3100 W. Grand Development Plan

west grand 3100

Intro Letter Design Introduction Background: Past Present Future Neighborhood Analysis Concept and Design Powers of 10 Stake Holders Comparables Financial Summary Proforma and Returns TOD Programming

INTRO west grand

Mr. Peter Allen Stephen M. Ross School of Business University of Michigan 701 Tappan St Ann Arbor, MI 48109

3100

Dear Mr. Allen, We are pleased to present 3100 W. Grand Boulevard, a full-block, transit-oriented mixed-use development in Detroit’s New Center neighborhood. This ground-up project includes a tower, retail, and underground parking as well as acquisition and renovation of Woodward Ave. retail. The development meets the growing demand for residential and retail space along the Woodward Ave corridor including Target as a retail anchor - and also fulfills long-term plans for the city outlined in Detroit Future City. The project will remove an underutilized parking structure and replace it with a 15 story mixed-use development, revive and rehabilitate existing storefronts on Woodward Ave, and create an inner courtyard with food trucks, public programming, and other amenities that will serve not only the residents and New Center neighborhood, but ideally the entire city of Detroit.

Located at the corner of Woodward Ave. and W. Grand Blvd, 3100 W. Grand Boulevard is perfectly positioned at the end of the M-1 Rail project, and just two blocks from Detroit’s Amtrak station. The future transit access with M-1 and Amtrak’s regional expansion will mean that this project will provide residents access to downtown and the rest of the Woodward corridor, but also to Chicago and points beyond. We also anticipate that the Target, restaurants, other retail, and the courtyard, combined with easy access from Amtrak and the M-1 line will draw visitors from both the entire city and greater metro region.

Our modeling shows the project with the following financial projections based on aprox. $37 million in equity and aprox. $57 million in debt, resulting in a levered project IRR 20.4% and a stabilized NOI of $10.02 million.

We see the new, modern mixed-use tower combined with the existing retail along Woodward as a fitting blend of the old Detroit with the new Detroit. We would like this project to serve as the anchor of the New Center neighborhood, as well as play a significant role in the revitalization of Detroit as a whole. We believe this project will create a sense of place that can be enjoyed and built upon for years to come, and hope that you see a similar future as you read through our proposal.

Sincerely, David Geunther BBA ‘14

Nora Johnson MBA ‘15

Mark Knutson MArch ‘14

Danielle Thoe MUP ‘14

DESIGN INTRODUCTION

Courtyard - Lunch Hour

19,920 SF

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For the New Center neighborhood, and the city as a whole, the courtyard at 3100 W Grand is designed to provide a gathering place that can be enjoyed 24/7. We aim to provide a space that is like nothing else in the city.

A central feature of 3100 W Grand is the open courtyard, which provides a pedestrian-friendly space, allowing for a variety of improvised programming under the mantra of Lighter, Quicker, Cheaper. Food carts, “pop-up cafes,� street performers, temporary retail, bright and inviting furniture, live music, among other amenities, will all be utilized to create a unique space.

A collection of small restaurants and retailers open into the courtyard to stimulate pedestrian traffic. The courtyard space is intended to be active throughout the day, serving as a lunch hour destination for office workers in the area, and transitioning to a destination for the entire city in the evening. With residential, commercial, and office space, 3100 W. Grand will always be busy.

BACKGROUND: Detroit’s Past, Present, Future PAST

Above: Hudson’s Woodward Avenue location The common narrative regarding the city of Detroit is one of decay and poverty, and one that we all know well: A city that rose to glory on the backs of the auto industry; a city that peaked in the 1950’s; a city that has hemorrhaged jobs and citizens ever since, including 250,000 in the last decade.

But in contrast to the story that is being played out almost daily in the national media, Detroit is a city that is already beginning to rise again.

Above: Streetcars filled the streets of the City of Detroit

Fisher Building - Albert Kahn west grand 3100

PRESENT

Above: Comerica Park and Ford Field represent new developments Significantly, Detroit experienced a 59 percent increase in the number of college-educated residents under the age of 35 over the last decade, and these ‘urban pioneers’ are exactly the type of individuals that make up a thriving urban metropolis: young, educated, employable, and active members of the community. The influx of youth recently prompted the New York Times called the city a “Midwestern TriBeCa”.

