Equity Partner Package

Quarry Hill MultiMulti-Family Development
Investment Offering
PRESENTED BY:
THE LARRY PEEL COMPANY AND
ROSALES PARTNERS REAL ESTATE DEVELOPMENT
2008
Quarry Hill MultiMulti-Family Development
Investment Offering
Table of Contents
Development Summary………………………………………….…………………………………...2
Area Map………………………………………………………………………………………………...3
Site Aerial Map…………………………………………………………………………………………4
Site Plan…………………………………………………………………………………………………5
Unit Mix & Market Rents…………………………….……………………………….……………..6
Market Analysis…………………………….…………………………………………………………7
Direct Market Comparables………………………………………………………………………8-9
Market Analysis Summary………………. ……………………………………………………….10
Population & Employment Growth ……………………………………….…….…….…....11-12
TXDOT Planning………………………………………………………………………………….....13
Partnership Structure and Financing…....……………………….……………………………..14
Seven Year IRR Projections……………………………………………………………………..….15
Replacement Cost Schedule……………………………………………………………………….16
About the Developers...…………………………………………………………….…….……17-18
Contact Information………………………………………………………………………………...19
1
Development Summary
Quarry Hill is being developed as a 148 unit for lease, infill project in Southwest Austin,
Texas. The superior location of the site is just west of “The ‘Y’ at Oak Hill” - the
intersection of Highway 290 and State Highway 71. The two main arteries of ‘The Y’ merge
to create a corridor leading to the heart of Austin. Independently, each of these highways
has attributed to the growth of Southwest Austin. Highway 290 is the gateway to the Texas
Hill Country, and Highway 71 connects Oak Hill to the thriving city of Bee Caves and the
Lake Travis area.
The heavily-wooded site is 7.571 acres or 327,440 square feet with a density of 19.6 units
per acre. Quarry Hill is surrounded by 30 feet of natural vegetation and will have limitedaccess gates providing residents privacy. It is located on the southeast corner of Highway
290 and Convict Hill Road, and will be highly visible from “The Y” as a result of the varying
topography and 922 feet of highway frontage.
Quarry Hill will feature an elegant clubhouse & information center overlooking a resortstyle swimming pool with sundeck and courtyard. On the lower level, the community will
offer a fully-equipped fitness center, spa, sauna and lounging area. The exterior of the
development will feature native Texas stone, natural stucco, cedar entries and barrel-tiled
roofs. The six residential buildings will be two and three stories and include 92 one
bedroom, one bath units and 56 two bedroom, one and two bath units in addition to 34
private garages.
The units will feature tiled entries, kitchens and baths; large, private patios and balconies
with Hill Country views; high-quality countertops; designer cabinetry; 9’ ceilings and plush
carpeting. Select units will feature upgraded wood-like flooring, gas fireplaces, built-in
bookcases, stainless-steel appliances, kitchen islands and stackable washers and dryers. All
units will be wired for telephone, cable and high speed data, as well as full-size washer and
dryer connections.
Nalle Woods
Nalle Woods’ Resort-Style Swimming Pool
8
Quarry Hill will be developed with a heavy environmental focus and dedication to
preserving the surrounding natural environment.
2
3
8
4
5
Quarry Hill Unit Mix
The development offers seven floor plans ranging in square footage from an innovatively
designed 615 square foot one bedroom to a luxurious two bedroom with 1,215 square
feet. There are a total of four one bedroom floor plans and three two bedrooms plans.
