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Undergraduate Honors Theses

2020-03-18

Stadium Apartments: A Mixed-Use Development Proposal Stadium Apartments: A Mixed-Use Development Proposal

Connor Lee Wen

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Honors Thesis

STADIUM APARTMENTS: A MIXED-USE DEVELOPMENT PROPOSAL

by

Connor Lee Wen

Submitted to Brigham Young University in partial fulfillment of graduation requirements

for University Honors

Economics Department

Brigham Young University

April 2020

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ABSTRACT

STADIUM APARTMENTS: A MIXED-USE DEVELOPMENT PROPOSAL

Connor Lee Wen

Economics Department

Bachelor of Science

Stadium Apartments is a proposed class-A mixed-use development located on 4.3

acres of land at 88 W 1300 S, Salt Lake City UT. The single parcel is currently owned by

Salt Lake City and is being operated as a parking lot. Salt Lake City hopes to develop the

parcel in order to provide stable income to maintain the Smith’s Ballpark across the

street. A detailed market and financial feasibility analysis has determined that a

development consisting of 448 dwelling units (319,176 rentable square feet) and 3,750

square feet of retail space will both meet the goals of the city and provide solid returns

for a developer. The development will achieve a 3 FAR from 563,061 gross buildable

square feet spread over six stories of construction. A 1.26 spaces per unit effective

parking ratio will complement the proximity of the Ballpark TRAX station and 1300

South’s I-15 entrance ramp, allowing residents easy access to downtown and other parts

of the Salt Lake Valley.

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ACKNOWLEDGEMENTS

I would like thank Dr. Michael Ransom, my faculty advisor; Dr. Barrett Slade,

my faculty reader; Dr. John Stovall, my honors coordinator; as well as Steven Bond and

James Doolin, my industry readers, for their patience, trust, advice, and assistance

throughout this process.

I would also like thank Danny Walz, Corinne Piazza, and Corey Rushton from

Salt Lake City Corporation for allowing me to use their site as a subject property.

I would like to thank Richard Bird and Steve Lowell from The Yellowstone

Group for their insight into the quality of my model and providing loan quotes and

construction comparables.

I would also like to thank Vika Filimoeatu and the staff from the Brigham Young

University Honors Program for giving me the opportunity to conduct this creative thesis

despite it not being directly related to my major or minor.

Finally, I would like to thank my family and all those who have supported and

helped me along my journey in commercial real estate. I dedicate this project to you.

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TABLE OF CONTENTS

Title …………………………………………………………………………...….………. i

Abstract …………………………………...…………………………………………….. iii

Acknowledgements …………………...…………………………………………...…….. v

Table of Contents …………………………………………………………………….…. vii

List of Tables and Figures ……………………………………………………………...... ix

I. Executive Summary …………………………………………………..………….. 1

II. Site Overview ………………………………………………………….……...…. 1

III. Location Analysis ……………………………………………………………...… 3

IV. Apartment Market Analysis …………………………………………………….. 23

V. Retail Market Analysis …………………………………………………………. 34

VI. Development Potential and Site Plan …………………………………………… 40

VII. Financial Analysis ……………………………………………………………… 47

VIII. Risks and Challenges …………………………………………………………… 56

IX. Conclusion ……………………………………………………………………… 58

Works Cited …………………………………………………………………………….. 59

Appendix A: Comparables and Unit Mix ……………………………………………….. 63

Appendix B: Financial Calculations ……………………………………………………. 67

Appendix C: Site Plan …………………………………………………………………... 91

Appendix D: Annual Cash Flow ……………………………………………………… 95

Appendix E: Summary ………………………………………………………………….. 97

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LIST OF TABLES AND FIGURES

Table 1: Commute Times.................................................................................................... 6

Table 2: Population By Race (CoStar).............................................................................. 22

Table 3: C9 Flats Unit Mix (CoStar) ................................................................................ 28

Table 4: The Ritz Classic Unit Mix (CoStar) ................................................................... 29

Table 5: TenFifteen Apartments Unit Mix (CoStar) ......................................................... 31

Table 6: Towers on Main Unit Mix (CoStar) ................................................................... 32

Table 7: Park Vue Unit Mix (CoStar) ............................................................................... 34

Table 8: Retail Comparables ............................................................................................. 36

Table 9: FAR Comps ........................................................................................................ 42

Table 10: Lot and Building Breakdown............................................................................ 44

Table 11: Space Breakdown ............................................................................................. 44

Table 12: Parking Breakdown .......................................................................................... 45

Table 13: Unit Mix............................................................................................................ 46

Table 14: Development Timeline ..................................................................................... 46

Table 15: Land Comparables ............................................................................................ 48

Table 16: Land Valuation ................................................................................................. 49

Table 17: Tax Calculator .................................................................................................. 49

Table 18: 2018 Development Cost Comparables ............................................................. 50

Table 19: Permit & Impact Fees ....................................................................................... 52

Table 20: IRR Waterfall.................................................................................................... 53

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Table 21: Vacancy Sensitivity .......................................................................................... 55

Table 22: Exit Cap Sensitivity .......................................................................................... 55

Table 23: Income Growth Sensitivity ............................................................................... 56

Table 24: Expense Growth Sensitivity ............................................................................. 56

Figure 1: Site Overview (Google Maps) ............................................................................. 2

Figure 2: Site Photo (Connor Lee Wen) ............................................................................. 2

Figure 3: Distance to Ballpark Station (Google Maps) ...................................................... 6

Figure 4: Adjacent Site 1 (Google Maps) ........................................................................... 7

Figure 5: Adjacent Site 2 (Google Maps) ........................................................................... 8

Figure 6: Adjacent Site 3 (Salt Lake County Assessor) ..................................................... 8

Figure 7: Adjacent Property 4 (Google Maps) ................................................................... 9

Figure 8: Adjacent Property 5 (Google Maps) ................................................................. 10

Figure 9: Adjacent Property 6 (Google Maps) ................................................................. 10

Figure 10: Adjacent Property 7 (Google Maps) ............................................................... 11

Figure 11: Adjacent Property 8 (Google Maps) ............................................................... 12

Figure 12: Adjacent Property 9 (Google Maps) ............................................................... 12

Figure 13: Adjacent Property 9, Aerial (Google Earth) .................................................... 13

Figure 14: C9 Flats (CW Urban) ...................................................................................... 14

Figure 15: Sears Warehouse (Salt Lake County Assessor) .............................................. 15

Figure 16: Central Community Master Plan (Salt Lake City) .......................................... 16

Figure 17: States with Strongest Job Growth (Gardner Institute)..................................... 18

Figure 18: Utah Components of Population Change (Gardner Institute) ......................... 18

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Figure 19: Utah Value of New Construction (Gardner Institute) ..................................... 19

Figure 20: Demographic Radius Rings (CoStar) .............................................................. 20

Figure 21: Population & Education, 1 mile (CoStar) ....................................................... 21

Figure 22: Asking Rents (IRR) ......................................................................................... 24

Figure 23: Rent Comp Map (CoStar)................................................................................ 26

Figure 24: C9 Flats (C9 Flats) .......................................................................................... 27

Figure 25: The Ritz Classic (Google Maps) ..................................................................... 28

Figure 26: TenFifteen Apartments (CoStar) ..................................................................... 30

Figure 27: Towers on Main (CoStar) ................................................................................ 31

Figure 28: Park Vue (CoStar) ........................................................................................... 33

Figure 29: Retail Ask Rents (IRR).................................................................................... 35

Figure 30: Retail Vacancy Rates (IRR) ............................................................................ 35

Figure 31: Lease Comparable Map (CoStar) .................................................................... 36

Figure 32: 259 W 900 S .................................................................................................... 37

Figure 33: 877 S 200 W .................................................................................................... 38

Figure 34: Lincoln Plaza ................................................................................................... 39

Figure 35: FAR Comps ..................................................................................................... 42

Figure 36: Units Per Acre ................................................................................................. 43

Figure 37: Ballpark Deferred Maintenance (Salt Lake City Corporation) ....................... 47

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1

I. Executive Summary

Stadium Apartments is a proposed class-A mixed-use development located on 4.3

acres of land at 88 W 1300 S, Salt Lake City UT. The single parcel is currently owned by

Salt Lake City and is being operated as a parking lot. Salt Lake City hopes to develop the

parcel in order to provide stable income to maintain the Smith’s Ballpark across the

street. A detailed market and financial feasibility analysis has determined that a

development consisting of 448 dwelling units (319,176 rentable square feet) and 3,750

square feet of retail space will both meet the goals of the city and provide solid returns

for a developer. The development will achieve a 3 FAR from 563,061 gross buildable

square feet spread over six stories of construction. A 1.26 spaces per unit effective

parking ratio will complement the proximity of the Ballpark TRAX station and 1300

South’s I-15 entrance ramp, allowing residents easy access to downtown and other parts

of the Salt Lake Valley. This development proposal explores the highest and best use of

the land as a mixed-use development.

II. Site Overview

The project site is located at 88 W 1300 S in Salt Lake City’s Ballpark

neighborhood. The site is located on the north side of the arterial West 1300 South and is

surrounded by South West Temple, Paxton Avenue, and Richards Street on the West,

North, and East sides, respectively.

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Figure 1: Site Overview (Google Maps)

Figure 2: Site Photo (Connor Lee Wen)

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The site is a single rectangular parcel (15-12-478-019-0000) owned by Salt Lake

City Corporation, the formal entity for Salt Lake City’s government. The tax assessor’s

2019 market value of the parcel appraises at $1,996,200 dollars. The parcel is zoned PL

which is translated as ‘public land’. PL’s purpose is “to specifically delineate areas of

public use and to control the potential redevelopment of public uses, lands and facilities.”

(SLCgov.com)

The site is currently being operated as a parking lot for the Smith’s Ballpark and

contains approximately 420 spaces. While the lot can be seen at full capacity during any

of the Salt Lake Bees’ 70 home games, the lot remains mostly vacant.

Walkscore.com gives the site very high ratings. They report the site having a walk

score of “85: Very Walkable” and that “most errands can be accomplished on foot.” They

also give the site a transit score of “73: Excellent Transit- transit is convenient for most

trips.” Walkscore also gives the site a bike score of “74: Very Bikeable- biking is

convenient for most trips.”

III. Location Analysis

The location offers great retail frontage on 1300 South across from the Smith’s

Ballpark. The property’s proximity to TRAX, I-15, downtown Salt Lake City, State

Street eateries, 300 West shopping, and Jefferson Park make it an ideal location for

residents.

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3.1 Regional Overview

The target site is located just south of Salt Lake City just outside of the de facto

“edge of downtown” on 900 South (see Figure 3). The property is also ideally located

close to amenities on 300 West and State Street (see Figure 4). Groceries can be obtained

at Walmart, Target, Costco, and Sam’s Club just minutes away from the site. State Street

also features many restaurants and is transforming from an industrial area into a home for

nicer retail and restaurants.

Figure 3: Regional Map (Google Maps)

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Figure 4: Neighborhood Map (Google Maps)

3.2 Public Transit Options

The Utah Transit Authority (UTA) TRAX Light Rail Ballpark Station is located

just a 6-minute walk from the site (Google Maps) and offers connections to the Blue,

Red, and Green lines. The TRAX lines offer connections to Salt Lake Central Station,

Draper Town Center Station, University Medical Center Station, Daybreak Parkway

Station, West Valley Central Station, and Airport Station from as early as 4:45 AM to

11:22 PM on weekdays (UTA). With over 20 years of service, UTA’s TRAX and related

rail lines reliably serve over 78,000 people daily (UTA) and continue to be a preferred

method of transit. Ballpark Station also offers connections to U Car Share carsharing

services to the University of Utah, three secured bicycle lockers, and UTA Bus

connections.

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Figure 5: Distance to Ballpark Station (Google Maps)

3.3 Driving Commute Analysis

For those who opt to drive, the site is conveniently located a 3-minute drive to

Interstate-15 and a 1-minute drive to State Street (Google Maps) and provides easy

access to popular commuting locations throughout Utah. The following table displays

commute times for popular commuting destinations.

