University of Miami · Local Partners The City of Miami has been working on a $40 million effort to restore the Miami Marine Stadium, which is approximately half a mile from our site

UNIVERSITY OF MIAMI

Impact Investing in Commercial Real Estate

Alejandro Garza MPSRE '18 Mark Hughes MPSRE ‘18

Miguel Klipstein '11 MBA/MPSRE '18

2

Table of Contents

Project Overview ................................................................................................................... 3

Site History ............................................................................................................................ 4

Local Partners ........................................................................................................................ 4

Market Analysis ..................................................................................................................... 5

Project Risks .......................................................................................................................... 6

Construction and Operating Budget ....................................................................................... 7

Additional Assumptions Underlying Financial Analysis ........................................................... 8

Project IRR and Equity Multiple Based on Risks ...................................................................... 9

Exit Strategy .......................................................................................................................... 9

Summary ............................................................................................................................... 9

Works Cited........................................................................................................................... 9

Appendix ............................................................................................................................. 11

3

Project Overview

San Francisco has Pier 39, Chicago has Navy Pier, LA has Santa Monica Pier, and Atlantic City has

Steel Pier. All of these piers are landmarks in their respective cities; must see attractions for visitors and

residents alike. Miami, with its many world-class attractions, still lacks this one. On the way to Key

Biscayne in Miami, FL, cars, cyclists, and pedestrians alike cross one of Miami’s most well known sites,

the William Powell Bridge. Our team’s vision is to convert the underutilized ‘fishing’ pier next to the

William Powell Bridge into a retail attraction, complete with specialized stores and restaurants providing

an active indoor/outdoor experience (Figure 2 shows current photos from bridge). This pier presents an

incredible and rare opportunity of “developable” land in south Miami, which is difficult to come by. The

project will serve a dual purpose in that it will not only revitalize the old bridge, but the retail

components will be made from used shipping containers. The piers location, size, shape, and condition

affords us the perfect opportunity to transform a lost icon within the City of Miami into a bustling

destination that blends into the surrounding environment. The revitalization of the pier will also prevent

further decay of rusted metal and concrete that occasionally falls into Biscayne Bay.

We have named our project, Sunset Pier, as our location is one of the few places in Miami where

people can view the sunset from land. The location, next to one of the most transited points for boats,

makes it a lively place year round. Furthermore, over 40,000 cars and thousands of pedestrians, runners,

and cyclists pass by the property every day, making it one of the most visible ‘invisible’ sites in Miami

(Figure 3 and 4 show the driving distance from our project site as well as major bike routes through

Brickell, downtown and Key Biscayne areas).

The pier is 1,448 ft long and 46 ft wide. The 66,608 sf of unused road is the perfect size for our

project and affords us enough space to include parks and open space. The use of shipping containers

gives us flexibility in both the design process and off-site construction (allowing us to simultaneously fix

the bridge and build the containers). Our aim is to create 40,000 sf of retail and restaurants with twenty

tenants using a mix of 36, 40 x 8 ft and 24, 20 x 8 ft containers, thus making the total container space

38% of the net rentable area. To incentivize people to walk the full length of the pier, our anchor tenant

will be a nearly 5,000 sf destination restaurant at the end of the pier next to the bridge underpass.

Furthermore, we plan to build a dock alongside the pier that will be accessible to the hundreds of boats

that sail into Biscayne Bay. Our target tenants will include a potential partnership with a local

restaurateur, such as David Grutman or similar and fast casual chains, as well as clothing stores and

artist workshops. Our target demographics are young millennials and affluent families who have

discretionary income and are able to spend money on dining out at trendy restaurants.

