ALTERNATIVE DEVELOPMENT OPTIONS
FOR
A SITE IN DOWNTOWN SEATTLE
by
J. Christopher Kirk
Bachelor of Architecture
University of Arizona
Tucson, Arizona
1972
SUBMITTED TO THE DEPARTMENT OF ARCHITECTURE
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
OF THE DEGREE
MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
SEPTEMBER,
@
1986
J. Christopher Kirk
1986
The Author hereby grants to M.I.T.
permission to reproduce and distribute publicly copies
of this thesis document in whole or in part.
/A
Signature of the author
J. Christop$er Kirk
(/Department of Architecture
August 15, 1986
Certified by
James McKellar
Chairman
Interdepartmental Degree Program in Real Estate Development
Thesis Supervisor
Accepted by
James McKellar
Chairman
Interdepartmental Degree Program in Real Estate Development
1~
T EC11
SEP 05 1986
A R1
ALTERNATIVE DEVELOPMENT OPTIONS
FOR
A SITE IN DOWNTOWN SEATTLE
J.
by
Christopher Kirk
Submitted to the Department of Architecture
on August 15, 1986
in partial fulfillment of the requirements of the degree
Master of Science in Real Estate Development
ABSTRACT
This
thesis
assesses the
feasibility
and
relative
advantages of five alternate development options for a halfblock
site
in
the
downtown
retail
core
of
Seattle,
Washington.
It was conducted with
the assistance
of the
actual site
owner and
developer, Prescott,
as a potential
continuation of its previous development of the block.
The site
is in
a key location in the retail core.
It
is covered
by three
older buildings
leased to
retail and
office tenants, which, while still economically productive,
appear to be far
below the highest
and best
use.
Therefore,
several
options
new retail,
for
both with and without office
development, are
studied.
The
analysis
covers
several
complex issues
including
different
ownership
of
various
parcels, an
existing ground lease, a planned transit tunnel
under
the
site
and
station
on
the
site,
an
unusual
opportunity to
include
a
major
new
downtown
department
store, and
the transfer
of development
rights both to and
from the site.
BIOGRAPHICAL NOTE
I received
a Bachelor
of Architecture degree from the
University of
Arizona in
1972, and am a licensed architect
in Indiana
and Washington
state.
I have practiced in the
northwest for ten years, and previously for several years in
the midwest.
Much
of my
work has
been for
real
estate
developers.
It
has
included
a
range
of
commercial,
institutional, and residential projects, including high-rise
office, condominium, and mixed-use buildings, and the United
States embassy
and consulate in Lisbon, Portugal (published
Architecture + Urbanism, February, 1985).
THESIS SUPERVISOR
James McKellar
Chairman
Interdepartmental Degree Program in Real Estate Development
2
TABLE OF CONTENTS
I.
INTRODUCTION AND CONCLUSIONS............................
II.
DEVELOPER....................
III.
LOCATION.....
......
9
.........
12
NEIGHBORHOOD...........................
WESTLAKE..
.........
18
.........................................
19
METRO TRANSIT TUNNEL..............
CENTURY SQUARE, PHASE I........
IV.
V.
.......... .
PROPERTY
20
.................. 22
MARKET ANALYSIS.......................................
..
ANALYSIS.........................
24
...............
31
3, 6
(OLD CENTURY SQUARE BUILDING).....
31
LOTS 1 AND 4
(DOCE BUILDING)....................
33
LOTS 2,
LOT 5
VI.
4
(CENTURY TOWER)........................... .34
DESIGN OPTIONS....
OPTION 1
...................................
38
(MAJOR RETAIL)......................... .41
OPTIONS 2 AND 2B
(MAJOR RETAIL WITH OFFICE)...... 44
OPTION 3
(MULTI-TENANT).............
OPTION 4
(MULTI-TENANT WITH OFFICE)............. 46
OPTION 5
(RENOVATION)
.
.........
............................
46
46
VII. ZONING AND ENVIRONMENTAL ANALYSES...................
47
VIII.
58
PROJECT TIMING.......
..............................
IX. EQUITY AND FINANCING..................................
.61
X.
XI.
COST PROJECTIONS........................................ 65
ECONOMIC ANALYSIS AND CONCLUSIONS.....................
3
72
I. INTRODUCTION AND CONCLUSIONS
This
paper
is
an
analysis
of
several
alternative
development options for an actual site and developer.
A major
structure
hurdle
an
and
form.
of the
the
need
process
to
into
a
The reality of the
because the volume of data
subjectivity
a hypothetical
was
subjective
this problem
obscure the
away many
analysis
and definitive
project reinforces
analysis of
thi-s
iterative
seemingly linear
tends to
in
of
the
project could
messy problems
process.
An
afford to assume
encountered in
an actual
project, problems
of which this particular project has more
than its
In addition, performing the analysis with
share.
the cooperation
of a
professional developer eliminates the
luxury of expedient streamlining.
For
these
reasons,
the
analysis
deals
more
with
defining and valuing the complex, interrelated factors which
make up
this
real urban
exhaustive economic
in reality,
but
modeling.
with
narrowing was required.
have been
project scenario,
and less with
Obviously both are important
limited
time
and
experience
some
To have reversed the emphasis would
less informative,
and would
have put
the
cart
before the horse.
The division
establish order
and sequence of the paper were imposed to
within the
analysis, not
relative importance of the various factors.
to indicate
the
It is organized
from general to specific in three indistinct and overlapping
4
at the
usually located
figures are
Tables and
sections.
ends of sections.
then
of each
relative advantages
about the
reaches conclusions
proposed options,
outlines the
The introduction
option.
of the paper describes or analyzes background
The body
data
develops specific
and land,
and financing,
timing, equity
requirements
then
and
project
alternatives,
design
proposed
areas,
zoning
as
such
It
characteristics.
and market
physical, political,
allowable
and site
as the developer, and regional, local,
issues such
construction, and
financing costs.
the previous data in an
section synthesizes
The final
economic analysis which leads to the conclusions.
PROJECT DESCRIPTION
a
for
options
development
half-block
The project
Seattle, Washington.
of
analysis
the
is
paper
This
several
potential
downtown
in
site
is called Century Square,
The research was conducted with the assistance of
Phase II.
the property
owner and
developer, Prescott,
Inc.,
in
its
offices in Seattle.
property
The
occupied by
alley.
the
remaining
half
of
the
block
Prescott's new Century Square office and retail
project, Century
one acre,
is
Square, Phase
I.
The site, approximately
is covered by three older buildings and a vacated
The existing buildings have been partially renovated
5
in
the last six or seven years, and are more than 95 percent
occupied with
tenants which
cover a
range
of
types
and
classes.
The analysis will compare the costs, returns, and risks
associated with
new
The first four are entirely
five options.
construction
based
on
demolition
of
the
existing
buildings.
1.
A major retail
(department) store;
2.
Option 1 with an office structure above;
Option 2 where the major retail store pays for
2B.
its own shell;
3.
A
multi-tenant retail project;
4.
Option 3 with an office structure above;
5.
Maximization of the existing buildings.-
CONCLUSIONS
The thesis
paper is
of this
existing older
economic sense on such a valuable
buildings
no
site.
was originally assumed that the alternatives would
It
rank in
approximately the
nearly the
1,
and
rates of
longer make
that the
order shown
reverse is true.
only the
first two
return under
above.
Their order is 4,
meet the
In
5,
developer's
the assumptions
of this
3,
fact,
2B,
2,
required
study
(see
Summary of Results, Page 80).
The reasoning
which lead
to the
expectation that the
major retail store was the best alternative seemed
several
reasons.
The
location
6
is
possibly
sound for
the
best
department store
site in
downtown, Saks
Fifth Avenue
has
been looking for a potential location for several years, and
the City
has passed
encourage new
new
zoning
"major retail"
regulations
stores.
designed
Development
of
to
a
department store qualifies for FAR increases and is the only
avenue by
which the city allows the transfer of development
rights to another block.
this site
is severely
city park,
limited by
almost half
with special
In other
of the
bonuses for
words, there
department store:
plus the
Because the size of development on
shadow impacts
development rights achieved
a department store would be lost.
is
a
double
zoning
additional, saleable
ability to
on a new
transfer
rights
bonus
for
a
development rights,
to
another
block--
"double or
nothing" in
problem is
securing the tenant, especially under acceptable
the case of this site.
The obvious
terms.
However, it was soon discovered that the terms proposed
by Saks
were so
rights were
possibly not
project feasible
was then
still
A
make
for construction
a
development
major
retail
mid-rise office structure
the department
but not enough.
office structure,
the additional
enough to
(Option 1).
added above
this helped,
Saks pay
limiting that
store
(Option 2),
and
Finally, it was proposed that
of its
but pay no rent
own building
(Option 2B).
under
the
This helped
more, but not enough.
A
options.
similar
process
The first,
created
a two-story
7
two
multi-tenant
development
retail
(Option
3)
generated better
returns than the major-retail options, but
was so small-scale that its income was virtually the same as
a renovation,
with higher costs, lower rates of return, and
considerably more risk.
The second multi-tenant retail plan combines the Option
3 retail
with the previous office structure
this point
the returns
saleable development
become acceptable,
rights are
created.
(Option 4).
At
even though
no
This option also
produces the largest before-tax cash flows.
Maintaining the
least risky
option in
produces the
cost.
could
be
of the
option is
partially
to
and
unknowns,
on equity
is Option
best
4.
and total
condition
at
they have all been recently at
renovated.
below the
and
The buildings
possible
However,
the
increase in value would be similarly modest,
them well
is the
also less rewarding in terms of
the
cost because
(Option 5)
costs
of return
returns than
upgraded
relatively low
least
terms of
highest rates
But this
the size
existing buildings
"highest and
best" use
best-located sites in downtown Seattle.
8
incremental
and would leave
of one of the
II. DEVELOPER
Prescott has
began as
a
existed for
small
firm,
approximately ten years.
the
Seaboard
Group,
which
It
was
composed of several individuals forming partnerships for the
renovation
Seattle.
of
older
Over the
and eventually
the
commercial
years the
grew
Pacific and
in
in
downtown
members of the firm changed,
the president became Richard Clotfelter, and
vice president,
to the
properties
size,
Gary Carpenter.
Seattle Group,
although
The name was changed
and the firm's projects
remaining
in
the
commercial
renovation field.
In the
profile
last several
(for
class "A"
Seattle) move
office
market.
years the
It
development
space,
is
now
firms
into the
still
one
which
established northwest
in
of
the
is
not
corporation or
firm has
made a high-
development
the
of
downtown
only
Seattle
major
linked
new,
downtown
to
a
institution.
large,
It has
developed ties with several Japanese investment groups which
are providing
projects.
both debt
and equity
Clotfelter has become a
downtown business
community and
Seattle Association,
which is
financing on two major
leading spokesman for the
president of
now implementing
the Downtown
the
first
privately-organized downtown support program in the country.
Meanwhile, the name of the firm was changed again, to simply
Prescott.
"A"
downtown
The company
is concentrating
Seattle office
and
9
retail
entirely on class
development,
and
there are
no indications
of
future
in
changes
type
or
location.
Prescott is
now moving tenants into its just-completed
Century Square,
Phase
I,
a
Concurrently, construction
Stewart Building,
project next
Prescott
29-story
is beginning
a speculative
to
the
recently
mixed-use
Pike
a
First
very
Market.
large
In
addition,
project
development stage from an established development
"went south."
This project,
Stimson Center),
and 150,000
and
12-story office and retail
Place
bought
on the
project.
1420 Fifth Avenue
in
the
firm which
(formerly the
will contain 825,000 square feet of office
square feet
of retail
space.
Preleasing
is
underway.
Prescott is
including the
subject of
block adjacent
to the
various other
property is
also studying
several potential projects,
this paper.
Century Square
downtown
occupied by
properties.
It controls another
block,
All
of
tenants
removed
well
this
as
other
older, leased, multi-tenant office
and retail space, except for the 1420 Fifth Ave.
had the
as
by
the
block which
unfortunate,
or
badly-
managed, previous developer.
At this time, all of these activities are managed by an
office staff
of twelve.
vice president,
and assistant
construction, a
manager, a
In
addition to the president and
Prescott is
composed of
project manager
who
retail leasing
controller,
two
coordinate
design
representative, a
accounting
10
a project manager
staff,
and
property
an
office
manager, and
a chief
two office staff.
engineer, a
purpose workers.
performed by
building
Leasing
of
Outside the office there is
engineer,
major
and
office
two
general
projects
is
outside agents, and construction is managed by
general contractors
under the
supervision of
the
project
managers.
In summary,
organization.
Prescott is
The growth
a young
in scale
and essentially lean
and complexity
of its
projects has required some enlargement and adjustment of the
firm's management.
This
may continue, especially if there
is future emphasis on risk avoidance through diversification
of project
types or
locations, as
firms.
11
is found
in many older
III. LOCATION
SEATTLE
Seattle is
eastern shore
located in
of Puget
to the Pacific Ocean.
Seattle has
of a
western Washington State on the
Sound, a natural waterway connected
Founded only in the mid 19th century,
grown to half a million residents in the center
metropolitan area
of almost
two million.
This area
extends up the east side of the Sound, including Everett and
Bellevue.
While not the state capital, Seattle is certainly
the commercial and cultural nucleus of the northwest region.
city is
Seattle's central
Elliot Bay,
shape by
Lake Washington,
on the
forced into
Puget Sound
three miles
to the
an
hour-glass
to the west, and
east.
is
Downtown
further constrained in the same direction by steep hills and
Interstate 5 to the east.
very compact.
slope
which
Further,
down
to
These factors cause the CBD to be
downtown is
the
harbor,,
also built
on
hills
creating
steep
San
Francisco-like streets and beautiful vistas of the Sound and
Olympic Mountains to the west.
there are
also views
From buildings of any height
of Mount
Rainier to the south, Mount
Baker to the north, and the Cascade Mountains to the east.
Within downtown Seattle there are the traditional zones
found
many
in
classes of
addition,
Pioneer
cities:
office or
retail,
financial
government,
(see
there are special areas:
Square
historic
several
following maps).
In
the Pike Place Market and
districts,
12
and
the
International
District
(formerly
Chinatown), and
downtown retail core
office core
the
waterfront.
The
(DRC) is at the north end, the downtown
(DOC) in
the center,
and the governmental core
south of the DRC.
The retail
core is
centered at
Fourth and
Pine, the
intersection of the monorail, the proposed Metro bus tunnel,
and Westlake
downtown
park.
and
It is adjacent to the boundary between
the
Denny
significant example
fifteen blocks
major hill
Regrade.
of urban
renewal,
(In
Seattle's
an
area
of
most
about
had not only the buildings demolished, but a
as well:
hence, "the
Regrade.")
The area
is
generally composed of older, somewhat ornate stone and terra
cotta buildings of three to eight stories.
The office
last twenty
core has
years, and
five years.
The
office floors
had much new development over the
has much
typical new
more planned for the next
project is
thirty to
sixty
over a multi-level retail base which is often
terraced to fit a sloping site.
The site
for this
relatively close
fact,
the
to the
proposal is in the retail core, but
perimeter of
the office core.
In
office zone has begun to overlap the retail zone,
with new projects such as Century Square and Westlake Center
moving into the retail center and becoming hybrids with more
retail area
responded to
and
smaller
this trend
office
with a
towers.
new zoning
The
city
has
code to insure
that the special nature of the retail core is not sacrificed
in the name of greater FAR.
13
Base Map:
DOWNTOWN AREA MAP
Department of Construction
Seattle
and Land Use.
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14
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AERIAL DRAWING OF DOWNTOWN
Map courtesy of POCKET CONCIERGE, INC., Seattle, WA.
Use granted for the sole purpose of the Christopher Kirk
All copyrights reserved.
thesis.
CENTURY %QLM.METRO lJHNE.L
15
DETAILED DOWNTOWN MAP
Base Map copyrighted by Kroll Map Co., Inc.,
16
Seattle, WA.
DETAILED AERIAL VIEW
K
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17
A
I
NEIGHBORHOOD
As previously indicated, the site neighborhood actually
spans two
major downtown
retail core,
zones, retail and office.
the city's
Bon Marche,
four major
Nordstrom, Frederick
In the
department stores, the
and Nelson, and I.
Magnin
are all within a block to the north and east of the site, as
are the Rouse Westlake Center retail and office project, the
city's proposed
Linking all
of these,
between Third
for the
Westlake Park,
in
and Sixth
a
and the
corridor
monorail terminal.
along
Pine
Street
Avenues, will be the major station
new transit tunnel.
The Phase II site occupies one
of the few front row seats on this urban stage, probably the
most intense activity center in the northwest.
Two blocks
known Pike
to the
west, toward
Place Market.
tourists year
The
around, and
the bay, is the well-
market
and derelict
same places
people who
two
blocks
else.
of
Some, directly
market, are
partially vacant
growth.
Between the
under-utilized
across First
and leased
site and
older
Avenue
to
Second and
assembled
in
Prescott has
Third Avenues
from
porno
anticipation
been active
18
.of
are being,
continued
in this
the
low-rise
the
shops,
an eccentric and infamous absentee landlord.
blocks along
been,
Unfortunately, this
seem to gravitate naturally to the
buildings.
thanks to
and
includes a high concentration of homeless
as everyone
Market are
locals
there is much pedestrian traffic
between it and other parts of downtown.
local-tourist mix
draws
The
or have
downtown
area, both
in
property assembly
and in
the development
of the First and
Stewart Building.
To the south of the site is, of course, Century Square,
Phase I,
which
Farther south
is
technically
is the
significant new
part
mature office
projects.
of
the
same
core with
site.
a number of
Two blocks south is the site for
Seattle's new Robert Venturi-designed Art Museum and another
new Metro
transit station.
blocks to
the south
Outward from a radius of three
and southeast are a number of proposed
major office projects.
WESTLAKE
The "Westlake
Mall" project
originally conceived
private
mixed-use
development, and
as one
office
public project.
and
the other
is actually
major
two projects
Now, one is a
multi-tenant
an adjacent
retail
public park.
Over
the last 20 years it has been the focus of many proposals by
many developers,
issues such
for a
and many
as the
political and legal battles over
use of eminent domain or public funding
project which
would include private development
(the
latter not allowed by the state constitution).
The
private
developed by
project is
project,
the Rouse
Westlake
Company with
located diagonally
the site.
retail structure,
which, while
markets, "
is
a
is
being
a local partner.
across the
intersection from
"festival
Center,
Fourth and
The
Pine
It includes a new 135,000 sf.
not one
very
19
of Rouse's typical
elaborate
glass
atrium
structure with a mid-rise 270,000 sf. office building above.
Inside the
atrium will
be the new station for the existing
monorail, a popular relic of the 1962 Seattle World's Fair.
The Westlake
the east
directly across Fourth Avenue to
site.
Its small size belies the public
from the
and political
concern associated
might affect it.
many
Park is
with
any
project
which
After so many years of struggle, there are
watchdogs.
The
major
source
of
concern
is
the
possibility of shadowing, especially during mid-day hours in
the
"warm"
(this is
Square, Phase
Prescott not
I,
Seattle, remember)
is
located southwest
months.
of
the
Century
park,
and
only had to reduce the height of the building,
but had to make payments for park improvements to compensate
for
some
remaining
shadow
impacts
(see
environmental
analysis).
METRO TRANSIT TUNNEL
Seattle has
system.
It is
only one
considered to
country, but
its success
gridlock
downtown,
in
transit
project, another
system,
be one
has nearly
the
the
of the
Metro
bus
best in
the
created rush-hour bus
system's
hub.
The
transit
public project which has been in the works
for years, will put much of this transit traffic underground
in a double, mile-long tunnel.
Construction is scheduled to
begin in late 1986 and finish in April,
The bus
ways.
tunnel affects
First, the
Prescott's
1990.
project
in
three
major station is at Westlake, and one of
20
its entrances is on the site.
the station
II
extended vest
site.
The
Prescott lobbied hard to have
so that it would be on the Phase
benefits
of
having
this
generator
of
pedestrian traffic on the site are clear, and Metro does not
pay for the easement for this reason.
The second
affect is
the tunnel itself.
It makes one
90-degree turn
in its
entire length, and this is under the
northwest part
of the
site, between
Pine and Third.
