Distressed Shovel Ready Residential Rental Development Opportunity, Westchester NY


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

Proj. capital structure: $86.9MM ($12MM equity needed by new Sponsor.  $17MM sunk costs from previous Sponsor), ($25MM low cost 15 yr. mezz. debt and $50.4MM 3 yr. senior construction debt, LTC 87%)

*** Please note – All debt financing for this development project is already secured in advance for the new Sponsor.

319K gsf (189 residential units 250k nsf / 7.5ksf commercial space and parking)

This is a distressed shovel ready private equity commercial real estate development opportunity that requires a new Sponsor with local knowledge and construction expertise to build a 189-unit residential rental development.  Previous Sponsor had acquired three parcels on 6 acres to demolish and build three two to four story multi-family buildings with 257K nrsf for residential rental, and 7.5K nrsf retail, along with parking spaces.  The property is situated in a prime location that is strategically located near the transit station for easy access to midtown Manhattan.  This development will have incredible panoramic and unobstructed views of the Hudson River and the Palisades Park. 

Additional Amenities: There will also be more than 50K sf of indoor and outdoor amenity space including a health and wellness center, outdoor pool and deck, outdoor kitchen, dog run, amphitheater, indoor communal space, test kitchen, media room and gardens.

Control of Land and Current Status:
The former Sponsor spent $17MM assembling the site, conducting due diligence (Phase 1 / Phase2 studies, appraisal, architect designs, zoning analysis, and land entitlement along with land acquisition), and pre-developing (legal, planning, architecture, engineering, plus interest and taxes) this project.  The former Sponsor became financial distressed and lost this development due to lack of additional funding.  This is a rare shovel-ready investment opportunity for a new Sponsor who recognizes the intrinsic value of this development site and has the local expertise, the development capabilities, and the financial capacity to complete this project.  All building permits and re-zoning approvals are complete. 

New Sponsor Equity Needed, All Debt Financing Secured, and Investment Tax Credits: This large development site (319K gsf) is shovel ready (previous Sponsor assembled the properties and received building permits and re-zoning approval) with the majority of due diligence, design, and pre-development planning completed.  This is a highly attractive distressed shovel-ready opportunity. All financing is secured for this assemblage. The project is approved for $25MM 15-year state sponsored eco-friendly financing program as well as a traditional 3-year bank construction loan. A new Sponsor can quickly close on this distressed shovel-ready development site for roughly $11.5MM and begin construction immediately. 

The development project has full political support of the town council who are pro-development and want to encourage long term investment in the community with the rehabilitation of outdated commercial properties and also the creation of much needed affordable housing rentals.  The large development will bring hundreds of high paying construction jobs and may qualify for employment tax credit.   

Value Proposition in The Northern Frontier The property is located in one of Westchester County’s renowned River Towns.  The development boom in this northern frontier is attracting young professionals due to easy access to Manhattan while offering the value proposition of luxury suburban living.  Housing demand in Westchester County and Hudson Valley continue to strengthen as demand for affordable housing is expected to rise dramatically in the next five to 10 years in the NYC Metro area.  Westchester County has the highest median family income in New York State ($100,863). Over the last 10 years, incomes grew faster in Westchester County than anywhere else in NY (24.6 % for the county, versus 18.9% for the state overall.)

Economic Trends Favor Affordable Rentals as a Long-Term Investment NYC Metro is a leading educational hub with at least sixty-three academic institutions which draw demand for affordable rentals from students, faculty, and visitors.  There are sixteen higher educational institutions located in Westchester County.  The shortage in affordable housing stock has created a strong long-term need for affordable rentals.  As a mega-city, NYC benefits from many positive long-term economic forces such as diverse job creation, student population growth, and tourism which will continue to lead to strong rental demand.   

Current Land Valuations: The development site was appraised in 2016 at $13.2MM (189 units 319K sf, $41sf).  A new appraised land valuation with re-zoning now completed and with current market comps will be significantly higher than the outdated 2016 appraisal.

* This site qualifies for possibly 421A abatement program.

Project Valuations: Can acquire land at roughly $12.5MM+

Construction costs:  Hard costs $59.6MM / Soft costs $5.4MM

Using current market comps for investment valuation analysis: 189 apt units: 70 1-bedroom and 119 2-bedroom = GI $11M / NOI $7.9M

** Only using a conservative below market $36 rsf in model. There’s ample room for future increases since market comps are at $46rsf for new luxury rentals offering superior amenities and larger layouts than comparable products.

189 Parking Spots:  $18rsf x Occupancy 98% = GI $353.7K / NOI $283K

7.5k sf Retail: $30rsf = GI $243.4K / NOI $195K

Storage & Amenities: GI $243.2k / NOI $195K

Total Year 5 Stabilized NOI: $8.5M at 5.5% Cap Rate = $154.85MM MV

NOI: $8.5MM, Investor ERM: 10x, IRR: 60%, Cash on Cash Yield 20%+

*** All financing for this development is secured including $50.4MM 3-year traditional bank construction loan and $25MM low-cost mezz debt for 15 yr. / Only $12MM new Sponsor equity needed.

Time line:  ASAP *Shovel-ready.  This asset is a distressed shovel ready investment opportunity on a prime location

Oxstones Real Estate www.Oxstones.com  CRE@Oxstones.com

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