NO. OF
UNITS
36
UNIT
TYPE
A
DESCRIPTION
OF UNIT
1 BD - 1 BA
SQUARE
FEET
615
TOTAL
SQ FT
22,140
MARKET
RENT
$800
RENT
PSF
$1.301
ANNUAL
INCOME
$345,600
2
2A
1 BD - 1 BA
661
1,322
$825
$1.248
$19,800
27
1A
1 BD - 1 BA
770
20,790
$940
$1.221
$304,560
9
1A-FP
1 BD - 1 BA
770
6,930
$965
$1.253
$104,220
12
3A
1 BD - 1 BA
850
10,200
$1,050
$1.235
$151,200
6
3A - FP
1 BD - 1 BA
850
5,100
$1,075
$1.265
$77,400
22
4A
2 BD - 1 BA / DEN
975
21,450
$1,175
$1.205
$310,200
18
B
2 BD - 2 BA
1,150
20,700
$1,375
$1.196
$297,000
10
2B
2 BD - 2 BA
1,215
12,150
$1,450
$1.193
$174,000
6
2B - FP
2 BD - 2 BA
1,215
7,290
$1,475
$1.214
$106,200
148
Total
128,072
$1,064
$1.230
$1,890,180
Avg. Sq Footage
865
One Bedrooms 92 or 62% of total units
Two Bedrooms 56 or 38% of total units
Nalle Woods’ Kitchen & Dining Room
Village Park Private Balcony
8
Private Garages 34 or 23% of the total units
6
Market Analysis
Overall Market Con dition
The 4th Quarter M/PF Yield Star Austin Apartment Report indicates a total of 157,035 multifamily units in the Austin MSA. The apartment occupancy for the Austin metro area stood
at 95.3% holding above the 95% threshold for an 8th consecutive quarter.
The average rent growth of 6.1% for Austin in 2007 was notable. When compared to the
57 major metro markets tracked by M/PF, Austin earned the No. 8 in the nation. Austin is
reported to have almost doubled the 3.5% rent growth average reflected for the nation as a
whole and surpassed all 27 Southern region markets including other major Texas markets
such as Dallas and Houston. The average rental rates are reported at $816 per unit or
$0.97 per square foot.
In addition to favorable rent growth and stable occupancy rates, the Austin metro area
absorbed 1,820 units, even after delivering 4,856 new units to the market. As a result of
strong job growth averaging 4%, Austin is ranked as one of the top Cities to live in the
nation. Austin added 29,100 new jobs in 2007 and has an unemployment rate of 3.6%
which is well under both the Texas average of 4.3% and the national average of 4.6%.
Sou th west Market
The Southwest sector of Austin has been an ongoing market leader, and has reported
occupancy rates of 96.5% with an average rent of $1.05 per square foot. The Southwest
sector delivered 849 new units to the market and absorbed 820 units in 2007. Rent
growth remains strong and increased 5.4% over 4th Quarter 2006.
This year should prove to be no different with projected absorption of 750 units outpacing
the number of new units scheduled to be delivered to the submarket totaling 620 units.
More remarkable, only 396 additional units, including Quarry Hill, are slated for the
construction pipeline. Currently, there are no new developments planned in the immediate
Quarry Hill submarket.
Nalle Woods’ Pool & Tower Loggia
Nalle Woods’ Clubhouse
Market Analysis
7
Direct Market Comparables
Quarry Hill will compete with eight direct comparables - five are established communities
and three are new construction developments. The immediate submarket has
outperformed the overall Southwest submarket as a result of a small cluster of high-end
product located on the fringe of the Hill Country.
All direct comparables are gated communities, except for Windsor at Bee Caves. Each
development offers a clubhouse, swimming pool, gym and business center. Private
attached or detached garages are available at all comparables, except for the Alexan
Galleria which features a gated, four-story parking garage.
Existing Properties
Yr Built
No. Units
Occupancy
Avg. Sq Ft
Avg. Rent
Rent PSF
AMLI at Lantana Hills
2003
262
93%
964
$1,090
$1.13
AMLI at Lantana Ridge
1997
352
95%
881
$918
$1.04
Hudson Miramont
2005
276
96%
1,010
$1,050
$1.04
Legacy Western Oaks
2002
477
97%
977
$1,094
$1.12
Preserve Travis Creek
1999
606
97%
957
$1,095
$1.15
1,973
95.6%
970
$1,050
$1.09
AVERAGES
New Construction
Yr. Built
No. Units
Occupancy
Avg. Sq Ft
Avg. Rent
Rent PSF
Windsor at Bee Caves
2007
293
80%
1,033
$986
$0.95
2008/09
309
2%
949
$1,405
$1.48
2009
276
0%
875
$1,006
$1.15
Yr. Built
No. Units
Occupancy
Avg. Sq Ft
Avg. Rent
Rent PSF
2009
148
0%
865
$1,064
$1.23
Alexan Galleria
Residences at Bee Caves
Subject
Quarry Hill Apartments
8
Standard unit amenities include 9’ ceilings, washer and dryer connections, microwaves
ceiling fans, walk in closets and outdoor patios. Windsor at Bee Caves, Alexan Galleria and
AMLI at Lantana Hills provide washers and dryers in each unit. . Fireplaces are available in
select units at all projects, except Windsor at Bee Caves and Alexan Galleria.