This
turn is very broad to allow for a future rail system, so the
arc extends
into the
undermines the
site precisely
development must
Park.
be located
80 ft.
Thus
the
tunnel
where the highest parts of a
to
avoid
shadowing
Westlake
To determine the increased cost of building a future
project over
cost study
the tunnel, Prescott had a foundation plan and
(May,
1985;
Consulting Engineers)
lowrise retail
parking
site some
for
Skilling
prepared for
cars.
estimated to
$4.76 million.
transfer
and major
cost a
of
a
shoring
grade
beams,
around
the
premium of approximately
This amount was so much more than Metro had
budgeted that
a special
Lots 4
were actually
reversion rights
deal was
negotiated.
sold to
to Prescott,
In essence,
Metro, with ownership
for the $4.76 million.
somehow mitigated the shock to Metro's budget.
the tunnel
Barkshire,
the construction
Heavy
specially-drilled caissons,
and 5
Rogers
and midrise office building with underground
400
tunnels were
Ward
In
undermines the corners of lots 2 and 5,
This
addition,
so Metro
purchased easements for $181,000 and $238,000 respectively.
21
The third
affect, tunnel construction and the required
easements, influences the Pine Street and Third Avenue sides
of the
site.
It has
heavy negative
especially street-facing
advantage in
retail.
negotiating lease
impacts on
This
will
single monthly
be
buy-outs with
would otherwise have no desire to leave.
rental payment
tenants,
of
some
tenants
who
Metro is to make a
of $13,000
for the easement
around all three properties.
See the
individual properties
in
the
site
analysis
section for details on the financial terms of the easements.
CENTURY SQUARE, PHASE I
Century
Square,
project including
over a
55,200
Phase
a 524,200
square
foot
recently started
moving in,
percent leased.
Many
that the
the
and
projects.
It
departure from
to
the
a
29-story
mixed-use
office
structure
square foot
retail
and
base.
it
is
a significant
quality
is
is
of
design
Seattle's
50
and designers feel
improvement
over
first
have
in both
previous
completed
local
high-rise
the undecorated, modern-style box, returning
traditional
("post
modern")
differentiating the base, middle, and top.
transitional
Tenants
approximately
local developers
building marks
style
I,
building;
the
next
concept
of
As such, it is a
generation
of
office
buildings will be even more complex and individualized.
The base
with buildings
levels achieve
of the
a spatial
1920's and
22
quality associated
1930's.
The two-level,
through-block arcade
25 ft.
high, and
which is
overlaps the
22 ft.
window above
high.
third
(office lobby) level,
This-creates,
the entrance,
entrance space.
to the
(see plan in Option 1 section) is over
a nearly
behind a large rose
50 ft.
elevator lobby,
as the vault continues
overhead to the other side of the building.
aside, the
Italy,
The storefronts
teak, and the exterior skin is Spanish granite in
several textures,
in
vaulted
From this space the office escalator leads
third level
are solid
high
as is
granite was
the paving in public areas.
As an
quarried in Spain, cut and finished
and panelized
in a
Seattle suburb.
The
only
significant breakage occurred in the last ten miles.
The polished
creating eight
partners to
granite office
corners and
offset in plan,
thus improving the
corner windows.
which, along
tower is
It
"FAR" of law
also has several setbacks
with the top of the building, are crowned with
vaulted skylights.
These
used variously
as a
Prescott's new
office.
vaults enclose
law library,
To say
two-story spaces
an employee
this is
lounge, and
some of
the most
desirable space in Seattle is an understatement.
The retail
levels were
be connected
to the
party wall.
Similarly,
areas allow
would have
for all
been
planned to allow the arcade to
Phase II development through the north
the basement
Phase II
little
parking and
vehicular access,
opportunity for
as
there
parking or service
access directly into Phase II from the street.
23
service
IV. MARKET ANALYSIS
SEATTLE AND THE REGION
The areas
of concern in this study are downtown office
and retail markets, particularly new first-class space which
is proposed for Options 1-4.
taken from
the 1986
Local market
Coldwell Banker
(DDS),
by
Wheaton
Torto,
(CB) report, the 1985
of Community Development
Data System
were
Seattle Supplement to
the United States Real Estate Forecast
Seattle Department
statistics
Annual Downtown
and from employment growth data developed
&
Associates
(TW),
and
supplied
by
Professor William Wheaton in the 1986 Market Analysis course
at the
M.I.T. Center for Real Estate Development.
The Seattle
diversified
and
employment growth
composed largely
office space,
statistical area
has
shown
since the
of service
and to
has become
strong
mid
increasingly
non-manufacturing
1970's.
This
sector
is
businesses which occupy leased
a lesser extent, the retail industry.
The following table is based on the TW data.
PERCENT CHANGE IN SEATTLE EMPLOYMENT
Past....
Five-year
Periods
19741979
19791984
5.5
6.6
-2.0
1.8
Manufacturing
Non-manufacturing
The data
growth is
the 1979-84
indicates that
actually expected
period to
.. Projected.
198419891989
1994
1.2
2.8
1.9
1.6
the rate of non-manufacturing
to increase more than 50% from
the 1984-89
24
period.
After 1989 the
rate drops
to about
strong relative
Curiously, it
the level
to the
of 1979-84,
forecast
also shows a
rates
which is still
for
many
cities.
1989-94 manufacturing rate which
rebounds and surpasses non-manufacturing.
If true, this can
only be good.
Downtown Seattle
office development
has taken
the
major
opportunities generated
share
of
the
by this growth.
Unlike many inland cities, especially in the midwest, south,
and southwest, powerful geographic characteristics including
very hilly
terrain, Puget
help concentrate
development
business center.
do not
Sound, and
and
several major
reinforce
the
lakes
original
Critical factors such as geography simply
change with
time,
and
this
generates
consistent
locational traditions.
Although there
is now some competition for first-class
office tenants from Bellevue, a mushrooming city across Lake
Washington to
the east,
that growth
tends to be in branch
offices or small firms serving that particular market.
RETAIL MARKET
Generally there
space than
is much less data available for retail
office space.
There
absorption rates,
but vacancy
much
office
lower
than
Survey, DKB Corp.,
1986).
useful
is apparently
vacancy
published
about
(first-quarter
10.5%,
Downtown
Seattle Daily Journal of Commerce, May 9,
Major retail
figures, but
are no
space
is
included
in
total
space
not in absorption and vacancy rates unless one
25
of the
very few
major retail
spaces was leased or vacated
during a particular period.
The suburbs do represent real competition in the retail
market, and
some stores
downtown.
such as Penneys have pulled out of
However, according
the four
major downtown
largest suburban
retail stores
stores have
retail sales."
Accepted
continue to
new downtown
"and during recent
had substantial
wisdom is
be, strong.
increases
in
that retail demand is,
Reinforcing this is the
support program, which will attempt to capture
the advantages
financed
is greater than the
retail shopping center,
years, downtown
and will
to DDS the space occupied by
of suburban
street
malls by
security
and
providing
maintenance,
privatelyand
common
operating hours.
In the
to be
major retail market, only a single tenant needs
found.
in this
Saks Fifth Avenue has been looking for space
area for several years, and some of its alternative
locations have
recently been
eliminated.
Saks is owned by
Batus, which also owns Frederick and Nelson.
been speculation
Thus, there
replacing
that the
were a
Fredericks
Fredericks
in
its
building,
with Nordstrom
Saks building
store on
a new
Fredericks.
owners who
its present
might
close.
number of possibilities, including Saks
Fredericks' building
by,
store
There has also
However,
Saks
trading
and locating there, or
the block east of, and owned
Fredericks is
now being sold to
claim that the store will continue to operate in
location.
This leaves only the third option, a
26
site in
a very
site, in
mediocre location.
which Saks
has
expressed
Therefore,
interest
Prescott's
for
several
years, is the front runner.
The CB retail rents generally range between $20 and $50
per square
foot.
rents of $19
Century Square,
Phase I,
is
to $60 per square foot, with an average of $36,
according to
Prescott's leasing representative.
is unrelated
to the
position.
achieving
It views
downtown market
rent in
Saks'
rent
because of its unique
terms of suburban malls while
Prescott is thinking in terms of zoning bonuses.
The Metro tunnel construction will play a major role in
the market,
especially on
construction will
drive rents
should be
make it
Third Avenue,
harder to
down, especially
oriented to
until 1990.
lease space
retail rent.
Fourth Avenue
The
and will
The new project
as much
as possible,
especially multi-tenant retail and office entrances.
OFFICE MARKET
The CB downtown vacancy rate is 14.88%
"A"
space),
17.50%.
almost three
This is
brokerage firm,
a reminder
is not
attempts to
some degree
possible in
the interest
climate.
TW may
accounting not
points lower
that CB,
exactly an
than the TW rate of
as
a
leasing
impartial observer.
to make the market
and
It
look as rosy as
of maintaining a healthy business
perform somewhat
only for
(14.0% for class
more rigorous
basic unleased
"vacant" space, but
also for space which is leased but not occupied.
27
studies,
CB expects
vacancy
to
drop
slightly
in
1986,
"provided
office
absorption again reaches or exceeds the five-year average."
ABSORPTION
(CB)
1981
1982
1983
1984
1985
1,558,000
464,000
910,000
736,000
1,460,000
Five-year Average
1,025,000
Previous 5-year Ave.
859,000
1986, First quarter
228,000
1986, Projected 1st quarter
912,000
There are
an anomaly,
average.
several points
being 70
Also, the
annual absorption
average.
"A"
percent greater than the 1981 to 1985
first-quarter
of 912,000,
states that
1986 figures point to an
much closer to the five-year
1.5 million
sf. of
new space will
to the market in 1986, and if the absorption is 1.0
million sf.,
be added
more than the projection, then 500,000 sf. will
to the
(14.88% of
total of
1985 appears to be
The CB report, which includes more than just class
space,
come on
to note.
existing
the total
vacant
17,812,000).
stock
of
2.65
Thus, there
million
will be a
3,150,000 sf. vacant, or 16.3% of the new total of
19,312,000 sf.
According to the CB report, the downtown Seattle market
contains 17,812,000 sf. of office space of all classes, with
another 1,303,000
1.5 million
alone
af. of
sf.
under
construction in five projects,
which will
(an obvious discrepancy).
28
come on
the market in 1986
Estimating market
estimating
demand.
An
theoretically benefits
even be
supply is
increase
all proposed
self-perpetuating.
market, a
certain number
are proposed,
but the
even more
With
in
demand
not
development,
supply,
in
a
but
only
can
downtown
of very large, long-term projects
eventual inevitability
cause the delay or abandonment of others.
is not
unlike poker
(or chicken),
try to
improve the
cards they
their opponents
difficult than
and drop out of the game.
Thus, the process
where developers not only
hold, but
underestimate the
of some will
posture to
make
value of their own hands
Supply is controllable on several
levels, but inherently more risky.
To estimate
future office
narrowed to
class "A"
vacancy and
absorption data
projections based
Annual Report.
now and
space.
on the
vacancy, the
analysis
was
The following table utilizes
from the
CB study, and supply
1986 Downtown Seattle Association
The major downtown projects proposed between
1990 are
itemized, and the projects marked with an
asterisk are
included.
and location
of the project, the track record and perceived
risk character
major tenant
of the developer, and whether financing or a
have been secured.
office projects
though one
The choices were based on the type
are included as a worst case scenario, even
or two
absorption is
All four of the major 1988
probably will
set at
not be
built.
912,000, and increased at 2.8 percent
per year, the predicted rate of employment growth.
vacancy rate
is set
The 1985
at 17
percent, a
29
The 1985
conservative figure
closer to
the TW
vacancy rate
than the
CB projection.
The result is a
dropping until 1988, then jumping to well over
20 percent with the completion of most large projects in the
Vacancy then drops through 1989-90.
same year.
The CB
from $18
market rent
to $28
for class
per square foot.
"A"
office space ranges
Century Square, Phase I,
is renting in this range.
PROJECTED VACANCY AND ABSORPTION
(from Annual Report 1986,
Downtown Seattle Association)
PROJECTED VACANCY AND ABSORPTION
YEAR
PROJECT
DEVELOPER
* 3131 Elliot
1986
Marketview Place
1987
1988
*
1988
1420 Fifth Ave.
Block Five
Two Union Square
Westlake Center
Gateway Center
Metro.Park II
Westlake Park
Convention Center
Courney Group Hotel
* Century Square II
New World Center
Seattle Art Museum
Prescott
Sea.Prop.
Prescott
Runstad
Unico
Rouse
Sarkowski
Selig
City
City/State
Prescott
TravisHam.
Museum
1990 * Transit Tunnel
City
United Meth. Church IstCityEq.
1990
RETAIL
EXISTING
SPACE
VACANT
SPACE
17,812,000
3,028,040
17.0%
912, 000
70,000 18,941,000
3,219,504
17.0%
937,536
191,464
19,026,000
2,340,717
12.3%
963,787
(878,787)
5,709,944
24.4%
990,773
3,369,227
4,826,429
20.5% 1,018,515
(883,515)
4,384,396
18.2% 1,047,033
(442,033)
---
VACANCY ABSORPTION
RATE (See Note)
NET SF
CHANGE
55, 000
15,000
85,000
47,000
3,000
13,000
85,000
3,000
825,000
1,015,000
1,000,000
270,000
900,000
350, 000
150,000
20, 000
50, 000
135,000
20,000
4,360,000
375,000 23,386,000
Courtney
ANNUAL TOTALS
* Crown Center Ph.1
524, 000
425,000
180, 000
1,129, 000
ANNUAL TOTALS
*
1989
Selig
Selig
ANNUAL TOTALS
*
*
*
*
*
*
*
1989
Prescott
ANNUAL TOTALS
1987 * First & Stewart
OFFICE
----
1985 * --1986 * Century Square I
* Seattle Trust
OFFICE MARKET (END OF YEAR)
Marathon
ANNUAL TOTALS
NOTES: Annual absorption growth rate=
135, 000
284,000
100,000
9,000
135,000
100, 000 23,521,000
580,000
605,000
20,000
13,500
605, 000
13,500 24,126,000
2.8%
* Asterisk indicates projects expected to be completed
and included in projections.
30
V. PROPERTY ANALYSIS
The site,
six lots,
alley
the north
1 through
which
has
ownership by
been
the city.
this section.)
The
is technically
Prescott.
6,
half of
three
Block 22, is composed of
existing buildings,
vacated,
or
to
an
private
(See photos and plans at the end of
ownership of each of the three parcels
different, although
All of
returned
and
the parcels
all are
controlled
include easements
for
by
the
transit tunnel and its construction.
LOTS 2,
The lots
3,
6
(OLD CENTURY SQUARE BUILDING)
east of
the alley, 2,3 and 6,
are covered by
one building, now called the old Century Square.
referred to
It is also
by the name of the controlling partnership, the
Fourth Avenue (Associates) building.
This is
39,000 af.
a two-story retail building with approximately
of leasable area. It was renovated by the Pacific
and Seattle
Group about six years ago.
the street,
and there is an entrance on Fourth Avenue which
leads
to
an
escalator
serving
second
Several stores face
floor
retail,
a
restaurant, and the Century Tower across the alley.
Prescott owns
the three
lots on
which expires
$160,000 per
the old Century Square building, but not
which it
in 2029,
year,
sits.
or 43
increasing
intervals beginning in July,
years.
The ground
rent is
with the C.P.I. at five-year
1984.
31
There is a ground lease
The lessor, which is now
a bank
acting as trustee, as well as the original trustees,
must approve
major leases
(over
10,000
agreements such as those with Metro.
a complex
such as
lessor group
financing.
ownership as
and
other
Negotiations with such
are difficult,
Prescott
sf.),
hopes
as are other issues
to
buy
fee
part of Phase II for approximately $2
simple
million,
or roughly the 1988 capped ground rent.
The Metro
Prescott had
tunnel easement
hoped to
payment was
receive it.
$181,000,
However,
the
and
ground
lessor negotiated to receive half of the easement settlement
from Metro, the other half going to the mortgagee.
There is
no payment for the station, but there is a 25,000 sf.
bonus, partially owed to lot
1.
The tunnel has no permanent
serious construction impacts on the property.
collect a
$13,000
single
for
$156,000,
all
mortgage from
and
of
the
easement
properties,
Prescott will
monthly
with
a
rent
of
maximum
of
or one year's payments.
There is
term
construction
zoning
an existing
$2-million
Connecticut
General
the renovation, at ten percent with a 15-year
30-year
amortization.
balance is $1.9 million.
a 7 percent, $131,000
The
remaining
Prepayment will
principal
require payment of
penalty, as well as payoff of a linked
mortgage on lot 5.
32
LOTS 1 AND 4
Lots 1
sometimes
and
4
also
are
(DOCE BUILDING)
occupied
confusingly
called
Sherman-Clay, or Third and Pine
Located
on
the
corner
of
have no
and basement
windows.
the
the
Doce
Building,
Crawford-Conover,
(Associates) Building.
primarily known for McDonald's.
ground, second,
by
Third
and
Pine,
it
is
There is retail area at the
levels only;
the upper floors
It contains about 23,000 sf. of leasable
area.
As discussed
earlier,
the
location
of
the
transit
tunnel directly under the building affected the ownership of
the property.
It
is now
owned by Metro, but the Purchase
and Sale
Agreement of
Dec. 13,
right to
retake title
to the
easements) through
the estimate
Prescott
property (except the transit
a "reversion
"cost to
cure")
The amount
had budgeted that
probably moving
Thus Prescott
notice."
This was due to
necessitated
was so
by
the
no ownership
it was found easier to "buy" the property,
the cost to another area of Metro's budget.
maintains the
costs, the
the purchase.
may
tunnel
much in excess of what Metro
property and collects the rent
(even though the leases were assigned to Metro),
Prescott
the
of the $4.76 million construction cost premium
(called the
easement.
1985, gives
As
reversion notice.
price adjustment
mortgage having been paid off with
long as
regain
At
but carries
fee
the transit project goes ahead,
simple
that time
payment", which
33
ownership
it must
by
make a
giving
a
"purchase
increases annually
on
a
schedule contained in the P.
designed to
purchase
offset for
relative
to
construction costs,
transit project
funding, then
the time
agreement.
value
Prescott's
of
The payment,
Metro's
actually
early
incurring
will be $1.125 million in 1988.
is terminated
Prescott may
original amount.
the end
and S.
because of
lack of
the
If the
federal
repurchase the property for the
If Prescott does not begin construction by
of 1990,
it must make the maximum price adjustment
payment of
$1.7
building a
project as
million, but there is no adjustment for not
large or
costly as
was used in the
original study which determined the cost to cure.
LOT 5
Century
Tower
grandfather of
is a
(CENTURY TOWER)
(Third
the whole
Avenue
Associates)
is
Century Square phased family.
the
It
small, eight-story structure, located in the center of
the block,
above.
with retail
on the
ground
floor
It contains about 7,000 sf. of retail
and
offices
and 32,000 sf.
of leasable office space.
Unlike the
ownership.
other properties,
There is a $1.75
Prescott has
simple fee
million, 15-year term, 23-year
amortization Connecticut General mortgage, linked to the Old
Century Square
mortgage, with
a $1.6 million balance and a
7-percent prepayment penalty, or $106,000.
There was a Metro tunnel easement payment of $238,000.
34
BLOCK SURVEY
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PIKE ST.
35
SITE PHOTOGRAPHS
Upper Photo: East side, northwest across Fourth Avenue.
Phase I in foreground, Old Century Square beyond.
Lower Photo: East and North sides across Fourth and Pine.
Old Century Square in foreground.
fit
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36
SITE PHOTOGRAPHS
Both Photos: North and West sides across Third and Pine.
Doces Building (McDonald's) in foreground.
Century Tower and Century Square Phase I beyond.
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37
umma
IN ELMMMM
VI.
DESIGN OPTIONS
GENERAL ISSUES
The five options, again, are:
1.
A major retail
2.
Option 1 with an office structure above;
(department) store;
2B. Option 2 with major retail pad only;
3.
A multi-tenant retail project;
4.
Option 3 with an office structure above;
5.
Maximization of the existing buildings.
The common
quality.
design issue
The location,
Square, Phase
first four
II might
I, demand
affecting all five options is
and the
relationship
to
first-class buildings.
