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Broker Opinion of Value Downtown Village Square

859 Cape Coral Parkway E., Cape Coral FL 33904 TO: Robbie Lee Jr., Downtown Village Square LLC FROM: Annette M. Barbaccia, Commercial Manager Miloff Aubuchon Realty Group Inc. DATE: January 4, 2017 RE: Assessment of Value Downtown Village Square Overview: The Broker Opinion of Value provided herein includes the assemblage of properties totaling 3.94 acres in the City of Cape Coral, known as Downtown Village Square. These properties further described below include: 845, 851, 859 and 877 Cape Coral Parkway E. and 826 SE 47th Terrace, Cape Coral, FL 33904. Included in this opinion of value are the development rights, governmental approvals, public financial commitments, development costs and anticipated return. Based on the assessment provided herein, the property is estimated to be valued at $20 million with the development rights and financial public commitments. The projected sales values of the Downtown Village Square development are also consistent with recent sales. Location: Downtown Village Square is located within the South Cape Community Redevelopment Area (CRA) in the southeastern section of the City of Cape Coral, Lee County Florida.

 

 

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Property Description: Downtown Village Square encompasses an entire City block, bounded by SE 47th Terrace to the north, SE 9th Place to the east, SE 8th Court to the west and Cape Coral Parkway to the south. Centrally located with the City of Cape Coral’s downtown area, it lies along one of the primary commercial corridors connecting the City of Cape Coral to Fort Myers and the region.

Regional Location

Downtown Village Square Assemblage

 

826 SE 47th Terrace 

845  877 859 851 

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Downtown Village Square Properties Property Address & Strap#

Parcel Size SF Bldg. SF & Build Year

Land Use & Zoning

Taxes 2016

845 Cape Coral Pkwy E. Cape Coral FL 33904 #184524C1000090000

17,011 SF Vacant Land Downtown Mixed South Cape

$2,074.82

851 Cape Coral Pkwy W. Cape Coral, FL 33904 #184524C1000100000

7,628 SF 1,525 SF Built: 1966

Downtown Mixed South Cape

$2,562.36

859 Cape Coral Pkwy W. Cape Coral, FL 33904 #184524C1000110000

37,923 SF 3,370 SF Built: 1976

Downtown Mixed South Cape

$13,445.22

877 Cape Coral Pkwy W. Cape Coral, FL 33904 #184524C1000120000

44,239 SF 7,792 SF Built: 1989

Downtown Mixed South Cape

$15,811.10

826 SE 47th Terrace Cape Coral, FL 33904 #074524C4000080000

64,881 SF Vacant Land Downtown Mixed South Cape

$4,321

845 Cape Coral Parkway E., Cape Coral FL 33904: This 17,011 sf vacant parcel lies at the southwest corner of the assemblage, at the intersection of SE 8th Court and Cape Coral Parkway East. The property is owned by Red Rock Land Corporation with the address of PMB 237, 1019 Fort Salonga Road, Suite 10, Northport, NY 11768.

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851 Cape Coral Parkway E., Cape Coral FL 33904: Immediately adjacent to 845 Cape Coral Parkway East and 859 Cape Coral Parkway East, this 7,629 SF parcel has a 1,525 SF single story masonary building built in 1966. It is currently occupied by two tenants, each occupying half of the building. The gross rent of both tenants, a mobile phone company and an insurance agency is $3,150 monthly gross or $37,800 annual. The building has been kept up by the owner and current tenants. The property is owned by Red Rock Land Corporation with the address of PMB 237, 1019 Fort Salonga Road, Suite 10, Northport, NY 11768. 859 Cape Coral Parkway E., Cape Coral, FL 33904: A former bank building occupied by Fifth Third Bank, this 3,370 SF building on a 37,923 SF parcel fronts Cape Coral Parkway between the 851 and 877 Cape Coral Parkway E properties. It is currently rented at $3,700 per month or $44,400 annually triple net. The property owner is Downtown Village Square LLC located at STE D, 3505 Veterans Memorial Highway, Ronkonkoma, NY 11779 in the Lee County Property address site. The building is in fair condition.

 

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877 Cape Coral Parkway E., Cape Coral, FL 33904: This property lies on the southeast corner of the assemblage, adjacent to SE 9th Place. The 7,792 SF building, built in 1989, on a 44,239 SF parcel is a car wash facility. It has been maintained and kept up by the owner and tenant. The monthly income is $10,500 or $126,000 annually triple net. The owner is Downtown Village Square LLC, with an address of STE D 3505 Veterans Memorial Parkway, Ronkonkoma, NY 11779 in the Lee County Property address site. They also have a local address of 877 Cape Coral Parkway E., Cape Coral FL 33904. 826 SE 47th Terrace, Cape Coral Parkway, FL 33904: Formerly a City owned parking lot, the City sold this parcel to Downtown Village Square in 2010 as part of a larger public/private partnership for the redevelopment of this assemblage. Currently vacant, this 64,881 SF parcel lies along the northwest section of the assemblage, fronting SE 47th Terrace. The property is owned by Downtown Village Square LLC with a mailing address of STE D, 3505 Veterans Memorial Highway, Ronkonkoma, NY 11779 in the Lee County Property address site. They also have a local address of 877 Cape Coral Parkway E., Cape Coral FL 33904.