8
9
Market Analysis Summary
Quarry Hill is being projected at the most opportunistic time considering all of the
development signals in Southwest Austin are favorable and provide solid indicators of
developing this infill, garden-style community.
•
Occupancy benchmarks above 95% for 24 consecutive months
•
Absorption rates have surpassed the amount of new units being delivered in the
submarket, and are projected to remain at this level
•
Limited supply of 396 new units projected for the direct submarket
•
No new multi-family developments planned in the immediate submarket
•
Limited amount of land available for multi-family developments in the
submarket
•
Built-out market creating a desirable infill location resulting in increased
demand
•
Job growth is expected to remain above both the local and national averages
well into 2009
•
Visibility from Highway 290 surpasses all direct comparable locations and will
favorably influence the volume of leasing traffic generated for the development
•
Direct access to Downtown and the Texas Hill Country via Highway 290
•
Proximity to major employers including Freescale, ACC and Seton Southwest
•
Neighboring single-family residences allowing for a quiet residential setting
•
Unique and efficiently designed floor plans with large private patios some
overlooking the Texas Hill Country
•
Proven desire to live in Southwest Austin
•
Reputation of award-winning development partner, Larry Peel
8
These factors coupled with the prestigious site location, high-end quality and unique
design will allow Quarry Hill to achieve rents of $1.23 per square foot, which will allow
us to compete with the market leader, Alexan Galleria, who is currently demanding
rents of $1.48 per square foot.
10
Popluation and Employment Growth
“One of the Best Cities in the U.S. and Texas”
Austin consistently makes the top 10 list of best places to live in the United States.
Among large U.S. cities, Austin ranks as one of the top cities for entrepreneurs,
Hispanics, dating, relocating families and budget weekend getaways. Of the major
Texas cities, Austin is recognized as being the healthiest and most educated. The city
is also known as one of the most ecologically-aware and high-tech cities in the nation.
Austin is internationally noted as the Live Music Capital of the World and has
developed events promoting local and national music and film including Austin City
Limits, South by Southwest (SXSW) and the Austin Film Festival.
With all of the accolades that Austin has earned, coupled with favorable weather
conditions and a healthy business climate; Austin will remain on the forefront in
population and job growth when compared to the rest of Texas and the United States.
2007 At a Glance
Austin
Texas
USA
Employment
749,100
10,267,000
137,930,000
New Jobs
29,100
230,400
1,788,000
Annual Growth
4.0%
2.3%
1.3%
Unemployment
3.6%
4.3%
4.6%
Population
New Population
1,580,000
24,000,000
301,800,000
42,000
497,000
2,860,000
Source: Angelou Economics
The population is projected to reach 1.8 million in 2012 with the Central Business
District tripling in size from 2000. This growth is in-line with historical trends as the
U.S. Bureau of the Census reflects that Austin MSA population grew 41% between 1996
and 2006.
11
Popluation and Employment Growth
A total of 41,100 new jobs are projected over the next 24 months, indicating a healthy
growth of 3% to 3.5%.
Projection for Austin 2008 and 2009
2008
2009
Total
Job Growth
17,000
24,100
41,100
New Population
40,000
45,000
95,000
Source: Angelou Economics
Top job growth employment industries:
Government - 11,100 new jobs
Professional Services - 6,500 new jobs
Leisure & Hospitality - 5,200 new jobs
Retail Trade - 3,800 new jobs
Education & Health Services - 3,500 new jobs
Major Employers n ear Qu arry Hill
Active Power - Advance Micro Devises - American Achievement
American Campus Communities - AT & T Telecommunications - Cirrus Logic
Citizens - Computer Science Corporation – EZCorp - Freescale Semiconductor
Multimedia Games - Sigma Tel - Silicon Laboratories - Spansion
Temple Inland Financial Services Headquarters - Toyko Electron – Vignette
8
Corporate Headquarters located in Austin are bold
12
Texas Department of Transportation (TXDoT)
Quarry Hill is adjacent to land acquired by the State of Texas with the major
infrastructure to widen Highway 290. The TXDoT project is in the early development
stages and consideration is being given to the environmental impact on Williamson
Creek, located at the intersection of William Cannon and Highway 290. The study will
take approximately 48 months to complete as extensive work will be done in
Williamson Creek.