Century
And
options are all aimed at class A tenants.
also be
similar or
physically connected
to Phase I,
the
Phase
meaning
identical architectural treatment if they are to
be perceived
as a
single development.
Even Option 5, the
renovation, which will largely still not be in the class "A"
market because of inherent limitations, must nevertheless be
carried out with an eye toward maximizing quality.
Further, the four options for all-new construction have
many common planning characteristics.
should be
or in
Avenue
primarily oriented
addition to,
has
location, and
by the
been
will probably
proximity to
to Fourth Avenue rather than,
Third Avenue
traditionally
the
If possible, all uses
and Pine
a
much
remain so.
center
38
of
the
Street.
more
Fourth
prestigious
This is reinforced
retail
core
at
Westlake, and
Park.
will be
more so
Prescott, realizing
station located
on Pine
space than on Fourth.
buildings, Prescott
an escalator
old Century
with completion of Westlake
this,
where it
managed to have the Metro
displaces
less-valuable
In fact, when renovating the existing
created a major entrance on Fourth with
and alley skybridge to the second floor of the
Tower, thereby
moving its
office address from
Third to Fourth Avenue.
Providing a Fourth Avenue entrance is simple enough for
the retail use, whether a department store or a multi-tenant
development.
And an
could provide
access to
interior atrium
an office
Avenue, half of the block.
39
or shopping corridor
core in the west, Third
PROPOSED FLOOR AREAS
PROPOSED FLOOR AREAS
\A
OPTION 1
OPTION 2
OPTION 2B
M-R PAD
MAJOR RETAIL STORE
(W/OFFICE) (WI OFFICE)
OPTION 4
OPTION 5
MULTI-TENANT RETAIL
(W/ OFFICE)
RENOVATION
OPTION 3
BELOW-GRADE
LOADING & SERVICE
PARKING, STORAGE, MECH.
10,500
80,640
10,500
110,816
10,500
118,816
10, 500
50,640
10,500
82,448
TOTAL BELOW-GRADE
91,140
128,516
120,516
61,140
92,948 SEE TOTALS
TRANSIT STATION
OFFICE LOBBY & CORE
SHOPPING ATRIUM
SHOPPING CORRIDOR
MISCELLANEOUS
MULTI-TENANT RETAIL
MAJOR RETAIL
2,700
0
0
5,80
2,136
6,450
23, 850
2,700
3,300
0
5,000
2,136
6,450
20,550
2,700
3,300
0
5,00
2,136
6,450
2,700
0a
N
51
5,8880
2,136
30,308
0
5,8880
2,136
27, 88
0
TOTAL LEVEL 1
40,136
40, 136
19,586
40,136
40,136 SEE TOTALS
0
2,300
700
a
2,136
2,300
700
2,300
0
5,808
2,136
30,788
0
48,136 SEE TOTALS
RETAIL LEVELS
I
(18FT. /FLR.)
2,780
3,300
OFFICE LOBBY & CORE
SHOPPING ATRIUM
SHOPPING CORRIDOR
MISCELLANEOUS
MULTI-TENANT RETAIL
MAJOR RETAIL
5,008
2,136
5,0
28,80
0
35,000
2,136
0
0
0
5,000
2,136
33, 88
a
TOTAL LEVEL 2
40,136
40,136
5,136
40,136
OFFICE LOBBY & CORE
SHOPPING ATRIUM
SHOPPING CORRIDOR
MISCELLAEOUS
MAJOR RETAIL
500
a
2,136
37,500
2,300
500
0
2,136
35,200
2,300
500
TOTAL LEVEL 3
40,136
40,136
4,936
TOTALS BY TYPE
TRANSIT STATION
OFFICE LOBBY & CORE
SHOPPING ATRIUM
SHOPPING CORRIDOR
MISCELLANEOUS
MULTI-TENANT RETAIL
MAJOR RETAIL
2,700
a
500
18,000
6,408
11,450
89,350
2,700
7,900
1,200
6,408
6,450
90,750
2,700
7,900
1,200
5,8000
6,408
6,450
0
18,8000
4,272
63, 388
0
4,272
57,700
TOTAL AREA: BASE LEVELS
120,408
120,408
29, 658
88, 272
80,272
NET RENTABLE RETAIL
100,800
97,200
6,450
63,300
57,700
66,270
OFFICE LEVELS (12FT./FLR.)
AREA PER FLOOR
#OFFLOORS
8
8
18, 00
8
18,000
8
0
0
18, 80
9
0
0
GROSS OFFICE BUILDING
84.0%
NET RENTABLE OFFICE @
0
0
144, 0
120,9%0
144,800
120,960
0
0
162, 00
136,080
N/A
31,628
TOTAL NET RENTABLE AREA
100, 800
218,160
127,410
63,300
193,780
97,898
GROSS BUILDING AREA
Transit station not included.
208,848
382,224
291,474
138,712
332,520
18
12
54
54
54
96
36
0
36
108
150
150
36
144
2
3
RETAIL FLR/FLR HEIGHT
OFFICE FLR/FLR HEIGHT
OVERALL BUILDING HEIGHT
54
0%
40
0
0
0
2,136
a
2100
0 SEE TOTALS
50
2,700
0
100
2,700
8
8
8
66, 270
0
N/A
N/A
EXISTING
OPTION I (MAJOR RETAIL)
a major department store, of
alternative is
The first
three stories, covering the most of the site.
This site
this use initially seems to be the highest or best
core and
use.
strategic location in the retail
occupies a
The city
recognized this and heavily encouraged this
type of
development with
the new
zoning
code
specific and
generous bonuses
special
These
analysis).
(zoning
in
bonuses include both floor area increases and the ability to
"transfer" area
to another
However, major
block.
retail
tenants are few in number and can therefore demand favorable
terms;
the
are
bonuses
meant
help
type
this
of
where it might not if left
economic sense
development make
to
Finally, there is such a tenant,
solely to the marketplace.
Saks Fifth Avenue, which has been looking for a site in this
area for several years.
There has
been some
preliminary negotiation with
Saks, which has consistently presented very difficult deals.
If
paying
Saks
rent,
approximately $7.50
proposes
per sf.,
an
or about
one quarter
this is
of
of the
based
on
normal downtown
retail rent.
percentage rent
only, so the income is not even guaranteed,
making financing
paid for
free, that
its own
a problem.
Finally, in Option 2B, if Saks
shell, then it
is, without
its expectations
Further,
rate
effective
would expect the pad to be
ground rent.
Saks appears to base
on suburban mall developments, where major
anchors are loss leaders for the developer, who makes up the
41
difference on the rents of many small stores.
mix does
roughly 90
However, that
not exist here where the department store occupies
percent of the leasable retail area.
the feasibility
of the
major retail
Therefore,
options hinges on the
value of the additional development rights generated by that
use.
The area
of
the
department
store
is
approximately
90,000 sf. on three above-grade levels, as required by Saks.
This leads
arcade on
site.
to the
the first
inclusion of
two levels
several small shops and an
to use
the balance of the
(See the following table of proposed floor areas.)
42
GROUND FLOOR PLAN:
PHASES I AND
CENTURY SQUARE,
-
-
-~~
~~
-
-
II
T
-
UDDCo
a
1
G8m
Wi T
- -
.gB
I
I..
L
.
------
I
43
FLOORPLAN LEVEL 1
OPTIONS 2 AND 2B
this is
above.
office structure
with an
from
store
the department
alternative is
The second
Option 1,
(MAJOR RETAIL WITH OFFICE)
A variation of
Option 2B, where the developer provides underground
parking and services and a pad on which the department store
is built at its own expense.
addition, Prescott
based on economic analysis
this zone
the previous
allowed
code, which
much
more
(The new base FAR has been cut
floor areas.
generous gross
It is assumed that the bonuses will provide
from 10.)
to 5
assembled not only this block, but parts
others in
dependent on
In
with the special bonuses.
area allowable
realizing the
of several
store would not come close to
a major
Developing only
used to increase development on this
the highest
return if
site rather
than being sold, thus the development of office
space.
the office
Access to
planning problem
2.
with Option
to be
probably have
core from
because of
a
side of a small
store adjacent to the Century Square, Phase I,
The height
is
would
This connection
the north
located at
Avenue
Fourth
north wall.
of the building is limited to about 150 ft.
shadow problems
with
Westlake
Park,
so
this
proposal is for eight office floors (12ft. per floor times 8
= 96ft,
plus 3
retail levels
at 18ft.
per floor = 150ft.
mass was located parallel and adjacent
total).
The office
to Third
Avenue also
the area
per floor is a modest
to limit
44
shadow impacts.
Similarly,
18,000 square feet, based on
a schematic
ratios.
ll2ft.,
plan and average normal office floor efficiency
This floor area generates an office block 161ft. by
which
fits comfortably
onto the
west half
site.
TYPICAL OFFICE FLOOR PLAN
North toward top.)
(No scale.
45
of the
OPTION 3
(MULTI-TENANT)
The third alternative assumes that a major retail store
tenant cannot
be secured,
limited chances
level above the street.
of the
of success
of stores more than one
Also, to increase the marketability
to secure
well as
project, as
bonus problem
must be
bonuses, there
To
arcade.
for the
if
There may be
qualify
for
between a street
minimum distances
I arcade and the
corner and an arcade, and between the Phase
proposed arcade.
bonuses
zoning
appropriate, an arcade and atrium are planned.
a zoning
multi-tenant
The height is cut to two floors because
retail development.
of the
a
and substitutes
appears to be a matter of a few feet,
It
so it is assumed that it can be accomplished.
OPTION 4
(MULTI-TENANT WITH OFFICE)
The fourth alternative is Option 3 with the same office
structure above as in Option 2,
but with an additional floor
in place of the third retail level
(2 retail
floors at 18ft.
per floor plus 9 office floors at 12ft. per floor = 144ft.).
OPTION 5
The last
option of
(RENOVATION)
the status
alternative is
leaving the
existing buildings,
quo, or fall-back
but
maximizing
their condition and income through full renovation.
46
VII. ZONING AND ENVIRONMENTAL ANALYSES
BACKGROUND
the
past several years,
for the
extensive revision
process of
in
been
has
code
zoning
downtown
The Seattle
and this is one of the first projects analyzed under the new
There are several background issues which affect
standards.
the zoning analysis.
Century Square,
the then
code, exceeded
the previous
designed under
I,
Phase
and 74,113
allowable FAR,
This transfer was made binding,
to cover the excess.
by the
as required
the partnerships
partnerships' agreements
bonus retail
code would
thereby
former code,
new FAR
would attempt
step which
Phase II
by
properties and
the three
which owned
with the
title to run with
However, the transfer was made reversible in the
the land.
within the
creating an agreement between
City, by
agreement recorded
having this
of
(Lots 1,4,
development rights were transferred from Phase II
and 5)
sf.
must be
permit
the borrowed
approved again
process.
previously objected
Century
In that
limits.
to return
a higher
space at
bringing
In
the
new
rate than
the
expectation that
in the
Square,
case, the
area to
by the
the
past,
I,
Phase
developer
Phase II,
a
City during the
the
City
has
to this approach on the logical grounds
that a project cannot be partially reviewed under two codes,
thereby skimming
off the
the correspondingly
benefits of
each without meeting
restrictive limitations.
47
Retroactive
exchange of
creates the perfect vehicle
development rights
for this type of traveling bonus.
in this
exchange, and
attempting this
Nevertheless, it
is worth
has
study it
been
initially assumed that the whole amount was returned.
In addition, during the concurrent development of Phase
I and
the new zoning code, Prescott realized that Phase II,
like Phase
I,
because of
shadows on
probably be
code
would
Westlake Park,
even more stringent.
and the limits would
At the same time, the new
within the
different blocks
limits on its size
development
of
transfer
disallows
parcels on
face environmental
rights
retail
between
core
(see
Apparently Clotfelter, a member of a
environmental review).
committee, played a key role in drafting a
citizen's review
special exception for major retail development, the Combined
Lot Option,
allowing the
blocks
on different
for
combining of floor areas on sites
averaged
an
or
"combined"
FAR
calculation.
ZONING ANALYSIS
was reviewed according to the 1985 Seattle
The project
Zoning Code, Downtown chapter.
Actual review of the project
will be conducted by the Department of Construction and Land
Use
(DCLU)
for zoning,
environmental,
and
building permit
approvals.
The site,
by the zoning code, lies within the Downtown
Retail Core area.
The maximum height in this area, from the
Official Land Use Map is 240 ft.
48
include all
Permitted uses
and
Accessory
structures.
parking
long-term
principal-use
manufacturing
except
parking is allowed up to certain limits.
Conditional Use
on
ruling
Process
Approval
and
benefit feature
subjective City
a somewhat
This requires
stores
retail
a public
theaters granted
performing arts
bonus.
major
include
uses
Conditional
Council
whether
the
project is materially detrimental to the public welfare, and
Public
bonuses
benefit
limitations
or
requirements
imposing
a
for
major
deemed
necessary.
retail
store
are
increases in height and FAR.
known reputation,
core.
The store
sf.
than 200,000
already located
must be
at
least
for
qualifies
side, and
it must
bonus
is
The
certain landmark
buildings, none
80,000 sf.,
but no more
For
each square
bonuses.
established
operate during
contingent
of which
on
preserving
occur
Building height may be increased to 400 ft.,
there are
no negative
on public
spaces or
zoning official,
limit applies
be
retail
the
2.5 sf. of additional floor area may
shopping hours.
site.
in
There must be a major pedestrian entrance on
be developed.
each street
"established concern" of
but not
retail store,
foot of
an
operated by
must be
The store
for a major retail store.
several standards
There are
determined
W.
this
provided
wind or shadow impacts, particularly
Priority 1 streets
Duchek,
regardless of
by
on
stated that
(Pine St.).
A City
the basic 240 ft.
these limits, but heights will
environmental
49
rather
than
zoning
design
General
restrictions.
65 ft.,
facades below
articulation of
include
requirements
elimination of large
dark or reflective materials, and overhead weather
areas of
protection at all street frontages.
zone to
The lots
a project
be
may
on
incorporating a
different
that
except
site
the
the receiving
potential of
determine the
of
store.
major retail
blocks,
the
calculating
the
and
to both.
The
Council
effect
is
typical transfer of air or development
the more
similar to
allows two lots in the DRC
purpose
process applies
conditional use
rights,
for the
be combined
density of
This
Lot Option.
the Combined
point under conditional uses is
but crucial
The final
overall gain
area
site must
and
separate
bonus
be known in order to
accomplished with
the Combined
Lot Option.
In addition, if the additional rights are to be
sold, there
are the
questions of price per square foot and
even basic demand in the limited retail core zone.
Prescott
possibly intends to use the additional rights for its future
Pike project,
Third and
is proposing $10 per sf.,
overcharging itself.
and so can name its own price.
It
and it is probably not planning on
If that price does not offset the low
department store
used to create
rent anticipated
from the
the transferable
bonus area, then Prescott thinks it may be
able to
demonstrate this economic need to the city and have
the FAR increased in the code.
bonus rate
of 2.5
If this is pursued, then the
sf. per square foot of major retail must
50
permitted by a greater
the area
to generate
also increase
FAR.
base floor area ratio is 5,
The DRC
features
public benefit
and
public
features
whether bonused
3.0 if
1.5, or
a
store
retail
major
(gfa) of
store)
retail
of retail up to an FAR of
the gfa
or not,
major
a
(except
or
below grade
floor area
the gross
short-term parki ng,
benefit
floor area
FAR
from
Exemptions
retail.
all gross
calculations include
used as
than a major retail store),
(other
major
for
11
to
increased to 7 for
is
An
bonused.
allowance of 3.5 percent for mechanical area is not counted.
Major retail
public benefit
bonuses, but
achieves
maximum
the
may be combined with other
store bonuses
on
FAR
96,326 sf.
store of
a retail
own
its
(zoning
area
calculation).
Floor
benefit
given for the following public
bonuses are
area
features:
Must be 4,000 sf. min.,
Shopping Atrium:
max.
If
is less,
each
high, the bonus ratio is 8;
it is 40 ft.
side
if it
There must be an entrance on
the ratio is 6.
street
15,000 sf
a
and
connection
clear
between
streets.
Shopping Corridor:
wide, at
Avenues
ft.
least 12
(in
this case
distance between
Must be
high,
and
must
Third and Fourth).
a street
corridor is 120 ft.,
between 20 and 30 ft.
property line
and between corridors
51
connect
two
The minimum
(Pine) and a
(Phase I)
is
60 ft.
This appears to be a very tight fit.
ratio is
6,
or
8 if
skylighted, with
The bonus
a maximum area
eligible for a bonus of 7,200 af.
Transit Station Access Easement:
Blanket 25,000 ef
bonus, no area requirements.
Overhead Weather
4.5 if skylighted.
Protection:
Bonus ratio of 3,
or
Max. eligible area equals ten times
the street frontage of the lot.
Human service
gardens, and
or daycare
housing all
not initially
qualify for bonuses, but are
considered because
unnecessary to
because they
uses, cinemas, roof-top
achieve the
are more
they
appear
to
be
maximum allowable FAR, and
expensive, less
effective,
or
both.
Transfer of
the same
development rights
block in
the DRC,
is only allowed within
except for
the
Combined
Lot
Option for conditional uses.
Street level
percent of
use requirements
the street
entertainment,
regulations for
or
frontage
similar
to
uses.
facade height,
include a minimum of 75
be
retail,
There
are
detailed
transparency and percent of
blank area, upper level setbacks, and street trees.
52
services,
ZONING CALCULATIONS 1:
FLOOR AREAS
ZONING CALCULATIONS: ALLOWABLE FLOOR AREAS
SITE AREA
13,108
20,868
6,960
DIMENSIONS All Phase I area
considered returned.
Including half of alley
113*116
173*116
Including half of alley
60*116
Including half of alley
40,136
173*232
AREA
LOTS 1 AND 4
LOTS 2, 3, AND 6
LOT 5
TOTAL SITE AREA
BASE FAR
FAR W/ PUB. BEN. FEATURE BONUS
FAR W/ MAJOR RETAIL BONUS
PUBLIC BENEFIT FEATURE BONUSES
BONUS FEATURE
\B
RATIO
2.5
8.0
7.5
4.5
1.0
5
7
11
200,680
280,952
441,4%
OPTION 2 OPTION 2B
OPTION 1
M-R PAD
MAJOR RETAIL STORE
(W/ OFFICE) (W/ OFFICE)
OPTION 3
OPTION 4
OPTION 5
MULTI-TENANT RETAIL RENOVATION
(W/OFFICE)
0
N/A
0
37,500
25,000
2,250
0
37,500
25,888
2,250
0
289,375
11
289,375
11
64,750
11
64,750
11
N/A
285, 886
289,386
289,386
64,761
64,761
N/A
1.50
60,204
11,450
1.50
60,204
6,450
1.50
60,204
6,450
1.50
60,204
63,300
1.50
60,204
57,700
N/A
N/A
N/A
3.00
120,408
89,350
3.00
128,408
90,750
3.00
120,408
89,350
N/A
N/A
N/A
N/A
N/A
TOTAL RETAIL AREA
OTHER BASE AREA
OFFICE AREA
8
6,408
0
8
14,308
144,88
8
14,308
144,000
N/A
4,272
N/A
9,872
162, 88
N/A
TOTAL ZONING AREA COUNTED
6,408
158,308
158,308
4,272
171,872
N/A
MAJ.RETAIL STORE*
SHOPPINB ATRIUM
SHOPPING CORRIDOR
TRANSIT EASEMENT
OH. WEATHER PROT.