Table 1: Commute Times

Commute Times

Destination Public Transit Commute Driving Commute

Salt Lake City (Temple Square) 17 Minutes 6-16 Minutes

Salt Lake City Int'l Airport 48 Minutes 7-12 Minutes

University of Utah 35 Minutes 8-20 Minutes

Intermountain Medical Center (Murray) 19 Minutes 9-15 Minutes

Thanksgiving Point 1 Hour, 26 Minutes 22-35 Minutes

Provo 1 Hour, 40 Minutes 40-60 Minutes

Departure time: 8:30AM, Wednesday. Source: Google Maps

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3.4 Adjacent Properties and Land Uses

Adjacent land uses include single family housing, office, entertainment, and

service uses. The following is an analysis of the adjacent properties:

The south-west corner of Stadium Apartment’s site contains event parking for the

Ballpark and is privately owned and operated (see Figure 6). There is potential that the

owner could develop the property for commercial use, as it’s zoned as CN. The property

is owned across 4 parcels and is currently not under development or construction.

Figure 6: Adjacent Site 1 (Google Maps)

The southernmost part of West Temple adjacent to Stadium Apartments’ site, is

home to a 7-Eleven service station (see Figure 7). The single parcel is privately owned

and operated. Zoned CN, the plot is dedicated to low intensity commercial uses that can

be located within and serve residential neighborhoods.

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Figure 7: Adjacent Site 2 (Google Maps)

Just north of the 7-11 on West Temple is a neighborhood of privately owned

single-family homes (see Figure 8). Zoned RMF-35, these lots could be assembled and

developed into moderate density multi-family up to a height of 35 feet. However, the

number and small sizes of the parcels would give a developer a challenge in assembling

for redevelopment.

Figure 8: Adjacent Site 3 (Salt Lake County Assessor)

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On the corner of Paxton and South West Temple is a single 0.84 acre parcel

owned by the Housing Authority of Salt Lake City (see Figure 9). It currently houses a

vacant office-style structure with a large undeveloped side-yard. Zoned CC, the future

use of the property could be commercial development. However, no known attempt to

redevelop the plot has taken place.

Figure 9: Adjacent Property 4 (Google Maps)

On the corner of Paxton and Richards Street sits three privately owned parcels,

totaling 0.68 acres of commercial land being used as a tow lot or salvage yard of some

kind (see Figure 10). Like the Housing Authority site, but owned by Schneider

Properties, LLC, it is zoned CC and would need to be redeveloped into such a use. This

site is the most unattractive of the adjacent uses. However, it is largely hidden from view.

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Figure 10: Adjacent Property 5 (Google Maps)

On the north-east corner of the site lies another CC zoned privately owned parcel

(see Figure 11). Totaling 0.24 acres, this Oikos 8, LLC property seems to be operated as

the warehouse for National Construction Specialties’ flooring and concrete business.

Figure 11: Adjacent Property 6 (Google Maps)

On the east side of the property, just south of the flooring business, lies the home

of the Horizonte Instruction and Training Center (see Figure 12). The school offers a

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variety of programs, including: certified teacher librarian program, after school programs,

dance programs, JROTC programs, CTE Pathways, and concurrent enrollment classes for

adults and youth as appropriate (slcschools.org). The parcel is owned by the Salt Lake

City Board of Education and is zoned as public land. The parcel totals 2.90 acres.

Figure 12: Adjacent Property 7 (Google Maps)

On the south-east side of the property at the intersection of Richards Street and

1300 South sits Spencer’s Car Wash (see Figure 13). Zoned CN, this 2 parcel 0.5 acre

property owned by BFR, LLC offers self-wash options across 4 car stalls and 1 RV stall,

and also operates 6 vacuums.

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Figure 13: Adjacent Property 8 (Google Maps)

Finally, on the south side of the property sits the home to the Minor League

Baseball Salt Lake Bees, Smith’s Ballpark (see Figure 14 & Figure 15). Owned by Salt

Lake City Corporation on PL zoned land, this 6.48 acre stadium has been in operation

since 1994 and seats 15,400. The average attendance in 2019 was 6,671 per game

(MILB).

Figure 14: Adjacent Property 9 (Google Maps)

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Figure 15: Adjacent Property 9, Aerial (Google Earth)

3.5 Notable Nearby Developments

Located on the west side of Ballpark Station, CW Urban is in the process of

developing theLUCY (see Figure 16), 35 modern townhome style condos. These condos

are 3-4 bedrooms and 2.5-3.5 bathrooms, offer two floorplan variants, and each take up

an area of 1603-1809 square feet. With plans to include a healthy amount of green space,

these condos start at $375,000 and will create a healthy community on 1300 South. As of

2/29/2020, 3 of the 7 listed buildings have already sold.

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Figure 16: C9 Flats (CW Urban)

Across the street on the south side of Ballpark Station sits the old 4.04-acre Sears

warehouse (see Figure 17). Long owned by Gershman Properties, sources at Salt Lake

City state that there are plans to redevelop the site into a mixed-use project. Zoned CG,

this commercial zoning provides opportunity for a mix of land uses including retail,

entertainment, office, residential, and commercial.

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Figure 17: Sears Warehouse (Salt Lake County Assessor)

3.6 Central Community Master Plan

The Stadium Apartments’ site lies within the Central Community section of Salt

Lake City. Adopted November 1st, 2005, the Central Community master plan aims to

achieve four fundamental goals:

1) Livable communities and neighborhoods

2) Vital and sustainable commerce

3) Unique and active places

4) Increased pedestrian mobility and accessibility.

Furthermore, within the Peoples Freeway neighborhood, where the site is located, there

are neighborhood specific plans. These include:

- Mitigating impacts relating to the adjacency of residential and non-residential /

heavy commercial land uses. And,

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TRAX Ballpark Station

Figure 18: Central Community Master Plan (Salt Lake City)

- Addressing ways of transitioning the northern portion of the neighborhood from

the historic character of low-density residential development to one of transit-

oriented development.

To achieve these goals, the community master plan has implemented a future land use

plan to encourage zoning changes (see Figure 18).

From the community master plan, one can see that developing the site as mixed use

would not be out of character with the vision for the neighborhood. The master plan

suggests that the area surrounding the TRAX Ballpark Station be rezoned to Low,

Medium, or High-Density Transit Oriented Development or High Mixed Use. With this

in mind, there should be little difficulty in having the site of Stadium Apartments be

rezoned as either High Mixed Use or High-Density Transit Oriented Development since

the surrounding zoning changes are of a similar nature. However, since the zoned area is

Institutional, the city may be able to approve of a variance instead of a zoning change,

Stadium Apartments

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thus allowing the improvements to conform to the surrounding zoning without changing

the zone of the parcel itself.

3.7 Salt Lake City & Utah Economic Drivers

Home to firms such as Zions Bancorporation, Questar Corporation, Sinclair Oil

Corporation, and with presence from high caliber firms like Adobe, eBay, Micron, L-3

Communications, 3M, and Goldman Sachs, Salt Lake City has become a significant

player in government, trade, transportation, utilities, and professional and business

services sectors. Unemployment in the city is low at 2.0% compared to the national

average of 3.5% (BLS) which is an indicator of a strong, competitive job market. This

continues to attract talent into the city. Utah experienced one of the largest increases in

tech jobs in the nation from 2015-2017 resulting in one of the highest concentrations of

tech workers relative to the overall employment base (CoStar). The financial sector also

continues to grow quickly in Salt Lake City with double-digit gains (CoStar). Salt Lake

City also enjoys high quality-of-life benefits from being so close to easily accessed

natural amenities such as national parks, ski resorts, and hikes. The Salt Lake City metro

was responsible for approximately 40% of the state’s tourist-generated tax revenue

(CoStar). The city’s strong investment in infrastructure with the $3.5 billion dollar

renovation and expansion of the Salt Lake City International Airport, the relocating of the

Utah State Prison, and further developments in the northwest quadrant indicate a

proactive move by the city and state to provide for continued economic growth. The

growth isn’t confined to the city, however.

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The Gardner Institute’s 2020 economic report to the Governor highlights Utah state’s

overall strength compared to the national average. Utah added over 45,600 jobs from

2018-2019 with the highest increase being a 3.8% growth in the professional and

business services sector. Furthermore, Utah ranked second in the nation for job growth at

3% compared to the national average of 1.6% (see Figure 19).

Figure 19: States with Strongest Job Growth (Gardner Institute)

Utah’s population continues to grow from a balance of fertility and immigration. In

2018, 47% of population growth came from a natural increase and 53% came from net

migration (see Figure 20).

Figure 20: Utah Components of Population Change (Gardner Institute)

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State tax cuts and infrastructure investment provide a favorable tailwind for 2020

growth while counteracting the headwinds from a tight labor market, increasing costs,

housing affordability, declining fertility rates, and poor air quality. Despite the rising

affordability crisis, Utah experienced “record-level residential and near-record

commercial activity. . . The boom in the multifamily sector, primarily apartment

construction, drove a 10.9 percent increase in the value of all permit-authorized

residential construction to $5.7 billion” (Gardner). All these economic drivers have led

Utah to lead the nation in the Hachman Index of economic diversity with a #1 ranked

score of 97.1. Scores closer to 100 indicate economic diversity which is an advantage

against the volatility from globalization and tariffs.

Figure 21: Utah Value of New Construction (Gardner Institute)

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3.8 Neighborhood Demographics & Affordability

CoStar data gives insight into the demographic makeup of the population within a

1, 3, and 5 mile radius from the site (see Figure 22).

Figure 22: Demographic Radius Rings (CoStar)

Within a 1-mile radius from the site, population is approximately 15,653 and is

expected to grow 5.7% to a population of 16,538 by 2024. The average age of the

population is 37 years old with median household income being $39,671. This supports

average monthly rents of $991 (30% of AMI). Stadium Apartment’s average rent is

$1,358, or 41% of average median income (AMI). In 2019 there were 7,184 households

that are also expected to grow at a rate of 5.7%. The average household size was 2.1 and

each household had 1 vehicle on average. The majority of the population is White

(80.51%) and only 27% of the population identifies as Hispanic. The population is either

well educated or in the process of receiving an education (see Figure 23).

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Figure 23: Population & Education, 1 mile (CoStar)

Within a 3 mile radius, the population is approximately 149,617 individuals

spread across 63,500 households and is growing at a rate of 5.2%. The median household

income is markedly higher at $50,803. This supports average monthly rents of $1,270

(30% of AMI). Stadium Apartment’s average rent is $1,358, or 32% of average median

income. The average household size is slightly larger at 2.2. Each household has on

average 1 vehicle. The ethnic majority is White (83.35%).

Within a 5 mile radius, the population is approximately 314,312 individuals spread

across 121,637 households. The population growth rate sits at 4.9% and the household

growth rate is 4.7%. The median household income is not much different from the

previous metric at $52,059. This supports average median monthly rents of $1,301 (30%

of AMI). Stadium Apartment’s average rent is $1,358, or 31% of AMI. The average

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household size is larger at 2.4 and the average household has 2 vehicles, rather than 1.

The ethnic majority is White (82.74%).

Table 2: Population by Race (CoStar)

Overall, the Ballpark neighborhood shows strong demographics for renters.

Median incomes, household sizes, and population growth suggest a young/early

professional demographic who will benefit from access to public transit and jobs

downtown.

RentCafé states that average rent in Salt Lake City is $1,248 and the Department of

Numbers states that the median per capita income in Salt Lake City is $31,039 making

the current average rent being 48% of AMI. Stadium Apartments’ rents come in at 41%,

32%, and 31% of AMI at the 1-, 3- and 5-mile radii, respectively. This supports Stadium

Apartments being more affordable compared to the market average. Incomes are low

enough to suggest that the majority of individuals prefer to rent rather than buy but are

not so low as to eliminate a healthy demand for class A luxury product.

