180 Maiden Lane
In 2013 in the Lower Manhattan area of New York City, the impact of Hurricane Sandy, caused significant damage to the building as a result of its location in Flood Zone A. There is great potential post refurbishment however looking at the massive transportation investment, evolving technology, emerging green spaces and a cultural and social renaissance at the newly-minted Seaport District for 180 Maiden Lane, which can be transformed in to an iconic part of the East River waterfront, re-imagined as an amenity rich vertical campus providing the perfect business environment.
Aniruddh Jain Columbia MSRED Capstone Dealbook +1-718-473-2604 | a.jain@columbia.edu
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CONTENT Executive Summary Site | Transport | Zoning Neighbourhood | Demographics Project Overview | Best Use Design Concept | Project Schedule - Lobby | Retail - Observation Deck | Cafetaria - Office Spaces Market Analysis | Demand Comparables Target Tenants Marketing | Rebranding Finance and Budget - Acquisition - Debt Financing - Value Add Budget - Capital Structure - Sensitivity Analysis - Exit Plan Team Strength and Risks Appendix
EXECUTIVE SUMMARY The proposed investment will be a value add to 180 Maiden Lane which is very close to the Seaport District (0.2 mile) and to Fulton Subway Station (0.3 mile). The building enjoys spectacular views of Manhattan’s skyline. The site sits in close proximity to all major downtown Manhattan transportation, parks, shopping, schools, restaurants, and business hubs in the one of the most desirable neighborhoods in NYC. The project will be financed by a construction loan equal to 55% of the total development cost, and an equity investment equal to 45% of the total development cost. Once the repositioning of he property is completed, we will stabilize the rent roll and pursue a permanent loan as a replacement for the construction loan. At stabilization of rent-roll, we expect to cash out approximately 95% of the initial equity investment. We intend to sell the property as soon as it stabilises as an income generating asset and sell at the end of a 4 years holding period (2 years from end of lease-up period). AJA Development estimates 16.16% Levered IRR and 2.28 Equity Multiple for the LP investors.
The conversion will also boast approximately 60,000 SF of retail which opens into the Public Plaza of the building and will gain from the upgrades city plans to do for the seaport district retail. Transit connections are unparalleled with two blocks away from express green line trains, and close proximity to A, C, E train with 5 minutes walking distance. This office rental part of upgrade will benefit from a new NYC trend of vertical universities and TAMI tenants, which is evident by the popularity among millennials of such buildings and locations. The Overall, the site is extraordinarily well positioned to capture best in class commerical tenants at great rents and to deliver unique micro-offices with unparalleled design quality. FINANCIALS
The project will cost approximately $430 million to acquire. We will first secure a single amortisating permanent loan and 55% LTC. Construction will totally take 18 months, and by the month 19th, tenants will be slowly secured. The project will be operating 4 years and sold year after its stabilization. A NOI of approximately $62 million at stabilization will be appealing to the investors. The project will exit at year 4 with cap rate at 6%. The strategy towards this unique value add investment will be to buy, fix and sell in a quick turnaround time frame. This will bring a high unlevered IRR of 9.1% and an attractive levered equity multiple 1.38x to the investors. The proforma office rent is underwritten at $57 per SF, which the average market rent. The proforma retail rent is underwritten at a blended rent of $285 per RSF for the two floors based on the comparable properties. Hotel has an ADR of $160.
We believe that the project will be able to achieve opportunistic returns for the investors, and we are looking for a partner to invest capital in a joint venture to make it possible. 2
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NEIGHBOURHOOD & DEMOGRAPHICS
In a 4 block radius. Total Population Change 2010 No High School Some High School Some College Associate Degree Bachelors Degree Graduate Degree
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80,885 -0.8 % 17,238 6,804 5,025 1,922 10,677 5,503
AMENITIES | 4 Block Radius
The building is uniquely situated on the East River Esplanade, which features a two mile stretch of new bikeways/walkways, seating, lighting and public spaces. The building also located one block from the South Street Seaport, which is presently undergoing a major transformation to become a premier eating, shopping and entertainment destination. Maiden Lane is an east-west street in the Financial District of the New York City borough of Manhattan. Its eastern terminus is at South Street, near the South Street Seaport; its western end is Broadway near the World Trade Center site. The panoramic views of Manhattan, including the Statue of Liberty, Brooklyn and New York Harbor and efficient floor plates allow for the opportunity for companies to create truly outstanding workspaces for their employees.