ROOFTOP SARDEN
223,375
0
37,500
25 88
kEQD
0
226,875
a
37,500
25 88
EQD
8
226,875
0
37,500
25 0
TOTAL BONUS ACHIEVED
PLUS BASE AREA
285,875
11
TOTAL AREA W/ BONUSES
ZONING AREA COUNTED
SM.RETAIL FAR EXEMPT.RATIO
SMALL RETAIL EXEMPTION
PROPOSED SM. RETAIL AREA
MAJ.RETAIL FAR EXEMPT.RATIO
MAJOR RETAIL EXEMPTION
PROPOSED MAJ.RETAIL AREA
kEQD
TRANSFER OF DEVELOPMENT RIGHTS: "COMBINED LOT OPTION"
MAJOR RETAIL STORE
OPTIONS 1,2, 2B
SITE AREA
CENTURY SQUARE PHASE II
THIRD AND UNION
40,136
83, 88
COMBINED SITE AREA
TOTAL COMBINED ALLOW. AREA
123,936
11
1,363,2%
OPTION 1
-OPTION 2
OPTION 2B
TOTAL COMBINED ALLOW. AREA
LESS PHASE IIAREA COUNTED
1,363,296
6,488
1,363,2%
158,38
1,363,296
158,308
AREA LEFT FOR 3RD & UNION
3RD & UNION AREA @ FAR 7
1,356,888
586,600
1,204,988
586,680
1,204,988
586,600
770,288
618,388
618,388
NET AREA "TRANSFERED"
53
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Required
carpool,
parking
and
includes
short-term.
substituting additional
proposals include
the proposals
1,000 sf.,
and will
exception appears
the two
carpool
or
may
van
long-term,
reduced
spaces,
than is required.
special
but
by
the
In fact,
of 1 space per
exception.
reasonable because
actually function
Phase I,
be
maximum allowable
require a
to be
phases will
Century Square,
Amounts
more parking
exceed the
unrestricted
This
the parking of
as a single garage.
included 250 spaces, and required
another 300 spaces in a garage a block away.
In conclusion,
double
advantages
increase of
the
over
major
retail
multi-tenant
development
retail:
block.
first,
the
the FAR from 7 to 11 and a bonus ratio of 2.5:1
for the department store to help accomplish it,
the ability
offers
to utilize
and, second,
this additional area on a different
These twin benefits mean the opportunity of eventual
development of much more area than with multi-tenant retail,
but the
increase depends
on several
second site.
54
factors related
to a
ZONING CALCULATIONS 2:
PARKING
ZONING CALCULATIONS: PARKING
\C
OPTION 1
PARKING
RATIO*
RETAIL AREA
LESS EXCLUSION
RETAIL AREA COUNTED
UNR.LONG-TERM
CARPOOL
SHORT-TERM
0.32
0.08
0.50
TOTAL RETAIL PARKING
OFFICE AREA
LESS EXCLUSION
OFFICE AREA COUNTED
UNR.LONG-TERN
CARPOOL
SHORT-TERM
0.54
0.13
0.10
TOTAL OFFICE PARKING
TOTAL PARKING REQUIRED
PROPOSED**
MAXIMUM ALLOWED @1/1000
EXCESS (OVER MAXIMUM)
OPTION 2
MAJOR RETAIL STORE
OPTION 3
OPTION 4
OPTION 5
MULTI-TENANT RETAIL RENOVATION
OPTION 2B
SAKS PAD
100,800
30,000
97,200
30,000
63,300
30,000
57,700
30, 000
70,800
67,200
33,300
27,700
23
6
35
22
5
34
11
3
17
9
2
14
64
60
30
25
0
2,500
144,000
2,500
0
2,500
162,000
2,500
0
141,500
0
159,500
0
0
0
76
18
14
0
0
0
86
21
16
a
109
0
123
64
169
30
148
169
202
71
275
209
127
33
206
187
275
209
131
66
93
19
*HIGH TRANSIT-ACCESS AREA
**PROPOSED PARKING RATIOS: RETAIL = 1/500SF; OFFICE = 1/1500WF.
55
97,200
30 000
N/A
67,200
22
5
34
N/A
60
144,000
2,500
N/A
141,500
76
18
14
N/A
N/A
109
66
ENVIRONMENTAL ANALYSIS
The environmental review is conducted by the Department
and Land
of Construction
Statements
Impact
required standards of accuracy and completeness,
(EIS) meet
of
because
very unpredictable
of
nature
subjective
the
to which
the degree
and valuing
predicting, measuring,
This process can be
hearings.
orchestrate public
and will
The DCLU will see
(SEPA).
final Environmental
draft and
the
by
as mandated
(DCLU),
Policy Act
State Environmental
that the
Use
a
project affects its surroundings.
it became
of Phase I,
the development
However, during
clear that the most serious environmental restriction on the
was
(assuming it
made
Prescott
improvements in
not
artificially
stories
to
start),
city
for
high
the
29
to
reduced
contributions
to
atonement for
some shadows
Hill,
Luersen, CH2M
and
park
which were not
Prescott's Phase I environmental consultant
eliminated.
process as
was
height
building
The
Park.
problem of shadowing Westlake
was the
the project
size of
(P.
Consulting Engineers) characterized the
the requiring of funds for the construction of a
which would
park shelter
shade, were it not
have provided
located in the shadow of the new building.
of
The result
monitored that
Phase
much more
citizens.
About this
is assumed
to be
park at
I
is
that
closely, both
Phase
by
there is no ambiguity.
a given
II
the
will
DCLU
be
and
Therefore it
that Phase II may not shadow the
all during the hours of 10 A.M. to 2 P.M.,
56
March 21
to September
Draft EIS
that DEIS,
than the
21,
times
outlined in the Zoning code and the
for Phase I.
Based on shadow diagrams, also from
this ban will restrict height to 150 ft.,
240 ft.
basic limit,
even for
a
rather
building
located entirely to the west of the existing alley line.
57
mass
VIII. PROJECT TIMING
schedule is
timing of the two important
of the
a function
which complement
civic projects
The
open in late 1989.
planned to
is being
Phase II
the Metro tunnel
Phase II,
and Westlake Park, and of competing private projects.
The Metro tunnel is scheduled to be completed in April,
heavily disrupted,
will be
the Phase
with access
by construction
stores limited
and Third Avenue
Pine Street
and then
Between now
1990.
to
and
sidewalks
Opening any of
activities.
during tunnel construction will limit
II options
of
marketing impact
as the
the
leasing success,
as well
opening itself.
It would unnecessarily drive initial rents
heavy, above-ground
However, after
down.
complete
in
the
half
second
is
volume
of
the
1989,
of
tunnel work
pedestrian activity on those streets will return to previous
levels,
and
when
significant increase
the
opens
system
activity.
in downtown
will
there
In
be
a
addition,
Westlake Park and the Convention Center will be completed by
reinforcing
then,
Therefore, relative
the
of
rebound
to the
public
retail
the
projects,
the
core.
optimum
opening time is the second half of 1989.
The following
and 5,
schedule is
proposed for
Options 1,
the projects without new office structures:
Pre-planning
Design/Permits
Construction
Completion
0.5 year
1.5 years
1.0 year
58
6/86-1/87
1/87-7/88
7/88-7/89
7/89
3,
The
period
construction
projects, and,
July, 1989,
is
one
earliest desirable
if the
then construction
the
smaller
move-in time
would start
paying Metro
This necessitates
for
year
in July,
is
1988.
the 1988 adjustment payment
of $1,124,884.
schedule is
A longer
options with office towers, Options 2,
years
as
a
2B, and 4:
6/86-1/87
11/86-4/88
3/88-12/89
12/89
0.5 year
1.5 years
1.75 years
Pre-planning
Design/Permits
Construction
Completion
(preliminarily made two
time is 1.75-years
The construction
construction of the
allowed for
simplifying
in
assumption
the
financial
Working back from completion in December, 1989,
analyses).
in
begins
construction
begin in
construction could
1988.
March,
Preliminary
to reduce the
December, 1987,
Metro payment to the 1987 amount, saving $347,000.
is
This schedule
considerations.
relatively
with
compatible
market
The retail and office market forecasts show
vacancy rates
for both sectors following a similar pattern,
increasing to
a peak
in 1988-89,
declining
then
(market
analysis).
Option
1,
a stable
department stores,
competitor,
is related
major retail,
in
which
eliminated anyway.
Options
2,
major
I
existing
Saks becomes
market unless
case
Option
only to
and
retail
2
would
a
be
with an office
tower, is sensitive to other office development.
Option 3,
multi-tenant retail,
retail development,
and Option
59
4,
is sensitive
to other
multi-tenant retail with
an office structure, is sensitive to both retail and office.
Options 3
and
Center, which
4
are
affected
by
Westlake
is similar in size, market, and location, and
open in
scheduled to
particularly
However, it would be very hard
1988.
to beat it on to the market, and probably not worth the risk
of opening during the height of tunnel construction.
Option 5,
markets, but
and office
retail, space
However, the
and, with
the renovation,
rather than
is sensitive to both retail
in class
"B"
class "A"
existing buildings
careful management,
office, and partially
as
in
are nearly
Option 5
fully
1-4.
leased,
many tenants may be retained
through a limited renovation as is proposed.
timing of
Options
Therefore, the
is assumed to be relatively insensitive
to the market.
60
IX. EQUITY AND FINANCING
EXISTING EQUITY
several types of equity in the property
There are
(see
following table).
is
First
The Old Century Square
improvements.
Century
price
purchase
the
Tower
(Lot
5)
had
small
and
cost
the
(Lots 2,
3,
purchase
and 6)
prices
of
and
and
relatively larger costs of improvements, whereas Doces (Lots
I and 4)
cost much more but has had little improvement.
Equity invested was reduced by Metro easement payments.
Century
and
Tower
Square's was
however Century
lessor and
no
divided
both
received
these,
the
ground
between
the mortgagee.
The Doces property was purchased
rights, so
in effect Prescott still owns it
with reversion
but has
Square
Century
negative) equity
(or
rather than
as zero
carried forward
price adjustment
The purchase
in it;
this
equity
the negative
was
amount.
payment has been shown as an
interim expense.
Equity
invested
penalties of
the ground
buying out
reached.
rent at
the two
increased by
will be
the
prepayment
Connecticut General mortgages, and by
lessor if
reasonable terms
can
be
The price was estimated by capping the 1988 ground
9.5 percent.
The total
million, is
equity in
$163
all three
properties, about $6.5
per square foot of site area, or less than
61
half of
current land
per sf.
of $350
Prescott's estimate
value in the area.
NEW OWNERSHIP AND EQUITY STRUCTURE
sources
Outside
partnership arrangements
equity was
assumed
The
than is
on a
mortgage based
first
the
stabilized
required equity for the
million, and
5 the existing equity in the land is more
3 and
In
required.
the
analyses
maximum
cases, unlike
the pro
discounted
in all
still utilized
leverage was
total
between
different options varies from $823,500 to $15.8
in Options
this
is several years in
difference
using
operating income.
focus of
point of view, the required
the
of 1.15,
debt-coverage ratio
year's net
been the
maximum permanent
and a
project cost
be
to
potential
various
project
a financing
From
and
have not
since the
analysis, especially
the future.
equity
of
forma.
wants to take cash out initially and limit
If Prescott
its risk
by
finding
Japanese partners
approach the
projects.
These include
acts as
general contractor.
equity,
would
probably
it has worked with on other
Konoike both
Ltd.
a joint-venture
It
it
several contracting firms such as
Construction Co.,
the Konoike
money and
outside
partner
receives fees
with
for this
invests
a
local
work,
in
addition to its return on equity, and protects its interests
by monitoring
It derives
pay requests, and loan draws.
construction,
additional benefits at home by being able to run
62
the project
through
its
books,
increasing
its
apparent
annual volume of construction.
So far
the newness
there have
of the
only been minor problems because of
process.
For instance,
the
Japanese
would not allow any deviation from pro forma rents in making
deals
with
until
tenants
understand the
were
they
finally
realities of the marketplace.
made
to
They also had
adjustment problems in working with Prescott's woman project
manager.
LAND COSTS AND EQUITY
LOTS 2 3,6
CENTURY k
4TH AVE ASSO
INVESTMENT TO DATE
PURCHASE
IMPROVEMENTS
TOTAL
LOTS 1,4
LOT 5
DOCES CENTURY TOWER
(METRO) 3RD AVE ASSO
187, 440
2, 104,800
2,790, 230
23,8000
384, 800
1,848,200
2,292,240
2,813, 230
2,233,000
LESS METRO PAYMENTS
0 (4,759, 317)
C.S.II ALLEY PURCHASE
0
0
0
TOTAL INVESTMENT TO DATE
2, 292,1240
(1,946,087)
1,995,000
BASIS CARRIED FORWARD
2,292,240
0
1,995,888
- -
FUTURE LAND COSTS
MORTGAGE BALANCES
PREPAY.PENALTIES
PENALTY PAYMENT
1,876,492
7.0%
8
131,354
8
GROUND LEASE BUYOUT
2,8800,8800
TOTAL FUTURE LAND COSTS
2,131,354
(238,000)Lots 2,13,6: Metro payment to
to mortgagee & ground lessor.
- --- ---
--
-- ---
08
- -- -
106,950
-----
0
106,950
08
SITE AREA
- ---
08 1,527,852
7.0%
TOTAL INVEST. PER PROPERTY 4,423,594
TOTAL INVESTMENT
--- -- --
2,101,950
6,525,544
40,136
INVESTMENT
$162.59 PER SF, OR
ESTIMATED CURRENT VALUE
$350.00 PER SF, OR $14,047,600
DIFFERENCE
$6,525,544
$7,522, 056
63
188,984 = 1988 Ground rent
1,989, 302 Capped at 9. 5%
--
PERMANENT FINANCING
Prescott
has
also
developed
Japanese source of financing:
C.
ongoing
Itoh.
ties
with
a
Its financing rates
are perceived to be more stable than traditional sources, so
a permanent
rate of
11 percent was projected, with 35-year
amortization and a debt coverage ratio of 1.15.
based on
Prescott's experience,
cost rather
than being
feasibility the
and taken
amortized.
issue,
no
Points were
as an
indirect
With ranking and basic
participating
nor
convertible
mortgages were considered.
There is
terms
a special
(Options
1 and
problem relating to Saks' proposed
2).
Saks
wants
percentage only, without base rent.
many lenders,
and that
reconsider since,
rent
to
be
This is unacceptable to
fact should
unlike a mall,
its
help convince
Saks to
its rent is not incidental
to the overall income of this project.
CONSTRUCTION FINANCING
Prescott's sources
both U.S.
of construction financing have been
banks and Japanese investors.
It is difficult to
guess what kind of terms will be available in several years,
but it
was assumed to be 11.5 percent interest
single-year pro forma).
using 80
percent of
principal,
percent over
times
an
(10.5 in the
The interim interest was calculated
the direct
average
the construction
and indirect
outstanding
period.
balance
of
The principal
liberally estimated as double the direct costs.
64
costs as the
60
was
X. COST PROJECTIONS
Land costs
covered;
(equity), and
financing
costs
this section covers other costs.
cash flow
analysis, unlike
-the pro
have
been
In the discounted
forma, these costs are
spread over several years where appropriate.
DIRECT COSTS
Direct
(hard)
costs are
the construction costs.
They
are based on rough square foot prices for the basic types of
areas in the building: parking and loading, service, retail,
and office.
These costs,
shown in
the following
table of Project
Costs, were based on the 1985, Mean's Square Foot Costs
costs
for
Century
Square,
Phase
I,
as
Prescott's project manager, Doug Hazelrigs.
was based
on Phase
I costs,
described
core refers
structure occurring
less the Phase I premiums for
to that
retail is
because of
they are
being borne
by
office
Office
tower
Miscellaneous is
space.
Multi-tenant
per square foot than major retail
higher proportions
Tenant
the
levels.
and mechanical
more expensive
demising walls.
part of
on the retail
unspecified structural
by
Demolition cost
larger buildings and use of the implosion technique.
lobby and
and
of storefront
entrances and
improvement costs are included, as
the
developer
in
this
market.
Current cost figures were inflated at 4 percent per year for
two years.
65
INDIRECT COSTS
Indirect
(soft)
costs are non-construction development
costs
Percentage indirect
costs.
direct costs,
based on
and where
usually
are
time,
the
based
on
construction
period is shown.
LEASE TERMINATION COSTS
As the leasing of property involves transferring to the
lessee part
landlord's bundle
of the
the redevelopment
problem with
property is
the cost
of rights,
a
major
of this nearly fully-leased
of removing the tenants, or regaining
those rights.
of this project became more certain,
Since development
has
Prescott
renegotiate existing
lessee simply
pay to
construction.
negotiate
ones, with
Ideally, these
clauses.
had to
to
attempted
by giving
demolition or
allow the
lessor to
required notice.
remove some
new
tenants for
or
leases,
termination
displace
a
Also, Metro has
the transit tunnel
All costs were based on lease termination at
the beginning of 1988.
Some leases,
however, require payments for moving, new
tenant improvements,
lost income,
new location, or special expenses
tenant removal
several
renewal
costs).
options.
Some are
the rent difference at a
(see following schedule of
also long-term
have
The cost varies from $1200 for a
very-small office to over $230,000 for Winchell's,
a formula
or
which has
for projecting its income through its last option
66
in 1998,
and discounting
it to
the present.
The
chain-
operation leases typically contain the most onerous specific
conditions.
leases
The worst
provisions at
aware of
all.
the key
to
terminate
Worse still,
role
they
no
have
termination
some tenants
play
and,
like
are
a
fully
hold-out
property owner, tend to think in terms of ransom rather than
reasonable costs.
group.
Examples
are McDonald's and the Ferrera
Values for these were estimated by those at Prescott
who know the individuals involved.
The total
estimated
$1,813,000, except
of
of the
and
sidewalks
"undermine" some
terminations
existing tenants
some cost to the owner.
the streets
lease
is
for Option 5 where it was assumed that a
significant portion
but at
cost
of the
would remain,
The impending disruption of
by
tunnel
tenants' will
construction
to
fight
or
could
make
windfall profits.
DESIGN FEES
Total combined architectural and engineering fees would
be approximately
five percent
possible slightly less.
the difference
for a
project of this size,
The renovation would cost more, but
is negligible at this stage of analysis, and
project returns
are usually virtually insensitive to design
fees anyway.
LEASING COMMISSIONS
Leasing of
Office space
will be
retail space
will be
leased by
67
handled by Prescott.
commercial brokers.
Major
retail was included because there has actually been a broker
involved with
excluded.
of the
Saks
negotiations,
The real
rent the
percent the
but
parking
income
is
office commission will be five percent
first year,
fifth year.
decreasing
annually
to
one
However, as a simplifying measure,
the discounted analysis allows for a 5 percent commission on
the space
leased during
assumes that
each of
the lease-up
years, then
the later parts of the initial commissions, as
well as ongoing commissions from lease turns, are covered
by
operating expenses.
SALES TAX
The current
to
rate,
increased
as a
conservative
measure
8.1 percent, times direct costs.
REAL ESTATE TAX
The actual amount, increased for inflation.
LEGAL FEES
One percent
Prescott's
of direct
costs,
an
estimate
based
on
costs,
an
estimate
based
on
experience.
PERMIT FEES
Two percent
of direct
Prescott's experience.
CONTINGENCY
Five percent of direct costs.
DEVELOPER OVERHEAD
Five percent
of direct
costs.
68
PROPERTY INSURANCE
One percent
of direct
costs,
an
estimate
based
on
Prescott's experience.
LEASE-UP RESERVE
Total rent
lose to vacancy, less the normal structural
vacancy factor, until the first stabilized year.
MARKETING
One percent
of direct
costs,
an
estimate
based
on
Prescott's experience.
SPACE PLANNING
Tenant space design costs Prescott $.40 per sf. times a
factor of 1.25 for repetitive layouts, equaling $.50 per sf.
This applies only to multi-tenant retail and office.
CLOSING COSTS
Three percent
of direct
costs, an
estimate based
on
Prescott's experience.
INSURANCE
One percent
of direct
costs,
Prescott's experience.
INDIRECT CONTINGENCY
Five percent of indirect costs.
69
an
estimate
based
on
LEASE TERMINATION COSTS
LEASE TERMINATION COSTS
BLDG. TENANT
CS
CS
CS
CS
CS
CT
CT
CT
CT
CT
CT
CT
DO
DO
Burt's Shoes
Ferrera Family
Flower Nook
Gap
Prudential (Westside)
Alexander & Ahlberg
Flair Camera
GSA
Hyatt Legal Services
Natureway
Transamerica Tax
World Wide Import #800
McDonald's
Winchell's
RELOCATION
$/SF AMOUNT
TENANT IMPROV
OTHER
$/SF AMOUNT PAYMENTS
10 24, 88
20 48, 80
10 40,250
5
8
2 1,200
2 5,500
20 80,500
2
2
2
20 55,000
6,784
3,848
8,050
15 45,000
458,242
35,115
500,000
50,000
422,625
0
25,000
12,936
25,200
TOTAL
PAYMENTS
FLOOR
AREA
107,115
500,000
50, 000
543,375
0
1,200
85,500
2,400
3,100
0
4,025
4,360
600
2,750
3,100
1,617
1,924
3,525
5,280
2,800
1,770
0
19,720
29, 048
8,050
25,000
25,000
25,000
233,665
210,000
323,500 1,354,541
1,812,673
50 140,000
CS = Old Century Square
CT = Century Tower
DO = Doces
Includes only tenants requiring payment to remove.