The local economy has begun to pick up, adding jobs in a diversity of industries. Major corporations such as Compuware, Quicken Loans and Twitter have either relocated to the city or strengthened their positions downtown and a new ‘creative-class’ has emerged start-ups like Ponyride and Green Garage. Detroit also features a very strong ‘Meds and Ed’s’ presence with Wayne State University, Henry Ford Health System, and the Detroit Medical Center. Finally, the city has seen major investments such as Comerica Park and the Detroit Riverwalk, and other placemaking efforts are underway.

Above: Michigan Central Station lies empty

FUTURE

Above: Rendering of an M-1 Light Rail station For the first time in decades, Detroit has the makings of a diversified economy, and for the first time since Henry Ford oversaw his Piquette Plant, there is an entrepreneurial spirit drawing together young, talented, hard-working individuals, beaming with creativity and invention. Planned placemaking efforts will provide more opportunities for Detroit’s residents, including the new stadium for the Red Wings and surrounding entertainment district, Dan Gilbert’s corridor retail launch, and the M1 light rail line up Woodward Ave. For the first time before the Great Depression, well-to-do individuals have begun to consider the city a desirable place to call home.

Above: Map of the proposed Red Wings arena district

NEIGHBORHOOD ANALYSIS: New Center

City Center Employment Statistics

3

City Center Statistics

2

1

CANADA

1

Central Business District

2

Mid Town (Arts District)

3

New Center TOD Site Highways AmTrack M1 Rail

City Center Neighborhoods

Produced by a partnership of many of Detroit’s most prominent economic and data enterprises, 7.2 SQ MI outlines the 7.2 square mile area that makes up greater downtown. According to the report, this is an area which is performing at a significantly higher rate than the rest of Detroit. This 7.2 square mile area is home to 36,550 people, or a population density of 5,076 people per square mile.

Throughout the greater Downtown area average per capita income is $20,216.

New Center is a diverse area at the edge of downtown that is home to a wide variety of land uses and residential types. It stands out as more unique than much of the city-center due to the range of housing types. Additionally, New Center is a daytime employment hub, with 17% of the city’s total employment - in both the public and private sector - within its bounds.

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At top: An overall view of the city-center area of Detroit Above: A close up view of the city-center labels all of the neighborhoods, many of Detroit’s finest, that are included in the city-center.

NEIGHBORHOOD ANALYSIS

At Left: A map of all properties involved in our development.

Below: Recent sale prices of some of the neighboring properties that have sold recently.

All these positive indicators of development in New Center have lead to much land speculation locally, and throughout the larger city. Properties are selling for prices that reflect a confident expectation of transit development and hopes of continual growth.

These land speculators await large-scale developments from the city’s major players before they make their moves. Upcoming developments like the Ilitch Family’s new Red Wings Arena, M-1 Light Rail, and investments from Wayne State University and other key players are setting the stage for future development. Our project will also rely on these developments to increase viability and bankability of our project. Considering this expected development, the time it will take to accumulate parcels, establish investors, and get incentive packages approved; we plan to begin construction in January of 2019.

Development Site Recent Sales A B C D K L M

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6540 Cass 3092 W Grand Blvd 6565 Woodward Ave See C 22 W Milwaukee 40 W Milwaukee 6540 Cass

Sold - Year Sold - Amount Assessment 2010 $100,000.00 $49,115.00 $0.00 $98,814.00 2003 $1,450,000.00 $242,051.00 2003 Vacant Interior Lot 1999 $75,000.00 $64,242.00 Vacant Interior Lot 2002 $42,000.00 $16,551.00 Parking Deck 2004 $2,350,000.00 $1,175,000.00 $4,017,000.00 $2,019,091.00 NW Corner Lot

SF Ownership 10,000.00 ARA VARTABEDIAN REVOCABLE TRUST 12,110.00 VARTABEDIAN, ARTHUR 15,594.00 Woodward Parking Company Inc Woodward Parking Company Inc

19,994.00 New Center LLC 5,445.00 New Center LLC 30,000.00 NEW CENTER PARKING DECKS VENTURES 110,696.00 Above Chart: Sale prices from whydontweownthis.com Photo: Sewer Cap - Flicker

TRANSIT ORIENTED DEVELOPMENT AmTrak is in the process of expanding and upgrading its service in the Great Lakes region. High Speed rail will make travel between Toronto, Detroit and Chicago faster, more convienent and more appealing.