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IV. Apartment Market Analysis

4.1 Market Trends

Data from Integra Realty Resources, Real Capital Analytics, and Reis Services

suggest that the multifamily market in Salt Lake City is one of the strongest sectors in the

area (IRR). Despite 3,000 units being delivered in 2019 and more than 10,000 under

construction (4.7% increase), Salt Lake City has maintained solid rent growth, low

vacancy, and high absorption. The presence of an affordable housing crisis has provided

high demand for new deliveries and absorption is expected to remain steady through

2020 with stable vacancy and increasing rents. Cap rates for both urban and suburban

class A product are predicted to remain stable at 4.8% and 5.0%, respectively. Vacancy is

also expected to remain stable at 5% for all urban and suburban class A and class B

product types. Rents for urban and suburban class A and class B product are predicted to

experience 2%-3.9% growth and .1%-1.9% growth in the next 12 months, respectively.

However, compared to the western regions of the United States as well as the national

average, Salt Lake City still has room to grow (Figure 24). While 7,000 units are

expected to be delivered in 2020, urban and suburban class A product is still expected to

take an additional 12 months to reach equilibrium.

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Figure 24: Asking Rents (IRR)

A 36-month forecast by IRR suggests average market and expense rates of 2%

and urban class A annual absorption of 400 units and suburban class A annual absorption

of 500 units.

Stadium Apartments can be described as being located just outside the edge of

downtown (900 South). Also, despite not being fully in a suburban area such as

Sugarhouse, the site is not in the West Temple Gateway area or Central Business District.

Based on this unique location one can assume that the site will take on growth rates that

lie somewhere between the urban and suburban averages.

4.2 Rent Comparable Analysis

Rents from 5 comparable multifamily and mixed-use buildings ranging from 0.5

miles away to 2 miles away support high rents per square foot. A comprehensive table

comparing rents across these 5 properties can be found in Appendix A. Asking rents were

used in the rent comparable analysis as opposed to effective rents since they reflect the

current state of the market. Effective rents would include leases made 12 months ago, and

since rent growth in Salt Lake City has been so high these leases would skew what rents

25

actually are today. Rents from C9 flats and The Ritz Classic were used to set asking rents

due to their being the strongest of all rent comparables. Properties were chosen based on

the following criteria:

- Age of Construction: In order to select properties that would be in a similar state

of repair as new construction, properties built before 2000 were excluded without

question. Properties older than 10 years were included if they were strong

contenders in other criteria. Preference was given to new properties since they

would likely have similar construction, style, amenities, and pricing as Stadium

Apartments.

- Location: Properties were excluded if they were located in the central business

district or north of 900 South. This is because the demographic, neighborhood,

and floor area ratios of those properties change dramatically. 900 South has

received significant amounts of infrastructure investment and is considered the

edge of downtown. Properties were given priority if they were located in the 300

West corridor between 900 South and Interstate-80. This is because the

demographic and neighborhood dynamic are similar up and down this corridor.

Furthermore, the surrounding property usages and zoning are similar between 300

West and State Street, making properties in those areas experience similar

circumstances as Stadium Apartments.

- Amenities: Stadium Apartments is a mixed-use modern apartment community. To

predict what demand for this style of product, properties that were amenity rich or

have quality-of-life amenities (in-unit washers and dryers, exercise centers,

community areas, etc.) were preferred.

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- Income and/or Age Restrictions: Properties that were income restricted (MoDa

Granary Place) or age restricted (Ballpark Apartments) were not included in the

rent comparable analysis since Stadium Apartments does not contain income or

age restricted units.

The following is an analysis of the chosen comparable properties. Properties are

presented based on subjective importance.

Figure 25: Rent Comp Map (CoStar)

27

1: C9 Flats- 1075 South 200 West

Figure 26: C9 Flats (C9 Flats)

“Integrating seamlessly with one of Salt Lake City’s most eclectic neighborhoods, C9

Flats, located in Central and Ninth District, fuses modern design elements and luxe

finishes for the ultimate boutique living experience. Here, an inviting, urban chic

aesthetic is prominent throughout the stunning apartments and art-filled community

spaces.”

- https://www.c9flats.com/

C9 Flats was chosen as the most important comparable due to it meeting all of the key

criteria. Built in 2018, this 97-unit property contains basic amenities such as a fitness

center, dog wash, on-site parking, controlled access, package lockers, rooftop deck, and a

yoga / cycling room. The property is located 0.5 miles north of Stadium Apartments site

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and is under the same market influences. Construction and style of Stadium Apartments

will likely be of a similar make to C9 flats and thus this property is the strongest

comparable.

Table 3: C9 Flats Unit Mix (CoStar)

2: The Ritz Classic- 2265 South State Street

Figure 27: The Ritz Classic (Google Maps)

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“Come home to relaxed, elegant living at The Ritz Classic Apartments in Salt Lake City,

UT. Located in the enviable South Salt Lake neighborhood near prime shopping, dining

and entertainment options, The Ritz offers modern apartments with opulent amenities and

a warm and active community.”

- https://utah.weidner.com/apartments/ut/salt-lake-city/the-ritz-classic/

The Ritz Classic was chosen because of its age and size. This 287-unit property was

delivered in 2019 and has a healthy mix of studios, 1 bedroom, and 2 bedroom units.

Amenities include in-unit washers and dryers, a pool, a fitness center, kitchen and dining

facilities, a yoga studio, a reservable club room, and a bocce ball court. Despite this

property being the furthest away (2 miles south from the site and 5.3 miles from

downtown), its strong rental rates give good evidence of healthy demand for new

construction.

Table 4: The Ritz Classic Unit Mix (CoStar)

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3: TenFifteen Apartments

Figure 28: TenFifteen Apartments (CoStar)

“Located in the heart of Salt Lake City, TenFifteen is the newest luxury mixed use

community. Conveniently located close to TRAX, and I-15, plenty of shopping, TenFifteen

is the place to call home.”

- https://www.emg-apts.com/tenfifteen.htm

Though it lacks community amenities, this 54-unit mixed-use building was delivered

in 2018 and is only 0.5 miles from the site. Since this property will be below the quality

of Stadium Apartments, this comparable acts as a good baseline for minimum rents.

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Table 5: TenFifteen Apartments Unit Mix (CoStar)

4: Towers on Main

Figure 29: Towers on Main (CoStar)

“Nestled in the heart of Salt Lake City, Towers on Main offers all the rewards and

comforts of high-class living. Whether it be a relaxing night of beautiful Salt Lake City

views or a night out on the town, Towers on Main gives you the neighborhood you’re

looking for at the price you want.”

- https://www.towersonmainapts.com/amenities

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Towers on Main is a 176-unit apartment community delivered in 1963 yet recently

updated to modern luxury standards. While the U-shaped layout shows its age, the

interiors and amenities do not. With a heated pool, fitness center, game area, outdoor pet

area, and outdoor barbeque spaces, this community contains many luxury standards

except for in-unit washers and dryers. This property is 1 mile south from the site and its

1-bedroom heavy unit mix acts as a solid comparable.

Table 6: Towers on Main Unit Mix (CoStar)

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5: Park Vue

Figure 30: Park Vue (CoStar)

“Park Vue boasts affordable urban apartments in the Ballpark neighborhood of

downtown SLC, just steps from public transit options, Smith’s Ballpark and nightlife on

State Street. Stay close to home with thoughtful community amenities or head out to

explore the best of Salt Lake City, all at Park Vue.”

- https://www.parkvueslc.com

Though not a luxury, amenity rich, new building. This 286-unit class B garden style

complex was delivered in 2008 and represents an alternative to the luxury lifestyle.

34

Table 7: Park Vue Unit Mix (CoStar)

V. Retail Market Analysis

5.1 Market Trends

Despite large vacancies, Salt Lake City retail ended 2019 with a strong year.

Rental rates are increasing in top tier locations but are flat in others. This has led cap rates

and rents to stay stable on the average. Integra Realty Resources report average rents per

square foot being at $28 dollars for community retail and $22 for neighborhood retail (see

Figure 31). Vacancy rates for these locations are predicted to increase but currently sit at

6% for community retail and 8% for neighborhood retail (see Figure 32). As it stands

today, there is approximately 28,700,000 square feet of retail inventory which is expected

to grow by 0.1% over the next 12 months. This inventory is distributed as 57.5%

community retail, 28.6% neighborhood retail, and 13.9% in regional malls. Though

Integra Realty Resources expect supply and demand to be in equilibrium over the next 12

months, they forecast 50,000 square feet on average to be absorbed annually over the

next 36 months. Overall, retail is in early stages of hypersupply.

35

Figure 31: Retail Ask Rents (IRR)

Figure 32: Retail Vacancy Rates (IRR)

5.2 Lease Comparable Analysis

A total of 3 lease comparables were used in the lease analysis. All leases were

NNN and within 1 mile in order to capture the local competitiveness of retail. Higher

quality buildings were preferred. Since mixed-use within this range is scarce, only one of

the three leases were in a comparable building. Despite each comparable not being equal

in quality, they were weighted as such in the average for setting rents in an effort to be

conservative. This is because there is a lack of quality comparable leases. 900 South’s

Mixed Use development property is the most comparable, however it’s location on 900

South directly adjacent to the TRAX station would have the lease be higher in value than

one at Stadium Apartments. The following leases are presented by distance; furthest to

nearest. A summary of the leases is seen below (see table 8):

36

Table 8: Retail Comparables

Figure 33: Lease Comparable Map (CoStar)

Retail Comparables SF/YR Type

900 S Café 25.00$ NNN

900 S Mixed Use (New) 26.50$ NNN

1300 S Strip Mall 19.00$ NNN

Average: 23.50$

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1: 259 West 900 South

Figure 34: 259 W 900 S

This class C 2,013 square feet restaurant was on the market for 1 month before

signing a NNN lease on Feb 27, 2020 at $25.00 per square foot. This was a new lease, not

a renewal. Despite the low quality of this building, the high price per square foot is likely

due to its location on 900 South; though, the building or sign is not easily seen from 300

West. The property is 1 mile away from the site.

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2: 877 South 200 West

Figure 35: 877 S 200 W

This class A 1,500 square foot mixed-use multifamily-retail space was on market

for 12 months before being leased. The building itself was delivered in December 2018

and the lease was signed April 10th, 2019. The NNN lease was for retail space at $26.50

per square foot. This supports retail demand for mixed-use spaces in Utah. There are 24

units on the site and the property is adjacent to the TRAX station. The site also fronts 900

South. The property is 0.8 miles away from the site.

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3: Lincoln Plaza- 145 E 1300 S

Figure 36: Lincoln Plaza

On July 2, 2019 a $19 a month NNN lease was signed for 1,540 square feet at

Lincoln Plaza on 1300 South. This was a new lease and represents competition with

established mall space. The strip mall fronts 1300 South but has exposure on State Street.

There is no anchor tenant and the majority of the tenants are restaurants. The property is

0.5 miles away from the site.

40

VI. Development Potential and Site Plan

6.1 R-MU Requirements & Restrictions

While the property is currently zoned PL, it would not be out of character with the

community master plan to rezone the site as R-MU (Residential/Mixed Use District). The

city code defines the purpose of R-MU being “to reinforce the mixed use character of the

area and encourage the development of areas as high density residential urban

neighborhoods containing retail, service commercial, and small scale office uses. This

district is appropriate in areas of the City where the applicable master plans support high

density, mixed use development. The standards for the district are intended to facilitate

the creation of a walkable urban neighborhood with an emphasis on pedestrian scale

activity while acknowledging the need for transit and automobile access.” The standards

are listed below:

- Minimum Lot Area: No minimum lot area required

- Minimum Lot Width: 50 feet

- Setback:

o No setback required for front, corner side, or interior side yards

o Rear Yard Setback: 25% of lot depth, but need not exceed 30 feet

- Parking Setback: Surface lots need a 30-foot landscape setback from the front

property line or be located behind the primary structure. Parking structure shall

maintain a 45-foot minimum setback from a front or corner side yard property

line or be located behind the primary structure. There are no setbacks for

underground parking.