70
233, 665
NOTES
2 mos. lost income.
Estimated buy-out.
Estimated buy-out.
Rent differential.
Options cancelable.
Estimated buy-out.
Unknown
Rent differential.
Year's Profit
Stipulated max.
Lost income.
Buy out provision.
PROJECT DIRECT AND INDIRECT COSTS
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71
-A-i
4-
XI. ECONOMIC ANALYSIS AND CONCLUSIONS
ASSUMPTIONS
There
are numerous
assumptions built
into both
the
single-year pro forma and the discounted cash flow analysis,
and they are sometimes slightly different.
was
the
more
assumptions are
refined
and
covered in
important
Since the latter
of
more detail.
the
two,
Major
its
variable
assumptions are listed at the top of both analyses.
RENTS
Multi-tenant retail,
based on
office,
today's estimated
space, inflated
and
parking
rents
average new, class "A"
at 4 percent to 1988.
are
downtown
Major retail rent is
based on the effective rent per square foot mentioned in the
most recent Saks'
letter, both inflated and "rounded up."
"GROWTH RATE"
This is the inflation rate which affects growth of both
rents and operating expenses.
LEASE-UP RATE
Because of the obvious potential space glut hitting the
market soon before this project, the initial lease-up period
was spread
over two
vacancy in
the leasing
operating year.
years, with
year, and
an average
25 percent
of 70 percent
in the first
This is reflected in the lease-up reserve.
72
VACANCY RATE
This is
achieved in
the
long-term
the
or
stabilized
vacancy between
year.
It
vacancy
covers
level
temporary
tenant turnovers and more permanent vacancy
of miscellaneous small spaces.
percent, but
structural
It
is usually estimated at 5
here it is 7 percent to offset some other more
liberal assumptions
and to allow for a softer future market
in general.
AVERAGE OPERATING EXPENSES
To simplify things, this is an average of the different
rates for
each of
the four different types of lease space,
included here
as a
average
taken
was
percent of
from
gross possible income.
the
pro
forma
analysis
individual rates for each type of area were used.
are $5
per sf.
major retail,
percent for
for office,
3 percent
parking.
on Prescott's
2 percent
The
where
The rates
of gross income for
for multi-tenant
retail,
and
15
Rates for both types of retail, based
usual allowances,
are low
because the space
will be net leased.
STABILIZED-YEAR PRO FORMA
The pro
and debt
forma is
coverage ratio
determines the
value
ratio
determine the
maximum mortgage.
and
required equity.
exceeds the
nearly self-explanatory.
the
Where
total
An
project
the existing
amount required,
debt service, which
85 percent
cost
loan
determine
equity in
the mortgage
73
The N.O.I.
amount
the
to
the
land
and debt
service were
reduced rather
This
cash out.
than taking
should help the anemic return on capital.
For Options 1 and 2 there were development rights to be
sold, less
This area
another
2 because
in Option
times $10
return
per
which
sf.,
reduced
of its
office
Prescott's
total
structure.
price,
project
created
costs
required equity to create higher after-T.D.R. returns.
74
and
STABILIZED-YEAR PRO FORMA
OPTIONS 1-5
STABILIZED YEAR PRO FORMA
--
-
\F
=-
-
-------------
ASSUMPTIONS
OFFICE RENT (OR)
MULTI-TENANT RETAIL RENT (RR)
MAJOR RETAIL RENT (MRR)
RENOVATED OFFICE RENT (ROR)
RENOVATED RETAIL RENT (RRR)
PARKING RENT(PARK$) PER DAY
PERMANENT MORTGAGE
INTEREST RATE (IR)
TERM (TERM)
DEBT COV.RATIO (DCR)
SF VALUE OF DEVELOP.RIGHTS (TA)
$28.00
$40.00
$9.00
$18.00
$35.00
$6.00
VACANCY RATE (VAC)
100.0
OPTION 1
OPTION 2 OPTION 2B
MAJOR RETAIL STORE MAJ.RET.PAD
W/OFFICE W/ OFFICE
GROSS POSSIBLE INCOME
MAJOR RETAIL (INCL.DOCK)
MULTI-TENANT RETAIL
OFFICE
PARKING
816,650
458,080
TOTAL GROSS POSSIBLE INCOME
GROSS EFFECTIVE INCOME
LESS OPERATING EXPENSES
NET OPERATING INCOME
OE + VAC / GPI
------------------ANNUAL
DEBT SERVICE W/ DCR OF
1.15
------
-
MAXIMUM LOAN AMOUNT
PROJECT COST
K
2.0%
3.0%
$5.00
15.0%
20.0%
OPTION 3
OPTION 4
OPTION 5
MJLTI-TENANT RETAIL RENOVATION
W/ OFFICE
0
829,250
258, 000
3,386,880
495,072
412,500
258, 000
3,386,880
495,072
0
2,532,000
0
227,880
0
2,308,000
3,810,240
371,016
0
2,319,450
569,304
0
1,637, 530
4, 969, 202
4,552, 452
2,759,880
6,489,256
2,888,754
22,900
182,244
182,244
126,600
305,912
144,438
1,614,630
4,786,958
4,370,208
2,633,280
6,183,344
2,744,316
84,505
703,386
688,863
110,142
805,292
577,751
362, 88
LESS VACANCY (M-T RETAIL &OFFICE)
11.0%
35
1.15
$10.00
MAJOR RETAIL OPERATING EXP. (OEMR)
MULTI-TENANT RETAIL OP. EXP. (OET)
OFFICE OPERATING EXPENSES/SF (OEO)
PARKING OPERATING EXPENSES (JEP)
RENOVATED OPERATING EXPENSES (DER)
5.0%
COST FACTOR (CF)
------
1,536,125 4,083 572 3, 681 345 2,523,138 5,378 052 2, 166 566
6.6%
17.8%
19.1%
8.6%
17.1%
5.0%
-
1,330,543
3,550,932
----
3,201,169
-
2,194,033
-
4,676,567
-
1,883,970
11.29% 11,782,282 31,444,357 28,347,122 19,428,689 41,412,119 16,683,006
100.0% 26,993,050
FACTOR
REQUIRED EQUITY (COST - LOAN, OR 85% LTV)
48,315,946 40,104,659 24, 704,084 48,358,849
18,743,304
15,210,769
16,871,589
11,757,538
5,275,395
6,946,730
2,060,298
LAND INVESTMENT
6,525,500
6,525,500
6,525,500
6,525,500
6,525,500
6,525,500
ADDITIONAL EQUITY REQUIRED
8,685,269 10,346,089
5,232,038
0
421,230
0
18,178,584 41,412,119
12,217,804
CORRECTED LOAN AMOUNT
11,782,282 31,444,357 28,347,122
CORRECTED DEBT SERVICE
- ------
--
1,330,543
-
-
3,550,932
2,052,862
3,201,169
---- ----
4,676,567
1,379,726
-----------------------
CASH FLOW
NET OPERATING INCOME
1,530,125
4,083,572
3,681,345
2,523,138
5,378,052
2,166,566
LESS DEBT SERVICE
1,330,543
3,550,932
3,201,169
2, 052, 862
4,676,567
1,379,726
199,582
532,640
480,175
470,276
701,485
786,840
BEFORE TAX CASH FLOW
--------
--------------------------------
-
-------------
---
BREAKEVEN RATIO ((OE+DS) /GPI)
86.4%
85.6%
85.4%
78.4%
84.5%
67.8%
RETURN ONEQUITY (BTCF/EQUITY)
1.3%
3.2%
4.1%
7.2%
10.1%
12.1%
RETURN ON CAPITAL
5.7%
8.5%
9.2%
10.2%
11.1%
11.6%
(NOI/TOTAL COST)
TRANSFER DEVELOPMENT RIGHTS
TRANSFER AREA
VALUE 0
$10.00
770,288
7, 702,880
618,388
6,183,880
618,388
6,183,880
EQUITY REDUCED BY T.D. R.
7,507,889
10,687,709
5,573,658
RETURN ONEQUITY WITH T.D.R.
2.7%
5.0%
8.6%
RETURN ONCAPITAL WITH T.D.R.
7.9%
9.7%
10.9%
75
DISCOUNTED CASH FLOW ANALYSES
These analyses
provide basic
the
have been
kept very
simple, but still
return and ranking information as a backup to
single-year
pro
analyses and
forma.
model only
Thus,
they
are
simple financing.
before-tax
Further reason
for the before-tax approach is self-evident at this time.
are allocated
Project costs
split accordingly.
cost estimate,
here, so
Hard
but soft
the total
costs are
have office
taken from the earlier
or indirect costs are recalculated
project cost is slightly different than
in the single-year pro forma.
year construction
year incurred and
to the
Options 1,
periods, and
towers, have
3,
Options 2,
and 5 have one2B, and 4,
which
two-year periods (rounded up from
1.75).
The model
simply develops
deducts vacancy
G.P.I.
to
and operating
reach the
gross possible
expenses as
net operating income.
income, and
percentages
of
The mortgage is
determined as in the pro forma, and debt service is deducted
to get
the cash
was not
reduced if
land value.
the direct
permanent
flow.
The
In this case, though,
the required
equity was
construction loan
and indirect
costs, and
the mortgage
less than the
is again 80 percent of
is taken
out
by
the
loan at the end of the construction year(s).
The project
the eleventh
is sold
after ten
years, the price being
year N.O.I.
capped at
9.5 percent,
percent sales commission.
76
less a 3
The net
rate of
plus a
present value
12 percent,
3 to
was found,
or an
4 percent
based on a discount
8 to 9 percent
risk factor.
alternate return
The internal rate of
return was also calculated.
ANALYSIS AND CONCLUSIONS
The results
flow analyses
is roughly
of both
the pro forma and discounted cash
establish the same rank order of options.
opposite what
was originally
indicated by
the numbering
rank
3,
4,
5,
interpretation.
2
or
order of the options.
2B,
and
1,
2,
same critical
problem:
$9.00 per
square foot
per year,
pro forma
multi-tenant rent
leasable
area
up the
They now
room
for
than
In Options
overall returns
(Saks) options suffer
Saks'
expected
rent,
at
is only 26 percent of the
of $35.00.
occupies almost
other
overwhelming.
some
is
AND 2B
All of the major department store
department store
with
as
A summary of results follows.
OPTIONS 1,
from the
expected,
It
In
Option 1, the
90 percent
parking,
so
of the
the
total
problem
is
2 and 2B, the office tower pulls
considerably, but
they still
fall
well below desired returns, and those of the other options.
Option 2B,
improves pro
because the
space
where
Saks
forma returns,
pays
but
for
not
its
own
building,
markedly,
partially
major retail is the least-expensive above-grade
(per square foot) in the project.
77
In the pro forma, a
figure of
for some
$400,000 was used as Saks' ground rent,
below grade
Saks routinely
forma
prefers
2.
approximately $2.7
while
the
discounted
analysis
further analyses, the cost of
and service
million in
them.
2,
2B
Also, in
below-grade parking
to Option
they essentially
This accounts for the fact that the pro
Option
prefers Option
rent deals;
Therefore, in the discounted analysis, no
included.
charged to
Later it was discovered that
refuses ground
want a free site.
rent was
space.
plus rent
area associated with Saks,
hard costs
alone, should be
This will make Option 2B clearly superior
but
will probably not pull it up to the other
options.
These poor
Saks' pro
returns occur
forma rent
despite the
is actually $1.50
fact
higher
that
the
(11 percent)
than what Saks has actually proposed, even with two years of
inflation included.
not applied
In the discounted analysis vacancy was
to Saks,
percentage-only rent.
and there
is
also
the
problem
of
In other words, the analyses of these
options are optimistic in several respects.
The reasons
and 2B
for the
seem obvious,
options was
but
the expected
development rights
other projects.
before and
poor performance of Options 1, 2,
the
real
driver
benefit derived
and the
ability to
behind
from
sell the
these
additional
rights to
The summary pro forma included returns both
after development
improve significantly.
rights, and
Return
the returns
did
on equity nearly doubled on
average, a fact easily overlooked given the initially dismal
78
pre-T.D.R. returns.
to four
times
Return on total capital, which was two
higher
than
return
on
equity,
increased
proportionately less, in the range of 15 to 40 percent.
A major
retail project
rent, vacancy,
projects.
has fewer
and expense
In this
case,
unknowns
levels
than
however,
it
most
regarding
development
appears
to
be
a
predictably safe way of making below-market returns.
In summary,
retail rent
help, even
rights.
which is
with
the
that the
leverage
work.
result
is a
A new
of
from
major
returns are
the
extra
great desire
beyond
development
to make one of
department store is attractive
civic perspective, and this site is the most natural
location.
In addition,
invested considerable
groundwork for
the city
can be
low returns
so low
However, there
these options
from a
the very
time and
this type
might change
shown.
FAR's, working
R.O.E. and
would be
even more
such a
in
of project.
city
have
laying the legal
Prescott feels that
preliminary study of necessary code
backwards from
required.
effort
and the
the code if compelling economic need
A very
12 percent
would grant
both Prescott
R.O.C.,
It is
hurdle rates
of 8.5 percent
indicated an FAR of 18 to 20
questionable whether
drastic increase, up from 11,
questionable whether
there is
a market
development rights within the small retail core.
79
the
city
and it is
for the
SUMMARY
SUMMARY OF RESULTS
OPTION I
OF RESULTS
OPTION 2
OPTION 2B
MAJOR RETAIL STORE
W/ OFFICE W/ OFFICE
PAD ONLY
OPTION 3
OPTION 4
OPTION 5
MULTI-TENANT RETAIL RENOVATION
W/ OFFICE
PROJECT COST
TOTAL COST*
REQUIRED EQUITY*
WITH T.D.R.
25,550,000 46,756,200 39, 868,000 24,020,000 47,428,400 20,776,000
13,456,500 15,849,500 13,653,500 4, 752,900 7,591, 88
2,705,88
5,753,500 9,665,5g0 7,469,500
DISCOUNTED CASH FLOW ANALYSIS
INTERNAL RATE OF RETURN
NET PRESENT VALUE
CASH FLOW***
0.9%
8.4%
7.5%
16.4%
18.1%
22.6%
(6,787,600) (3,332, 600) (3,504,900) 1,855,000 4,460,88
3,268,000
188,900
474,900
390,000
299, 000
611,000
278,000
PRO FORMA ANALYSIS
RETURN ON EQUITY
WITH T.D.R.
RETURN ON CAPITAL
WITH T.D.R.
CASH FLOW**
RATIO ANALYSIS
LOAN TO VALUE RATIO**
BREAKEVEN RATIO**
*
1.3%
2.7%
5.7%
7.9%
200, 08
47.3%
84.9%
3.2%
5.0%
8.5%
9.7%
532,600
4.1%
8.6%
9.2%
10.9%
480,200
66.1%
84.5%
65.1%
83.5%
FROM DISCOUNTED ANALYSIS, NOT PRO FORMA.
FIRST STABILIZED YEAR
80
10.1%
12.1%
10.2%
11.1%
11.6%
470, 300
- L.T.V. RATIO BASED ON MAX. LOAN WITH DEBT COVERAGE RATIO OF 1.15 AND
RENTAL INCOME OF FIRST STABILIZED YEAR (EXCEPT OPTION 5).
i*
7.2%
80.2%
82.2%
701, 000
84.0%
83.5%
787,880
*n
65.2%
67.8%
OPTION 3
This option, the multi-tenant retail project, continues
up the
spectrum of
Prescott's hurdle
increasing returns,
rates of
R.O.C.,
and
of the
options for
16.5 percent
equity than
any
new
and almost reaches
8.5 percent
I.R.R.
R.O.E.,
It is the least expensive
construction,
other
new
Prescott has in the land.
12 percent
and
project,
less
requires
less
in
than
fact
However, it is the most expensive
per square foot, probably because of its small area relative
to high
an FAR
land costs.
of 2,
It contains only two floors of retail,
well below
the basic
code FAR of 5,
and far
below the higher FAR justified by land values.
Option
options.
3 involves
In a
sense, this
emphasized interior
on a
single market,
studied than
different risks
is
an
circulation.
multi-tenant
the office
than the
urban
mall
earlier
with
de-
It is entirely dependent
retail,
market, making
which
is
the prediction
less
of
real rents and vacancy difficult.
This option
the hurdle
will be eliminated.
rates, and,
because of
The returns are below
the small
size of
the
project, the actual income even lower than could be achieved
with the
existing buildings.
this project
is to
In other words, the point of
increase the
density of development on
the site, and this option does not do this.
81
OPTION 5
As
expected,
provides the
because it
renovation
highest pro
requires the
study, however,
option and
it was
its returns
of
the
existing
buildings
forma returns and I.R.R.,
least investment.
assumed that
largely
Throughout the
the magnitude of this
was obviously
the least promising.
That was, in fact, the thesis of the analysis.
In actuality,
to all
but Option
Option 5 appears to be equal or superior
4.
The problems
options have been discussed.
differences in
scale of
leasable
of
area
98,000 sf.,
the
is 55
of the
major
retail
Also, the assumption about the
the options
existing
is misleading.
buildings,
percent greater
The
approximately
that Option
3.
Only
Option 4 excludes major retail and includes office space.
In the
largest of
pro forma,
all
the
required equity
in the
the before
options.
tax cash
This
occurs
flow
is
the
because
the
is less than a third of the existing equity
land, so the mortgage was reduced, lowering the debt
service and
raising the cash flow $500,000.
analysis assumes
The discounted
more realistically that leveraging will be
maximized, reducing the cash flow accordingly.
A last note on the renovation.
The same sale cap rate,
9.5 percent,
and discount rate, 12.0 percent, were used for
all options.
In fact, these might be more conservative for
Option 5
than newer
because it
would be
construction.
perceived as
The discounted
82
less desirable
return
measures
would then
drop.
Option 5 could be a viable alternative if
Option 4 is not developed.
OPTION 4
This scenario,
is the
recommended alternative.
return of
flows.
the all-new
Its R.O.C.,
its I.R.R.
equity is
million
which is
A very
much higher
it
than even
1,
equity.
on debt
simple sensitivity
The
analysis was
following graph
84 percent,
percentage changes
in the
multi-tenant retail rent
direct
they
should.
proportional to decreases.
rent because
Vacancy appears
because
of
changes
induced
to be
costs
by other
(MTR),
loan
Increases
in
in I.R.R.
vacancy
(VAC),
interest
All
rate
factors
variables
Office rent was more
there is
on
variables office
(CCOST).
were
influential
much more office space.
less important
the parameters
conducted
shows changes
project
than retail
to value ratio,
coverage, is
(PLI),
as
Required
and 2B, or about $1
The loan
(OPEXP), permanent
behaved
Option 5.
2,
operating ex penses
and
of
should be.
resulting fr om
(OFFR),
has the best rates
percent, is a little low, but
of Options
than land
this option.
rent
11.1
actually based
where
above,
18 percent, with a net present value of
about half
more
It
structure
options, as well as the highest cash
at
is over
$4.46 million,
right
Option 3 with an office
than
it
really
is
of the analysis and the relative
variables.
83
A
seemingly
small
change in
vacancy from 5 to 7 percent would be a 40 percent
increase and would be off the graph.
In summary,
no
indications
Option 4 yields the best returns and shows
of
underlying
results misleading.
84
qualities
which
make
the
OPTION 1:
2 D1SC311TED
26 Fl
7a
9
AN6.ALIS OPTION
1: 6412
12 .