M-1 Light Rail is designated as a “circulating streetcar” that will run the length of Woodward Avenue between Larned St. near the riverfront and W. Grand Boulevard in New Center. The site of our development is just North of the termination point of this line and development along this corridor will be greatly aided by the new system. Long-term this is set to be just one piece of a larger regional transit system.

M-1 RAIL will revolutionize the central business district, Midtown and New Center areas of the city, allowing people to lower their dependence on their cars, enjoy the entertainment districts to the fullest, and explore certain parts of the city with a major connection point to other transportation options.

SITE AmTrak

M1 Rail

At right: An example a TOD station in Denver and the mixed-use, sidewalk exciting development it creates is a perfect deception of future development in Detroit.

Denver At right: Houston’s light-rail line has created a visible corridor of high rise, and walkable development that brings people to the street.

Houston

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Above: Map showing stops along the M-1 Rail corridor.

NEIGHBORHOOD ANALYSIS Site West grand 3100

community spaces bars restaurants museums Woodward Ave./Grand Blvd.

Wayne state university

district boundary

M

Midtown

N

New center

N

M1 Rail 3 Min to Midtown 8 Min to Downtown Amtrak 1/4 Mile 1/2 Mile

This map shows just some of the amenities that attract residents and businesses to the area. The clustering of activity in New Center shows its rapidly developing importance as a node along Woodward Avenue’s Path of Growth.

M

NEIGHBORHOOD ANALYSIS 1989

New Center Income Trends As the northern terminus of the new M-1 Light-Rail Line, New Center reigns as the city’s next up-and-coming urban neighborhood. New Center has seen an economic and population resurgence evidenced by the steadying of households as well as an increase in homeownership. In 2000 the area consisted of only 169 owner-occupied homes, but in 2010 that number increased drastically to 264 owner-occupied homes.

Additionally, Census data shows the average incomes in New Center, as well as Detroit on the whole, increasing over the last 20 years (images at right). In addition to current trends, the New Center area has been designated a “City Center” in the Detroit Future City plan’s Land Use section. This space will be targeted for high-rise, mixed-use, investment, much like our Transit Oriented Development. The M-1 Rail project will be instrumental to our site meeting the goals of Detroit Future City. It will provide a key link between the more secluded New Center and the cultural and entertainment options of downtown and Midtown.

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1999

2009

Census data from the 1990 and 2000 Census and the 2009 ACS show general trends in the New Center, and Detroit area rather than the most current income data.Up to date data, with small sample sizes is often of lower quality and reliability.

3100 W. Grand Site Location

UNIT PLANS ROOF GARDEN 7,600 Sf outdoor roof garden RETAIL/RESTAURANT 4,366 Sf variety of inviting spaces HEALTH CLUB 5,523 Sf new equipment, clean facilities COURTYARD 19,920 Sf movable furniture, dining WOODWARD RETAIL 55,257 Sf Acquired and up-valued

Isometric - Northwest. Woodward Ave. and Grand Blvd.

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The new courtyard opens to the south to allow for maximum sunlight in courtyard. A continuous canopy of trees shades the space in the summer time when weather is warm. During the winter months, the trees loose their leaves and allow sunlight to fill the courtyard.

The design of the courtyard is intentionally open, allowing for a variety of impromptu activities to occur: live music, markets and craft fairs to name a few.

The design pays homage to the adjacent General Motors building design by applying the same limestone material to a modern design aesthetic. The tower is proportional to one of the GM building’s wings. The goal is to infill the skyline profile along Grand Ave. without overwhelming the existing historic structures. The application of clean glass to the exterior reflects the geometry of the historic structures surrounding the site, further echoing the architectural character of the neighborhood.

UNIT PLANS

Each unit has floor to ceiling views of the beautiful Detroit skyline.

Two Bedroom

One Bedroom Square Footage: 789 sf.

Exclusive resident access to the healthclub facilities, roof-top gardens and party room.