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Public Private Partnership & History: The City of Cape Coral’s Community Redevelopment Agency (“CRA”) issued a Request for Proposals in 2006 to facilitate redevelopment of the 3.94 acre city block in their downtown between Cape Coral Parkway E., SE 8th Court, SE 47th Terrace and SE 9th Place. To incentivize this assemblage, the CRA indicated they would convey the City’s parking lot at 826 SE 47th Terrace to the selected proposal. The CRA approved the Downtown Village Square proposal and worked with the Downtown Village Square LLC and the City of Cape Coral to facilitate a redevelopment plan for the property, identify public financial support and convey the City owned parking lot in conjunction with approvals for the project. In 2010, the Downtown Village Square project received all zoning approvals, site plan approval, purchase of the City owned parking lot, Tax Increment Financing Approval, and credits towards all building impact fees. The specifics of the proposed project and financial commitments are provided below along with elevations of the proposed project and site plan.

Downtown Village Square Approved Mixed Use Project

251,546 sf of commercial retail, restaurant and office development 152 Residential Units Parking Structure – 6 Stories with 938 parking spaces, commitment of 127 parking

spaces for the public. $28 Million in Tax Increment Financing Impact Fee Credits at the Time of Construction Commitment to Provide 2,000 SF Police Substation, 2,000 SF General Office Space

for City of Cape Coral use and $100,000 contribution towards the City’s Affordable Housing Program

Construction to occur within 5 phases, which may occur simultaneously, however Phases 1 and 2 must occur first and other phases may occur in any order after that

Elevations approved along with deviations as per the Planned Development Project approvals in 2010, extended until May 2017. Buildings fronting Cape Coral Parkway to be six stories, two residential towers 8 stories above six story parking garage to total 14 stories and one 7 story commercial bldg. along SE 47th Terrace.

Public Square to be constructed in the center of the project, running east to west Drive through to support the commercial office building in the southwest corner of

the property; Cross over bridges to be provided between buildings along Cape Coral Parkway

and Parking Structure at the 3rd floor level Ornamental features and fountains to be provided at select locations within the

development Access/Egress to be provided at Cape Coral Parkway, SE 8th Court and SE 47th

Terrace City of Cape Coral and Downtown Village Square to create

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Downtown Village Square Elevation

Downtown Village Square Elevation Facing Cape Coral Parkway E

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Downtown Village Square Site Plan

Downtown Village Square Typical Building Elevation

 

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Downtown Village Square Phases of Development

Phase Building Description of Development 1 A 6 Stories, 57,229 SF Office, 4,191 SF Retail 2 B 6 Stories, 14,498 SF Retail, 10,345 SF Restaurant,

11,680 SF Theatre, 10 Residential Units 3 C 6 Stories, 23,541 SF Retail, 13,169 SF Restaurant,

31,816 SF Office, 24 Residential Units 4 D 8 Stories 2 Residential Towers, 112 Units, 3,791 SF Retail 5 E 7 Stories, 19,727 SF Retail, 10,185 SF Restaurant, 6 Residential

Units

Approvals

Approval of Downtown Village Square Project Concept by CRA 2006; Purchase of City Owned Property at 826 SE 47th Terrace, Cape Coral FL 33904 on

February 29, 2010, Ordinance 46-10; Tax Increment Rebate Agreement March 16, 2010; Downtown Village Square Planned Development Project (PDP) Approval, Ordinance 42-

10 approved May 17, 2010; South Florida Water Management District Extension to April 10, 2020, Approved April

15, 2016 Permit No. 36-06993 P; State of Florida Department of Economic Opportunity TEA approval for the EB-5

Southwest Florida Regional Center LLC application which includes Downtown Village Square on August 5, 2014;

Extension of PDP & Site Plan Approval by the City of Cape Coral Resolution 102-15, Substantial Construction to be completed by May 18, 2017;

Tax Increment Rebate Agreement Amendment on October 20, 2015 extending benefits to coincide with PDP and Site Plan Extension; and

USCIS approval of the Southwest Regional EB-5 Center, which includes Downtown Village Square, on February 29, 2016.

Southwest Florida EB-5 Regional Center: The economic assessment included in the approved EB-5 Regional Center indicated that the project has proposed would create approximately 1,331 jobs. Based on the employment projected, up to $66 million in EB-5 funding would be achievable.