1,721,66603ET
6,525,5661.2T
EgT25,549,94 +TQET
6Ill(ET 1
19
6TI-TEL
ETAIL
19
26
9Alt4D6
(PIE
912S 19.6
911
FR7
2PM2JE CETS
23
24
25
26
PERMIT
l6TE5ts
TUTAL
II. ECT0I
E1.*ENTCONSTRUETIO
2
.2
264,25
1,431
214,42
53,615
35,45
11,43%
FA
CARS
I
am
F
E
1969
LESING
199%
1991
PERTION
1956
OETION
L
199
OERTIN
1993
1995
19%
OERTION
i
1996
1997
2
1999
OPERATION
ETI
A
3
OPEATION
4
PERTION
9A
536,M
5,725
214,
42
107,216
45,978
64 587
557,37
441
187.216
88,
,4813,m
1,813,001
64,26
321,63
1183,5%
167,210
,65
25
536,595
1,124,96
7,634,27 3,149
589, 63 24,260,
727
125,3%
15,97X
536,6
am
124,9es
536,
91,
4
, 149
12,3%
A X,363,414
4,363, 44
15,976
E
1967
1986
1969
DEVELZOENT
CONSTRUETION
LEASI
6
F
1996
6
4
1991
1993
1992
OPERATION
OPERATIO3N
OPERATION
ETI
25,349,94
I
H
1994
195
OPERATION
1
4
J
2
1997
1996
OPERATION
3
1998
OPERATION
49.00
9.41
69.43 646.27 O1.73
$11.22 111.72 112.23
W12.6
s444.
$41.86 643.64 45.65 647.79 $49.85 152.09 454.43 456.n6
S2a.n 629.26 636.34 631.95
S33.39
634.89 36.46 638.11 49.42
4I,866.OL 4$,8668.8 41,9.65 62,54.16 42,146.53 62,243.13 42,344.47 42,449.55
L
N
5
4
1999
OPERATION
6
SAE
$13.37
59.44
$13.96
662.12
s43.4a
62,795.34
S41.61
$2,559.76
2.674.97
-
14 ETAIL
ILtaTI-TElsff
4,337
878,152
478,646 366,147
844,15
454,S
PA(IN
343,46M 379,962
72
3 TOTALS POSSIBE146E
74
75
LESS AE3ACY 7 A E MAYANPTE
O
6
TOTAL
VACACY
-7
7 EFFECTTW DI3
79
4
LES
OPERATING
EFEME3
at
82
LESSr9m
WIT
1.625,175
(FinIimMJ.ETAIL.
GROSS
917,669
22,654
397,we
414,566
1,775,36
1,69,969
1,
136,Me
1,913
1,606,117
376,751
4, 112
6
42,o9
64,564
1,671,153 1,954,316 2,4, 24
14,426
14a
92, 537
1,571,526
1,34a,353
1,641,29
699
1,715,54
3
F
E
1964
t987
DEVEUNf
NT
TI
Z M4EEVEMED
CAE4
FLO
4
2,23, 15
162,678
169,372
0
1
1,792,231 1,872,Be
4
1,248,82
711,26W
6
6
564,466
74
74,69%
2,33551
184,956
-
3
1,715,54
73
78,246
75
81,786
a5,46
2,43,426
476,994
-
193,282
261,979
0
-
1,792,231
L
A
2
1996
1991
1992
1993
1994
1995
19%
1997
LEASING
OPE1ATIOOPERATION
OPERATION
OPERATIO3N
24
OERATIO7
2ETI36N
E31
OPERTIONOPERATIN
1,641.200
1,195,643
6A,632
6
4
546,344
0
1,957,162 2,645,234 2,137,269 2,233,446SAE P4E)'EEDS
23,509.9&3
PROCE2,
804,.664 7@5,
299
I
1969
1,576,526
1,143,552
651,322
76
75
71,676
1
92,571 1,34,353
LAN
36
37CONSTRUETION
PRINCIPAL
74
2,134,13
86SALES
#.YSIS
1,694,337
623,273
517,
2,117,149 2,212,421 2,311,980 2,416,019 2,524.74
0
ET
1,447,212
596,43
6
494,469
473,566
74
65.631
219
62,485
44, 266 1,71I2, 1, 789,628
1,5,63
9%,%4
56,174
433,66
1, = 251 1.931,737 2,15M6
71
214,643
375,120
44 OEATING
IMNE
a7
44
89LEVR ED
96
91
92
3
94
1.15
89,358
TA
78,932
29,676
461,318
95,719
156,200
64,326
321,63n
1,183,359
53,65
264m
268,
rT
d5
PLPT
JEBT CW.4.
4.64
6,525,588
61 RENTS
62
JR6.19ETAIL
63
6It.TI-TE
4ETIL
64
FFIQE
63
PARKING
66
67 SM POSSIBLE
I3E
64
11
59
1TAIL
74
5INTS
7.64
Wy(6,747
6474
16
R
.892
0 13,436,324
2E.EQITY
OCR
35
41.6
4,294
V6, 4,1
167,216
509, 6
52
53TOTA.
POJECT
COSTS
34
55 POJETP6M
FOR6
36
37
5B
59
@FIG1
A.T
AL2
10,721,66
S1UACOST
8.3
946
RESUL5
PEs65f6 LOAN
rEW673W)
INTEEST
AEA
ENTIE
646.4
624.66
196
53
73
/Yl
I
1797
27
24 0IECT
29
A I166ICT
31
A84EFEES
32
SPACE
PLANING
FEEB
33
FEE
34
L.3i FEES
35
INITIALEASING
COMISS116
36
LEA!E-.P
ESER
37
WA ESTATE
TUEB
36
SALES
TA
39
INiU6
CE6
44
LEASE
TE4INTI4 COETS
41
FINANCINi
FEE
42
CL6
COST
43
INTERI6
44
NARI(2ETD
45
DEVELOER
043EAD
46
INDIRECT
CENT1D9E1CY
47
9ET. REERSION
P~6f
49
i9
PAIM 64,29.6
CAN)
-4459CI4
F1TE
46
4.5
DIS3COUN
OR
12.0
CAP
9.35
0196.7p
WDCCY FATE
WC
AWL ELEP
GE
GFTH
,363,44 +ICT
13
14 INCOME
FATORS
15
16
MJM
ETAIL(SW)
17
4ETAIL
FINANCIA
6ATES
I~ IE CT
D194CT
LAND
TOTA PoEECT
1s
11
DISCOUNTED CASH FLOW ANALYSIS
1998
3
6
1999
6
4
5
2,945,234
2,137,269
SAE
1,872,82
1,957,162
M5219,523
99
:0 PEIBROff
MORTGAE
i61
Vl4
EBTERVICE
1,365,675Basedan CRand stailazed year wi (1992).
of total cost.
12,693,3J
1,363,673
12,693,388
21,717,418
- 855LTVratio
A2
46IM.
PRINCIALE
3 CTUA.
PRINCIPAL
ACTL.DEUTSERIm
.15 pT6AGESCIE)LE
A6 AL
ANCE
7
4 1TIZATI31
8
.64
INTEEST
1,33,
DEBT
9EllV41
11CAS1 FLOW
AFTER
12
13
.14
7,345,473
12,6
93,83 12,057,
977 12,01,679 11,975 9
W3,44
272 1,26,377 1,322,62
,
256
29B1.36
Pai4T
B4EE9ENM
116
117BEFORE-71CASH
FLOW
ANALYSIS
774
19
.3
92.
a
32
OFAFTER
DEBT
SERVICE
:.U
34NET BEFDE-TAX
0WFFLOW
3
36
37 [E3LOER FETIN6
39
9
67 PEENT WL1
17
6
44.4%
6
(589.6)412,187,346)
1969
LE67
INi
1996
(538,149)
44. 185)
61.42
6
19%
E1MTI
(125,3%)
.NTElt 66TE RETUN0
REQU1RE9EQ11T
275, 25
TTA
COST LESS
9PER691
LAN
85
1,363,675 1,345,673 1.365,675
t,673,518 11,591,936 12, 93,83
46,419
53,743
59,657
6
,345,675
1,365.675
72.2
591,46
679,559
69.75
H
I
3
1994
12,674,891
67.1%
I
6
1993
1995
19%
1997
PERTI1 @EMTI2N @EMT111 OERTIO 2ETI[N
349,379
14,873
(42,7464
L99
13, 45,524
2
57,207
75.44
4
426,4
56
275,525
K
7
1998
5
SAE
9
L.
9
a
1999
76
1
4)
(0)
(1,978)
(6,787,647)
4
42
43
78.4%
426,556
4
7
1991
@62E41
24
TI[N
(17,322)
24, 851
(93,254)
349,379
F
3E.2TI26
1487,4,8%
1. d67
2752
84.99
E
198
CEESTRUTIO
22
.239EFOR-TAX
CASH4FLOW
24
PROJECT
COSTS
569,62)(24,26,77)
125
.26
CSTETION MOT1GAE
15,219523
127
.28
PAY M
(M5,219,23)
136
PE6643O
PUTRI
12,6093,346
21
264.851
f17.322)
4,35,473 7
11,
813, 239 11, 747, M
39,296
43,620
1,311,936 1,386.819 1,299,456 1,M2,172
214,
1.275,112 11,501,367
!1,541,367 ROW)NPWT.
317,
44515
4,345,473
1,925,64
57,267
591,486
349,379
679,559
426,356
12,674,891
567.27
591,44
679,59
12,474,89
OPTION 2:
2 DI LITED
CAM
FLOW QA.YSIS
3
TIC31
2:
DISCOUNTED CASH FLOW ANALYSIS
4UM RETAIL
Pa1 OFIG
4AG!UIPTION6
cTS
8 DIECT
6
7
9
11
12
13
14
15
17
FDNANCIA RATES
21,%2,0 omm
18,268,738
+ICOST
6,525,58
46,756,23A
+TCST
INIRET
1U e
TOTAPAIE.T CT
INME
FACTOS
16
1989MRKETFN/TS/1/T
AUM
RE-TAIL
(SAK(S)
MALTI-TENIAMT
RETAIL
OF 9FIGE
9Altt18(PERCAR)
Sam(SR
8TR
19
21
21
22PM3ECTC'T
3
24
25
PA
$48.8
D
31INDIRECT
1989
SFA
F
13,177,28
8,784,38
1991
1998
A & E FEES
SPA3
PLANNIG
FEES
PERIT
FEES
LEGAFEES
INITIA LEilM COK81036
LEE-A9
ESER
REAESTATE
TM
SAES TA
INSURANE
!ASE
TERMINATION
CSTS
FINANCINi
FEE
549,m
43
44
45
46
47
4,849,218
WAING11T
109,818 1
A366,833
386,o33
366,833
EL@ER
IDIRECT
C8TIMDCY
549,83
549,85m
OETM8
REVERSIO1
PAYENT
778,48
549,83
15,926
439,240
189,818
CLOSING
COSTS
INTEREST
INTERI
1598888
711,569
87,88
104,984
718,966
66,924
2,558,952
1,744,38
TT8
DI3lECT
cam
R
YMETAIL
18.TI-6981T RETAIL
OFIGE
62
63
64
1
PARIN6IM
74
75
7
8
1
7
OP
1,898
3,269,918
219.62a
1,8%6,1m
18.6,73
18,68,73
8
.6, 756, 231
8
I
N
1
2
1993
1994
1995
@EMATIm OERATION OPERATION
PERTION
1992
K
3
4
1996
1997
1998
OPERATION OERTION
853,
932
81,742
88
M
lECE
4,956,638 5,179,678
5,412,764
788
7%
7%
3A 711
345,582 341,133
4,98,133
5.m%,34
99,326
1.35,936
1,8w2, 23 1.131,464 1,182,175
1,35,373
.
82
5. 32,63
xn
377, 384
E
198
1987
33
F
1989
ou4J
, 194, 78
4. 383.
xveamoo~~n
a
iaIoEsTwEicm
8
1991
1998
6,745,289
7,848,827
39.82
7,366,424
7%
7%
7%
412,113
394 86
4,
45,
658
5,535,292 5,815,738 6,877,438 6,35, 922 6,636,714 6,935.36
841.61
837
7.697,495
7%
7.247,457
1,298,9%41,349,853 1,489,763 1,473.2M
4,588,37 4, 784 473
117
1.539,499
5.,3,865 5,226.948 3.462,161 5,787,9548
6SAES
P EEDS
., ;,.83,772
56,281,359 1,862,513
37
S
$13.98
S63.12
38.18
.3
8 1,8d67,
388 3.862,
199 4.
-
A8E
102
2,83.714
S8
m
4
7
973,990 1,817,819 1,863,621 1,111.484 1,141,51
1,213.768 1.268,388
8. 66
387.678 321,515
383,413
366, 38
35.
35 %3
4,838,917
4.3,9 418,1599 4,689,876
4,816,484 5,.3226
5,259,721
598,297
616,
64,619
673,627
783,946
735.617
768,72
5, 6, 338 5,918,873 6,176,863 6, 454,
71L
25%
316.464
2,897,936 1,881,544
as
LESS OPERTING EXPENSES
81
82
LESS
SA325 RENT
9384 MET 3N11
TIME
45
i.85LYSIS
ETI8
4
6
5
aim
$2,795.34
816,75
584911
847
891,
258,8
m 269,618
294,421
3,539,29
3. 69, 55
3,864,993
517,275 548,552
564, 877
3.386,
495,
-FG
89 LEVEMED
98
13
L
1999
61,94563
OF
LESSWADCYAT AEIRE NOTE
T8TA.VACANCY
4EXil1.4Mi8U. ETAILJ
92
N
6
OPERATION OPERATIONOPERATION
ETIN
19.88
19.41
89.83
11.27
8d.
$11.22 11.72
$12.25
$12.88
813.37
848,88 $41.88 843.48
$4.65
$47.78 149.85 $52.09 854.43 856.88 89.44
s28.88
s
39.26
838.58
&31.95
433.39
L34.89
36.46
83,888.8 s3,861.80
2,88.16 (2.146.3 82,343.13 2,344.87 82,449.55 82,559.78 82,674.97
MUJR
M.LTI-rTEMMT
72
73 TOT. GROES
PSIK.E
48,715
F
E
D
66
67 ME8 PO!SIB.E IECOE
&8
ETAIL
RETAIL
69
70
71
A
5
201
L999
63,785
4329,34
219,629
29,543
823,87948,715
1,748,388 25,674,64 15,685.151 2,775,465
PARKINS
65
4
312,088
1,778,922
219,62
1,813,88
131,772
658,860
8,849,218
823,87
1987
!9"
1989
19%
1991
ELO9EN
CO6TitTO136TE1TIG LEASINGPEAT!8.
3NT
OPERATION
@ETIG
L
K
1998
6,525,50
52
53 TOTA
PMJECT
CamT
54
55PFGJECTPROFORMA
57
58
59
48
61
I
3
1997
19%
1,09,188
778,4W
5,971,941 6,986,331 2,775,445
Lw
cETS
2
48,7135
48
51
OPERATION
I
1995
69,814
GE11E
49
58
H
1
1994
1993
47,779
54,985
156,M
1,7,.m
131.772
I,813 8
131.772
658,8m
129%1
8
1992
LEASING
03MTICTIl3C06TICI
31
32
33
34
35
3
37
38
39
40
41
42
8.8
E
198
54,983
L.O
w4 i3,332,63)
IRi
8.48
RELEIJITY 15,849,57
98,758
26EWELOPENT
37
28 DIRECT
29
PEWS"ET
F18CIMS
TERM9
(mmoT)
A9T
33
INTEEST
AI
11.1%
POLINT
PLPT
I
DEBTCV,6.
OCR 1.15
92
2.81
9TA.E AREA
S9.
ASM
8TA
6,458
OF9
CARS
275
It,8.m
1987
4.5%
12.88
9.5%
7.0%
A..E3P
GROWTH
RATE
6ilR
DISCOL8
DR
LCOif DISi- CM
CW
WACANCY
PATE
VC
4
1994
1993
1
1994
3
1994
1995
1997
4
1998
8
L
1999
8
2880
OPERTIGM @EMTIN
OPERATION PERT'IO
OPERATION OPERATION OEMTIN
OPERAT
94
M -NN-LEV
E os FLO
1,M7,388 3.62,199 4,8130,71 4,194,378 4,383,117 4,588,337 4,786,473 5.01a,863 5,226,948 5,462,161
36
97 CO8TA9ECTIM
LONPRINCIPA
32,184,584
38
79
M8 PERMAW
Or TmAGE
i1
SET
SERVIG
3.498,219Based DC3AnM
stabilized yew 88 11992).
82
PRINCIPLE
3 986,723 39,742,7%Scon
on . 85
to valum.
93
ACT1.
PRICIP
3A,986,723
4 T789
DOT
SERVIG
3,498,219 3,498,219 3,498,219 3,4%219 3.498,219 3,498,219 3.498,219 3.498,219 3.498,219 3.498.219
@5PCIRGAw
459.03
86
89
38,986,723 31,816,24438,715.812
604,333 3, 48, 591 38,343,23738,198,774 3,821,541 29,833,69 29,65,179 38.986,723
@7
44ORT1TIm
,479
10,432
111,+79 12742
137,354
169,33
187.849
208,513
231,449
1,512.9
Is
4 T
3,399,748 3,389,787 3.378,739 J.366,477 3,352,865 3,337,756 3,3295
3,312,369 3. 21, 786 3.25,779 9,393.738
8983.83
PAYMENT7
69,33.,
738 R 3LLO
P8T.
1 CFO
RIN AFTER
OUTSERVICE
(428,82s)
523.533 74,152
892,898
1.98.139
1,296,255
1,511.646
1,736,73 3
12
14
886986783
98.48
87.4%
84.5%
81.70
79.1%
7&.58
74.1%
71.70%
69.53
15
13
5
6
9-e
i
16
17 BEFOR-TAX897298913 CP
FLO
FAYI
8 E
1
3 j
x
. L
18
MIIM.
M8IM
a
based
LEASIS
loan
3,
152,463
(2.433.831)
19
.
29
21
23 BEFIE-TAX CAWi FLO
PJE
27
31
219Tca
2,674,64
(48,
715)
()
8
6,569,944
(32.184,584)
tA PER91WloMOAE
i3
.
, 98,
CFATER
DOTSERVIGE
33
!34 457 89438E-T82
CASH4FLOW
32
13
37 0EIELZIERETIM8
38
39
7PRESET
WILIE
.40
4
.3
(1,744,388)(25,674,641)(15,685,151)
12,775,465)
(823879)
CDNST3ETIGN
MoTGAE
26
29
1987
1988
1989
1998
1991
1992
1993
1994
1995
19%
1997
1999
1999
~~~DEWELIPOefT
CDONTETIIEDCONTWEIOLEASINGOPERATION
OPERATION
OPERATION
OPERATION
OPERATION
OPERATION
OPERATI[ON
OPERATIONSAE
N
I
(1, 748,388)
73
(8
(2,3831)
22,
428,8283
523,33
8 1#.453.869)(5.19,62%) 1.251.898) 474,818
(3.332,6A3)
iTElKt FATEOF RETURN
8.4
D
4M3383 Eg3379
15.3849.587T5TAI
1CTE
PE8I8E9
T 179TGE
86
74, 152
89, 8%
'11,152
892.89% 1,9,139
1,98, 139 1,2,2
1.MZ,
1,511,646 1,736,738 38,859,471
1,511.646
h,736,730
31,89.471
5
4
2011
i
OPTION 2B:
2
DISKJ1TED
CASH
FLN 3.YSIS
OPTION
28:
DIRECT
8
Lt
11
13
is
6
17
18
19
20
1989
S)
OFIGE
3ARKIG
(PERCAR)
3
1967
QNISSIG6
-2,60,
351
M3ETI07
INDIRECT
COTIMEMC
281,867
7 81. RE\ERSION
68lEN6
49TOTA
IDIRECT
77686
STS
7.56
1326
6,459
FA
128,68
E
F
a
I
H
1991
1592
1993
1994
t995
36788.31NT C6(7 KETE7TI1E06TizTIG
K
19%
1997
1996
LEASIN
OERATIN
1999
3E
L
48,386
54,679
156,
547,949
67,648
1, 813,6
m
8,769
7, 779
,46
4,691
181,679
3,387,136
1,265,872
165,136
-181.42
567,3
3734,179
84,568
422,866
3,734,173
84,560
281,867 281,867
169,12
145690
422,886
845,66
8
864,48
2,79,372
48,691
6
6
15,63.3
15,636,58
1,525,347 21,724,194
12,118,86
a
2,7,372
E
8448
F
40,
691
6
6
6
39.868,92
j
I
r
K
L
571
58
5%
TS5E1387r11
1967
156
199
1998
1991
1992
1593
1994
1995
19%
1997
19%
1999
LEASINiOPERATION
OPERATION
OPERATION
OPERATION
OPERAN OPERATION
OPERATION
OPERATIONSALE
6811
38111 86111
1 1
11
11
0611
3878
0111
1.