- Maximum Building Height: 75 feet

41

- Minimum Open Space Area: Not less than 20% of the lot area shall be maintained

as an open space area. This open space area may take the form of landscape yards

or plazas and courtyards, subject to site plan review approval.

- Minimum Off-Street Parking: 0.5 space per multi-family dwelling unit.

Both the community master plan and zoning code do not specify restrictions on floor area

ratios.

6.2 Floor Area Ratio Comparable Analysis

Since there is no floor area ratio (FAR) requirement/maximum outlined in code, a

FAR comparable analysis was conducted on surrounding property to ensure that Stadium

Apartments is not out of character when it comes to density. Both FAR and units per acre

were examined. Properties within a mile radius of a similar character were selected. It is

important to note that Ball Park Apartments is an age restricted community, and

GreenPrint Apartments is mostly micro units and studios. 365 Paxton Ave, a mixed-use

community, is also under development.

In order to not exceed local densities, but in order to maximize site potential, a

FAR of 3 was selected at 104 units per acre. This FAR exceeds the average FAR (2.49)

by 0.51 but is below the average units per acre (194) at 104. This combination of high

FAR and lower units per acre lands Stadium Apartments in an average density range that

is not out of character with the neighborhood.

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Table 9: FAR Comps

Figure 37: FAR Comps

FAR Comps

Property Land Area GBA FAR Units Units/Acre

C9 Flats 0.68 68580 2.32 97 143

365 Paxton Ave 1 103000 2.36 121 121

Ball Park Apartments 0.36 53000 3.38 62 172

TenFifteen Apartments 0.81 54000 1.53 54 67

GreenPrint Apartments 0.2 22000 2.53 60 300

844-856 S W Temple 0.4 48951 2.81 145 363

Avg 0.58 58255 2.49 90 194

Min 0.20 22000 1.53 54 67

Median 0.54 53500 2.44 80 157

Max 1.00 103000 3.38 145 363

Stadium Apartments 4.31 563061 3.00 448 104

43

Figure 38: Units Per Acre

6.3 Development Plan and Timeline

The site is 187,687 square feet. In order to achieve desired densities and have

room for surface parking, a lot coverage of 50% was selected. The number of floors was

maximized at 6 stories. With an average of 11 feet between slabs, this puts the building

height at 66 feet; below the height limit of 75 feet.

44

Table 10: Lot and Building Breakdown

Table 11: Space Breakdown

Parking will accompany retail and leasing office & amenities on the first floor.

Parking will fully occupy the second floor. Rentable space will fill the other 4 floors with

an 85% efficiency factor. This leads to 319,176 square feet of rentable space.

A parking ratio of 1.2 was desired since the average car per household is 1. In the

garage parking there is 1 spot for every unit. Surface parking of .2 spots per unit. as well

as an additional .1 spot per unit for visitors, retail, and leasing, was included. In the

parking garage a gross-up of 15% was applied. Each spot is 350 square feet which is a

Lot and Building

Lot SF 187687

Max Lot Coverage 50%

Open Space 93844

Surface Parking Space 47250

Effective Open Space 25% 46594

Max Footprint 93844

# of Stories 6

Avg. Slab to Slab Height 11

Height Limit 75

Building Height 66

Height Limit (stories) 6.82

Gross Buildable Area 563061

FAR 3

Less Retail SF 9.3% 8750

Less Above Ground Garage SF 178810

Residual GSF 375501

Efficiency Factor 85%

Rentable SF 319176

Space Breakdown

Open Space 25%

Surface Parking 25%

Building Footprint 50%

45

comfortable size for mid-size vehicles. In total, 178,810 square feet of covered parking

and 47,250 square feet of surface parking will be deployed on site.

No parking will be used for the Ballpark. According to Corey Rushton from Salt

Lake City, they are not opposed to a loss of parking since there is still parking left on the

West side of the Ballpark. The loss of parking would be beneficial for 1300 South and the

city since it will encourage more people to use TRAX and public transit to get to the

stadium. This use of public transit will alleviate stress on the roads and expose more

individuals to TRAX. Furthermore, since the average attendance at a home game is 6,671

individuals, a loss of ~420 spaces is marginal and many people commute via TRAX to

the games already.

Table 12: Parking Breakdown

Since the average household size is 2, a mix of Studios, 1 Bedroom, and 2

Bedroom apartments were chosen. See table 13 below or in Appendix A for a breakdown

Parking

Spots/Unit 444 0.99

Surface Spots 135 30.4%

Ballpark Spots 0

Total Spots 579

Covered Spots 444

Effective Spots/Unit 1.29

SF per Spot 350

Spots GSF 202650

Surface Spots GSF 47250

Covered Spots GSF 155400

Gross-Up 15%

Total Covered Spots GSF 178710

Above Ground Floorplate 93844

Above Ground Levels 2.00

Above Ground SF 178810

Below Ground Floorplate 93844 <- Podium / Underground

Needed Below Ground Levels 0.00

Below Ground SF 0

Above Ground

46

of the unit mix. Rents and square footages were decided upon based on market averages.

2 bedroom, 2 bathroom units were included based on the number of individuals who have

“some college”.

Table 13: Unit Mix

Retail will be broken up into 3 suites and a detailed breakdown of the retail

component can be found in Appendix B.

The start date for the project was set as 5/1/2020 and reversion will occur

5/31/2031. A detailed breakdown of the development timeline is included below in table

14:

Table 14: Development Timeline

Unit Mix

Unit Type Rent/SF SF Avg Rent % of Rentable SF Rentable SF # of Units Monthly Rev Revenue Share

Studio 2.00$ 500 1,000$ 10% 31918 64 64,000$ 11%

1 Bed / 1 Bath 1.92$ 650 1,250$ 45% 143629 221 276,250$ 45%

1 Bed / 1 Bath with Den -$ 650 -$ 0% 0 0 -$ 0%

2 Bed / 1 Bath 1.88$ 850 1,600$ 30% 95753 113 180,800$ 30%

2 Bed / 2 Bath 1.84$ 950 1,750$ 15% 47876 50 87,500$ 14%

3 Bed / 1.5 Bath -$ 850 -$ 0% 0 0 -$ 0%

100% 319176 448 608,550$ 100%

Start Finish

RDA Request for Proposals 5/1/2020 8/1/2020

Contract Ratification 8/1/2020 10/1/2020

Feasibility/Due Diligence/Partnership Agreement 10/1/2020 12/1/2020

Entitlements: Rezoning/Site Plan/Construction Plans 12/1/2020 6/1/2021

Close Development/Construction Loan 6/1/2021

Construction 6/1/2021 11/30/2022

First Delivery to Stabilization 12/31/2022 11/30/2023

Close Permanent Loan 12/1/2023

Reversion 5/31/2031

Development Timeline

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VII. Financial Analysis

7.1 Site Acquisition

Conversation with Corey Rushton from Salt Lake City Corporation revealed that

they want to use the site to provide funds for deferred maintenance or ongoing

maintenance demands at the ballpark. Currently, the Salt Lake City Bees team is

deploying capital towards deferred maintenance and improvements and the city wants to

cover those expenses. It’s estimated that there is $8,804,973 in deferred maintenance (see

Figure 39) at the ballpark and there will be $400,000 to $500,000 in annual maintenance

costs in the future.

Figure 39: Ballpark Deferred Maintenance (Salt Lake City Corporation)

A comparable analysis of 3 recent land sales in the vicinity revealed that the

average price per acre for commercial property is $1,400,346 (see table 15). The tax

assessed value of the property is $1,901,200. It could be concluded then that an outright

purchase would not be sufficient to cover the deferred maintenance at the ballpark. A

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ground lease might be more favorable for the city since it can allow them to prevent

future deferred maintenance issues, although they will need to come up with funds for the

immediate demands.

Table 15: Land Comparables

A comparison of land values (see table 16) uses average price per acre, tax

assessed value, and various present values (8% discount rate suggested by a local market

expert) for different ground leases was conducted to determine what options could

provide the city with what they need. It was decided $2.50 per square foot ground lease

would be ideal. This would be able to not only cover most of the ongoing maintenance

for the ballpark but also allow Stadium Apartments to hit a high IRR for developers and

investors. The $2.50 per square foot ground lease’s present value also lands the ground

lease close to the average price per acre. The ground lease term is 99 years so that the

project will be able to secure financing and the city will have long term control over the

site.

Discussion with the city shows that they are open to the idea of a ground lease,

however further discussion is needed to determine their level of comfort with

subordinating the ground lease to the lender. Subordination is required by the lender, and

while it seems far from ideal, the ground lease solution would allow the city to receive

income to solve their maintenance issues.

Land Comparables

Location Size Price Price per Acre Zoning

The Granary Building (600S) 1.63 5,400,000$ 3,312,883$ Commercial

300 W 1.13 138,200$ 122,301$ Commercial

Target Lot 0.82 628,000$ 765,854$ Retail Pad

1,400,346$

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Table 16: Land Valuation

7.2 Real Estate Taxes

Assuming a ground lease, the land will have no taxable value on the developer or

investors. Furthermore, since the parcel is owned by the city it is 100% tax exempt. To

calculate the effective tax on the property, the stabilized untrended value of the building

was used at a 4.80% cap rate. Then, a deduction from the stabilized value based on the

present value of the ground lease was applied to get the value of the improvements. From

this value, a 45% deduction was given for the property being residential. The local mill

rate was then applied to get the annual tax. This amount was rounded up to the nearest ten

thousand ($630,000) and applied to the profit and loss analysis.

Table 17: Tax Calculator

7.3 Costs: Overview

Since the calculation and determination of hard and soft costs are difficult to

acquire without actual quotes, data was used from online in conjunction with actual data

Subject Property Acres Payment Land Value Price per Acre

At avg. price per acre 4.31 -$ 6,033,672$ 1,400,346$

Tax assessed value 4.31 -$ 1,901,200$ 441,247$

PV $2.50/sf Ground Lease 4.31 469,218$ 5,212,585$ 1,209,416$

PV $2/sf Ground Lease 4.31 375,374$ 4,170,068$ 967,825$

PV $1/sf Ground Lease 4.31 187,687$ 2,085,034$ 483,912$

PV $1.5/sf Ground Lease 4.31 281,531$ 3,127,551$ 725,869$

Tax Calculator

Stabilized Value 98,532,389$

Value of Improvements 93,319,804$

% Appraised 55%

Appraised Value 51,325,892$

Mill Rate 0.012908

Annual Tax 662,515$

50

from a nearby mixed-use property under construction. Data from Integra Realty

Resources (see table 18) was also consulted to ensure that, if anything, the cost per unit is

in accordance with local averages.

Table 18: 2018 Development Cost Comparables

7.4 Hard Costs

(See Appendix B for breakdown)

Demo and grading was calculated at $2 a square foot due to the fact that the

current use of the property is a parking lot and there are no other improvements. This

price was estimated from https://demolition.promatcher.com/cost/utah.aspx

Direct building cost was calculated at $150 a square foot of rentable and

efficiency space, and the direct parking structure cost was calculated at $50 a square foot.

These Figures were decided upon by consulting data from

Location Units Total Costs Cost/Unit Notes

Clearfield, UT 123 $15,777,726 128,274$ Parking on main floor, apartments above

Draper, UT 120 $21,485,997 179,050$ Mid-Rise/Parking level

Lehi, UT 330 $48,198,111 146,055$ High-rise

Midvale, UT 190 $26,098,800 137,362$ LIHTC

Midvale, UT 374 $56,700,000 151,604$ Townhomes and garden

Midvale, UT 206 $34,650,594 168,207$ LIHTC

Provo, UT 67 $11,668,664 174,159$ Parking garage

Roy, UT 75 $12,442,338 165,898$ Townhouse/Garage

Sandy, UT 264 $45,517,988 172,417$ Parking garage

Vineyard, UT 468 $51,625,400 110,311$ Garden/Walk-up

Avg 153,334$

Salt Lake City, UT* 61 $10,360,545 169,845$ Parking on main floor, apartments above

Salt Lake City, UT* 139 $27,362,203 196,850$ Parking structure included

Salt Lake City, UT* 53 $11,921,897 224,941$ Townhomes and garden

Salt Lake City, UT* 95 $24,822,019 261,284$ High Rise, garage, CityLift system

Salt Lake City, UT* 272 $98,293,266 361,372$ High Rise

*SLC CBD Avg 242,858$

Total Avg 183,175$

Stadium Apartments 448 78,207,358$ 174,570$ High Rise, mixed use, 4 on 2

2018 Development Cost Comps (Soft & Hard, no land, no contingency)

51

https://ccorpinsights.com/costs-per-square-foot/ and https://evstudio.com/construction-

cost-per-square-foot-for-multifamily-housing-based-on-construction-type/. CUMMING

suggested costs for above grade parking structures in Denver to range from $51-$67 dollars a

square foot. EVStudio suggested costs for Suburban 3-6 story wood frame with podium or wrap

to be from $150-$180 dollars per square foot. FF&E was calculated at $2,500 a unit.