Hobie Island Beach Park is adjacent to the east of our site. There is a limited amount of parking

here and on the western end of the William Powell Bridge designated for the park. We will implement a

marketing scheme in order for visitors to our site to use ride-sharing apps such as Uber and Lyft to

alleviate parking demands. We will approach ride-sharing companies and collaborate with them so that

any person arriving by Uber or Lyft would get a coupon to use at our retail outlets. Additional solutions

include the use of pedal wagons, leasing the parking lot from the Miami Marine Stadium (and busing

guests to and from the parking lot to the pier), a boat dock and water taxis. With the addition of a dock

to our site, boats may dock on a first come first serve basis to visit our retailers. The dock will have

designated space for water taxis to bring people from Miami Beach Marina and Bayside Marketplace. It

4

is our intention to partner with Water Taxi Miami to subsidize the cost of the water taxi to Sunset Pier.

The below render aids in visualizing our concept, while Figure 1 in the appendix outlines our site plan.

Site History

The William Powell Bridge, completed in 1985, serves as the main artery connecting mainland

Miami with Virginia Key and Key Biscayne. It replaced a much shorter bridge that used to have a

drawbridge to allow boats passage to and from Biscayne Bay. While long time Key Biscayne residents

might remember the pain it was to traverse the old, low-height bridge and getting stuck waiting for the

drawbridge, many now see the decrepit half bridge as a fishing pier. After completion of the new bridge,

the drawbridge was demolished and the east and west sides of the bridge remained until 2011 when the

west side was demolished. Today, the east side of the bridge serves no useful purpose other than a

fishing and diving pier for visitors to Hobie Island Beach Park.

Local Partners

The City of Miami has been working on a $40 million effort to restore the Miami Marine Stadium, which is approximately half a mile from our site. Given the county’s ownership of the pier, Miami-Dade County and the City of Miami would be natural partners to work with on this project. Collaborating with the city and county will be critical in securing public support for the project as well as obtaining possible variances for parking. Furthermore, we plan to approach the county with a ground lease for the bridge. For the project to be financially viable we assume a ground lease term of 30 years and the present value of the bridge is $6 million. A calculation of the ground lease payments and calculations can be found in Table 4.

5

Another potential partnership would be architect Bernard Zyscovich of Zyscovich Architects who has proposed a plan to create a pedestrian and cyclist friendly park along the Rickenbacker Causeway called Plan Z. In mid-2017, the county reclaimed part of the adjacent beach area for Plan Z’s potential development. This partnership could be mutually beneficial, as the architect is planning to create green space and improve the area close to Sunset Pier.

The Miami Downtown Development Authority (Miami DDA) is an independent agency of the City of Miami. Its boundaries fall just outside Virginia Key along Brickell. However, its mission is to grow, strengthen and promote the economic health and vitality of Downtown Miami. With our proposed development site being a stone’s throw away from Brickell and Downtown Miami, we believe the Miami DDA will agree to work with us or at the very least aid us in our efforts for research and seeking out further partnerships that will help us with the development.

Market Analysis

Miami-Dade retail vacancies increased 3.6% YoY in the 3rd quarter of 2017. 380,000 sf of new

retail has come to market in 2017 from mixed-use developments. Two significant projects of note are

Brickell City Centre and The Esplanade at Aventura Mall. Together, these developments total 815,000 sf

of retail, restaurants and entertainment. Miami-Dade has approximately 2.3 million square feet of retail

space currently under construction. Sunset Pier takes advantage of the continued robust demand for

retail and entertainment in the Miami-Dade area.

The Cushman & Wakefield 2017 Miami Retail Report shows that rents in Brickell and Wynwood

average $80 and $60, respectively1. We use Brickell as a comparison as it is the closest submarket to

Sunset Pier and has the most comparable retail developments. We also use Wynwood as a comparison

because it has the type of retail space and ambiance our project aims to have. Furthermore, retail rents

in Key Biscayne are substantially lower than Brickell. Current supply of retail in the Village is limited and

rents average $50 psf for class B properties. We believe our location on the water and innovative project

design is superior and warrants higher rents than Key Biscayne, but we have modeled conservative

assumptions to account for the speculative risk.