DEV~~ELOPENT
006STitEION36TiTRImI
~
366JE68
62 JAMRETAIL
63
M.3
$9.M
u
628.81
731TRETAIL
140. a
PAWINM
65
66
3
OPERT1 IO OEP118 ER
,550
3 TOTA
PJECT
COSTS
54
55 2MJECT
PROF0RA
61
A 1
2
2m
TI8O1
68
6.,716
-4
47,782
1,525,347 5,851,44 5,353,26
UAO COSTS
51
52
6
1.15
DCR
63 4,86
416O
7.510
8TA
275
84,568
191,472
517,30
DEELOPER
MWEE
.69
11.61
+"MiTy
13,653,488
LI
AREA
1998
15,W7
338,240
156,
u21,923
161,472
LEASE
7EMI8TI COETS
FI6CING
FEE
CLDSINS
COSTS
INTERI INTEST
DEBT
CN.
8ESJS
LOAN
35
6,764,8M
42,m
42,26
ALT
INTEREST
P1NTS
PLT
6
1989
5E3UOff
TEM(AM6)
s40.66
8F7
198
422,M
0I
42
43
44
45
.6
3m
8TR
CARS
10,147,2
8
A EFEES
SPAGE
PLA6NIN
FEES
PEWIT
FES
LEGAFES
INITIA LEASING
s
ESTATE
TAS
3
SA.ES
TAX
I6U13E
39
Q#
Vc
5
REA
37
4.56
- .6
9.58
7.86
RENTAB.E
I5.66
PARKA1,81.1
22PMJE'T COSTS
3
341
38
26
Z7
I C1T
39
32
33
34
V1CWCY
RATE
U6T ENTSW/YR
1
so
OR
CA
T
DISOS-CW
6,55,506
LCET
39,6
68,68 +TCDST
TuT7A
PEmE75
Ca
14INOME
FACTOR
31
FIMAMCIM
8R5TH
RTE
AL.TI-TDENf
8ETAIL
A 0l1C
AM OFICE
FI46CIA FTES
16,912,660COT
563,5884w
+ICOT DIS
16Q1E7
JOR878
ETAIL
P0
SAMS
;A MasWTIG6
6 CETS
8
DISCOUNTED CASH FLOW ANALYSIS
11,816.1
9.41
41.80
29.26
63.58
61,861.80
~
19.83
S16.37
$43.68
$4165
631.95 13.39 634.89
$1,%5.65
611.22
'16.73
147.73
$12.25
$54.43
S12.8
$2,59.78
15.09
41.61
$43.48
88,344.67
3
12,449.55
111.72
149.85
3646
138.18
15. 82
13,146.53
13,343.13
62,64.16
2
26
~
113
156.88
15
12,67
67 SKES
POSSIBE EE
PAM RETAILl
AOLT-TMATRETAIL
6A
811
M
73
.4
M
81,669
T
1,242,872
3.244,913 4,24756
82,0 885,316 964945
414,24
3.36,
1,66,638
12 LSS -RI- RErT
a4
5%T
IT
E873848176
8
2,
379, 643
47%,32
509
3,3,149,638
60393,766,429 3,935 919
.
122 4,491,537
835M296,
4,.113.
9 EVEMNEDAMPp.YSIS
U
Z4
D
E
6
F
1967
1988
414,Q4
CO6TICTION
LOWPINCIPA
8
K
L
195
35MISHLE CASH
FLOW
36
97
j
I
3
199
1991
1992
1993
1994
1995
19%
197
1998
9EV~~~ELX0ENT
CONiTETIONCO6TOIKE
N LEASINGOPERATION
OPERATION
OPERATION
OPERATION
OPERATION
OPERATION
OPERATION
ETI
32
2,379,63
36, 509
3 449,L2
.
4,693.656 SAES PRCEE
.9.446.8m
47,3924.791 1. 8, 297
-
17
1
a
768,72
767
78
25%
78
7576
78
71
76 71%
78
316, 467 345,612
33, 311,164
729
377,417
394,01
412,149
4, 65
450, 77
4383,573
4,591,781
5,814,23 5,39,894 5,475.689 5,7228,6
5,979,589
54,946
87,463 1,831,85 1,v6,334 1,126,85931,177,366 1,231,
6 1,385,933
2,896,168
ROSIMM
dq5%T
476
42,666
18
7OTA
WOACY
37
6P
13
%, &3
aM
0
A,99
388,360 269,96
p 964
33 452
383,13
359,8328
383,944 401,m
367,414
3,386,881 3,53,2906 3,68, 558 3,864,993
4838,59174,
4689, 4,816,
4,416,559 6m81,588
484 5,633,226 5,259,721
4 i9,0 517,2735 548,52
564,877 596,387 616,868 644,619 673,627
73,940
735,617
,148,
240
4,3,551
4,521,246 4,937,313
4,724,702
5,159,24% 5,391,669
5,634,295 5,867,838 6, 15, 791
6,
3,6044239 3,766,4
63
3, 93,919 4,113,
4.38, 122
4
5
209
1999
SAE
6
7
4,91,537
-14634,74
65
MlPERMAMEN1T
MRTSAE
lo aMUI
DEBT
SERVIGE
2,.872,088Basedlon DCR"d stabilized
M~NIl
(1992).
A2
M11981711tE
23,414,616 33,297,878Scen6as3 d an.85 loanto valu..
.#3
XTUR91 19A
25.414,2618
14x
OUSERVIC
,871.
42,871,1
8862,874,808
,86
.7
2,872,06
2,87,666 3,876,666 2,87, 8
2,873.866 2.873,
,870, 8
3414,616 5, 344,25 38,387,623 8, 165,954 25,84.281 24,51.55
24.835,885 24.686, 724 24.532,256 24,368,7%
74,401
91,669
101,753 112,946 125,371 139,161 154,468 171,460 196,321 1,244,134
2,795,647 , 787,433 3,778,
335 2, 768, 5
2, 757, 82 2, 74438
,738,847 2,715,544 2,68,548 2,679,688 24,171,475
A9BALLOON
PAYMENT
,17,75 31ll"
2.455,964)
498,40)
436,501
5714
734,231
8%,421
1.865,911
1,243,87
1,428,114 25,375,755
3k.3E
3,585
45T6IATIm
,s ATER
PMT.
11COH
FLOW
7E OUT
ERVIGE
13
.1 &E8.
3 85.3
16
17EFE-T
16
19
0
FLOW AA6YSIS
2
FLOW
A1EEC
cDST
3 EF30-TA CAM4
24
27
126
CONT71056MRTAG
D
1567
1986
1909
DEVELOPMENT
CON6TUtTl@NCON6TIG
N
(1,525,347)(21,724.1)
195
LE1N
3.) 12 32
(12.11846
21,724,194
35
E
4
F
1991
1998
1993
1994
OPERATION
OPERATION
OPERATION
ENTIO
(8&4.464
(44691)
1995
3
%53
3
.
1997
1596
it
66
4365,8M
D:tseT mTt
31
25,414,616
a
34 WETSEFE-TKCAWFLOW
61,535,347)
(49,4056
(5,361,36)
61,34,83)
J (2, 48564)
6
8,427,585)
579,14
734,231
85, 421
1,865,911
389,616
57,6 64
736.231
8%, 421
1,865,511 1,24"1627 1428,114 25,375,755
38
36
(3,504.862)
.5
604
.
NMTERN.
RTE OF EIA
B JIREDEilITY
7.5%
13, 653,. 42
A CT
1,243.27
4.3.506
LESS PEl6846T MORTiE
87
1,438,11435,375,755
66.
L
5
1999
OPERATION OPERATION OPERATION OPERATION
(26,634,074)
29
3.52
K
I
7
A
6
7
2
SALE
OPTION 3:
2 819MLIEDCMl9FUN.
3
T
2
LYSIS
DISCOUNTED CASH FLOW ANALYSIS
OPTIO 3: ALT1-TEMT RETAIL
4 F911TIONS
5.
61
7
CSTS
FINACIARATES
DIECT
IS
LN
11
PRJECT
CST
TUTA
12
13
14 INCOME
RETO
I5
16
MRi3
RETAIL(SAKS)
17
M2.TI-TEW3T
RETAIL
1
OFFICE
19
PARKIN
(PEM
CA)
29
1989 mo ET
D
197
29.0
LEASE
TERMINA3TIO
COSTS
43
44
45
%6
47
.8
a49
MARKETIN
DEELOPER
18ED
[IDECT
CONTIE1C
3ET98.
REERION
P~E
29,
TT6
1DIRECT
CET
461,835 6,16,3876
51 1.3AW CamS
52
53 TOTAPMJECT
OETS
54
559PET PROFORM
56
57
50
59
2
64
65
66
67
63
69
73
!
81
1,342,3
461.35 21,109,376 1,842,S1
1987
1988
DEVELOPMENT
CG6TiE3TI
_ __
'2
3 TOTAL
iMwliPOSSIKLEIINCOEE
___
IRMDEE
326,1
Of
E
DEUO
T CSTIETI
WASED
CASH
A.OW
52,120
29
83898Ei
EFOE-TAX
CASH
FLUW
3,NYSIS
3.A
ERNE-TAI
CAM FUO3
PIMECT
COSTS
F
E
D
198
41
.43
INTERNAL
FATE
OF ETIlM
iEGJIMED
EgJITY
344, vl
019
3,5
75
231,651
A
7
9ERATIO
2
SALE
456.88
059.84
22,674.97
22,795.34
0
0
3, 762,793 3,932.119
a
a
339,721
355,609
75
274,810
3,92,851
4,
12,514
4,287,127
75
287,176
3,651,41
3, 493,3826
338,099
3,815,33
3, 987,
375, 6M6 3M, 535 4Il, 251
359.5m
L
6
413.37
$13.98
352.09
054.43
041.61
643.42
2,449.52
2.559.78
3,756.795
72
262,976
5
1999
OPERATION
0
%S,713
272,,4152,8,
2, 614,752
2
374 2, 983,1166
3, 118,148 3,256 456
K
3,.405,37
3,55,316 SALES PROES
--.--.. 37,455,955
36,332,276 1,123,679
9
L
5
6
1992
1993
PERTION OPERATIOOPERATIO
2, = 374 2,983,2866 3,118,14
(199).
cost.
19.267,113
2,1757,7 2,175,787
215787
2,175,787
3,2586,46
3
2
7
2
1994
9
1995
10
19%
1997
SAE
3,4W5,07
2,175,787
2,175,787 2,175,787
2,175,787
L
22.29
2
1996
E31LSIG
(578,03)
1991
OE3I
(303,6491
79.11
76.1%
I
3
(27,132)
7132
K
J
4
1992
1993
OPERATION
(6)
326,368
1994
OERATIO
78.51
L
438,%5
556.629
67.95
2,670,287
679,587
2,358,62
304.079
2.045,38
942.353
a
9
5
6
1995
i996
OPERATIO
P 2
7
a
997
1998
1999
OPERATION
OPERATION
9
OPERATIO
1
OPERTIO
(8)
13,99616
19,267,113
0 (1.623,667) (3^,649)32,368
(461.835)
(1.42.257) (3, 466, 547)
(879,452)
4
43,965
299,
16.42
4.752.97 TOTACOETLES S6PE0RMENT
NTlilE
88
236
556,629
438, %5
679,587
L26 629
1,082
65.4%
(13,9S,616)
PERMIAENT
"GfBME
31
32
CF AFTER
337 3ERIC
i13
34 NETBERNME-T3
CAMFLOW
3
36
37 DEVEUl 3 ET386
38
39
3T PE3N 2
.1f
3,444,210
329.7
$12.82
49.85
139.82
52,344.67
6
I
a
3,297,323 3, 44. 72 3,60, 759
4
8
a
297,697
311,693
325.49
75
248,315
K
j
4
1997
1990
9ETI3
$11.72
$12.25
147.70
336.46
332.14
52,243.13
83,619
2, 29 782 3,111, 622 3,199,395 3,343,368
315, 03s
I
2, 732,415
H
2
199
(461,835)(21,109,379)(1,82,881)
TmE
78YM
4
2
3
1994
1995
1996
OPERATION
OPERTION
2,614,752
88.8% 85.41
197
CONSTRITION
1
1,623,667)
[EVEUOENT
CN6TI T
25
9,097,528
24,&20,0
3
1992
1993
OPERATION
I
1,875,138 2, 502,12
ERVIE
129
2
50
464
I.A.M3ENT
26
a
OPERATION
419,
19,267,113 19,211,79 19,148,i
19,078,684 19,01,
18,915,838 18,82. 794 12 715,294 18598,198 18.468,214 19.267,113
56,488
62,609
69.4%
77,146
45,636
95,44
132.499
117,134
129.986
144.284
943,193
2,119,32
2,113,178
2,1.6,291
2,68,646
2,V,161
2.00,742
8. 133 320 8.L3i 96IT.
8AL3NC
14
23
.20
a
2
Based
AMOlTIZATION
INTEEST
PA
27
OPERATI
ETION
13,99, 616
PRINCIRL
CASH R. ATER
DOT3
0
3
4
1989
1990
1991
LEASINGOPERATION
OPERATIONPERATIONOPER1TI O3E1TIO
11
247
!19
OPE1
N
-
7
6
0
H
1
1988
PEIN6
ENT108T98E
MA160
DEBT
SERIE
2,175,787
on DCR
and stabilized yew 31
00112U
19,267,113 2,417,017 855 LTVratio of total
13
ACTlLPRINCIPA
ACTUALD
SE31
IE
2, 72175,
737 2,1775,7
10
09
2,
381.464
4
a
F
1987
97 0NiTiETIG LOAN
PINCIPAL
12
9,097,523
3,014,644
3,150,33
3,2M,367
3.
3w
733 79
75
211,0 22,521
2,445
163, f
28,483
0
a
H14
a
F
552,120 1. 75,138 2,532,15
lEVERAGED
Pi.YSIS
38
39
2,
276,.me4
MET
WNTING
INCOME
32
13
97
93
252
721,207
1,933,423
LESiOERTI6 E PSES6
47
22
9
27,132
2,768,6382,884,827
EFFECTIYEa
LESSSAOIJM £
573,803
1909
1990
1991
LEASINGOPERATIONOPERTION
EF
TOTA.
WClMC1
25
L
5
1999
419,50
1,124,90
E
MAT0
1123WANE
AT EE
84
57813
_____
27,132
0
0
PARI(N
2
S3
27,132
4
0
4
3
2,645,940 2,765,07
2, 532,038
2,3489,433 3,019,457 3, 12 333
0
1
0
a
26L,871 272,616
23,867
22,638 249,637
26477
OFF112
S
K
419,850
31,650
167,94
83,973
124,645
2,25,447
156,AS
689,157
83,970
1,813,8M
50,382
251,910
927,29
63,97
49.80
$9.41 19.33 313.27
110.73
411.22
4.40
$41.84
$43.68
445.65
128.00
29.36
436.58
31.9
333.39
134.89
51,84.8
31,281.40 31,96.65
12,54.10
52,146.53
9O8RETAIL
2.TI-TEMANT
RETAIL
OFFIW
PA611
MAOR
RETAIL
'S
WEATIO
59,534
519,269
D
AttTI-TEWT
RETAIL
75
19g8
j
2
3
4
1993
1994
1995
19%
1997
1996
OPERATION
OPERATION OE1 ERTION 231 E
6,525,501
GROSS
POSSIBLE
INCOME
71
1991
LEASING
I
N
1
23,738
50
63
a
1996
IC
37,980
1,739,178
156,m
60,157
3,970
1,813,M
50.382
251,919
927,029
41,95
41,90
29, 92
419,850
1,124, 96
FT MICINi
FEE
C0OSIG
COSTS
INTERIM
INTEEET
42
1919
209,9!5
7,913
167,948
41,95
PERIT
FEES
LEA.
FEES
41,90
3
NTM.
LEASING
C00USS1ID
LEA!E-(P
RESE
E8.ESTATE
TAES
SAESTA
iMMUAMG
36
37
33
39
48
41
+s38
1.15
8,397,3A
INDIRECT
A A E FEES
Ji
SACE
P4.2l6FEES
31
33
34
1988
11.1%
+1i9
I
+61ITY
DEBT C..
35
6LT
127
F
E
EELEENT
0
26
27
21DIRECT
29
ASLTS
121 1
16.4%
4,752,97
OCR
T
I
64.AITA 63,318
FR FFA 622.23
0
SI,8m.38 CARS
PA
LW
4.5
MEN7LE AMA
S/w/YR
E
23SL
49.01
MTN
SAMSR
2PRECTCSTS
23
24
25
3,
PEi68ENT
FINANCING
8, 397, AN DCOST
6SINT RATE 3
3
9,897,520+ICOST
DIiC3 T
DR
12.01
INTEEST
PLI
6,525,506 LCST
DIS!LOP
CAP
9.51
POINTS
PLPIT
24, ,!0
3n + 7ET
WCC
RA1E
WE
7.81
. .EP
OE - 1.5
8IMIET
a8.679
67,587
942,33
a8t 079
1,642,673
15,237,657
942,353
1,882,678
19,237,657
S
OPTION 5:
DISCOUNTED CASH FLOW ANALYSIS
2. DISlIffED CASFLOW
AA.YSISOPTION
5: RENOVATION
4 AS8
TI8IE
FINANCIA
PATES
cam
DIRECT
IMECT
LAND
TOTAPMJECT
COST
3
10
15
1is
6,41,n
6.52,58
UWET
2,776,86
IMCEFACTOR
1989
AMON
RETAIL
(SAKS)
M.TI-TEAMNT
RETAIL
16
17
18
19
OFFIGE
PARK8IN
(PERCM)
23
24
P2
IN
DIOS-.C
T
M.ER.8EP
MitET
D
5, 461,539
35M
Len
COETS
28,397
a
8
462,813
21,397
8
a
H
I
3
1992
1993
PERTIO
1991
PERTIO
2
1994
5ERATION
D
K
4
1997
5EMTI5
L
5
3998
1999
OPERATION
2.424,923
594,396
2,534,44
621,144
2,648076
2,767,239
2,891,765
3,23,892 3,157,888 3299,984
49,492
788&2 678385
748,726 774,t58 881,891
E
2,977,8m 3, 31, 86
69, .44
631,
33,170 3,
3251,
837
838
683,884
31,86B
4,
8,
875
79
3,877,876
4,
1.809,224 2,346,767 2,452,372 2.562,172 2,; ,
3
K4
997 968 198
199
1991
1992
1993
LEASING
OPERATION
OPERATION
OPERATION
aETI
1994
3
K
345
1995
OPERATION
199
OPERATION
SAE
649.77
132.81
854
666
4,446,995
75
M381 4,234,738
897,399
.
3.337,339SAESPRCEDS
.- 35,129.885
34,675,988 1,43,897
A
L
2
8
22257
858,
73
2. 798 564
2, 924,499 3.. ,191 3. 193.26
-
51
M
7
OPERATION
4,293,775
75
241,394
752, 524 786, 388 821,775
72m119
689,19
F
2
N
!997
OPERATION
199
6
P
7
1999
OPERATION
8
SAE
3.193,26
Based
2.844,667
on DCRandstabilized year 853 (1992).
8,678,597 17,6 651 . 85%LTVratio of total cost.
18,078,597
44,667 2,848,667 2,848,667 2,840,667 2,848,667 2,
2,
64,
84,
667 2,844,667 2.844.667 2,84,667 2,
667
:8, 871,597 18,817,695 17, 5,974 17,893,75 17,821,445 17,74, 137 17,651.995 17,53
17,44. 215 17,321,301 18,071,597
52,901
58,721
65,I86
2,35 86,38
89,142
98,948
169,632
23,9313 135.324 884,619
!,387,766
1, 9, 317 1,
359 1,951,525 1,94.7119
1, 938, 835 3.918,754
_PAYMENT_
_.15,977 BALD"
3MT.