City of Cape Coral & Surrounding Region Market Activity The City of Cape Coral’s permanent population was estimated to be 180,304 in 2015 a 17% increase from the federal census in 2010 of 154,305. The City with 115 square miles and 400 miles of canals, 200 of which provide gulf access, is one of the fastest growing cities in the nation. As a boater’s community, the household income and demand for services continues to rise. On

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December 28, 2016, Trulia identified Cape Coral as one of the top hottest real estate markets in the country. Coming in second in their study, they indicated that Cape Coral has the fourth highest job growth rate in the nation. Bankrate, based on weather, crime, taxes, quality of life criteria cited Cape Coral as one of the top10 places to retire in 2015. Since 2011 the vacancy rates for commercial properties has been steadily decreasing, with the City reporting the lowest vacancy rates they’ve had since 2006. The permit activity and sales values have also steadily increased and projected to in 2017. Provided below are data presented at the end of 2015 Outlook Conference in January 2016.

Overall Permit Activity Lee County 2014 Compared to 2015

As shown above the permitting activity for single family increased by 21.7% in 2015 compared to 2014. Multi-family permits increased by 77%. The significant vacancies for Multi-Family created during the recession have been absorbed and rental rates have been increasing by approximately 10% per year since 2010. The amount of new multi-family permitting activity has increased in 2016 as well, and will be posted within the next two weeks.

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Airport Activity Regional Southwest Airport Fort Myers FL & Charlotte County FL Trends

 

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Multi Family New Construction Permitting Trends Lee County FL

 

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Office Building Sale Trends Lee County FL

Retail Building Sale Trends Lee County FL

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As shown above, retail, office and multi-family sales increased substantially. This trend has continued in 2016 and is projected to increase in 2017 consistent with the influx of population. The State of Florida is reporting an increase of new residents, approximately 1,000 per day for the state, many of which are locating in the southwest Florida region. According to the 16th Annual Southwest Florida CCIM District Commercial Real Estate Outlook Conference held on January 21, 2016 office and retail rental rates were reported for the City of Cape Coral for 2015: Class A Office Space: $17.34 psf (excluding CAM & Tax) Overall Office Space: $12.39 psf (excluding CAM & Tax) Office Vacancy Rate: 9.1% Retail Space: $14.46 psf (excluding CAM & Tax) Retail Vacancy Rate: 3.4% In 2016, it is estimated that office space vacancy is down to 5% and retail vacancy rate is between 2 to 3%. Recent Office & Retail Sales Lee County Class A office and retail space and class B space at well trafficked locations within Lee County are shown below. The projected Downtown Village Square office sales of $300 psf, retail sales of $350 psf and restaurant sales of $375 psf are consistent with recent sales in Lee County as shown below.

Office Sales Comps Lee County Past Year

 

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Office Sales Comps Lee County Past Year Cont’d

 

 

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Retail Sales Comps Lee County Past Year

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Retail Sales Comps Lee County Past Year Cont’d

Residential Condo Sales Lee County FL Past Year As shown above, residential condo sales similar to the proposed Downtown Village Square development range in price from $276 psf to $558 psf depending on location, views and access to the water and how they are appointed. The projected sales price of $428 per square foot of condo space within the Downtown Village Square project is consistent with these recent sales.

 

 

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Project Costs, Income & Sales In consultation with their designers, engineers and architects, Downtown Village Square LLC has projected hard and soft costs associated with development of the project. The land development costs include the purchase price of the properties, removal of the LCEC pole, Total Soft Costs: $ 16,456,000 Total Construction Costs: $114,401,598 Total Land Development Value & Costs: $ 20,000,000 Total Project Costs: $150,857,598 The details of the project costs, provided by Downtown Village Square LLC are shown below. The land development value and costs include: the purchase price of all properties included within the assemblage, carrying costs associated with the land, consultant and attorney fees associated with procurement of the development rights, which include the PDP, site plan, SFWMD, LCEC, Tax Increment Financing and related approvals. Land Costs Estimates Associated With Land & Approvals:

Purchase Price: (all five properties 2006 to 2014 ) $ 5,880,000 Carrying Costs: $380,000 taxes, $80,000 insurance

$40,000 Legal & Accounting: $ 500,000 Procurement of Development Rights (includes staff, $ 7,000,000

Principal time, consultants, designers, engineer and attorney fees, application fees, administrative fees)

Removal of LCEC Pole & Related Work: $ 500,000 Affordable Housing Contribution $ 100,000 Costs of EB-5 Regional Center Application: $ 300,000

Sub-Total: $14,380,000 Added Land Value:

TIF $ 5,720,000 Total: $20,000,000 Note: Estimates are based on information provided by the property owners, and other sources noted.