Upon completion of the study and approved design, the project will then go through a
formal bidding process, and TXDoT will then secure funding.
TXDoT’s conceptual designs are included and illustrate that Highway 290 will be at
grade level once it passes “the Y” intersection of Highway 71.
As the project moves forward, further details can be viewed on the TXDOT website
located at:
http://www.txdot.gov/local_information/austin_district/us290_sh71west/exhibits.htm
Other Resources:
Capital Area Metropolitan Planning Organization: www.campotexas.org
Fix 290 is a grassroots effort to modify the Highway 290 design: www.fix290.org
13
Partnership Structure and Financing
Partn ersh ip Stru ctu re
Quarry Hill will be owned by a single asset entity, Convict/Quarry Hill Ltd., a Texas
Limited Partnership. The development cost for the project is $14,950, 000 and
$3,000,000 in equity is currently being raised. Larry Peel individually guarantees the
construction and development costs, and will be the guarantor on the loans for the
entire term.
Fin an cin g
Village Park Condominiums
8
In addition to the equity contributed, the development is being financed with a
construction loan in the amount of approximately $12,000,000.
14
15
Replacement Cost Schedule
Quarry Hill
Austin, TX
Units
Total Sq. Feet
Avg. Unit Size
148
128,728
870
Acres
Density
Date:
1-May-08
LAND
VALUES
PSF
PER UNIT
$2,085,500
$16.20
$14,091
CONSTRUCTION
$84.68
$10,900,687
$84.68
$73,653
CONSTRUCTION FEE
3.00%
$327,021
$2.54
$2,210
INTERIM LOAN FEE
1.00%
$109,007
$0.85
$737
$516,670
$4.01
$3,491
INTERIM INTEREST
Rate 6%
G & A/DIRECT OVERHEAD
2.50%
$272,517
$2.12
$1,841
ARCHITECTURE
2.59%
$282,000
$2.19
$1,905
ENGINEERING
0.78%
$85,025
$0.66
$574
MARKETING
0.28%
$30,000
$0.23
$203
0.9%
$100,000
$0.78
$676
LEGAL
0.41%
$45,000
$0.35
$304
CLOSING & TITLE
0.45%
$48,867
$0.38
$330
TAXES (Year 08 / 09)
1.61%
$175,000
$1.36
$1,182
2.4%
$262,707
$2.04
$1,775
$10,000
$0.08
$68
$15,250,000
$118.47
$103,041
INTERIOR DESIGN / FF&E
CONTINGENCY
APPRAISAL, ESA AND OTHER
TOTALS
8
7.571
19.5
16
ABOUT THE DEVELOPERS
The Larry Peel Company was founded in 1977 with the purpose of developing superior
multifamily communities in environmentally sensitive settings. The company has been
active in the Austin, Georgetown, New Braunfels, Dallas, and Houston markets where its
communities set new standards in multifamily living.
Larry Peel is recognized regionally and nationally for building unique, quality communities
with award-winning designs. Hardrock Canyon was presented the 1994 Pillars of the
Industry Award for Best Garden Apartment Development in the United States by the
National Multifamily Housing Council. He takes pride in selecting and developing difficult
environmentally sensitive sites where buildings are integrated into the natural beauty of
the existing topography and native landscape without disturbing nature’s delicate balance.
Concerned about maintaining the splendor and ecological integrity of Texas, he gives
protection of the environment high priority. The result is evident in each truly one-of-a-kind
development.