3.353. 577)
,231. 443)
386.8
411,705
522.861
637,384
757,8%
647
6LJINCE
AN34T13TIO
INTEK3
9
1,981,946
1,975.447
4EME6WNM
9.68
0
81.99
84.75
87.6%
E
EFDRE-TA
CASH
FLOW
(352,6885)(,3,&39)
PRWECT
COSTS
557667565 r
CSTREUONMINTIM
3
1992
WERATIN
(1,534,2%)
1993
1994
4.2%
73.9%
1995
OPERATION
5
39%
@PEMTlal
(28.397)
It, 4%0
448
3 11, 488,
I
6
1997
8
6)
OPENTION
38)
8l
444)
8
33,353,577)
(231,443)
386,388
411,745
327,442)(2,887,7831
(694,256)
277,73
411,M785 52. 61
3,26&,171
32.6
2.705,463 TA.CDST
LESSPEROff
LOAN
89
52861
637,384
63,832
17,183,5977
1,15,434
18,
84
9
K
1998
38,878,597
(352.
985 343
1,
69.75
I
H
4
(462.8133
.35
38
WV.16
76.7
33,48%448
MAYBEK
(
PERMANENT
MRTGAGE
31
32
OFAFTER
DEBT
SERVIG
.23
34 7 AC3EF73E-TAOE1 FLOW
19.2
6
F
2
1
.987
1988
1989
1998
1991
DEVELOET
COSTRETION LEASING
OPERATION
RATE
7 3E58
A
6
3,8446,44
,6"3,
845,291 883,329
23,999
687,851,889,224 2,346,767 2,432,372 2,562,728 2,678,851 2,7%,564 2,924,499 3, 56,38
6TU75.
PRINCIPA
ACTUA
DEBT
SERVIGE
ilQIAEDE2ITY
32
11,4 3 ,444
PEmvUvN
MOTGAGE
m5l8)
DEUT
SERVIGE
M5Ilo
PRICIPLE
WET PEENT
8466
j
3
1995
19%
OPERATION
2,5U9,3A 3,19,319 3,33, 188 3,297,171 3,443,544 3, 6, 5953 3.762,62 31,933,38
71%
258
75
75 7%1
7% 75
75
177,383
385.3 5
93, 787 221,.52
233,33
OYLPE
T ETIm
INE38t.
356,888
20.776,86
8
F
687,558
FLOW
ANALJSIS
13 OE-TAX CASH
39
44
43
64,116
7,839,568 7,639,568
1,624,328 686,231
CAM RIMA-TER
DEBT
SERVICE
306
3:
SAE
1,124,98"
FLC4SH
29
a
328,558
3,264,95 2,413.8
17CDNSTEIOZLOAN
PRINCIPA
361
2s
27
33EMTICN
N
7
1,816,977
0
t2
A
1999
797,774
64,118
2,328,588
568.88
33
34
i3
OPERATION
6
192,338
1989
199
LEASINGPERTIO
1932
1
.b9
L
398
139,671
32,M
577, 8
.86
867
5
1997
89.8
89.41
89.83
838.27
q'a "
I)I!2
111.72
112.25
112.88
133.37 113.98
. 835.8
36.58
238.22
t39.94
643./4
j;
.
58
847.63
838.88 138.81
S19.66
828.54
121.47
122.43
123.44
124.58
$25.68
126.75
$27.95
81,888.88 81,8.880 13,982.63
2,494.38 2,14.53 2,243.13 12,344.87
12,449.6 12,559.78 12,674.97 $2,795.34
1221565873GROSS INCOM
LEVERGED
A
YSIS
23
8a4
I
519.291
64,118
3,813,8
88
1987
1988
6.DEWLAlff C ETEI N
2
.9
4
1996
@EMT113M
PEMTI31
8683913S
POEES
37
.4
3,268,171
2,745,463
K
3
1995
43,348
67,935
28,397
1, 42,899
394,878
1560.
E
LES-UNRN
8
AmL
1.15
OR
MY
11.8
EWITY
32mme
48,956
325,32
1,334,206
462,813
D
20.C@B1N
mAIJETAIU
19
0
6
1
36,713
352,645 18.398,839 1,534,206
6
6t MENTS
62
8.5
1ETAIL
63
M2TI-TEM
T
1ETAIL
64
OFIGE
65
PARKING
66
67 GOS POSSIBLE
ICOME
66
.JORETAIL
69
mi1-TElT RETAIL
I's
OFF3CE
71
PARING
72
1 TOTA.
SM PO1SI3.EINCME
'41
15
LESSWCY AT AVwE RATE
's TOTAWICACY
77
52
PLI
6,525,5m
3 TOTA.
PJ3ECT
COTS
54
ZPROJECT
PROFORM
57
58
35
INTEEST
PLPT
EBT CN..
3INTS
7.0%
F
1998
INTERIM
58
411
E
18
8
59
12.1%
2
1987
1969
199
1
3953
394
DEWELIPINfCN6TMEION
LEAiINGOPERATION
OPETIG OPERATION @ERATIl1
TUO)t.
D88ECT
COSTS
AMLS
PLT
8
JECT COSTS
25
LW
PERANENT
MOFT)
AREA
RETAB.E
ENTS//V
27
28 DIECT
6,411,8M
29
36 IIECT
31
A E FEES
168,275 168,275
32
SPAGE
PLANNING
FEES
32,238
33
PERMIT
FEES
35,28,
4
LEGAL
REES
32.5
32,0I
35 INITIA LEASIN
C13MSS1ONS
3
LEASE-69 6ESEM
37
RFAESTATE
TA1ES
38
SAES
TA
519,291
39
IN)8m
6
64,11
40
LEASE
TERINATION
COTS
1,a81,
41
FINACING
FEE
31,466
42
CLOSING
COSTS
192,338
43
INTEREST
757,774
44
MRKETING
32.5
45
DEVELOPER
MNERE
168,275 16,275
46
1IW1EC7 CNTINiEEY
47 METR.
REVERSION
PAYMENT
1,124,988
49
59
51
52
:8M8CIn
6R
4.52
3558TE
DIM
1
Do
CP
9.5%
WAICY RATE
VC
DE
2.058
9.
Sli(5
8
135.NTA
66,388
FROFA 31,688
III.
CA
SI=S 88
8T
88
88
PAI61,888.88
29
21
SOMTHFATE
7,839,56w +ICMTp
DoETu
757.896
88U3832 3,635,434 18.04.970
637,384757,89%
883,832 3,515,434 18,842,971
7
3999
OERATION
3
OERATION
9
OEARTIO
1
S
321
OPTION 4:
2 DIENTED CAEH
FLOMANALSIS
OPTIO 4t
DISCOUNTED CASH FLOW ANALYSIS
30
RETAIL
MI.1-TE19
OFFIGE
4 RiMIPITIG
FINACIAMTES
&caES
I
DIECTCOT
9 16I1CT
CET
1s
LAW
COT
TTA. P9METCOT
It
13
15
Dm7
19,92,85.2 +ICO5T
45255 LCOST
47,42,352 +TCOET
12
14IDCE
FATO
1s
17
18
19
2138T PATE
DISCLT .
DI@9S.CAP
WAACY ITE
AVE.EO.PLEIP
21,66,668
1989 191
O) 61ETAIL981
LLTIT-TENAT 1ETAIL
3FIG
PAWING
9 ERCPA)
9ENTS/9/YR
99.:
SAMSi
4.55
R
Tl
12.06
CM
INTERE5
POINTS
OBTC(N..
9.5%
7.86
21.1
WAC
E
(owT)
0
TA
1,795,90
57,61
511 u COTS
52
53
54
6,
TUTA
P1117ECT
COETS
6,613,92
4,356,41
296
1987
1%8
EIE2LJ9T C06TREC10
6631
2 R681
1
6
62
1989
7ETAIL
1
89.80
144,6.
19.66
67 GROSS
POSSIBLE
INCE
68
*TAIL
D9K -EW ET AIL
74
MUJOR
R
T3TA
78EFCIRGINCAT
74Act
mm
101.11
1381
.2
2
1994
I
3
19%
1995
L
1997
1ERATI
LEASING
4
EMTIIN
87
33
34
~
NiTR1111
U
0
~
E
97
4
46
31 ,
'143m
(34,8
I'7
6
8
A
199%
89.41
$41.81
829.26
1993
$9.83
1
1995
@7PE11
$11.22
SI.73
47.73
633.39
$1,881.0S1,%5.65
62.654.1652,146.53
TI7I
149.85
13. 89
K
J
1
1994
OERTION
Sl1.27
45.65
431.95
643.68
436.58
47,42,352
H
E1MTICI EMI1TII
648, 3 73.
98292
1,
5, 173,566 5. 444,349
199
2
1998
32EM1TI8
1997
@EMTIO
L
3
1999
@GUTIO
AL
111.72
S12.25
I12.86
413.37
U3.44
S1.8.16
43. 82
2,559.78
12,674.97
I
5
141.51
PRINCIPA
5.173,54
143.448
12,795.34
161, 19
1,
L,696,261,1,617,496
766, 1,
349
845,&34
1,98,897
5, 649.635 5,983, 869
64169,543 6,447,172 6, 737,295
7,
547, 845
2,
15,697
646,
4737,357,295 SAE p9rC5
1993
OEIRTIm
5,46,349
I
I3
1994
1995
OPERAN
5, 649,G&Z 5,
3,869
I
19%
OPERATION
K3
1997
4
196
'999
OEJTION
6, 169,543 6,447,172
6,
OEMTIN
737,295
5
6
266
7,6,473
442
A
8
OC EMI-TK CAS FLO (1.715,911)
&DEWN
EM11D
E17TY
ETI3
6
7
ALE
39,837,3311
(7 CFATER
DOTSilVIG
37 DEWM3
RETIM
38
NE
VALfE
43
SL
Based
.0 PENIANEm
NOTMAE
iNTEROW
FATEOF62
7
OPERATIm
32,722.282
8
8
6 (3,849,749)
176,789)
92.687) (8.27,79)
674,816
(2,133,312)
36
,1
6
9E
4
,4
A
4
2
3E78TI
$52.69 154.43 154.86 159.44 813.96
162.12
12,243.1382,344.67 12,449.55
H
1996
1991
1992
LEASING
OPERATION
@IETIO
648,982 3,73,22
.02
.63
3334
m
19,962,852 19,982,852
DEBT
.31
a
16M
166.0
98II DEOT
SERVIGE 4,49, 731
on OCR
and stabilized owr NO1(1992).
9811Mo
PRINCIPLE
39,837,338 46,314,099 S.co basedo 4.85 loa to alue.
A.TK
PRINCIPA
59,837,33M
04 AC COTSEWNIGE
4,4%, 731 4,496,731 4,49, 731 4,496,731 4,49,1731 4,498,731 4,498,731 4,496.731 4, 49 731 4,496,731
i4
443961
39,837,338 39,726,714 39,591,262 39.447,571 39,268, 73 39,111,63 38,914,513 3, 6,379 3 , 454,258 3, 185,487 39,837,338
.47 .6 T63727
116,623
129.452
143,692
159,496
177,
643
96,517
218,134
24.3,129
.6&,763
9. 327 1,354.178
4, 47E67
3,342,167 4,369,279 4,3,439
4, 339 233 4.321,686 4,302,213 4,280,5% 4,256,62
4,229.968 4,26,44 37,887,164
.#9BALL"
PAYEN
7,8637,
16d
B814O
PT.
. CASHFLOW
TER
SERICG
13.849,749) (768,789) 674,81
917,619 1, 150,915 1,'45,138 1,676,812 1, 94.
2,3.2 54 39,776,433
A2
.13
.4 8898E2E
89.35
86.3%
3.5
84.75
72.1%
75.6%
73.2
78.9
68.75
15
14
17BEF0E-TACASH
FLOWANALYSIS
0
E
F
4
H
I
3
K
L
.is
19
3 3
5
as
:987
196
1969
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
'on
387ELOmENT 067TRETIOCON6TRE7
CTI
LEASING
GEMTION
3EMTI
OERATION
@ETIN
OPERATION
3E7TI14
OPERATION E3MTI2
22
23 EFR0E-T
CAH FLO
4
ECTcaT
(1 5,9M8)(24,922,1011415.13,95) 14,356,8411(1,34,683)
(63,783)
(6)
(8)
26
co67TMTIi7 m E
24,M 211
7,16S, 112
27
28
7Yn06
(32.722,22)
29
s.39
2
8
F
199
t96
mQiREIC~TEi
:0 PERIAENMOGE
61
O
TI
@
- 77.445,27
~5,121,850 2,323,356
3 N6CASH
FL13.
37
36
?9
a
@PERATION
299,43
8
1,297,963 1,3564372 1,417,40
S
89dEWGD
AWLYSIS
8
32
7
5,116,393
EXPENSES
INC
31
6
211
OPERTION
i,6M6
PRCnES
SALES
86
0
4
5
1999
1991
-
6
2,^3808
2,411,66 2, 52, 394
2, 633,11
2, 752, 3, 333
5, 616A 2,876,
3,144,869186
3,3 , 26 3,429, 906 3, 54,23
3,81, 8 3,962, 286
4,161, 489 4 346, 756 4,544,456
4,748.950
4,962,53
5.419, 341 5,643,211 5,912386
5.185,972
371,616
387,712
405,159
423,391
442,15943
43,
527,
564,
462,
22
353
962
551,365
576,177
64489,816 (4781,6
7,167,641 7,48,96
7,739,226 8,167,491
451,429 .8831,743 9,229,171
9,644,484 16,878,486
769
25l
79
79
75 79
79 79
75
79
79
4,542,871 1,69,464
4%,.93
518,417
591,66
612.322
541,746
675.114
646,834
566,124
7n5494
1,946945
6,9M,946 1.467,5461 7, 197,48 7,521,367 7,89,829
8,213,521 a, 5"3 129 8, %9,37
9, 372, 992
7TUTA RSS POSSIBLE INME
15LS 6qCY ATAVERAE
RATE
O
LEMS (1EIATM
63,783
1991
LEAING7
6ETIDI
SI,8,26.6
0
63,783
F
1996
63ALI-TDEW
RETAIL
76
1,384,63
E
41
12.,
52,50
55PROTECT
PROFORA
58
4,44,
+"m
7,591,614
+*EwITY
FACTOR
@FA
82'.86
1,765,96 24,922,166 15,613,925 4,358,641 1,34,683
54
57
59
-ER.LTS
35
+4IRM
6i7TIVITY
57 78
@FR
am
41,866.60
21
aP01JECTCETS
S
E
F
8
N
23
24
1
25
1967
19M
1989
199
1991
19%
1993
SDEVELOPMET
CD6TWREIMC6TWIC7
27
28 DIELT1,6R
M
8,wm a 48,
1111
29
36 1661677T
31
A8 EFEES
525,.3
5
25,.6
32
SlEPLANING
FEES
24,225
72,675
33
PEW1T
FEES
4,3
34
LEGA
FEES
52,5w
15,80
52,w6
35
IN1TIA
LEASI6
C3I06
91,782
143,868
63,783
3
A- RESERE
4,6,564
1,22,734
37
E9 ESTATE
TA4ES
156,0 w
566
3 SAESTAX
1,2e,60
680,46
39
IM3.0ouE
12 , m
14,66
46
LEASE
TERNIITIOCOSTS
1,813,"
41
FINANCIN
FEE
126,1w
42
CLOSING
COSTS
69 38,8
43
INTERIM
16TE
4,63,8
44
986(TI11
i5,166
AD 8
45
DEVEL2I2ER
9668E
35MR
35,38
356,3m8
525,38
525,30
1I6EC0C71TNEOC
46
41 ET. .E1E1l0 9 PAYMENT 778,410
Sam
525_00
TUTA19I1CT
C31T
Ur
9.T
11.01
A
1.15
AL
931T
OCR
6)TAA.E AWA
SLA
6A.6
TR
PARA
PElgMENT
F138CKIN
a
4,4660
1.14
7,591,814 TOTACOETLESSPEW6ET XXTSME
90
967,619
411,6
1,
156, 915
967,619
1-W5,138
1.150,95
1,670,812
1.4&5.138
1,949,W
1.676.812
2,3544 3%77643
1,948,4Q2
2,232,564
39,7
OPTION 4:
SENSITIVITY ANALYSIS TABLES AND GRAPH
SENSITIVITY ANALYSIS
INTERNAL RATE OF RETURN
5.0%
6.0f
7.0%
8.8%
9.0%
11.0%
11.0%
12.0%
13.8%
14.0%
15.8%
OPERATING
15.0%
25.2%
24.3%
23. 4%
22.5%
21.7%
20.2%
28.2%
19.5%
18.8%
18.1%
17.5%
9.0%
9.5%
1@.@%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.a%
2.0%
19.9%
15.5%
13.0%
11.3%
10.0%
9.1%
8.3%
7.8%
7.3%
6.9%
6.5%
+SIRR
VACANCY RATE
7.8%
28.0%
4.5%
11.0%
VACANCY
OPERATING EXPENSES
GROWTH RATE
P.L.INTEREST RATE
EXPENSES AS PERCENT OF GROSS POSS. INCOME
17.5%
20.0%
22.5%
25.0%
22.0%
19.4%
17.1%
15.1%
21.3%
18.7%
16.5%
14.5%
29.5%
18.1%
15.9%
14.0%
19.8%
17.4%
15.4%
13.5%
19.1%
16.8%
14.8%
13.0%
17.8%
15.7%
13.8%
12.0%
17.8%
15.7%
13.8%
12.8%
17.2%
15.1%
13.2%
11.5%
16.6%
14.6%
12.7%
11.1%
16.0%
14.0%
12.3%
10.6%
15.4%
13.5%
11.8%
10.2%
27.5%
13.2%
12.7%
12.3%
11.8%
11.3%
10.4%
10.4%
10.0%
9.5%
9.1%
8.7%
30.%
11.6%
11.1%
10.6%
18.2%
9.8%
8.9%
8.9%
8.5%
8.1%
7.6%
7.2%
INTERNAL RATE OF RETURN
+$IRR
INTEREST RATE
GROWTH RATE
4.0%
6.0%
33.7%
-363.1%
25.4%
36.7%
21.1%
29.6%
18.4%
25.5%
16.5%
22.7%
15.1%
20.8%
14.0%
19.3%
13.1%
18.1%
12.3%
17.1%
11.7%
16.3%
11.2%
15.6%
29.7%
19.8%
VAC
15.9%
16.4%
16.8%
17. 2%
17.6%
18.1%
18.5%
19.0%
19.5%
28.80%
20.5%
OFFR
78.6%
4.4. 4%
32.7%
26.2%
21.6%
18.
1%
15.1%
12.5%
10.1%
8.0%
5.3%
8.0%
ERR
ERR
39.3%
33.8%
29.1%
26.5%
24.5%
2.95
21.7%
10.0%
ERR
ERR
ERR
41.7%
36.1%
32.4%
29.8%
27.8%
26.3%
25.0%
24.0%
12.0%
-417.5%
ERR
ERR
ERR
44.0%
38.9%
35.4%
32.9%
31.0%
29. 4%
28.1%
OPEXP
10.6%
11.9%
13.3%
14.7%
16.3%
18. 1%
PLI
10.4%
11.1%
12.0%
13.3%
15.1%
18.1%
24.8%
INTERNAL RATE OF RETURN
GRAPH
DCOST
CCOST
6.5%
7.9%
9.7%
11.8%
14.5%
18.1%
23.4%
33.4%
77.5%
50.8%
40.0%
30.0
a
18.0%
10.05
-@05
-18.8%
-28.0%
-30. %
-!a. 0%
-50.0%
INTERN1AL
MTR
32.9%
28.6%
25.2%
22.5%
2M.17
18. 1%
16.2%
14.5%
12.3%
11.5%
10.
1%
T
22.2%
24. 7%
27.7%
31.4%
RETURNFI
OF
34':
1
I
AI"
Z
LA.
CC".A
c
1 4'n
'r_0 SIT
-fl':
-
10':
U':
91
it:':
14.@%
-434.5%
ERR
ERR
ERR
ERR
46.3%
41.6%
38.3%
35.8%
33.9%
32.4%