Floor 15 14 13 12 11 10 9 8 7 6 5 4

Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf Studio – 10 units 4,500 sf

3 2 1 B1 B2 B3

Target 21,896 sf

Tenant 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR/1 BA – 8 units 2 Bedroom – 1 unit 6,312 sf 1,176 sf 1 BR - 1 unit Health Club – 2 Bedroom – 1 unit 789 sf 5,523 sf 1,176 sf Target 29,478 sf Target 29,478 sf Retail Retail Retail Retail 4,366 sf 1,006 sf 968 sf 1,269 sf Parking Deck - Retail 120 Spaces Parking Deck - Multi-Family 120 Spaces Parking Deck - Multi-Family 120 Spaces

Above: tenant stacking diagram

Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 2,739 sf Common Area 3,776 sf Common Area 3,776 sf Common Area 6,014 sf

Studio Unit Square Footage: 450 sf.

Square Footage: 1176 sf.

Renderings showing natural light in units at 10:00 am June 21

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CONCEPT/DESIGN The economic situation in the City of Detroit in recent decades is not one that leads to investment from many major national retailers. But, as the city picks up steam it is beginning to atract national chains like Target.

Reasons to Expect Target’s Interest: -A track record of pioneering urban areas ripe for gentrification (locations include: Washington DC, Annapolis, Minneapolis, Seattle, Atlanta, and San Diego) -Site has great ingress/egress and access to major city arterials (W. Grand Blvd, Woodward and freeways) - Ample on-site parking -Attractive lease terms & signage

The residential entrance is located adjacent to the courtyard, off Cass Ave. to provide private access to the units.

Target - From Grand Blvd.

Residential Entrance from Cass Ave.

The Anchor Tennant is given priority signage on Grand Ave. to maximize visibility and attract shoppers.

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Target Street Front, Grand Ave.

POWERS OF 10 - PPS.ORG 1

At 3100 W. Grand you can...

2

Take in shade underneath the lush green trees of the courtyard.

3

Visit an array of food trucks, the ever-changing variety bringing people back.

Catch the M-1 rail to Midtown and Downtown.

10

10 9

Sit down for a beer at the microbrewery.

4 1

8

2

Stop for a bite to eat with a variety of restaurants to choose from.

5

9

One stop shopping: groceries, home goods, clothing - all in one place.

7

3

6

4 5 6

7

8

Relax without the noise and traffic of Woodward.

Eat your meal on outdoor patio space while observing the happenings of the courtyard.

Get in a workout at the health club.

Go shopping in the unique stores along Woodward as well as the interior courtyard.

STAKEHOLDER ANALYSIS Cadillac Assembly, a General Motors plant which employs 1,400 and has received recent investments from GM to produce five different vehicles.

3100 W. Grand LLC is an organization that gathers all investors into the project together, shedding individual liabilities and streamlining the tax incentive application process.

Cadillac Manufacturing Plant

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West Grand LLC.

The State of Michigan has invested in Detroit, locating over 4,500 employees in Cadillac Place (formerly the GM Building) just north of our site.

The state’s investment in the site shows a long-term commitment to operations in the City of Detroit.

The College for Creative Studies has recently expanded into New Center’s Argonaut Building, which is currently home to classroom and studio space as well as a 300 bed dormitory for CCS students. Overall school enrollment is 1,400 college students and 800 high school students.

Shinola is an upstart that produces and sells upscale leather goods, bicycles, and watches.

The company is located in the Argonaut Building and capitalizing on recent saleability of Detroit-made products.

M-1 Rail is set to begin construction along Woodward Ave. and to be in operation in 2015.

With stations being sponsored by organizations like Blue Cross Blue Shield, Chevrolet, Detroit Medical Center, and Quicken Loans there is a real motivation to get this done & get it done right.

College of Creative Studies

Shinola Manufacturing Facility

M1 Light Rail Program

MI N.

Detroit Public Schools has moved its offices into the community, occupying a portion of the Fisher Building and can be counted on as a New Center asset long-term.

TO

Wayne State University

WN TO

WN

DO

Detroit Public Schools

Wayne State University’s campus, with 29,000 students and 6,000 faculty/staff, is located less than one mile south of our site. New Center is a popular area for Wayne State graduate students & faculty to live and houses many of the school’s Greek houses.

Henry Ford Hospital

-8

HFHS Offices

M1

Henry Ford Health System employs over 9,000 people in Detroit. The 802 bed hospital in New Center is an employment hub with people coming and going around-the-clock.

