project development report 500 ferguson drive mountain view, california mona hassen brandy bridges...
TRANSCRIPT
Project Development Report
500 Ferguson DriveMountain View, California
Mona Hassen
Brandy Bridges
Juan Barrios
Nate Johnson
Wendy F. Wang
Chris Thompson
CEE 248May 28, 2002Amitis Pourarian
Project Background: Location
Project Concept
• Site size: 10.5 Acres• Site owner: Kalcic family• Development agreement
only; property owner retains deed
• Land previously used as apricot orchard
• Project bisected by VTA light rail right-of-way
Important Site Issues
• Environmental Issues• Easements• Site drainage• Seismic• Geotechnical
Zoning Information
• Currently zoned ML district: 0.35 FAR; will apply for T-zone overlay with 0.5 FAR
• On- and off-site improvements required for T-Zone overlay
• $3/sf for pedestrian and bicycle improvements
• Minimum 20 ft. building setback• 2/3 of site required for landscape
Project Concept: Flex Tech
• Two four-story, L-shaped buildings• Surface and podium parking• 16 ft. floor-to-ceiling on first floor• 14 ft. floor-to-ceiling on second,
third, and fourth floors
Site Plan
Amenities
• Adjacency to Highway 237• Garaged parking• Bicycle parking• Access to light rail and transit• On-site service facilities• Outdoor recreational facility
– Healthy tenants are happy tenants
A Great Opportunity
• Project satisfies need for lab space on the Peninsula
• Development already approved by City of Mountain View
• Proximity to premier biotechnology research institutions (Stanford, UCSF, UC Berkeley)
• Proximity to Highway 101, Highway 85, and Highway 237
Market Analysis
• Mountain View: Heart of Silicon Valley• Intensive public transit effort
underway• Location of notable companies
including biotechnology ventures• Much available office space on the
Peninsula, but little available for biotechnology
Mountain View Office Space
Mountain View R&D/Office Historical Available Square Feet
1,129,841
987,883
842,234
552,120
261,890
191,822
435,0291,092,227
1,684,683
2,223,759 3,180,030
3,904,378
3,938,335
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000
1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02
Rent Distribution on the Peninsula
• The following bell-shaped curve shows the distribution of rent rates in the following areas (Palo Alto having the highest rates):
Palo Alto/Menlo Park Redwood Mountain View
Sunnyvale
San Mateo
Burlingame Santa Clara
Mountain View Rental Rates
Mountain View R&D/Office Historical Rental Rates
$2.565 $2.621 $2.744$3.026
$3.499
$5.686
$8.169$8.629
$6.027
$3.943$3.093 $2.972
$1.810
$-$1.000$2.000$3.000$4.000$5.000$6.000$7.000$8.000$9.000$10.000
1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02
Total Development Cost
Total Per SF (Gross Building)
Percent of Total Development Costs
Land Acquisition $11,857,903 $52.00 18.49%
Hard Costs $36,606,937 $160.53 57.08%
Soft Costs $15,668,300 $68.71 24.43%
Total Project Costs $64,133,140 $281.24 100.00%
Timing and Source of Funds
PHASE: Land Acquisition
Pre-Development
Construction Permanent CUMULATIVE FINANCING
Owner’s Equity $ 11,857,903* $450,000 $10,754,103 $23,062,007
Construction Loan
$ 49,051,220 ($49,051,220) $0
Permanent Loan
$41,071,134 $41,071,134
Total $64,133,140
Maximum Loan Amount
Criteria Implied Maximum Loan Amount
Loan To Cost 0.85 Maximum $54,513,169
Dollars / SF $200 Maximum $45,607,320
Loan To Value* 0.75 Maximum $43,031,750
Debt Service Coverage** 1.25 Minimum $41,071,134
Operations and Project Returns
• Assume $2/sf and 7% vacancy rate– ROE = 4.11%– Rent NNN = $5,089,777– Vacancy = $356,284– NOI = $4,733,493– Debt Service $3,786,791– Free Cash Flow =
$946,701– Owner’s Equity $23 MM
• Assume $2.75/sf and 7% vacancy rate– ROE = 12.37%– Rent NNN =
$6,998,443– Vacancy = $489,981– NOI = $6,508,552– Debt Service
$4,205,031– Free Cash Flow =
$2,303,521– Owner’s Equity $18 MM
Project Schedule
• Complete Lease-Up by 2006– Commence project in May 2002– City approvals complete by March
2003– Engage architect concurrently with
initiating approval process – Construction duration 400 days until
September 2004