The Miami MSA has a population of 2.7 million people with a younger average age when

compared to most other Florida communities. The median household income in 2017 was $69,000 with

45% of households earning over $50,000. Figure 6 shows a geographic information systems map

detailing the areas with the highest household incomes and it can clearly be seen that our site is in the

middle of these areas. South Florida is leading the rest of the country in terms of job growth with a 3.2%

increase YoY from 2016 to 2017. The top three employment industries in Miami-Dade are: 1)

management, business, science and arts, 2) sales and office and 3) service occupations with 388,794,

343,675 and 259,856 jobs, respectively.

Retail sales in Miami-Dade increased by 34% between 2010 and 2015 thanks to growth in

population, jobs, income and tourism and totaled $55 billion for 2017. Further growth is estimated at

23% by the end of 2020. Figure 5 shows household spending habits for retail and restaurants in the area

and our site is located within ten minutes driving distance from some of the wealthiest neighborhoods

1 Cushman & Wakefield: 2017 Miami Retail Report

6

in Miami. Employment and total personal income increased by 14% and 21%, respectively, between

2010 and 2015 and it is expected to continue growing at this pace.

The large tourism industry of Miami has contributed to an increase of sales in retail properties.

The Miami area saw 15.8 million overnight guests in 2016, which was a 16% increase from 2011. These

visitors increased spending by almost 22% over that period to $25.6 billion. These numbers can be

attributed to Miami’s great multiple transportation hubs: PortMiami is the busiest cruise ships port in

the world with nearly five million multi-day passengers in 2017; and Miami International Airport ranked

2nd in the country for international arrivals with approximately 11 million international passengers in

2015. These attributes have helped fuel retail sales activity in Miami and generated strong demand.

With the lowest availability rate in the country, Miami has seen some of the fastest rent growth over the

last five years. With interest from institutional investors, high street retail cap rates range from 3.5% to

4.25% over the last couple of years.

Finally, Florida has a very friendly business environment ranking fourth in the Tax Foundation’s

State Business Tax Climate Index for 20182. Florida also ranks inside the top ten for individual income

tax, unemployment insurance tax and property tax. Furthermore, the city has endorsed efforts to

transform Little Haiti and Little Havana, showing the city has appetite for continued development

interest. Opportunities are still to be found in the area and can provide increased income streams after

renovations, such as our proposed development.

Project Risks

The nature of this development carries certain risks both pre and post construction. One of the

pre-construction risks is securing rights to a ground lease for the causeway from the county. The

surrounding sites (including Rusty Pelican restaurant and Rickenbacker Marina) are zoned CS, C-1 zoning

or Conservation/Restricted Commercial. Part of the risk is petitioning the city to include the pier within

its zoning map and we believe the closest zoning designation would be CS C-1. The building function is

permitted under Miami 21, Article 4, Table 3, civic use. This use allows food service and open-air retail

by warrant and general commercial and marine related commercial established by exception. For the

dock, the zoning code was amended to allow exceptions for docks to extend into Biscayne Bay with a

limit of 35 feet, but exceptions up to 600 feet are allowed. The city must be willing to work with our

team in order to approve any necessary zoning approvals needed and further permitting for commercial

use.

Other pre-construction risks relate to leasing and infrastructure. Leasing risk for the project can

be contributed to a lack of awareness of the project initially. To mitigate this, we would reach out to real

estate publications such as Curbed, The Real Deal and local news channels to make the public and

potential tenants aware of our project, as well as approaching retail leasing agents early in the process.

Given Miami’s strong retail demand and our 18-month construction timeline, we are confident lease-up

will not be an issue. In terms of infrastructure risk, the bridge is safe to cross but since it has been

abandoned for many years, unexpected infrastructure improvements that may not have been

accounted for in the initial construction budget may arise. After speaking with James Martincak from the

Miami Dade County Transportation and Public Works Department, we discovered that the county has

2 State Business Tax Climate Index.

7

initiated an engineering consulting firm to perform an analysis of the existing foundation of the pier. At

this time, only people are allowed to walk on the pier and nothing of significant load may cross it. Until

the results of this study are completed, we are assuming the integrity of the pier remains and is

repairable. However, to mitigate this, we have budgeted construction costs on the high end and

allocated a soft and hard cost contingency of 7.5% each to ensure on-budget completion.