An additional 3.5% general contractor fee and 5% hard cost contingency was included

in the calculation of hard costs. In total, hard costs land at $71,989,218, or $160,690 a unit, or

$225.53 per rentable square foot.

7.5 Soft Costs

Architecture and Engineering costs were set at 3.5% of direct building cost and

was compared with a nearby mixed-use property’s cost per unit to ensure that the

estimate was correct.

Marketing was priced at $250 a unit.

Impact Fees and Permits were calculated using city metrics and calculations (see table

19)

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Table 19: Permit & Impact Fees

A developer fee of 3% and construction management fee of 0.25% was included

alongside a 5% soft cost contingency.

No capitalized real estate taxes during construction were applied due to the

ground being leased from the city.

7.6 Construction Financing

Construction debt Figures were confirmed as accurate by Steve Lowell, Capital

Markets Director for The Yellowstone Group. Construction debt is set at 65% loan to

Permit Calculator

First $M 8,427$

After first $M 507,666$

Total Building Permit Fee 516,093$

Plan Review Fee 335,460.33$

State Surcharge 5,160.93$

Total Permit Fees 1,372,807$

Impact Fee Calculator

Fee Cost per Unit or 1000sf Total

Public Saftey- Fire

Residential 171$ 76,608$

Comercial/Retail 250$ 2,188$

Public Saftey- Police

Residential 59$ 26,432$

Comercial/Retail 86$ 753$

Roadways

Residential 231$ 103,488$

Comercial/Retail 1,650$ 14,438$

Park

Residential 3,078$ 1,378,944$

Total Impact Fees 1,602,850$

Total Permits & Impact Fees 2,975,656$

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cost at a 5.50% annual rate. A 1% loan origination fee is applied to the property in month

0 as well.

7.7 Permanent Financing

Permanent financing Figures were confirmed as accurate by Steve Lowell, Capital

Markets Director for The Yellowstone Group. Loan funding replaces construction

financing in month 30. The loan to value ratio is 70% of stabilized vale (83.3% of cost) at

a 3.70% interest rate amortized over 30 years. This allows for almost a full return of

equity to the developer and investors in month 30. The average debt coverage ratio

(DCR) is 1.28

7.8 Equity Terms

GP and LP contributions were 20% ($6,032,423) and 80% ($24,129,692),

respectively. Equity returns were distributed across a 4 tier IRR hurdle (see table 20).

Table 20: IRR Waterfall

7.9 Market & Vacancy Rates

Market growth rates are set to 3% as suggested by market data and reports

described earlier in this report. An analysis of the average consumer price index was

conducted for 5- (1.55%), 10- (1.77%), and 20-year (2.17%) periods in an attempt to

determine expense growth rates (FRED). A 2% expense growth rate was decided on

IRR Hurdle GP Promote Dist. % to GP Dist. % to LP

up to 9.0% 0% 20.0% 80%

up to 12.0% 15% 32% 68%

up to 15.0% 30% 44% 56%

above 15.0% 40% 52% 48%

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based on these CPI averages. Retail growth rate was set at 0% as suggested from market

data. Based on market information, a general vacancy rate of 5% was applied.

7.10 Operating Expenses & Capital Expenditures

(see Appendix B)

Operating expenses were determined based on Yardi data and comparable

property data. A management fee of 2.50% was applied. The ground lease costs $469,218

annually and there are $200 per unit in capital reserves.

7.11 Disposition Strategy

A 10-year period from month 0 to disposition was decided upon in order to

maximize income. Entry cap rate was determined based on market data as 4.80% for

class A multifamily, and a 0.5% increase in cap rate was applied to have the disposition

cap be 5.30%. At sale, 3.50% selling costs were applied. This leads to a sale value of

$121,243,071, or $270,632 per unit. At sale, a 7.46% yield-on-cost is achieved with a

development spread of 215.6 bps.

7.12 Return Metrics

Investors contribute $24,129,692 and gain a net profit of $35,363,946. This

equates to a ROI of 146.6%, an equity multiple (EMx) of 2.47X, and an IRR of 13.61%.

Developers contribute $6,032,423 and gain a net profit of $17,202,844. This

equates to a ROI of 285.2%, an EMx of 3.85X, and an IRR of 26.90%.

On a property level, there is a net profit of $52,566,791. This equates to an EMx

of 2.66X and an IRR of 14.61%

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7.13 Sensitivity Analysis

Vacancy sensitivity shows metrics supporting high long-term average vacancies

(10%) and still receiving solid returns and a high development spread. Breakeven

vacancy is extremely high at 62.58%.

Table 21: Vacancy Sensitivity

Exit cap rate sensitivities ensure the return of capital through 6.05% cap rates and

provide security in the case of large market swings. Higher exit cap rates also lower the

development spread significantly, but levered EMx is still over 1x.

Table 22: Exit Cap Sensitivity

Income growth sensitivity assumes expense growth stays the same (2%). Even if

income begins to fall, equity will be returned, despite a negative development spread.

SENSITIVITY #1

Vacancy Dev. Spread Levered EMx

Base Case 5.00% 215.6 bps 2.66X

Downside #1 6.00% 204.6 bps 2.59X

Downside #2 7.00% 193.6 bps 2.52X

Downside #3 8.00% 182.5 bps 2.45X

Downside #4 9.00% 171.5 bps 2.38X

Downside #5 10.00% 160.4 bps 2.31X

SENSITIVITY #2

Exit Cap Rate Dev. Spread Levered EMx

Base Case 5.30% 215.6 bps 2.66X

Downside #1 5.55% 190.8 bps 2.50X

Downside #2 5.80% 141.1 bps 2.21X

Downside #3 6.05% 66.6 bps 1.85X

Downside #4 6.30% -32.8 bps 1.49X

Downside #5 6.55% -157.2 bps 1.16X

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Table 23: Income Growth Sensitivity

Like income growth sensitivity, expense growth sensitivity assumes income

growth stay constant (3%). Since there is a conservative expense growth assumed despite

lower CPI levels on the 5- and 10-year averages, if expense growth is actually higher

predicted EMx and development spread is still able to maintain high metrics.

Table 24: Expense Growth Sensitivity

VIII. Risks and Challenges

8.1 Timing

Due to the tight construction market, working with the city, and the need for a

zoning change or variance, this development could be pushed back significantly. The

average delivery of product over the past year has averaged 12 months (CoStar) but

working with the city council and planning takes time and could be lengthy if concerns

and delays arise.

SENSITIVITY #3

Inc. Growth Dev. Spread Levered EMx

Base Case 3.00% 215.6 bps 2.66X

Downside #1 2.50% 171.1 bps 2.39X

Downside #2 2.00% 128.3 bps 2.13X

Downside #3 1.50% 87.2 bps 1.87X

Downside #4 1.00% 47.7 bps 1.63X

Downside #5 0.50% 9.7 bps 1.39X

SENSITIVITY #4

Exp. Growth Dev. Spread Levered EMx

Base Case 2.00% 215.6 bps 2.66X

Downside #1 2.50% 200.2 bps 2.56X

Downside #2 3.00% 184.1 bps 2.46X

Downside #3 3.50% 167.3 bps 2.35X

Downside #4 4.00% 149.7 bps 2.24X

Downside #5 4.50% 131.4 bps 2.12X

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Another risk is from oversupply. Since this project is expected to take 30 months to

stabilize, rent growth might be lower and vacancies might be higher than expected.

However, as seen in the sensitivity analysis, if rent growth falls and vacancies rise, equity

will still be returned to investors.

8.2 Market Risks

Multifamily construction is at record high rates and this could lead to a decrease

in demand. Furthermore, uncertainty with the trade war with China and speculation as to

when the market will tip into the next recession makes a development this late into the

expansionary period risky. If the market collapses and individuals lose their jobs, luxury

apartments will suffer as people move from class A to B and from class B to C. Stadium

Apartments is equipped to deal with this since it is on the lower end of class A and does

not feature amenities typically found in luxury apartments.

The area around 1300 South is also still in its early stages of growth. A downward

shift in the market could significantly deter investment in this area which would stall rent

growth and appreciation. However, Stadium Apartments still shows strong equity

multiples in the event of low rent growth and high vacancy.

8.3 Interest Rate Risks

The interest rate market is currently very volatile due to market risks. With

interest rates being at record low levels, it is difficult to assume that interest rates will go

much lower. Thus, if there is movement, it will be horizontal or upwards towards higher

rates. Higher interest rates could impact the development’s cashflow significantly.

58

8.4 Construction Cost Risks

Construction costs are at highs due to the high demand for development. If the

expansionary period continues and development keeps pace, the market could see even

higher prices per square foot or costs of materials. Increases in these costs will impact the

returns significantly since Stadium Apartments is such a large project with a high FAR.

Furthermore, competition for labor can result in higher than predicted costs to contractors

which could result in bids for construction being higher than expected.

IX. Conclusion

It can be concluded that 88 West 1300 South, “Stadium Apartments”, will be

developed into a mixed-use building featuring multifamily dwelling units and street-level

retail. Based on the evidence presented in this paper, this will be the highest and best use

of the site. The project is contingent on the hard and soft costs, market demand and

supply, the city, and financial markets supporting the assumptions made for the project.

Any change of these factors would necessitate a reevaluation of the project. However,

current market data supports the conclusion that now is an ideal time to develop the site

into a mixed-use project. This will not only lead to the achievement of the central

community master plan, but a beneficial investment for Salt Lake City, the developer,

and investors.

59

Works Cited

CoStar (2020). “Demographics Overview- 1380 S West Temple”. Retrieved from

costar.com

CUMMING (2019). “U.S. Construction Costs Per Square Foot”. Retrieved from

https://ccorpinsights.com/costs-per-square-foot/

Dalvit, Dean (2018). “Construction Cost Per Square Foot for Multifamily Housing Based

on Construction Type”. EVstudio. Feb 16, 2018. Retrieved from

https://evstudio.com/construction-cost-per-square-foot-for-multifamily-housing-

based-on-construction-type/

FRED (2020). “Consumer Price Index for All Urban Consumers: All Items in U.S. City

Average”. Last accessed 3/3/2020. Retrieved from

https://fred.stlouisfed.org/series/CPIAUCSL

Gardner Institute (2020). “2020 Economic Report to the Governor”. January 17.

Retrieved from https://gardner.utah.edu/economics-and-public-policy/2020-

economic-report-to-the-governor/

Google Maps. (2012). Retrieved from www.googlemaps.com

Integra Realty Resources (2020). “VIEWPOINT: 2020 Salt Lake City, UT Multifamily

Annual Report”. Retrieved from irr.com

Integra Realty Resources (2020). “VIEWPOINT: 2020 Salt Lake City, UT Retail Annual

Report”. Retrieved from irr.com

60

Milb.com (2019). “Pacific Coast League: Attendance”. Retrieved from

http://www.milb.com/milb/stats/stats.jsp?t=l_att&lid=112&sid=l112

ProMatcher (2020). “Utah Demolition Costs & Prices”. last accessed 3/3/2020. Retrieved

from https://demolition.promatcher.com/cost/utah.aspx

Salt Lake City Corporation (2020). “Salt Lake City Zoning Lookup Map”. Last Accessed

3/3/2020. Retrieved from https://maps.slcgov.com/mws/zoning-lg.htm

Salt Lake City Corporation (2020). “BSCE- Fee Schedules”. Last Accessed 3/3/2020.

