NJ Gold Coast Affordable Waterfront Luxury Residential Rental Development Project
Projected Capital structure: $183.6MM ($64.3MM equity, $119.3MM debt 65% LTC)
* Investment Opportunities – 1) refinance 1st lien land loan $30MM 2) $40MM Pref Equity Investment available for 28 months, 15%, negotiable puts 3) $39MM mezz. debt is negotiable with potential kicker
756k gsf (414 residential units 460k nsf / 820 parking spots)
This is a high-quality off-market private equity commercial real estate investment opportunity to co-invest with a local real estate developer with a successful track record in acquisition and development in affordable residential rental projects.
The Sponsor has already acquired the site (11.37 acres) and completed site plans to build 414 (460k nsf) affordable luxury residential rental units and 820 parking spaces for the only waterfront residential rental development in the region. Re-zoning will be completed by September 2020. The site is strategically located between multiple transportation hubs (ferry, bus, train, and car), and 8 minutes ferry commute to midtown west Manhattan or 16 minutes bus ride to NYC. This property will have incredible panorama views of Manhattan skyline and unobstructed waterfront views. It is located in the heart of the NJ Gold Coast with 18.5 miles of waterfront paths. There are 7 retail centers and several high-end grocery stores nearby.
Value-Added:
This development project differentiates itself from existing competitive product due to extremely affordable unit mix that is 60% lower than similar luxury residences in Manhattan. These affordable luxury residential units are great value for young professionals, families, and students.
High-end amenities package: garden, pool, sauna, gym, mini-cinema, children’s playground, etc.
Greater NYC Metro – Gold Coast NJ
New Jersey is known as NYC’s sixth borough. The main target demographic are young professionals who commute to Manhattan for work, small families looking for affordable luxury life style experiences and quality of life. The property is ideally located for high air and light quality and is less densely populated than Manhattan while providing the benefits of high-end amenities and conveniences you expect from big city living. The area is experiencing very strong demographic population growth and income growth. This NJ waterfront district has very low housing inventory and strong demand due to its close proximity to midtown Manhattan business district.
Economic Trends Favor Affordable Rentals as a Long-Term Investment
This development is strategically encircled by multiple elite academic institutions within a short commute including Columbia University, NYU, and Princeton University which will draw demand for affordable rentals from students, families, and faculty. This educational amenity also provides plentiful educational options for young working families. There is a severe housing crisis in NYC. The shortage in affordable housing stock has created strong long-term need for affordable rentals.
The gold coast offers a compelling alternative for young professionals due to easy access to Manhattan (6-8 minutes by ferry) while offering the value proposition of luxury suburban living. The Greater NYC Metro area benefits from many positive long-term economic forces such as diverse job creation, student population growth, and international tourism, and business travel which will continue to lead to strong housing demand. Long-term economic forces and housing demand continue to strengthen as demand for affordable housing is expected to rise dramatically in the next five to 10 years in the Greater NYC Metro area.
Valuations:
Acquired Land: $30.5MM ($66.3nsf) / Hard / Soft Costs: ($254nsf / $44nsf) / Total All-In Costs: $399nsf
Land Appraised at $54MM as of end of 2019. Sponsor has $30MM-$45MM in equity
Levered IRR: 39% / Investor ERM: 4.93x / Net Profit $143MM / Cash on Cash after Stabilization 11.3%
Time line: ASAP, *Fully Secured, Re-zoning will be completed in September 2020. Construction can be completed in 24 months
Oxstones Real Estate, www.Oxstones.com CRE@Oxstones.com
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