State of Michigan

FINANCIALS

Our operating expenses are based off of a report by Jones Lang LaSalle, the operators of Cadillac Place (the former GM Building), our neighbor to the west. The report* noted that following a $126 million renovation in 2001, JLL has operated the building for $8.21 per sf. Considering its location and scale, this a quality comparison to base our operating expenses on. This having been said, Cadillac Place is a singleͲuse property as opposed to our development which features four different uses and thus will be more expensive to operate, warranting an increase in operating expenses for our standardͲuse properties (residential, retail, and office) to $10 per sf. This allͲencompassing figure for operating expenses is The $27 million in grants and tax incentives calculated for this standard practice for Private Equity Real Estate firms due to it being less inherently speculative than site are critically important, but they, along with rental rates, predicting each lineͲitem individually. Since our financing plan seeks to leverage a PE investment in our are not enough to justify groundͲup development. Using the development, this remains the most reasonable forecasting method. numbers found in our Market Analysis and Comparables *http://www.joneslanglasalle.com/Detroit/enͲus/Pages/CaseStudyDetail.aspx?ItemID=2048 research, rental rates across all properties would need to Capital Stack increase by 50% for us to begin development. Such increases in rent (reflected in the below assumptions) are substantial, Debt Piece Amount Amort (Months) Interest PMT Debt Position but not impossible to achieve in the Detroit market.

Assumptions

Using an optimistic forecast of 10% annual rent growth thereafter, we expect to begin construction in 4Ͳ5 years, which will give us ample time to acquire the necessary plots of land, in addition to securing the listed financial incentives from various organizations. The planned construction start date is January 2019 with the first tenants expected in January 2022.

Construction Loan

$19,857,337.4

LISC via New Markets Tax Credit

$12,000,000.0

Michigan Commun. Revit. Loan MSHRA Gap Financing Woodward Corridor Fund Loan

$9,000,000.0 $6,000,000.0 $5,000,000.0

60

9%

$412,205.66 Senior Debt

120

4%

$121,494.17 1st Junior

120 84 360

4% 3% 5%

$91,120.62 $79,279.80 $26,841.08

2nd Junior 3rd Junior 4th Junior

RE Loans

$2,500,000.0

120

5%

$26,516.38

5th Junior

Detroit Investment Fund Loan

$2,500,000.0

120

5%

$26,516.38

6th Junior

5.8%

$783,974.09

$56,857,337.4

Market Projections Unit Type MultiͲFamily Parking Income New Retail Target Woodward Retail Office Unit Type

NRSF 138,333 240 Spaces 7,609 80,852 49,731 5,000 Gross SF

$/sf $3.00 $115 $33 $19 $30 $27

Vacancy 5.0% 5.0% 10.0% 0.0% 20.0% 25.0%

Months to Stabilize 12 12 12 1 24 12

CAM N/A N/A $7 $3 $7 $7

Op.Exp $10 $100 $10 $10 $10 $10

TI N/A N/A $0 $0 $15 $12

Lease Commission N/A N/A 5.0% 5.0% 5.0% 5.0%

Rent Growth

Exp. Growth

Stabilized NOI

Cap on Sale

Asset Value

Sale Commission

Sale Value

MultiͲFamily

176,724

10%

3%

$2,963,748.60

7.0%

$89,586,542

5%

$85,107,215

Parking Income New Retail Target Woodward Retail Office

360 Spaces 7,609 94,418 55,257 5,662

10% 10% 10% 10% 10%

3% 3% 3% 3% 3%

$278,640.00 $197,834.00 $834,564.25 $919,476.48 $70,880.00

9.0% 9.0% 8.0% 10.0% 10.0%

$5,715,756 $4,382,418 $25,296,919 $19,480,227 $1,582,668

5% 5% 5% 5% 5%

$5,429,969 $4,163,297 $24,032,073 $18,506,215 $1,503,534

Construction Start Date Construction Months CF Weight*

JanͲ01Ͳ13 36 80%

Hold Months Income Tax Rate

*CF Weight = (% of total budget spent during first half of construction, base would be 50%)

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48 39.60%

Project financing consists of multiple lowͲ interest debt pieces allocated to community development projects such as ours by various local entities. These are listed in the capital stack along with our construction loan, which acted as the plug in covering the remaining debt. Normally developers must seek bridge financing to cover this portion, however our various subordinated notes allowed us to avoid a highͲinterest mezzanine placement.