Retrieved from https://www.slc.gov/buildingservices/bsce-fee-schedules/

SterlingCodifiers (2020). “Salt Lake City, Utah: City Code”. last accessed

3/3/2020. Retrieved from

https://www.sterlingcodifiers.com/codebook/index.php?book_id=672

UTA (2020). “TRAX” Last Accessed 3/3/2020. Retrieved from

https://www.rideuta.com/Services/TRAX

WalkScore.com (2020). “88 West 1300 South”. last accessed 3/3/2020. Retrieved from

https://www.walkscore.com/score/88-w-1300-s-south-salt-lake-ut-84115

61

62

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Mana

gem

ent

Fee

2.5

0%

395

176,7

68

Insu

ranc

e100%

1.2

7%

200

89,6

00

Pro

pert

y T

axes

0.6

1%

Mill Rate

8.9

1%

1,4

06

630,0

00

TOTA

L O

PER

ATI

NG

EXPEN

SES

33.1

1%

5,2

26

2,3

41,1

68

NET O

PER

ATIN

G IN

CO

ME

10

,55

7

4,7

29

,55

5

CA

PIT

AL

EXPEN

DIT

URES

% F

IXED

% O

F E

GR

UN

IT/YR

AM

OU

NT/YR

Capital Rese

rves

0%

1.2

7%

200

89,6

00

Gro

und L

ease

0%

Straig

ht-Li

ne

5.3

1%

838

375,3

74

Reta

il Le

asing

Cost

Rese

rves

3.8

3/SF/YR

0.4

7%

75

33,5

21

TOTA

L C

APIT

AL

EXPEN

DIT

URES

7.0

5%

1,1

13

498,4

95

CA

SH

FLO

W F

RO

M O

PER

ATI

ON

S4,2

31,0

59

Debt

Serv

ice (

Perm

ane

nt D

ebt)

3,9

64,3

19

CA

SH

FLO

W A

FTER

FIN

AN

CIN

G266,7

41

74

75

TIM

ING

REV

ERSIO

N (

SA

LE)

ASSU

MPTI

ON

S

Cons

truc

tion

End

Month

18

Mark

et C

ap R

ate

Today

4.8

0%

Opera

tion

Begin

Month

19

Cap R

ate

at Sale

(Term

inal C

ap)

5.3

0%

1st

Sta

bilize

d M

ont

hM

onth

30

Sellin

g C

osts

3.5

0%

Sale

Mont

hM

onth

120

As

of

Today

Month

30 -

41

Month

120 -

131

SA

LE P

RO

CEE

DS

/U

nit

Am

oun

tV

ALU

ATI

ON

Gro

ss S

ale

Pro

ceeds

(Direct

Cap)

270,6

32

121,2

43,0

71

UN

TREN

DED

TREN

DED

SA

LE

- Selling

Cost

s @

3.5

0%

(9,4

72)

(4,2

43,5

07)

C

ap R

ate

4.8

0%

4.9

3%

5.3

0%

Net

Sale

Pro

ceeds

261,1

60

116,9

99,5

63

NO

I4,7

29,5

55

4,9

72,8

58

6,4

25,8

83

Perm

ane

nt L

oan

Payoff

(132,9

46)

(59,5

59,6

93)

Sta

biliz

ed

Va

lue

98

,53

2,3

89

10

0,9

71

,74

4

12

1,2

43

,07

1

Equity P

roce

eds

from

Sale

12

8,2

14

57

,43

9,8

70

/U

nit

219,9

38

225,3

83

270,6

32

/SF

308.6

9316.3

3379.8

3

76

77

PRO

PER

TY-L

EVEL

CA

SH

FLO

WS

Am

oun

t

Tota

l Pro

ject

Cost

(Befo

re C

arr

y C

ost

s)82,2

50,6

12

Tota

l C

ons

truc

tion

Loan

Inte

rest

(Befo

re L

ease

-up Inc

om

e)

4,7

46,5

38

Tota

l C

ons

truc

tion

Loan

Dra

ws

56,0

15,4

80

Perm

ane

nt L

oan

Fund

ing

71,7

73,2

14

Cash

Flo

w f

rom

Opera

tions

40,0

14,4

70

Perm

ane

nt L

oan

Debt

Serv

ice

29,7

32,3

90

DC

R1.2

8

Net

Sale

Pro

ceeds

110,7

31,7

30

- C

ons

truc

tion

Loan

Payoff

(56,0

15,4

80)

- Perm

ane

nt L

oan

Payoff

(60,4

80,7

20)

Equi

ty P

roce

eds

from

Capital Ev

ent

(s)

66,0

08,7

44

EQ

UIT

Y M

ULT

IPLE

IRR

NET P

RO

FIT

Net U

nle

vere

d C

ash

Flo

w1

.83

X7

.78

%6

8,4

95

,58

8

Net Le

vere

d C

ash

Flo

w2

.47

X1

4.0

2%

44

,45

9,1

54

Lev

ere

d C

ash

on

Ca

sh

Retu

rn

UN

TREN

DED

TREN

DED

SA

LE

Yie

ld-o

n-C

ost

5.4

9%

5.7

7%

7.4

6%

Mark

et C

ap R

ate

4.6

0%

4.8

5%

5.6

0%

Develo

pm

ent Spre

ad

88

.8 b

ps

92

.0 b

ps

18

5.7

bp

s

RET

URN

S S

UM

MA

RY

Contrib

utions

Net Pro

fit

RO

IEM

x

IRR

Inve

stors

24,1

29,6

92

35,3

63,9

46

146.6

%2.4

7X

13.6

1%

Deve

loper

6,0

32,4

23

17,2

02,8

44

285.2

%3.8

5X

26.9

0%

78

79

WA

TER

FA

LL (

GP A

ND

LP)

GP-L

P C

ON

TRIB

UTI

ON

SShare

Am

ount

GP

Develo

per

20%

6,0

32,4

23

LPIn

vestors

80%

24,1

29,6

92

Tota

l100%

30,1

62,1

15

DIS

TRIB

UTI

ON

WA

TERFA

LLIR

R H

urd

leG

P P

rom

ote

Dist. %

to G

PD

ist. %

to L

P

Pre

f. R

etu

rnup to

9.0

%0%

20.0

%80%

2nd

Tie

rup to

12.0

%15%

32%

68%

3rd

Tie

rup to

15.0

%30%

44%

56%

4th

Tie

rabove

15.0

%40%

52%

48%

GP-L

P D

ISTR

IBU

TIO

NS

Share

Am

ount

GP

Develo

per

28%

23,2

35,2

67

LPIn

vestors

72%

59,4

93,6

38

Tota

l100%

82,7

28,9

06

GP-L

P N

ET C

ASH

FLO

WEM

x

IRR

Share

Am

ount

GP

Develo

per

3.8

5X

26.9

0%

33%

17,2

02,8

44

LPIn

vestors

2.4

7X

13.6

1%

67%

35,3

63,9

46

Tota

l2.7

4X

16.0

4%

100%

52,5

66,7

91

80

81

SEN

SIT

IVIT

Y #

1SEN

SIT

IVIT

Y #

2

Vaca

ncy

Dev.

Spre

ad

Leve

red E

Mx

Exit C

ap R

ate

Dev.

Spre

ad

Leve

red E

Mx

Base

Case

5.0

0%

215.6

bps

2.6

6X

Base

Case

5.3

0%

215.6

bps

2.6

6X

Dow

nsid

e #

16.0

0%

204.6

bps

2.5

9X

Dow

nsid

e #

15.5

5%

190.8

bps

2.5

0X

Dow

nsid

e #

27.0

0%

193.6

bps

2.5

2X

Dow

nsid

e #

25.8

0%

141.1

bps

2.2

1X

Dow

nsid

e #

38.0

0%

182.5

bps

2.4

5X

Dow

nsid

e #

36.0

5%

66.6

bps

1.8

5X

Dow

nsid

e #

49.0

0%

171.5

bps

2.3

8X

Dow

nsid

e #

46.3

0%

-32.8

bps

1.4

9X

Dow

nsid

e #

510.0

0%

160.4

bps

2.3

1X

Dow

nsid

e #

56.5

5%

-157.2

bps

1.1

6X

SEN

SIT

IVIT

Y #

3SEN

SIT

IVIT

Y #

4

Inc.

Gro

wth

Dev.

Spre

ad

Leve

red E

Mx

Exp. G

row

thD

ev.

Spre

ad

Leve

red E

Mx

Base

Case

3.0

0%

215.6

bps

2.6

6X

Base

Case

2.0

0%

215.6

bps

2.6

6X

Dow

nsid

e #

12.5

0%

171.1

bps

2.3

9X

Dow

nsid

e #

12.5

0%

200.2

bps

2.5

6X

Dow

nsid

e #

22.0

0%

128.3

bps

2.1

3X

Dow

nsid

e #

23.0

0%

184.1

bps

2.4

6X

Dow

nsid

e #

31.5

0%

87.2

bps

1.8

7X

Dow

nsid

e #

33.5

0%

167.3

bps

2.3

5X

Dow

nsid

e #

41.0

0%

47.7

bps

1.6

3X

Dow

nsid

e #

44.0

0%

149.7

bps

2.2

4X

Dow

nsid

e #

50.5

0%

9.7

bps

1.3

9X

Dow

nsid

e #

54.5

0%

131.4

bps

2.1

2X

82

83

RET

AIL

IN

CO

ME

RET

AIL

BA

SE

REN

TAL

INC

OM

E4 S

uite

s

SU

ITE

TEN

AN

TLE

ASE S

TA

RT

SF

REN

T S

TA

RT

AN

NU

AL

BU

MPS

REN

T/SF/YR

AN

NU

AL

REN

T (

YR 1

)

110

Tenant 1

Month

19

1,0

00

M

onth

22

3.0

0%

24.0

024,0

00

120

Tenant 2

Month

22

1,2

50

M

onth

25

3.0

0%

23.5

029,3

75

130

Tenant 3

Month

25

1,5

00

M

onth

28

3.0

0%

23.0

034,5

00

100

Leasing &

Am

enitie

sM

onth

19

5,0

00

M

onth

19

0.0

0%

0.0

0-

8,7

50

M

onth

19

3.0

0%

10.0

487,8

75

REC

OV

ERY IN

CO

ME

REC

OV

ERY S

TA

RT

REC

OV

ERY %

PRO

RA

TA

SH

ARE

REC

./SF/YR

AM

OU

NT/YR

Tenant 1

Month

19

100%

26.7

%24.5

024,5

00

Tenant 2

Month

22

100%

33.3

%24.5

030,6

25

Tenant 3

Month

25

100%

40.0

%24.5

036,7

50

Leasing &

Am

enitie

sM

onth

19

100%

0.0

%0.0

0-

REC

OV

ERY IN

CO

ME

Month

19

10.5

091,8

75

PO

TEN

TIA

L RETA

IL IN

CO

ME

179,7

50

- Reta

il V

aca

ncy a

nd C

redit L

oss

10.0

0%

/SF/YR

(17,9

75)

EFFE

CTI

VE

GRO

SS R

EVEN

UE

18.4

9161,7

75

RET

AIL

EXPEN

SES

RET

AIL

OPER

ATI

NG

EXPEN

SES

% F

IXED

Expense

Gro

wth

UN

IT/YR

/SF/YR

AM

OU

NT/YR

Com

mon

Are

a M

ain

tena

nce

0%

2.0

0%

39

2.0

017,5

00

Mana

gem

ent

Fee

0%

2.0

0%

29

1.5

013,1

25

Insu

ranc

e0%

2.0

0%

20

1.0

08,7

50

Pro

pert

y T

axes

0%

2.0

0%

117

6.0

052,5

00

TOTA

L O

PER

ATI

NG

EXPEN

SES

10.5

091,8

75

RETA

IL IN

CO

ME (

Net of

Expense

s)7

.99

69

,90

0

Add R

eta

il Te

nant

Del.