Food and Beverage
Retail / Attraction
Hotel / Public
The Paris Cafe Nelson Blue Chop’t Iron Horse NYC Harry’s Italian Bonchon Chicken Chipotle Mexican Grill Digg In Industry Kitchen Watermark Bar Fresh Salt Cowgirl Seahorse Haru Sushi Roast Kitchen Starbucks
Adamo Art Gallery South Street Seaport Imagination Playground 55 Fulton Market Jubliee Market Duane Reade Wall Street Plaza East River Esplanade IPC Theatre Soul Cycle Fidi Amado Art Gallery Guess Several Sundry Shops
Holiday Inn Fairfield Mariott Four Point Sheraton EuroStar Andaz Wall Street NYC Helicopter NY Fire Department
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NEIGHBOURHOOD & DEMOGRAPHICS
Within the 1 mile radius from the property, 26% of the households have an annual income of $200,000 or more. However, within that radius, 32% of the households have an annual income of $50,000 or less. Lower Manhattan average household income (2017) is $214,000. Average Private Sector Employee Annual Wage: $141,000 (source: Downtown Alliance). Within the 5 miles radius from the property, 36% of the population are in the 20-29 age group, and 31% are in the 40-64 age group. Most of the population (56%) within the 1 mile radius from the property hold either an Advanced degree or a Bachelor degree. Within the 1 Mile radius from the property, 34% of the population are employed in professional & management occupations. Within that area, 23% work in transportation. Within the 1 radius mile from the property, 53% of the population commute to work in less than 30 minutes.
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SITE | TRANSPORT | ZONING
TRANSPORT ANALYSIS
The building is uniquely situated on the East River Esplanade, which features a two mile stretch of new bikeways/walkways, seating, lighting and public spaces. The building also located one block from the South Street Seaport, which is presently undergoing a major transformation to become a premier eating, shopping and entertainment destination. Maiden Lane is an east-west street in the Financial District of the New York City borough of Manhattan. Its eastern terminus is at South Street, near the South Street Seaport; its western end is Broadway near the World Trade Center site. The panoramic views of Manhattan, including the Statue of Liberty, Brooklyn and New York Harbor and efficient floor plates allow for the opportunity for companies to create truly outstanding workspaces for their employees.
Residential: Lower East Side market trends indicate an increase of $132,000 (12%) in median home sales over the past year. The average price per square foot for this same period fell to $1,558, down from $1,563. Looking at the neighborhood and the market conditions we can conclude to maintain only retail and commerical uses.
Site is located in the C5-3 is a central commercial district with continuous retail frontage intended for offices and retail establishments that serve the entire metropolitan region. It permits a commercial FAR of 15, which permits residential, hotels and retails however home maintenance services, auto rental establishments and other uses not in character with the district, including illuminated signs, are not permitted.
Retail: About 2M SF of shopping and dining to be placed in market by 2018. In addition the seaport districit renovation and walkable indoor plaza at our site, allows for an indoor retail atrium to be created, which would go well with the market trend.
ZONING ANALYSIS
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Commercial: There is a strong demand for Class A, with transactions totalling 2.86M SF since 2010, 62% increase over 2015;s 1,77M SF. The average asking rent is around $57/SF.