Sources & Uses Sources Equity Piece Community Block Grant Façade Improvements Michigan Commun. Revit. Grant Det. Brownfield Redev. Authority Investor Equity Developer Equity Total Equity

Debt Piece Construction Loan LISC via New Markets Tax Credit Michigan Commun. Revit. Loan MSHRA Gap Financing Woodward Corridor Fund Loan RE Loans Detroit Investment Fund Loan Total Debt

Total Sources

Amount $150,000.0 $550,000.0 $1,000,000.0 $25,356,823.4 $9,500,000.0 $500,000.0 $37,056,823.4

Amount $19,857,337.4 $12,000,000.0 $9,000,000.0 $6,000,000.0 $5,000,000.0 $2,500,000.0 $2,500,000.0 $56,857,337.4

$93,914,160.8

Uses Land Costs Hard Costs Soft Costs Other Costs

$16,998,702.99 $59,332,717.5 $8,401,372.3 $9,181,368.0 Total Uses

$93,914,160.8

FINANCIALS

Year 1 2022 $/NRSF

Pro Forma Operating Cashflows Rental Revenue MultiͲFamily Parking Income New Retail Target Woodward Retail Office Total CAM

NOI T.I. Lease Commissions Net Cash Flow Ͳ Unlevered

Year 2 $/NRSF

2024

Year 3 $/NRSF

$24.66 $6,926,640 $50.07 $7,619,304 $55.08 $945.18 $460,664 $1,919.44 $506,731 $2,111.38 $21.41 $330,868 $43.48 $363,955 $47.83 $25.29 $2,249,133 $27.82 $2,474,046 $30.60 $8.65 $1,347,015 $27.09 $1,922,226 $38.65 $14.60 $148,240 $29.65 $163,064 $32.61 $22.55 $11,462,560 $40.72 $13,049,327 $46.35

$476,719

Operating Expenses

$1.69

$778,046

$2.76

$958,637

$3.41

$3,751,004 $13.32

$3,863,534

$13.72

$3,979,440

$14.14

$3,074,245 $10.92

$8,377,073

$29.76

$10,028,523

$35.62

$432,985 $667,064

$1.54 $2.37

$372,985 $186,492

$1.32 $0.66

$0 $0

$0.00 $0.00

$1,974,196

$7.01

$7,817,596

$27.77

$10,028,523

$35.62

Total Debt Service

($6,672,002) ($23.70) ($6,672,002) ($23.70)

Net Cash Flow Ͳ Levered

($4,697,805) ($16.69)

$1,145,594

$4.07

$3,356,522

$11.92

Taxes NOI Less: Interest Less: Depreciation Net Taxable Income Income Tax Loss BTCF Taxes Due ATCF

$3,074,245 $5,823,079 $2,008,352 ($4,757,187) $0 ($4,697,805) $0 ($4,697,805)

$8,377,073 $5,761,710 $2,410,023 $205,340 $0 $1,145,594 $0 $1,145,594

$29.76 $20.47 $8.56 $0.73 $0.00 $4.07 $0.00 $4.07

$10,028,523 $5,695,905 $2,410,023 $1,922,596 $519,375 $3,356,522 $519,375 $2,837,146

$35.62 $20.23 $8.56 $6.83 $1.84 $11.92 $1.84 $10.08

Return Ͳ Unlevered Net Cash Flow Ͳ Investor Net Cash Flow Ͳ Developer Return Ͳ Levered Net Cash Flow Ͳ Investor Net Cash Flow Ͳ Developer Return Ͳ After Taxes Net Cash Flow Ͳ Investor Net Cash Flow Ͳ Developer

ͲNote: no taxes projected to be paid in 2022 due to a negative operating income

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$10.92 $20.68 $7.13 ($16.90) $0.00 ($16.69) $0.00 ($16.69)

Year 1 2022 $/NRSF

Waterfall

3100

$3,410,846 $226,842 $162,927 $2,044,666 $430,250 $72,997 $6,348,529

2023

2023

Year 2 $/NRSF

($6,672,002) ($23.70)

2024

Year 3 $/NRSF

$5,855,018 $20.80 $21,533,560 $76.49

$2,578,401 $5,239,195

$9.16 $18.61

$2,977,313 $7,051,211

$10.58 $25.05

$4,480,336 $15.91 $19,812,027 $70.37

$1,120,044 $25,550

$3.98 $0.09

$1,773,500 $1,583,022

$6.30 $5.62

$4,480,336 $15.91 $19,812,027 $70.37

$1,120,044 $25,550

$3.98 $0.09

$1,679,790 $1,157,356

$5.97 $4.11

ͲNote: no taxes paid in 2023 due to loss carryforward from previous year shielding taxable income .