A major concern of ours is the potential for Not In My Back Yard (NIMBYism), from residents of

Key Biscayne. Residents may be concerned with new traffic patterns and increased traffic. We plan to

involve local residents during the entitlement process in order to incorporate their ideas into our design,

as well as to alleviate any of their concerns. We plan to address this concern with off-site parking and

ride sharing incentives.

Construction and Operating Budget

We expect the pier to be in relatively good condition and we have budgeted $90 psf for repairs. This is on the high end of the budget scale and while expensive, we prefer to err on the side of caution with this important budget item. For the shipping containers, we estimate we will need 62 containers at a cost of $90,000 each, which includes the cost of the used container, design/build, transportation and installation. Other budget items include Architecture and Engineering, dock construction, and soft and hard cost contingencies. Finally, the off-site parking facility will be expected to cost $1.3 million for the 118 spaces needed. We have budgeted $60 psf for the parking facility, but we expect this is in the high range, as the Miami Marine Stadium parking would only need minor repairs to bring it into operating conditions. A full analysis of the sources and uses can be found in Table 3.

We anticipate pre-development to last one year starting on July 1, 2018 with actual construction commencing on July 1, 2019. We will use our own equity to begin the construction process in order to show the lender our commitment to the project before dipping into the construction loan. Since the bridge revitalization and container buildout can be done simultaneously, the expected construction duration is six months, with tenant possession occurring on January 1, 2020.

Our operating budget is lean given the nature of the project. The main expense will be advertising and marketing costs, which includes Uber and Lyft credits, as well as service contracts for buses to facilitate visitor travel between Sunset Pier and parking facilities. The full results of the operating budget can be found in Table 1.

8

Additional Assumptions Underlying Financial Analysis

The result of the previous assumptions can be found in the rent roll can be seen in Table 2. Similarly, a

full ten-year cash flow projection can be found in Table 5.

Analysis Period 10 years Number of Tenants 20 tenants

Gross Area 66,608 sf Lease Type NNN

Net Rentable Area 40,000 sf Rental Range $40-$70 psf

Parking Spaces Required 118 spots Annual Rent Increase 3%

Selling Costs 3% Average Lease Term 4.7 years

Exit Cap Rate 6% Tenant Improvement Allowance $50.00

Leasing Comission 5%

Free Rent 3 months

General Vacancy Rate 7.5%

Term 30 years Renewal Probability 65%

Lease Start Date 1-Jan-20

Estimated Cost PSF $90 psf

PV of Bridge $5,994,720

Discount Rate 5% Equity Contributions

Sponsor 10%

Limited Partner 90%

Number of Containers* 60 containers Debt Financing

Cost per Container $90,000 Construction Loan

Site Work $90 psf Amount $10,498,962

Parking Garage $60 psf LTC 60%

Soft/Hard Cost Contingency 7.5% Interest Rate (LIBOR + 5%) 6.63%

Dock $48,000 Term 18 months

*36 40x8 containers; 24 20x8 containers Fees 1%

Permantent Loan

Amount $13,475,913

Parking Revenue $515,424 LTC 75%

Cars per Day 3 cars Interest Rate (US10Y + 2.7%) 5.56%

Average Ticket Price $4 per car Term 10 years

Fees 1%

Dock Revenue $98,550

Average Boats per Day 18 boats

Average Ticket Price $15 per boatAd

dit

ion

al In

com

e

Ten

ant

Ass

um

pti

on

s

Gro

un

d L

ease

Ass

um

pti

on

s

Gen

eral

Ass

um

pti

on

s

Equ

ity

an

d D

ebt

Ass

um

pti

on

s

Co

nst

ruct

ion

Ass

um

pti

on

s

9

Project IRR and Equity Multiple Based on Risks

Exit Strategy

Given the unique nature of the project, we expect to be able to sell this property at a competitive cap rate to institutional investors looking into Class A retail properties. We have modeled a 6% exit cap rate, but believe this is a conservative assumption given the compressed cap rates in the Miami retail market. There are retail private equity firms that are currently looking for attractive opportunities in neighborhoods such as Wynwood, Design District, and Coral Gables who would be our ideal buyers.