The Larry Peel Company is an Austin-based company and has 30 years of experience in
bringing architecturally innovative designs to the multifamily industry. All levels of the
organization strive to go above and beyond the current standard of apartment living. The
company is committed to providing superior communities in exceptional environments.
MULTI-FAMILY COMMUNITIES DEVELOPED BY THE LARRY PEEL COMPANY
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
17
The Bee Cave
Indian Creek
Neely’s Canyon Condominiums
Stillhouse Canyon Condominiums
The Leeward
The Windward
Park Mesa
Hardrock Canyon
Caprock Canyon
Liberty Park Condominiums
Gaines Ranch
Waters Edge in Legacy
Waters Edge Georgetown
Village Park Condominiums
Nalle Woods
Landmark Garden
Landmark Lofts
1977
1979
1981
1986
1990
1992
1992
1993
1994
1996
1997
1998
2000
2004
2004
2006
2007
Austin, Texas
134 units
Austin, Texas
244 units
Austin, Texas
126 units
Austin, Texas
180 units
Houston, Texas
256 units
Houston, Texas
274 units
Austin, Texas
148 units
Austin, Texas
391 units
Austin, Texas
336 units
Austin, Texas
46 units
Austin, Texas
390 units
Plano, Texas
300 units
Georgetown, Texas 330 units
Georgetown, Texas
53 units
Austin, Texas
238 units
New Braunfels, Texas 178 units
New Braunfels, Texas 110 units
ABOUT THE DEVELOPERS
Rosales Partners Real Estate Development was established in 2007 and is working under the
leadership of the Larry Peel Company for the purpose of developing multifamily communities
which are designed to enhance the environmental features of the site. The principle, Shelly
Rosales, was employed by the Larry Peel Company for six years where she learned to appreciate
and respect the strict development principles and guidelines unique to The Larry Peel Company
and its founder. During her tenure at the Larry Peel Company she was involved with the
following developments:
o
o
o
o
o
Hardrock Canyon
Caprock Canyon
Liberty Park Condominiums
Gaines Ranch
Waters Edge in Legacy
Austin, Texas
Austin, Texas
Austin, Texas
Austin, Texas
Plano, Texas
In 1998, Ms. Rosales joined the national development firm JPI, who specializes in the
development of high-end multifamily projects and is a leading merchant builder. Her
involvement with JPI was in the Southern Region and included Austin, Houston, San Antonio,
Phoenix and Scottsdale. The developments were primarily class A, garden style projects, typical
of JPI, of which some included structured parking.
o
o
o
o
o
o
o
o
o
o
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Jefferson
Scofield Farms
Scofield Ridge
Hill Country
Center
Pines
Sunset Ridge – redevelopment
Central
Indian Springs
Maryland
Scottsdale
Austin, Texas
Austin, Texas
Austin, Texas
Austin, Texas
Houston, Texas
San Antonio, Texas
Phoenix, Arizona
Phoenix, Arizona
Phoenix, Arizona
Scottsdale, Arizona
After departing JPI in 2001, Rosales became involved in the development of high-end
condominiums complimented by luxury hotel services. She originally launched the Four
Seasons Residences, a hi-rise tower, for Maritz Wolff who owned the highly acclaimed Four
Season Hotel in downtown Austin. This venture leads her to join FaulknerUSA who developed
the 31-story Hilton Convention Center Hotel in downtown Austin. The tower included 108
condominiums, 25,000 square feet of office space and a small retail component. Ms. Rosales
directed this portion of the development for FaulknerUSA.
8
In 2003 Ms. Rosales returned to property management and joined Westdale Asset Management
as a Vice President of Operations. Westdale is based in Dallas, Texas, and is ranked 26th out of
the NMHC Top 50 national multi-family management companies. While at Westdale, Ms.
Rosales was responsible for the Central Texas Region which included 8,000 multi-family units in
Austin and San Antonio.
18
Larry Peel
LARRY PEEL & CO., INC.
P.O. Box 248
Austin, Texas 78767
(512) 327.3333 phone
(512) 327.3600 fax
[email protected]
Shelly Rosales
Rosales Partners Real Estate Development
6111 End of the Trail
Austin, TX 78734
(512) 426.2700 phone
(512) 276.2300 fax
[email protected]
19