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PROJECT OVERVIEW | HIGHEST BEST USE ANALYSIS
CORE AND SHELL
TRADITIONAL LAYOUT
Building Details
Redevelopment Concept 1. UNIFIED BUILDING The Cafeteria and the Fitness Centre are open to all employess and would be maintained at world class levels. 2. OBSERVATION DECK The area on the obeservation deck and floors below would be open to all and a lounge will be created for people to use. The open concept has become widely popular and would allow us to get the best views of the city.
The conference halls will be bunched together above the retail atrium and would be used both for rental and by the tenants.
Front Street
Block/Lot
37/23
Asset Type
Zoning Lot Size
As-Of-Right FAR Total FAR Total GSF
Stories Year Acquired 2011
4. RETAIL ATRIUM The retail atrium would utilise the open ground floor and allow the public to utlise more than just the ground floor similar to Fulton Street Station. 5. TENANT ATRIUM The floor slabs would be cut and would lead to more interconnectivity between the floors, this would allow larger tenants to lease up and make the complex their own space.
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Cross Street
PoPS FAR
3. CONFERENCE HALLS
Aniruddh Jain
Value Add
Ownership 100% Net Purchase Price
Glass and steel architecture
Class A C5-3
46,799 15.0 3.0
18.0
1,080,110 41
$425.7M
- Modern Lobby - Retail Atrium - Fitness Centre - Museum / Gallery - Conference Halls - Elevator Upgrades - Obeservation Deck - Topfloor Restauraunt - Cafetaria - Green Building Certification - Hardening of Facade - Flood Proofing - Visitor Waiting upgrades - Security Upgrade - Auditorium on First Fl.
The highest & best use outlined is a compelling opportunity to create a vibrant, mixed use building that adds value to the Lower East Manhattan neighborhood. By aiming for the deepest segment of the market, rather than what currently appears highly lucrative but thin, 180 Maiden Lane offers an exciting, long term opportunity to develop a stable and growing stream of income through mixed use retail and commerical space and solidifies 180 Maiden Lane as a desirable location in city’s psyche.
Although there is great addition of commercial spaces in Downtown the overall absorbtion indiciate the demand for Class A product. With the help of competitive services provided to the whole building and development of nearby retail in Seaport district the area will experience tremendous growth. The development of Manhattan office with great investor appetite – ensures that 180 Maiden Lane can attract capital today and in the long term, for refinancing or investment exit. With design and unification oriented solution we believe we can attract institution apart from only finance and insurance to the area.
Efficient center core floor plates 12’3” slab to slab height
SECOND FL
MSRED Capstone
THIRD FL
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DESIGN CONCEPT | PROJECT SCHEDULE EXISTING The current building has leases expiring and vacancy spread out throughout the building. The idea is to consolidate the space leased and start renovation from the bottom up.
RELOCATION
RENOVATED
REPOSITIONED
All the tenants are shifted up with relocation concession provided and the lower floor retail and slab cuts are made. Several indoor atriums are drawn inside the building to create better internal views.
With top floors renovated to be an observation deck, common cafeteria and lounge, with a possibility to add a museum / gallery just below the top floor, the lower floors will have a conference centre, retail, fitness centre and a grand lobby.
Top deck being open to all and the lower floor converted in to an retail atrium, the middle floors will be leased to large tenants, with atrium created to unify the office spaces.
SOCIAL SPACES AROUND ATRIUM
ACQUIRE
PROJECT SCHEDULE
LOBBY ELEVATOR
VALUE ADDED LEASING BEGINS
GYM HARDEN
HARDEN
OB. DECK
OB. DECK
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LEASING STABILISED
RETAIL
RETAIL
OFFICE
OFFICE
OFFICE
HOTEL
HOTEL
HOTEL
1 YEAR
1.5 YEAR
0.5 YEAR
INTERCONNECTED FLOORS
Aniruddh Jain
SALE
2 YEAR
2.5 YEAR
3 YEAR
3.5 YEAR
ATRIUM TOWARDS THE SHELL
4 YEAR MSRED Capstone
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DESIGN CONCEPT | MOOD BOARD
OBSERVATOR DECK AND CAFE
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Aniruddh Jain
RETAIL ATRIUM OVER PLAZA
PUBLIC PLAZA LOBBY MSRED Capstone
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COMPARABLES
One Seaport (161 Maiden Lane) 80 residential condos
101 Wall Street 52 Residential Condos
OFFICE SALE COMPS Lower Manhattan consists 86m square feet of office space and additional 4m square feet of office space are currently under construction. Major Industries: Media, Financial Services, Insurance, Real Estate, Government, Professional Services, Advertising, Technology, Nonprofit.