Summary

Sunset Pier represents an incredible opportunity to the City of Miami and the public. The pier is currently underutilized, completely empty and the majority of users of it are homeless. The local community stands to benefit from the creation of jobs, increased economic activity and repositioning of the area. The county has the risk that further decay of the bridge will result in the need to spend money to demolish it (like the west side). We, as real estate investors, would lease the bridge from the city, transform it into a retail destination, user-friendly experience, and make the unused land both environmentally friendly and income producing. Finally, even using conservative estimates, this project produces a superior return.

Works Cited

Cushman & Wakefield. 2017, Miami Retail: Major Markets Report

Jones Lang LaSalle. 2017, Miami: How does it compare?

“State Business Tax Climate Index.” Tax Foundation, taxfoundation.org/publications/state-business-tax-

climate-index/.

CBRE. January 2018, U.S. Cap Rate Survey: Advanced Review H2 2017

Unlevered Return

IRR 18.4%

EMx 3.13x

Levered Returns

IRR 26.2%

EMx 5.28x

Partnership Returns

Sponsor

Levered IRR 45.7%

Levered EMx 16.69x

Limited Partner

Levered IRR 21.9%

Levered EMx 4.02x

Sun

set

Pie

r In

vest

men

t R

etu

rns

[PAGE INTENTIONALLY LEFT BLANK]

11

Appendix

Table 1 – Operating Statement

RETAIL - OPERATING STATEMENT SUNSET PIER

ANNUAL OPERATING STATEMENT

Year YE Actual YE Actual YE Actual Year 3 Stabilized Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 ResidualYear Ending Dec-2015 Dec-2016 Dec-2017 Analysis CAGR Year = 3 Jun-2019 Jun-2020 Jun-2021 Jun-2022 Jun-2023 Jun-2024 Jun-2025 Jun-2026 Jun-2027 Jun-2028 Year = 11

Physical Occupancy 100% 100% 100% 100% 0% 50% 100% 100% 99% 100% 91% 99% 100% 100% 100%

Expense Recovery % 100% 100% 100% 97% 0% 98% 97% 97% 96% 97% 88% 96% 97% 97% 0%

Rental Revenue PSF

Gross Potential Rent - - - 60.11 2.4% 2,404,432 - 1,167,200 2,404,432 2,476,565 2,530,329 2,622,146 2,372,575 2,691,277 2,774,868 2,844,240 2,862,394

- Concessions - - - 1.94 77,662 - 583,600 - - 36,858 - 281,585 84,379 10,777 - -

Total Rental Revenue - $0 $0 58.17 2.9% 2,326,770 - 583,600 2,404,432 2,476,565 2,493,471 2,622,146 2,090,990 2,606,898 2,764,091 2,844,240 2,862,394

Other Income PSF % Fixed

Expense Recovery Income - - - 29.25 1,170,000 - 585,000 1,170,000 1,210,100 1,242,297 1,294,684 1,213,968 1,375,145 1,433,377 1,483,004 1,534,438

Parking Income - - - 12.89 3.0% 0% 515,424 - 257,712 515,424 530,887 542,730 563,218 525,835 593,056 615,443 633,907 652,924

Dock Income - - - 2.46 3.0% 0% 98,550 - 49,275 98,550 101,507 103,771 107,688 100,541 113,393 117,674 121,204 124,840

Total Other Income $0 $0 $0 44.60 3.3% 1,783,974 - 891,987 1,783,974 1,842,493 1,888,799 1,965,590 1,840,343 2,081,595 2,166,494 2,238,114 2,312,202

Total Potential Gross Income $0 $0 $0 PSF 4,110,744 - 1,475,587 4,188,406 4,319,058 4,382,270 4,587,736 3,931,333 4,688,493 4,930,584 5,082,354 5,174,596

