Plaza District Boutique Hotel & Residential Condo Development Opportunity NYC

12-Aug-2024

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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.

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Projected capital structure: $62.7MM ($15MM equity ($16.8MM for site acquisition), $47.7MM debt)
41.9k gsf (12 residential units 9k nsf / 80 hotel keys 23k sf / 8k sf – 2 level restaurant / 1-2 sub level wine bar lounge)

This is a unique private equity commercial real estate development opportunity to acquire an existing property located in one of the most desirable and prime real estate areas in Manhattan (Plaza district). The area is surrounded by ultra-upscale retail on Fifth Avenue as well as fine dining, Class A office buildings, and luxury residentials on Park Avenue/Madison Avenue.  The site is conveniently located steps away from many New York landmarks such as Central Park, Carnegie Hall, Rockefeller Center, Radio City Music Hall, Broadway Shows, St. Patrick Cathedral, MOMA, and Christies. 

The site’s flexible zoning and prime location makes it suitable for various potential developments including boutique hotel, luxury condominium, retail, and office.  After evaluating various development options, we concluded that the best use for the site is to build a mixed-use twenty-five story boutique hotel and residential condo tower with an award-winning restaurant in the two-level retail space along with a sublevel wine bar / lounge in the cellar.

This is a once-in-a-lifetime opportunity because the property is owned and controlled by a long-term owner.  The long-term holder is willing to sell at $15MM in return for a quick close and potential participation in back-end equity on the future development potential for the site.  The owner has already conducted due diligence – appraisal, architect designs, and zoning analysis.  A developer will be able to quickly build an iconic mixed-use property strategically located in one of the most exclusive areas in all of midtown Manhattan. 

The site will be delivered vacant at closing.

Current Land Valuations: The property was appraised as-of-right between $15.5MM to $18.8MM (41.9K sf, $370sf to $449sf).  Comps: Recent land purchases in the area were all above $2,500 psf +

Project Valuations: Can acquire land (off-market) at $15MM / Hard costs $30.4MM / Soft costs $6.1MM / Total all-in costs: $62.7MM, $1,497gsf / $1,567zsf / $1,793nsf  


Using current market comps. we project the following: Hotel projections: 80 keys (275sf/room) (55% of asset mix), 80% occupancy, $350 ADR, $280 RevPar, operating expenses 65% = GI $8.2MM / NOI $2.9MM,

Exit Cap Rate 7% = $40MM MV (positioned as boutique hotel $320-380 ADR)

Residential condo sell-out projections: $3,100/nsf (26% of asset mix) = GI $27.7MM / NI $26MM
 
Retail projections: 7k sf restaurant / wine bar / spa lounge: $200/sf (19% of Asset Mix) = NOI $945K, Exit Cap Rate 6.5% = $14.2MM MV

Projected Hotel & Retail Net Income $3.8MM / 8% annualized yield to cost / $431k cost per key
Investor ERM: 2.2x, IRR: 38%  (Assumption: $15MM equity needed, asset mix 55% hotel, 26% condos, 19% retail) *before depreciation tax shield

*This asset is a high quality off-market investment opportunity in the plaza district and next to a transit station

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

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