Courtyard by Marrriott 320 Rooms (hotel)
180 Water Street 565 Rental Units NEW DEVELOPMENTS
Data from “Compstak”, “Real Capital Analytics”, and market reports of “JLL”, “Cushman & Wakefield”, “Douglas Elliman” and the “Downtown Alliance”.
100 Wall Street 463,664 SF Office
OFFICE RENT COMPS 111 Wall Street 990,205 SF Office building, 175 Water Street 455,733 SF Office building
80 Pine Street 1,055,911 SF Office building
120 Wall Street 615,000 SF Office
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Aniruddh Jain
MSRED Capstone
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TARGET TENANT AND MARKETING Lower Manhattan has diversified its economy. Technology, media and fashion companies are relocating to the area from Midtown Manhattan where rent is higher. We will target companies who look for Class A amenities but still cannot afford Midtown prices ($70 PSF)/ Hudson Yards prices ($80-$90 PSF). Lower Manhattan and particularly our building is the perfect solution for these companies, offering a rent price of $55 for class A building, amenities, and infrastructure. Higher Education has been expanding in NYC In 2017, NYU Langone leased 583,000 SF in 180 Madison Avenue In 2017, Cornell Tech will open Roosevelt Island tech campus with 710,000 square feet In 2016, the University of Rochester’s Simon Business School & New York Law School co-leased a 235,000-square-foot building in Tribeca In 2016, Harvard Business School launched a startup studio at 33 Irving Place CMU has a Computer Science program at 55 Broad Street
Healthcare & Pharmaceutical Industry -Newer & more modern infrastructure -Collaborative space Professional & Business Services Industry -Industry clustering -Open & fluid space MARKETING - Brokers Involved Early - Pre Leasing Event - Tenant Benefits for referal
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MSRED Capstone
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ACQUISITION AND BASE INDEX
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CASH FLOW ESTIMATIONS
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MSRED Capstone
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DEBT FINANCING AND TAX
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MSRED Capstone
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CAPITAL STRUCTURE AND RETURNS
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EXIT STRATEGY | RISKS Lower Manhattan has diversified its economy. Technology, media and fashion companies are relocating to the area from Midtown Manhattan where rent is higher. We will target companies who look for Class A amenities but still cannot afford Midtown prices ($70 PSF)/ Hudson Yards prices ($80$90 PSF). Lower Manhattan and particularly our building is the perfect solution for these companies, offering a rent price of $55 for class A building, amenities, and infrastructure. The building is planned to be sold and out at end of 4 years however the CF once stable can be extended for several years after and the IRR would keep increasing. Although very conservatively underwritten with a 6 Cap, the building most definitely will over perform and provide better returns. PLAN B Non performing types of asset class for example retail or hotel can be either converted into conference rooms or condos and sold separately. Overall, the building has been given enough time to lease and regenerate CF while at the same time retaining the anchor tenant and hence can be efficient form the first day and hence such a short 4 year hold instead of the usual 7-10 year hold in such cases of building.
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MSRED Capstone
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APPENDIX - SENSITIVITY TABLE
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APPENDIX - MONTHLY CASH FLOWS
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APPENDIX - MONTHLY CASH FLOWS
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APPENDIX - MONTHLY CASH FLOWS
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APPENDIX - MONTHLY CASH FLOWS
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APPENDIX - WATERFALL
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APPENDIX - WATERFALL
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APPENDIX - WATERFALL
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APPENDIX - WATERFALL
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