- General Vacancy - - - $7.71 7.5% % Vacant 308,306 - 110,669 314,130 323,929 328,670 344,080 294,850 351,637 369,794 381,177 388,095

Effective Gross Income $0 $0 $0 $95.06 3.1% 3,802,439 - 1,364,918 3,874,276 3,995,129 4,053,600 4,243,656 3,636,483 4,336,856 4,560,790 4,701,177 4,786,501

Operating Expenses PSF % Fixed

Payroll - - - 2.50 3.0% 100% 100,000 - 50,000 100,000 103,000 106,090 109,273 112,551 115,927 119,405 122,987 126,677

Advertising & Marketing (ie Uber) - - - 6.25 3.0% 100% 250,000 - 125,000 250,000 257,500 265,225 273,182 281,377 289,819 298,513 307,468 316,693

General & Administrative - - - 0.75 3.0% 100% 30,000 - 15,000 30,000 30,900 31,827 32,782 33,765 34,778 35,822 36,896 38,003

Util ities - - - 1.25 3.0% 100% 50,000 - 25,000 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339

Repairs & Maintenance - - - 2.50 3.0% 100% 100,000 - 50,000 100,000 103,000 106,090 109,273 112,551 115,927 119,405 122,987 126,677

Service Contracts (parking buses) - - - 6.25 3.0% 100% 250,000 - 125,000 250,000 257,500 265,225 273,182 281,377 289,819 298,513 307,468 316,693

Management Fee - - - 2.50 4.0% 100% 100,000 - 50,000 100,000 104,000 108,160 112,486 116,986 121,665 126,532 131,593 136,857

Non-Reimbursable OpEx - - - 0.97 1.0% 38,743 - 13,649 38,743 39,951 40,536 42,437 36,365 43,369 45,608 47,012 47,865

Taxes - - - 5.00 5.0% 100% 200,000 - 100,000 200,000 210,000 220,500 231,525 243,101 255,256 268,019 281,420 295,491

Insurance - - - 2.25 3.0% 100% 90,000 - 45,000 90,000 92,700 95,481 98,345 101,296 104,335 107,465 110,689 114,009

Total Operating Expenses $0 $0 $0 30.22 3.4% 1,208,743 - 598,649 1,208,743 1,250,051 1,292,179 1,337,120 1,375,645 1,428,859 1,478,984 1,530,015 1,582,303 PSF

Net Operating Income $0 $0 $0 $64.84 2.9% 2,593,696 - 766,269 2,665,533 2,745,078 2,761,421 2,906,535 2,260,839 2,907,997 3,081,806 3,171,162 3,204,198

Capital Expenditures PSF

Tenant Improvements - - - 7.98 3.0% 319,239 - 2,017,152 - - 155,140 - 1,083,817 301,565 49,455 - 441,901

Leasing Commissions - - - 2.27 90,707 - 559,440 - - 31,416 - 400,016 103,288 9,186 - 124,363

Other CapEx - - - 1.25 3.0% 50,000 - 25,000 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339

Capital Reserve - - - 1.25 3.0% 50,000 - 25,000 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339

Total Capital Expenditures $0 $0 $0 12.75 509,946 - 2,626,592 100,000 103,000 292,646 109,273 1,596,384 520,781 178,046 122,987 692,941

Total Expenses $0 $0 $0 1,718,689 - 3,225,241 1,308,743 1,353,051 1,584,825 1,446,393 2,972,029 1,949,639 1,657,031 1,653,003 2,275,244 PSF

Cash Flow from Operations $0 $0 $0 52.09 5.6% 2,083,750 - (1,860,323) 2,565,533 2,642,078 2,468,774 2,797,263 664,454 2,387,216 2,903,760 3,048,175 2,511,257

Net Rentable Area: 40,000 SF

12

Table 2 – Rent Roll

RETAIL - RENT ROLL SUNSET PIER

ASSUMPTIONS

# of Tenants: 20 Date of RR: 1-Jan-20 Rent Calculation Method: Annual PSF Leased 0 SF 0.0%

Vacant 40,000 SF 100.0%

NRA: 40,000 As % of Site Area: 60% SF Unallocated: 0 Total 40,000 SF 100.0%

RENT ROLL

# Suite

Leased /

Spec Tenant Tenant Label SF

% of

Total Start End Term Remaining Annual PSF Annual $ Monthly $

Inc.

