIMUM FLOOR AREA OF 1.5 OVERALL OR 0.5 FOR OFFICE - MAXIMUM LOT COVERAGE OF 80% PROPOSED ZONING - MU 3 MIXED USE 3 OFFICE, RETAIL, PERSONAL SERVICE, LODGING, AND RESIDENTIAL - MC 4 MULTIPLE COMMERCIAL 3 - OFFICE, RETAIL AND PERSONAL SERVICE, LODGING - CR COMMUNITY RETAIL RETAIL AND PERSONAL SERVICE, AND OFFICE USES - MF-4(A) MULTIFAMILY RESIDENTIAL MULTIFAMILY RESIDENTIAL, SUPPORTING LIMITED RETAIL AND PERSONAL SERVICE USES 4/24/20 13
INSPIRATION PARKMERCED SAN FRANCISCO - 152-acre redevelopment site outside of San Francisco - Former car-centric community - Focuses on creating open space, sustainable features, improved transportation
INSPIRATION DALLAS MIDTOWN DALLAS TX
INSPIRATION CALTRANS BUILDING LOS ANGELES - Designed by Morphosis Architects - Maximizes natural heating and cooling through retractable aluminum PV panels - Panels open and close mechanically timed with the movement of the sun and weather conditions
INSPIRATION DALLAS MIDTOWN TOWER DALLAS TX
TIMELINE 4/24/20 13
SITE MAP DALLAS MIDTOWN TRANSIT TOWER LONE CENTER STAR GARDEN PARK MIXED-USE GROCER
ENTICING A NATIONAL TENANT - Construct a signature cuttingedge sustainable office product - Sign a national tenant to a longterm lease to kickstart development - Offer incentives with assistance from the City of Dallas - Tax Abatement - Tax Increment Financing - Economic Development Grants Source: Google Images 4/24/20 13
OFFICE SPACE FORECAST IMPROVING OFFICE FUNDAMENTALS
RENTAL SPACE FORECAST ABSENCE OF SUPPLY HAS ALREADY LED TO SUBSTANCIAL VACANCY COMPRESSION. THIS MOMENTUM IS ANTICIPATED TO CARRY IN THE FORECAST AND PUSH VACANCIES TO DECADE-LOWS. - COSTAR - 2013 OFFICE MARKET SUMMARY OFFICE VACANCY RATES HAVE DECLINED 8% IN THE LAST 12 MONTHS - COSTAR / PPR RETAIL: PROJECTED OCCUPANCY IMPROVEMENT AND 10% RENT INCREASE THROUGH 2016 MULTIFAMILY: PROJECTED STABLE OCCUPANCY AND 12% RENT INCREASE THROUGH 2016
DALLAS MIDTOWN TOWER FEATURES SKYBRIDGE - Floors 26 to 32 offer extensive views of surrounding area - Exclusive restaurant with unparalleled views on the top floors - SkyLobby with an observation deck - Outdoor ninth floor terrace SUSTAINABLE FEATURES - Built to LEED Silver standards - Solar heat-reducing PV cladding - Green living roof
TRANSIT CENTER - Public / Private Partnership with DART bus service - Private CNG shuttle to Love Field and Addison Transit Center / Airport for residents and tenants - Expandable to allow future proposed rail lines - Infrastructure costs offset by TIF funding
TRANSPORTATION 4/24/20 13
LONE STAR GARDEN PARK CENTERPIECE OF PHASE 1 GREEN SPACE - Dramatic, eye-catching design that is pure Texas - Gathering spot with benches and shade - Focal point for northern views from the Big D tower
LONE STAR GARDEN PARK Preserved mosaic used to create dancing water feature that honors area history 4/24/20 13
MIXED-USE GROCER http://www.mazzetti.com/images/uploads/m p_website3.jpg - Grocery on the ground floor with 2 or 3 floors of residential above - Adjacent parking garage to service Grocery, Multifamily and relocated Sears store - Crucial amenity needed to attract people to new multifamily projects within Dallas Midtown - Constructed early in project timeline to spark growth
CENTRAL PLAZA Lone Star Garden Park featuring benches, shade, green, permeable paving N Double row of retail joined by covered plaza Mall with central stream featuring links to a future park, benches, shade and cart vendors
TROLLEY AND STREET PLAN Streets with Trolley: one-way streets, two lanes of traffic, two bike lanes, parking on one side Trolley Line N Trolley: One-way system around - Central Plaza (Ph1) - Mall & Park (Ph2) Traffic circles at every intersection All other streets: Bi-directional, two traffic lanes, two bike lanes, parking on one side
TRANSPORTATION - 1 mile extension required down Alpha Road - Ties in with Dallas Bike Plan system of 136.4 total miles of lanes 4/24/20 13
TIMELINE 4/24/20 13
TIMELINE 4/24/20 13
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS CONSTRUCTION COSTS Construction Hard Cost: $77,342,400 or $110 / SF Total Project Cost: $95,913,360 or $137 / SF * Construction estimate based upon RS Means Estimating software and comparable building data 4/24/20 13
FINANCIAL ANALYSIS EQUITY FINANCING Total Equity Contributed: $40,811,177 - Managing Partner: $6,696,600 (land at $40 sf) - Investor Partner: $33,841,577 - $10,418,400 at construction loan close - $23,423,177 at permanent loan close 4/24/20 13
FINANCIAL ANALYSIS DEBT FINANCING - Permanent Loan: $61,216,765 (60% LTV) - Interest Rate: 5.25% (Prime rate + 200 bps) - Annual Debt Service: $4,096,438 - Construction Loan: $71,555,760 - Interest Rate: 5.25% (Prime rate + 200 bps) - Total Interest PMT: $5,635,016 4/24/20 13
FINANCIAL ANALYSIS EB5 FINANCING - EB5 provides a green cards for foreign job creators - EB5 funds used to pay operating shortfall and construction debt - Total EB5 Contribution: $8,000,000 - Annual EB5 Interest: $615,009 (4.5% interest / 20 year amo) - Payoff in Year 4: $6,909,022 4/24/20 13
FINANCIAL ANALYSIS PROFORMA RENTS - Office Rents: $22 25 / SF plus $3 NNN - Retail Rents: $19 / SF plus $5 NNN * Rent proforma based upon CoStar and PPR data TARGETED TENANTS: Any number of companies relocating or expanding in DFW will want to call the Dallas Midtown Tower their home. There are reports that JPMorganChase, CitiMortgage, CapitolOne, and American Home Mortgage all have plans for expansion in the metroplex per CoStar s latest report. 4/24/20 13
FINANCIAL ANALYSIS CASH FLOW STATEMENT Assumptions - Stabilized vacancy: 10% - Stabilized rent growth: 2% - Expenses: 35% of EGI - Lease-up: 20% vacancy and 50% rent concession in Year 1 4/24/20 13
FINANCIAL ANALYSIS DISPOSITION / RETURNS Assumptions - 5 Year total project length - ROFR Option to Investor Partner followed by Market Disposition - Exit Cap Rate: 7% * Cap rate data from Integra Realty Resource Dallas CBD Office Unleveraged IRR: 8.78% Leveraged IRR: 14.61% Returns Allocation Cash Flow and Sale Proceeds - Partners paid, pari passu, to 10% preferred return - 80% / 20% until Investor Total Return of 15% - 70% / 30% for all remaining proceeds 4/24/20 13
DALLAS MIDTOWN PROJECT 4/24/20 13
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