ͲNote: Although PGI is not displayed on the Pro Forma, it was used in calculations.

Projected vacancy for each property use can be found in Market Projections on the Assumptions slide.

Leasing Strategy: We propose attracting a Target store to anchor the retail portion of the development. Target’s traffic draw, Exit Strategy: Due to the as one of the top big box tenants, significant rent increases that we will allow us to charge a significant have forecast, this development, premium to our inͲline and Woodward retail tenants. In order to which starts as an upͲvaluing, draw a large retail tenant like Target, transitions into a yield play as the investment matures. At the time of lease terms hovering right above sale, our PE investor will be cost are often needed. Considering achieving an 18.7% annual CashͲ the risk inherent in opening a Detroit onͲCash yield. Since the property location, we forecast a Gross lease of is spitting out so much cash and $13/sf under current market has a strong DCR (can be found in conditions (this appears as $19 on the ReͲFi table on the financing our Market Projections due to the tab) we can be flexible on the sale future opening). date in order to best align with the Acquisition Strategy: Our RE cycle and fluctuating cap rates. development will be a boon to this community, raising property CashͲonͲCash Yield Ͳ Time of Sale values and rents throughout the Investor 18.7% Developer 305.6% neighborhood. All surrounding retail properties will in effect be Waterfall shadow anchored by our Target.

To capitalize on this, we will buy Cash Equity $10,000,000 out the entire Woodward strip of Dev. Cash 5% retail on the block between W. Grand Blvd. and Milwaukee (can Investor�Equity Cash $9,500,000 be seen on the Plottage Total $9,500,000 Acquisition slide). These properties will be converted to Dev.�Equity Cash $500,000.0 have both front and rear Dev. Fee $3,662,641 entrances, allowing pedestrian $27,056,823 traffic to feed into the courtyard. Other Total $31,219,464 The layout and design of the property will allow our retail to Total Equity $40,719,464 command rent premiums as the most desirable outdoor space in %�of�Total�Equity Investor 23.3% the city aside from Campus Developer 76.7% Martius.

Pro�Forma�&�Returns Return Hurdle

15%

Investor�Yield Unlevered Levered After Taxes

13.6% 20.7% 18.2%

Developer�Yield Unlevered Levered After Taxes

16.4% 22.4% 19.3%

Developer�Yield�� Only�Cash�Equity Unlevered Levered After Taxes

535.5% 517.2% 517.0%

Project�IRR Unlevered Levered After Taxes

15.8% 20.4% 17.3%

Returns: based on a waterfall structure that works as follows: • Private Equity partner receives their hurdle first • Any cash leftover is an 80/20 split • Developer receives 20% • 80% split by equity contribution All grants and tax incentives were recorded as equity pieces attributed to the developer, therefore the developer contributed 76.7% of the equity, leading to a levered IRR of 22.4%. However, if only the cash equity contributions are counted as equity (the outͲofͲpocket money from the developer), the developer receives a levered IRR of 517.2%.

Note: The PE investor was given a generous hurdle of 15% to compensate for the risk of developing in Detroit Note: We expect to reͲfinance our construction loans with one permanent loan once construction has been completed, and will cash out $26,713,691 in untaxed equity

FINANCIALS

Depreciation Depreciable Value MultiͲFamily $34,501,419.73 Remainder of Property $42,414,038.06 Entire Property $76,915,457.79

