Off-Market Residential Rental Opportunity Zone Development Project Phase II, 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. 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.

Projected capital structure: $70MM ($21MM equity, $49MM debt LTC 70%)

201.5k gsf (222 residential units 146k nsf / 12.1k sf retail / 46 parking spots 15.6k sf)

1) Investor investment opportunity: $20MM equity Class B membership interests are negotiable

This is an off-market private equity commercial real estate opportunity zone development project with a vertically integrated Sponsor with local knowledge, development capabilities, and construction expertise to build two large residential rental towers on time and within budget.  The Sponsor has 30 years of dedicated service in creating places of enduring economic and social value in existing cities in the NY metro region along with a lifetime of philanthropy focused on worthy causes including ethnic diversity and children of special needs. 

The Sponsor has assembled seven-eight properties in-contract, and can quickly build two large (201.5k sf) opportunity zone as-of right twelve-story residential rental towers with retail and parking spaces.  The site is situated in a prime location that is strategically located within walking distance to a transit station for easy access (30 min.) to midtown Manhattan.  This development will become the tallest towers in this town of Westchester and will have incredible views of the NYC skyline. 

Control of Land and Current Status
The Sponsor has already assembled seven-eight properties in-contract and conducted pre-development (architect designs, engineering, zoning analysis, and land entitlement).  The Sponsor will be able to quickly build a politically-endorsed residential rental towers strategically located in the downtown business district, and in the path of growth for residential and retail space.  The average household income is $185K within a five-mile radius of this project which will also boost retail sales and command interest from regional retailers, restaurants, and health clubs.

This development has strong political support and has already received re-zoning approval to increase the current as-of-right sf.  The Sponsor can quickly receive site plan approval.  The re-zoning has also increased the height limit for this assemblage compared to the surrounding properties, and therefore provide superior air and light amenities to residents. 

Investor Equity, Debt Financing, and Investment Tax Credits This large 201.5k gsf Phase 2 development site is available for JV partnership ($20MM equity investment opportunity Class B membership interests are negotiable).  Sponsor has assembled the 7-8 properties and are all in-contract and is conducted initial pre-development designing and planning.  Construction can be completed quickly in just 12-18 months.  The Sponsor has access to construction financing.  In addition, any equity investors in the current project (Phase1) will have first priority for investing in this larger Phase 2 project (seven-eight property assemblage next door to the current Phase 1 project which will also be a 12-story mixed-use residential rental complex).   

This 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 the commercial district and also the creation of much needed residential rentals.  The large development will bring hundreds of high paying construction jobs and may qualify for employment credit.  This site also qualifies for opportunity zone investments and 421A tax abatement.  

Value Proposition in The Northern Frontier The property is located in a high population density area between the affluent communities of Manhattan, NYC and Greenwich, CT.  The development boom in this northern frontier is attracting young professionals due to easy access to Manhattan while offering the value proposition of more spacious suburban living.  Long-term economic forces and 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 household 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.  With a severe housing crisis in NYC, 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 business travel which will continue to lead to strong rental demand.   

Project Costs Acquired land at $17.5MM ($119.9sf) / Hard costs $47MM ($322sf) / Soft costs $5.4MM ($37sf)

Current Market Land Comps: $152gsf – $182gsf

Total All-In Project Cost: $ 479nsf / $315k per unit

* This site qualifies for opportunity zone investments, 421A tax abatement, and employment tax credits

Using current market comps. we project the following valuations: Total Year 4 Stabilized NOI:  $5.95M at 5.15% Stabilized Cap Rate Method = $119MM MV

Total Year 10 Stabilized NOI: $6.5M at 5.15% Stabilized Cap Rate Method = $129MM MV

Sum of Parts Valuation Analysis 222 apt units: $46rsf 146k nsf – 99 studio ($2k rent), 98 1-bedroom ($2.5k rent) and 25 2-bedroom ($3.6k rent) = GI $6.7M / NOI $5.36M / 4.5 Cap = $119MM

46 automated parking spots:  $200/m = NOI $105k / 5% = $2.09MM

12.1k sf retail: $65rsf = GI $787K / NOI $708K / 5% = $14.2MM

$135MM MV based on sum of parts

Investor ERM: 2.8x, IRR: 34% / $2.8MM cash on cash return 14% (5.5% rate on $49MM & $21MM equity needed)

Time line:  *Construction can be completed in 12-18 months.  This asset is a high-quality off-market opportunity zone investment project on a prime lot next to a major transit station ***

Oxstones Real Estate,

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