Reta

il Te

nant

84

85

RET

AIL

LEA

SIN

G C

OST

RES

ERV

EN

ew

Lease

Renew

al Le

ase

New

Lease

Renew

al Le

ase

ASSU

MPTI

ON

SC

ALC

ULA

TIO

N

Renew

al Pro

bability

30.0

%70.0

%Tenant Im

pro

vem

ents

65,6

25

122,5

00

Avera

ge R

eta

il M

ark

et Rent

23.5

023.5

0/SF

Leasing C

om

missions

37,0

13

40,3

03

Tenant Im

pro

vem

ents

25.0

020.0

0/SF

Tota

l Le

asing C

osts

102,6

38

162,8

03

Leasing C

om

missions

6.0

%4.0

%Le

asing C

ost/Yr

10,2

64

23,2

58

Lease

Term

10 Y

ears

7 Y

ears

Reta

il L

easi

ng C

ost

Rese

rves

3.8

33

3,5

21

86

87

Retu

rns (

Lev

ere

d)

NPV

$3

3,0

36

,98

6

Net Pro

fit

50

,18

1,9

18

$

IRR

14

.61

%

EM

X2

.66

Avera

ge C

ash

on C

ash

7.6

3%

Ta

x C

alc

ula

tor

Sta

biliz

ed

Va

lue

98

,53

2,3

89

$

Va

lue o

f Im

pro

vem

ents

93

,31

9,8

04

$

% A

pp

rais

ed

55

%

Ap

pra

ised

Va

lue

51

,32

5,8

92

$

Mill Ra

te0

.01

29

08

Annua

l Ta

x6

62

,51

5$

Perm

en

an

t D

eb

t

Sta

biliz

ed V

alu

e100,9

71,7

44

$

Const

ruct

ion L

oan

56,0

17,7

15

LTV

70

%D

CR

1.2

7

Refi A

mount

70,6

80,2

21

$

Pro

pert

y IRR

14.6

1%

Type

Perm

Mezz

TIF

% o

f Refi

10

0%

0%

0%

10

0%

Am

ount

70,6

80,2

21

$

-

$

-$

Inte

rest

Rate

3.7

0%

10.0

0%

3.4

3%

Ble

nded R

ate

3.7

0%

88

89

Perm

it C

alc

ula

tor

First

$M

8,4

27

$

Aft

er

firs

t $

M5

07

,66

6$

Tota

l Buildin

g P

erm

it F

ee

51

6,0

93

$

Pla

n R

evie

w F

ee

33

5,4

60

.33

$

Sta

te S

urc

harg

e5

,16

0.9

3$

Tota

l Perm

it F

ees

1,3

72

,80

7$

Imp

act

Fee C

alc

ula

tor

Fee

Cost

per

Unit o

r 10

00

sfTota

l

Public

Saft

ey-

Fire

Residentia

l1

71

$

7

6,6

08

$

Com

erc

ial/

Reta

il2

50

$

2

,18

8$

Public

Saft

ey-

Police

Residentia

l5

9$

26

,43

2$

Com

erc

ial/

Reta

il8

6$

75

3$

Roadw

ays

Residentia

l2

31

$

1

03

,48

8$

Com

erc

ial/

Reta

il1

,65

0$

14

,43

8$

Park Residentia

l3

,07

8$

1,3

78

,94

4$

Tota

l Im

pa

ct F

ees

1,6

02

,85

0$

To

tal P

erm

its &

Im

pa

ct F

ees

2,9

75

,65

6$

90

91

A

pp

end

ix C

: S

ite

Pla

n

Lo

t a

nd

Bu

ild

ing

Lot

SF

18

76

87

Ma

x L

ot

Covera

ge

50

%

Op

en S

pa

ce9

38

44

Surf

ace

Pa

rkin

g S

pa

ce4

72

50

Eff

ect

ive O

pen S

pa

ce2

5%

46

59

4

Ma

x F

ootp

rint

93

84

4

# o

f Sto

ries

6

Avg

. Sla

b t

o S

lab

Heig

ht

11

Heig

ht

Lim

it7

5

Build

ing

Heig

ht

66

Heig

ht

Lim

it (

stori

es)

6.8

2

Gro

ss B

uild

ab

le A

rea

56

30

61

FA

R3

Less

Reta

il S

F9

.3%

87

50

Less

Ab

ove G

round

Ga

rag

e S

F1

78

81

0

Resi

dua

l G

SF

37

55

01

Eff

icie

ncy

Fa

ctor

85

%

Renta

ble

SF

31

91

76

Pa

rkin

g

Sp

ots

/U

nit

44

40

.99

Surf

ace

Sp

ots

13

53

0.4

%

Ba

llp

ark

Sp

ots

0

Tota

l Sp

ots

57

9

Covere

d S

pots

44

4

Eff

ect

ive S

pots

/U

nit

1.2

9

SF p

er

Spot

35

0

Sp

ots

GSF

20

26

50

Surf

ace

Sp

ots

GSF

47

25

0

Covere

d S

pots

GSF

15

54

00

Gro

ss-U

p1

5%

Tota

l C

overe

d S

pots

GSF

17

87

10

Ab

ove G

round

Flo

orp

late

93

84

4

Ab

ove G

round

Levels

2.0

0

Ab

ove G

round

SF

17

88

10

Belo

w G

round

Flo

orp

late

93

84

4<

- Pod

ium

/ U

nd

erg

round

Needed

Belo

w G

round

Levels

0.0

0

Belo

w G

round

SF

0

Above G

round

Sp

ace

Bre

akd

ow

n

Op

en S

pa

ce2

5%

Surf

ace

Pa

rkin

g2

5%

Build

ing

Footp

rint

50

%

92

93

Floor Area Breakdown

Floor

Retail9.3%8750 SF

Garage90.7%85094 SF

Rentable0 SF

Efficiency Loss0 SF

Total100%93844 SF

Floor

Garage100%93717 SF

Rentable0%108 SF

Efficiency Loss0%19 SF

Total100%93844 SF

Floor

Garage0%0 SF

Rentable85%79767 SF

Efficiency Loss15%14077 SF

Total100%93844 SF

Floor

Garage0%0 SF

Rentable85%79767 SF

Efficiency Loss15%14077 SF

Total100%93844 SF

Floor

Garage0%0 SF

Rentable85%79767 SF

Efficiency Loss15%14077 SF

Total100%93844 SF

Floor

Garage0%0 SF

Rentable85%79767 SF

Efficiency Loss15%14077 SF

Total100%93844 SF

6

1

2

4

3

5

FA

R C

om

ps

Pro

pert

yLa

nd

Are

aG

BA

FA

RU

nits

Units/

Acr

e

C9

Fla

ts0

.68

68

58

02

.32

97

14

3

36

5 P

axto

n A

ve

11

03

00

02

.36

12

11

21

Ba

ll P

ark

Ap

art

ments

0.3

65

30

00

3.3

86

21

72

TenFif

teen A

pa

rtm

ents

0.8

15

40

00

1.5

35

46

7

Gre

enP

rint

Ap

art

ments

0.2

22

00

02

.53

60

30

0

84

4-8

56

S W

Tem

ple

0.4

48

95

12

.81

14

53

63

Avg

0.5

85

82

55

2.4

99

01

94

Min

0.2

02

20

00

1.5

35

46

7

Med

ian

0.5

45

35

00

2.4

48

01

57

Ma

x1

.00

10

30

00

3.3

81

45

36

3

Sta

diu

m A

part

ments

4.3

15

63

06

13

.00

44

81

04

94

95

A

pp

end

ix D

: A

nn

ual

Cash

Flo

w

STA

DIU

M A

PA

RTM

EN

TS

DEV

ELO

PER

, LLC

Salt L

ake

City, U

TA

NA

LYSIS

STA

RT

- JA

N-2

019

AN

NU

AL

CA

SH

FLO

W

Analy

sis

Month

Year

0Year

1Year

2Year

3Year

4Year

5Year

6Year

7Year

8Year

9Year

10

Analy

sis

Date

May-2

021

May-2

022

May-2

023

May-2

024

May-2

025

May-2

026

May-2

027

May-2

028

May-2

029

May-2

030

May-2

031

AN

NU

AL

DEV

ELO

PM

EN

T C

ASH

FLO

WS

Land

Cost

s187,6

87

187,6

87

-

-

-

-

-

-

-

-

-

Hard

Cost

s-

59,6

90,9

31

12,2

98,2

87

-

-

-

-

-

-

-

-

Soft

Cost

s2,9

54,8

90

5,9

42,9

60

965,7

43

-

-

-

-

-

-

-

-

TOTA

L PRO

JEC

T C

OST

BEF

ORE

FIN

AN

CIN

G3,1

42,5

77

65,8

21,5

78

13,2

64,0

29

-

-

-

-

-

-

-

-

Carr

y C

ost

s850,0

00

347,6

56

2,6

98,4

35

55,5

55

-

-

-

-

-

-

-

TOTA

L PRO

JEC

T C

OST

3,9

92,5

77

66,1

69,2

34

15,9

62,4

64

55,5

55

-

-

-

-

-

-

-

SO

URC

ES3,9

92,5

77

66,1

69,2

34

15,9

62,4

64

55,5

55

-

-

-

-

-

-

-

USES

3,9

92,5

77

66,1

69,2

34

15,9

62,4

64

55,5

55

-

-

-

-

-

-

-

AN

NU

AL

OPER

ATIN

G C

ASH

FLO

WS

Rent

al In

com

e-

-

1,0

41,1

50

6,3

35,7

34

7,0

48,7

64

7,2

60,2

26

7,4

78,0

33

7,7

02,3

74

7,9

33,4

45

8,1

71,4

49

8,4

16,5

92

Oth

er

Inco

me

-

-

146,7

52

771,3

17

855,4

04

881,0

66

907,4

98

934,7

23

962,7

65

991,6

48

1,0

21,3

98

Reta

il In

com

e (

Net

of

Expens

es)

-

-

(15,3

24)

62,2

08

71,9

29

74,1

82

76,5

04

78,8

97

81,3

65

83,9

08

86,5

30

TOTA

L PO

TEN

TIA

L IN

CO

ME

-

-

1,1

72,5

78

7,1

69,2

58

7,9

76,0

97

8,2

15,4

75

8,4

62,0

35

8,7

15,9

95

8,9

77,5

75

9,2

47,0

05

9,5

24,5

20

- G

ene

ral V

aca

ncy a

nd C

redit L

oss

-

-

(58,6

29)

(358,4

63)

(398,8

05)

(4

10,7

74)

(423,1

02)

(435,8

00)

(448,8

79)

(4

62,3

50)

(4

76,2

26)

