|
| | CCRC Project
Feasibility Studies - Continued...
The typical
CCRC housing feasibility study product that will attract both capital market support and
local market support is based upon the following program outline:
-
Site -
usually 15 to 30 acres; no more than 10% of project budget, 8% of
project budget being optimal for our purposes.
-
Construction
- garden style apartments sized based upon the projected 90-day
sales velocity set forth in the market feasibility study's
conclusions and recommendations. These should be restricted to
no more than three (3) or four (4) stories. The optimal
arrangement seems to be a 24-unit prototype building having 12 units
on the first floor and 12 units on the second floor, with an
exterior walk area and elevator. This will result in the
floors being split into four (4) six-unit pod concrete construction
(poured-in-place insulated concrete form) of a downstairs set and
upstairs set of three (3) units. The resulting roof and
exterior finish can be varied greatly and finishing out the units to
a high Class "A" multifamily standard will meet the
expectations of the market. Where practical and possible,
living units should be the largest units in the market. Each
one of these pods (12/12) take about 140 to 170 days to
complete. Once the construction program is optimized, it will
be possible to deliver units on a 120-day average and that will have
a telling affect on the capital funding structure of the
transaction.
-
Operating
Program - offering units priced at the market median is important
because this gives the deal room to grow in the future. The
most important thing now is to fill the property as quickly as
possible so as to reduce the market risk exposure of the various
classes of investors involved in the transaction. Median price
units will provide outstanding financial returns to the developer
and investor syndicate(s) all the way through the development cycle
once the first units are delivered into the market.
-
Capital
Structure - the optimized transaction envisions a three-year
development stream having a total spend of around $78 to $88 million
and a remainder asset value of around $65 million and long-term debt
of around $40 to $50 million, making these transactions strong
performers in the market.
| |
|
|
Do
You Know The Secret?
When it comes to commercial real
estate development finance, it doesn't matter whether you need to raise
$5 million or $50 million, the out-of-pocket costs, advance fees and
project due diligence costs will always require the same relative
investment dollars the promoters have to fund. Do you know what
that amount is? Do you know the Secret? |
|