Method Increase

40,000 100% 1-Jan-20 31-Dec-24 4.7 4.7 194,533

1 100 Spec [Tenant 1] Common 4,800 12% 1-Jan-20 31-Dec-24 5.0 5.0 70.00 336,000 28,000 Inc. %/Yr. 3.0%
















17 1700 Spec [Tenant 17] Common 960 2% 1-Jan-20 31-Dec-22 3.0 3.0 45.00 43,200 3,600 Inc. %/Yr. 3.0%




Total

13

Table 3 – Sources & Uses

DEVELOPMENT SOURCES AND USES

Sources LTC Uses

Construction Loan 10,498,962 59.4% 60.0% 1. Construction Costs 8,235,274

Interest Reserve 286,911 60.0% 2. Architecture & Engineering 250,000

Lease-Up Income 0 3. FF&E — Containers 5,400,000

Equity Investment 7,182,011 4. Soft Costs 617,646

Total Sources 17,967,884 5. Dock 48,000

6. Other 3,130,053

Assumptions Development Cost W/O Interest 17,680,973

Construction Length 18 months Construction Interest and Fees 286,911

Construction Interest Rate 6.63% Total Uses 17,967,884

14

Table 4 – Ground Lease Calculation

GROUND LEASE VALUATION SUNSET PIER

ASSUMPTIONS Year Total Residual Annual Ground Lease Payment

Land Size 100% of total 66,608 SF 0 - - 0

Estimated Cost PSF $90.00 1 389,965 - 389,965

Lease Term 30 years 2 389,965 - 389,965

Lease Start Date Jan-2020 1-Jan-2020 3 389,965 - 389,965

Lease End Date Jan-2050 1-Jan-2050 4 389,965 - 389,965

Years Remaining (Max 99) 30 5 389,965 - 389,965

Discount Rate 5.0% 6 389,965 - 389,965

General Growth Rate 2.0% 7 389,965 - 389,965

Annual Ground Lease Payment 389,965 8 389,965 - 389,965

PV of Ground Lease 5,994,720 9 389,965 - 389,965

Residual Value No 10 389,965 - 389,965

11 389,965 - 389,965

12 389,965 - 389,965

13 389,965 - 389,965

14 389,965 - 389,965

15 389,965 - 389,965

16 389,965 - 389,965

17 389,965 - 389,965

18 389,965 - 389,965

19 389,965 - 389,965

20 389,965 - 389,965

21 389,965 - 389,965

22 389,965 - 389,965

23 389,965 - 389,965

24 389,965 - 389,965

25 389,965 - 389,965

26 389,965 - 389,965

27 389,965 - 389,965

28 389,965 - 389,965

29 389,965 - 389,965

30 389,965 - 389,965

15

Table 5 – Property Cash Flow

PROPERTY LEVEL CASH FLOW SUNSET PIER

RISK, RETURN, AND VALUATION - ANNUAL

Year Stabilized Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Reversion

Year Ending Growth Year = 3 Jun-2018 Jun-2019 Jun-2020 Jun-2021 Jun-2022 Jun-2023 Jun-2024 Jun-2025 Jun-2026 Jun-2027 Jun-2028 Year = 11

NOI Cap Rate 5.0 bps 5.60% 5.50% 5.55% 5.60% 5.65% 5.70% 5.75% 5.80% 5.85% 5.90% 5.95% 6.00%

Gross Property Value 46,315,997 - 13,806,645 47,598,800 48,585,443 48,445,974 50,548,439 38,979,978 49,709,353 52,233,999 53,296,840 53,403,302

- Ground Lease Value (5,809,750) (5,994,720) (5,904,491) (5,809,750) (5,710,273) (5,605,821) (5,496,147) (5,380,989) (5,260,074) (5,133,112) (4,999,803) (4,859,828)