EFFE

CTI

VE

GRO

SS R

EVEN

UE

-

-

1,1

13,9

49

6,8

10,7

95

7,5

77,2

92

7,8

04,7

01

8,0

38,9

34

8,2

80,1

95

8,5

28,6

96

8,7

84,6

55

9,0

48,2

94

OPER

ATI

NG

EXPEN

SES

Repairs

and

Main

tena

nce

-

-

70,2

90

202,6

03

214,2

96

218,5

82

222,9

54

227,4

13

231,9

61

236,6

00

241,3

32

Payro

ll-

-

286,5

52

583,5

95

595,2

67

607,1

72

619,3

16

631,7

02

644,3

36

657,2

23

670,3

67

Gene

ral &

Adm

inistr

ative

-

-

38,5

44

91,7

11

95,2

43

97,1

48

99,0

91

101,0

72

103,0

94

105,1

56

107,2

59

Mark

eting

-

-

57,3

10

116,7

19

119,0

53

121,4

34

123,8

63

126,3

40

128,8

67

131,4

45

134,0

73

Utilit

ies

-

-

93,7

20

270,1

38

285,7

28

291,4

43

297,2

72

303,2

17

309,2

81

315,4

67

321,7

76

Cont

ract

Serv

ices

-

-

43,3

62

103,1

74

107,1

48

109,2

91

111,4

77

113,7

06

115,9

80

118,3

00

120,6

66

Make

Ready C

ost

-

-

20,7

90

108,3

96

119,0

53

121,4

34

123,8

63

126,3

40

128,8

67

131,4

45

134,0

73

Mana

gem

ent

Fee

-

-

27,8

49

170,2

70

189,4

32

195,1

18

200,9

73

207,0

05

213,2

17

219,6

16

226,2

07

Insu

ranc

e-

-

45,8

48

93,3

75

95,2

43

97,1

48

99,0

91

101,0

72

103,0

94

105,1

56

107,2

59

Pro

pert

y T

axes

-

-

161,1

86

410,4

77

586,1

05

683,0

69

696,7

30

710,6

65

724,8

78

739,3

76

754,1

63

TOTA

L O

PER

ATI

NG

EXPEN

SES

-

-

845,4

52

2,1

50,4

58

2,4

06,5

69

2,5

41,8

38

2,5

94,6

29

2,6

48,5

33

2,7

03,5

76

2,7

59,7

82

2,8

17,1

77

NET

OPER

ATI

NG

IN

CO

ME

-

-

268,4

98

4,6

60,3

37

5,1

70,7

23

5,2

62,8

62

5,4

44,3

05

5,6

31,6

62

5,8

25,1

20

6,0

24,8

72

6,2

31,1

17

CA

PIT

AL

EXPEN

DIT

URES

-

-

109,7

98

572,2

97

628,5

44

641,1

14

653,9

37

667,0

15

680,3

56

693,9

63

707,8

42

CA

SH

FLO

W F

RO

M O

PER

ATI

ON

S-

-

158,7

00

4,0

88,0

41

4,5

42,1

80

4,6

21,7

48

4,7

90,3

68

4,9

64,6

46

5,1

44,7

64

5,3

30,9

09

5,5

23,2

75

AN

NU

AL

PR

OPER

TY

-LEV

EL

CA

SH

FLO

WS

Net

Unl

eve

red C

ash

Flo

w(3

,142,5

77)

(6

5,8

21,5

78)

(13,1

05,3

29)

4,0

88,0

41

4,5

42,1

80

4,6

21,7

48

4,7

90,3

68

4,9

64,6

46

5,1

44,7

64

5,3

30,9

09

122,5

22,8

38

Net

Leve

red C

ash

Flo

w(3

,992,5

77)

(2

6,1

69,5

38)

0

15,3

13,9

11

638,2

31

717,8

00

886,4

20

1,0

60,6

98

1,2

40,8

16

1,4

26,9

61

59,0

59,1

96

96

97

A

pp

end

ix E

: S

um

mary

STA

DIU

M A

PA

RTM

EN

TS

DEV

ELO

PER

, LLC

Salt L

ake

City, U

TA

NA

LYSIS

STA

RT

- JU

N 2

021

INV

ESTM

ENT

DES

CRIP

TIO

N

Addre

ss88 W

1300 S

, Salt L

ake C

ity U

TSTR

EN

GTH

S

Uni

ts448 U

nits

Loca

tion n

ext to

ballpark

NRA

(SF)

319,2

00

Tra

nsit oriente

d w

ith T

RA

X s

tation n

earb

y

Land

Are

a4.3

Acr

es

Easy

acc

ess

to I-1

5

Bui

ldin

g(s

)1 B

ldg

85 W

alk

Sco

re, 73 T

ransit Sco

re, 74 B

ike S

core

Heig

ht6-S

tory

Hig

h d

em

and a

nd r

ent gro

wth

Park

ing S

pace

s579

Strong d

em

ogra

phic

tre

nds

Park

ing R

atio

1.2

9/U

nit

WEA

KN

ESSES

Ana

lysis

Sta

rtM

onth

1Ju

n-2

021

Mark

et risk

due to o

vers

upply

Cons

truc

tion

Sta

rtM

onth

1Ju

n-2

021

Are

a in e

arly g

row

th s

tages

Cons

truc

tion

End

Month

18

Nov-2

022

Will deple

te a

lot of

park

ing f

or

ballpark

1st

Uni

t D

eliv

ere

dM

onth

19

Dec-

2022

Gro

und lease

will need to b

e s

ubord

inate

d f

or

debt

Sta

biliza

tion

Month

30

Nov-2

023

Lack

of

control fr

om

gro

und lease

Sale

Date

Month

120

May-2

031

Unattra

ctiv

e s

urr

oundin

g p

roperty u

ses

INSER

T IM

AG

E/M

AP

KEY

ASSU

MPTI

ON

S &

RET

URN

MET

RIC

S

Gro

wth

Rate

s -

Inco

me /

Expens

e3.0

0%

/ 2

.00%

PRO

FO

RM

AU

ntrended

Tre

nded

Sale

PA

RTN

ERSH

IP R

ETU

RN

SRO

IEM

x

IRR

Effe

ctiv

e R

ent

- P

SF

/ P

er

Uni

t1.7

2 /

1,2

26

Effe

ctiv

e G

ross

Reve

nue

7,0

70,7

23

7,4

49,8

51

9,2

96,6

92

In

vest

ors

146.6

%2.4

7X

13.6

1%

Gene

ral V

aca

ncy &

Cre

dit L

oss

5.0

0%

- O

pera

ting

Expens

es

(2,3

41,1

68)

(2

,476,9

92)

(2

,870,8

09)

D

eve

loper

285.2

%3.8

5X

26.9

0%

Opera

ting

Expens

e R

atio

33.1

1%

Net

Opera

ting

Inc

om

e4,7

29,5

55

4,9

72,8

58

6,4

25,8

83

Bre

ake

ven

Occ

upanc

y (

Unt

rend

ed)

84.3

9%

- C

apital Ex

pend

itur

es

(592,3

39)

(621,3

43)

(720,7

98)

PRO

PER

TY R

ETU

RN

SRO

IEM

x

IRR

Reve

rsio

n N

et

Pro

ceeds

(Aft

er

Selling

Cost

s)116,9

99,5

63

Cash

Flo

w f

rom

Opera

tions

4,1

37,2

16

4,3

51,5

15

5,7

05,0

85

U

nleve

red

89.9

%1.9

0X

8.2

0%

Perm

ane

nt L

oan

Payoff

(59,5

59,6

93)

Cap R

ate

4.8

0%

4.9

3%

5.3

0%

Leve

red

166.4

%2.6

6X

14.6

1%

Equi

ty P

roce

eds

from

Sale

57,4

39,8

70

Valu

ation

98,5

32,3

89

100,9

71,7

44

121,2

43,0

71

DEV

ELO

PM

ENT

RET

URN

SU

ntrended

Tre

nded

Sale

% o

f To

tal Pro

ject

Cost

114.3

%117.2

%140.7

%Yie

ld-o

n-C

ost

5.4

9%

5.7

7%

7.4

6%

Valu

ation/

Uni

t219,9

38

225,3

83

270,6

32

Mark

et

Cap R

ate

4.8

0%

4.9

3%

5.3

0%

Deve

lopm

ent

Spre

ad

68.8

bps

84.5

bps

215.6

bps

SO

URC

ES%

/U

nit

Am

ountU

SES

%/Buildable

SF

/U

nit

Am

ount

Cons

truc

tion

Debt

65.0

%125,0

40

56,0

17,7

15

Land

Cost

s0.4

%0.6

7838

375,3

74

SEN

SIT

IVIT

YExit C

ap R

ate

Dev. Spre

ad

Levere

d E

Mx

Inve

stors

28.0

%53,8

61

24,1

29,6

92

Hard

Cost

s83.5

%127.8

5160,6

90

71,9

89,2

18

Base

Case

5.3

0%

215.6

bps

2.6

6X

Deve

loper

7.0

%13,4

65

6,0

32,4

23

Soft

Cost

s11.4

%17.5

222,0

17

9,8

63,5

92

D

ow

nside #

15.5

5%

190.8

bps

2.5

0X

Tota

l Sour

ces

100.0

%192,3

66

86,1

79,8

30

Carr

y C

ost

s4.6

%7.0

28,8

21

3,9

51,6

46

D

ow

nside #

25.8

0%

141.1

bps

2.2

1X

Tota

l U

ses

100.0

%153.0

6192,3

66

86,1

79,8

30

Dow

nside #

36.0

5%

66.6

bps

1.8

5X

98

99

PRO

PER

TY-L

EVEL

CA

SH

FLO

WA

NN

UA

L C

ASH

FLO

W R

EPO

RT:

H

ide

Sho

w

-

2,0

00

,000

4,0

00

,000

6,0

00

,000

8,0

00

,000

10

,00

0,0

00

12

,00

0,0

00

Month 0

Month 3

Month 6

Month 9

Month 12

Month 15

Month 18

Month 21

Month 24

Month 27

Month 30

Month 33

Month 36

Month 39

Month 42

Month 45

Month 48

Month 51

Month 54

Month 57

Month 60

Month 63

Month 66

Month 69

Month 72

Month 75

Month 78

Month 81

Month 84

Month 87

Month 90

Month 93

Month 96

Month 99

Month 102

Month 105

Month 108

Month 111

Month 114

Month 117

Month 120

Tota

l Pro

ject

Cost

s b

y M

onth

(20

0,0

00)

(10

0,0

00)

0

10

0,0

00

20

0,0

00

30

0,0

00

40

0,0

00

50

0,0

00

60

0,0

00

Month 0

Month 3

Month 6

Month 9

Month 12

Month 15

Month 18

Month 21

Month 24

Month 27

Month 30

Month 33

Month 36

Month 39

Month 42

Month 45

Month 48

Month 51

Month 54

Month 57

Month 60

Month 63

Month 66

Month 69

Month 72

Month 75

Month 78

Month 81

Month 84

Month 87

Month 90

Month 93

Month 96

Month 99

Month 102

Month 105

Month 108

Month 111

Month 114

Month 117

Month 120

Net

Op

era

ting

Inco

me

-

2,0

00

,000

4,0

00

,000

6,0

00

,000

8,0

00

,000

10

,00

0,0

00

12

,00

0,0

00

Month 0

Month 3

Month 6

Month 9

Month 12

Month 15

Month 18

Month 21

Month 24

Month 27

Month 30

Month 33

Month 36

Month 39

Month 42

Month 45

Month 48

Month 51

Month 54

Month 57

Month 60

Month 63

Month 66

Month 69

Month 72

Month 75

Month 78

Month 81

Month 84

Month 87

Month 90

Month 93

Month 96

Month 99

Month 102

Month 105

Month 108

Month 111

Month 114

Month 117

Month 120

Eq

uit

y (

Blu

e)

and

Deb

t (G

reen)

Ca

sh F

low

s b

y M

onth

68.8

bps

84.5

bps

215.6

bps

0.0

bp

s

50

.0 b

ps

10

0.0

bps

15

0.0

bps

20

0.0

bps

25

0.0

bps

0.0

0%

1.0

0%

2.0

0%

3.0

0%

4.0

0%

5.0

0%

6.0

0%

7.0

0%

8.0

0%

Untr

ended

Tre

nded

Sale

Deve

lop

ment

Sp

rea

d

Yie

ld-o

n-C

ost

Mark

et C

ap

Ra

te

Deve

lop

ment Sp

rea

d

13.6

1%

26.9

0%

0.0

0%

0.0

0%

5.0

0%

10

.00%

15

.00%

20

.00%

25

.00%

30

.00%

Inve

stors

Deve

lop

er

Equi

ty IRR b

y P

art

ner

Equi

ty IRR

2.4

7X

3.8

5X

0.0

0X

0.0

0X

0.5

0X

1.0

0X

1.5

0X

2.0

0X

2.5

0X

3.0

0X

3.5

0X

4.0

0X

4.5

0X

Inve

stors

Deve

lop

er

Equi

ty M

ultip

le b

y P

art

ner

Equi

ty M

ultip

le