The Five Points Development - Part V

The Five Points Pre-Development - Recommendations/Conclusions

 Sassyk Real Estate Development has researched and reviewed the necessary information based on the client's provided criteria and have in good faith, provided the following:

1) Site Analysis - Based on site inspections and site research.
2) Regulatory Analysis - Based on research from different regulatory agencies. 
3) Market Analysis - Based on research for local Demographics.
4) Financial Analysis - Based on projected Construction Costs of the Preliminary Design.

Based on these four main development criteria, Sassyk Real Estate Development is recommending a "GO" for the development of this project. The building site is highly visible and will accommodate a mixed-use development, which by conducting local interviews, is highly desirable. The lot chosen for this project - Lot 8 - is currently in foreclosure. The Unicorn Lake area is 85% completed, which makes this area highly desirable. The City of Denton has an "Open Mind" policy for mixed-use development. The local Rental Market has seen new Multifamily Development in the 76210 zip code area (Rent Rates average between $1.25-1.45/SF). Retail growth has been very strong in the Unicorn Lakes Development (Rent Rates average between $12.00- 20.00/SF). The Average Median Income (AMI) in the 76210 zip code area ranges between $89,000-91,000 per household. This income range supports this type of development. The Financial Analysis performed is based on the Preliminary Design and anticipates construction costs of approximately $275/SF. This is based on a Glass and Steel structure with adequate parking, paving, landscape and hardscape features. Year One return on investment - cash on cash flow (BTCF/Equity Investment) is projected to be approximately 24%. Lastly, the unseen aspect of the project from a social equity point of view: The local community is a vibrant, thriving mixed-use area that would welcome this type of development.

The Five Points Development - Part IV

The Five Points Pre-Development Financial Analysis 

Preliminary Development Plan

Lot 8, Block B - "The Parks at Unicorn Lake"

The Preliminary Design of the Five Points Development is a basic "4-Square" design, with a Retail Quad as a first floor complex. Each retail section measures 75' x 75' or 5,625 sq. ft. of gross floor area for a total retail area of 22,500 sq. ft. The second floor is a larger "4-Square design, with a Multifamily Quad, each section measures 95' x 95' or 9,025 sq. ft, for a total of 36,100 gross sq. ft. of Multifamily. These sections cantilever over the first floor. This cantilever serves as covered parking and encloses the center section walk-thru, going North to South. There is a 10' wide Courtyard that runs East to West, which will be covered above by an archway covering. The Floor Area Ratio (FAR) is calculated thus: 38,000 sq.ft./63,598 sq. ft = 60%. Ingress and Egress are achieved through the North and East access roads. In addition, the adjacent business has a concrete parking lot built to this lot line, giving further access at the South, where the curb has been cut-away.

Each Multifamily Quad will be sub-divided into 4-750 sq. ft. units, 3-1,000 sq. ft. units and 2-1,200 sq. ft. units, or 16 total 750 sq. ft. units, 12 total 1,000 sq. ft. units and 8 total 1,200 sq. ft. units for this development. Total Net sq. ft for Multifamily = 33,600

Each Retail Quad can be sub-divided as demand dictates. The building design is flexible in that the doors can be placed in different areas of the retail units to accommodate ingress and egress.

Cash Flow Analysis For The Five Points Development Project
Prepared By: Richard Noel
Prepared For: Fred A. Forgey Investments
Date Prepared: 4/23/2012



Given:                           Unit Size        Per/SF      # of Units      
Multifamily Rent Rate:    750               $1.25             16
Multifamily Rent Rate:  1000               $1.30             12
Multifamily Rent Rate:  1200               $1.35               8
Retail Rent Rate/SF:      5625             $15.00             4
 
Vacancy and Collection Losses: (% of PGI)              15%
Total Operating Expenses: (% of EGI)                      30%
 
Financing Information
Debt Service Coverage Ratio (DSCR):                       1.3
Construction Costs/SF:                                             $275
Total Project Sq. Ft.:                                               63600
Land Acquisition Costs:                                      $750,000
Total Development Costs:                              $18,240,000
Loan to Value Ratio (LTV):                                         70%
Loan Term in Months:                                                  180
Loan Interest Rate:                                                     7.5%
Equity Required:                                              $5,472,000
Debt (Loan Amount):                                     $12,768,000
 
                                                                                          Year One
Potential Gross (Rental) Income (PGI)                           $4,572,720
- Vacancy and Collection Losses (VCL)                            $685,908
= Effective Gross Income (EGI)                                      $3,886,812
- Total Operating Expenses (OE)                                    $1,166,044
= Required Minimum Net Operating Income (NOI)          $2,720,768
- Annual Debt Service                                                     $1,420,331
= Before Tax Cash Flow (BTCF)                                     $1,300,437
                                                                                             
                                                    BTCF/Equity Required = 24%