Net Property Value 40,506,247 (5,994,720) 7,902,154 41,789,050 42,875,170 42,840,153 45,052,292 33,598,989 44,449,280 47,100,887 48,297,038 48,543,475

Net Operating Income 2,593,696 - 766,269 2,665,533 2,745,078 2,761,421 2,906,535 2,260,839 2,907,997 3,081,806 3,171,162 3,204,198

- Capital Expenditures (509,946) - (2,626,592) (100,000) (103,000) (292,646) (109,273) (1,596,384) (520,781) (178,046) (122,987) (692,941)

- Ground Lease Payment - (389,965) (389,965) (389,965) (389,965) (389,965) (389,965) (389,965) (389,965) (389,965) (389,965)

Cash Flow from Operations 2,083,750 - (2,250,288) 2,175,568 2,252,112 2,078,809 2,407,297 274,489 1,997,251 2,513,795 2,658,209 2,121,292

Total Investment Costs - (744,990) (17,222,893) - - - - - - - -

Gross Reversion Value - - - - - - - - - - 48,543,475

Selling Costs @ Reversion 3.0% - - - - - - - - - - (1,456,304)

Unlevered Cash Flow - (744,990) (19,473,182) 2,175,568 2,252,112 2,078,809 2,407,297 274,489 1,997,251 2,513,795 49,609,604

Unlevered IRR (Annual) 18.42%

Unlevered EMx (Annual) 3.13X

Cash Flow from Operations - (2,250,288) 2,175,568 2,252,112 2,078,809 2,407,297 274,489 1,997,251 2,513,795 2,658,209

Debt Service - (733,250) (1,759,800) (1,759,800) (1,759,800) (1,759,800) (1,759,800) (1,759,800) (1,759,800) (1,759,800)

Cash Flow After Financing Year = 3 Avg. Min. - (2,983,539) 415,767 492,312 319,008 647,497 (1,485,311) 237,451 753,994 898,409

DSCR (CFO) 1.24X 0.69X -3.07X N/A -3.07X 1.24X 1.28X 1.18X 1.37X 0.16X 1.13X 1.43X 1.51X

Debt Yield (CFO) 16.14% 11.63% -16.70% N/A -16.7% 16.1% 16.7% 15.4% 17.9% 2.0% 14.8% 18.7% 19.7%

Total Investment Costs - (744,990) (17,222,893) - - - - - - - -

Gross Reversion Value Cost % - - - - - - - - - - 48,403,500

Selling Costs @ Reversion 3.0% - - - - - - - - - - (1,452,105)

Construction Financing (Draws + Interest Reserve) - - 10,785,873 - - - - - - - -

Construction Financing Payoff - - (10,785,873) - - - - - - - -

Permanent Financing Funding - - 13,475,913 - - - - - - - -

Permanent Financing Fees - - (134,759) - - - - - - - -

Permanent Financing Payoff - - - - - - - - - - (2,661,332)

Levered Cash Flow - (744,990) (6,865,278) 415,767 492,312 319,008 647,497 (1,485,311) 237,451 753,994 45,188,471

Levered IRR (Annual) 26.23%

Levered EMx (Annual) 5.28X

Net Rentable Area: 40,000 SF

UN

LEV

ERED

CA

SH F

LOW

LEV

ERED

CA

SH F

LOW

16

Figure 1 – Site Plan & Other examples

Anchor Tenants

Pier Entrance and

Public Space

New Dock

Shipping

Container Retail

17

Figure 2 - Current dilapidated status

18

Figure 3 - Driving times from project site (purple: 5 min; green: 10 min; blue: 15 min)

19

Figure 4 - Transit (bike: green; cars: purple; bus: bus figure)

20

Figure 5 - Retail and restaurant spending per household 2017

21

Figure 6 - Average income per household 2016

Documents

University of Miami · Local Partners The City of Miami has been working on a $40 million effort to restore the Miami Marine Stadium, which is approximately half a mile from our site