Construction�Costs�&�Financing Land�Costs

Hard�Costs MultiͲFamily Studio

sf/unit 450

$/sf $186

# of Units 120

1 BR/1 BA

789

$148

89

2 BR/1 BA

1,176

$121

12

32,868

$115

Common Area

Land *See Plot. Val. Tab

5523

$125 Total

Retail New Retail Target

sf 7,609 80,852

$26,614,455.0

$/sf $142 $105

Common Area Loss Factor

13,566 13.3%

$100

Woodward Retail

49,731

$111 Total

Common Area Loss Factor Office 6505 Woodward Common Area Loss Factor

$17,060,062.5

5,526 10% sf 5000

$100

sf 19,920.0

$100

$/sf $100.0 Total

$1,992,000.0

Parking Structure

Spaces 360

$/space $35,000.0 Total

$12,600,000.0

Demolition

Spaces 1000

$/space $500.0 Total

Total Hard Costs

Land�Costs Land

Item

$59,332,718

Other Marketing $500,000.0

Contingency

Per GSF

Per NRSF % of Total % Paid at Close 100%

$26,614,455 $150.60 $192.39 $17,060,063 $108.47 $123.45 $566,200 $100.00 $113.24 $1,992,000 $5.86 $7.08 $12,600,000 $37.09 $44.76 $500,000 $1.47 $1.78 $59,332,718 $174.68 $210.75

28.34% 18.17% 0.60% 2.12% 13.42% 0.53% 63.18%

10% 10% 10% 10% 10% 100% 39%

$10.48 $12.65

3.79%

10%

$8.73 $2.54 $0.06 $0.06 $0.06 $2.69 $0.06 $0.06 $24.73

3.16% 0.92% 0.02% 0.02% 0.02% 0.97% 0.02% 0.02% 8.95%

10% 10% 10% 100% 100% 100% 100% 100% 20.6%

6%

$10.54 $3.06 $0.07 $0.07 $0.07 $3.24 $0.07 $0.07 $29.84

$3,559,963 $2,966,636 $861,600 $20,000 $20,000 $20,000 $913,173

Municipal/Filing Fees

$20,000

Building Permit

$20,000

Total Soft Costs

$8,401,372

Capitalization Loan Equity Total

Construction $56,857,337 $37,056,823 $93,914,161 Additional Equity Needed?

ReͲFi Cash Out PMT

$100,000 $5,418,727.1 8 $3,662,640.8 5% 5 $9,181,368 8%

$0.36

0.11%

0%

$15.95 $19.25

$0.29

5.77%

10%

$10.78 $13.01 $27.03 $32.61

3.90% 9.78%

100%

$93,914,161� $276.49� $333.59� 100.00%

Accrued Interest

$6,241,840 $18.38� $22.17 $100,156,001

6.65%

176,724 138,333

Retail Gross SF Retail NRSF

157,284 138,192

Office Gross SF Office NRSF

5,662 5,000

NRSF

281,525

Gross�SF

339,670

Debt Constant DCR Loan Points

Sale Permanent $83,571,029 $16,584,972 $100,156,001 No $0.00

N/A

$26,713,691

$783,974.09

$556,000.14

Loan Stabilized NOI (Current Rents, Rents at Stabilization) $5,265,143.33 Project Value $67,969,039.19 Cap Rate See Above Max Conventional LTV 65% Max Conventional Loan Amount $44,179,875 Actual Loan Amount $56,857,337 LTV 83.7%

$93,914,160.78

MultiͲFamily Gross SF MultiͲFamily NRSF

Financing�&�Re�Financing

Blended Interest Rate Amort. (months)

Total�Development�Costs

Total Project Costs

3100

$9,181,368

$16,998,703 $50.04 $60.38 18.10%

$3,559,963.0 5 $2,966,635.8 Contractor Fees 5% 8 Insurance $861,600 Title Insurance $20,000 Surveys $20,000 Environmental Studies $20,000 Loan Points/Financing Costs 100 $913,173 Municipal/Filing Fees $20,000 Building Permit $20,000 Total Soft Costs $8,401,372

Developer's Fee Total Other

west grand

Budget

Hard�Costs MultiͲFamily Retail Office Courtyard Parking Structure Demolition Total Hard Costs

Architect/Engineering Fees

$566,200.0 Courtyard

Architect/Engineering Fees Contractor Fees Insurance Title Insurance Surveys Environmental Studies Loan Points/Financing Costs

Soft�Costs

$/sf

662 11.7%

Total Development Costs

$100,000 $5,418,727 $3,662,641

Total Other Costs

Summary

Soft�Costs

$16,998,702.99

Other�Costs Marketing Contingency Developer's Fee

Loss Factor Health Club

Total Land Costs

Annual Depreciation $1,254,597.08 $1,087,539.44 $2,342,136.52

$10,028,523 $111,428,038.15 9.0% 75% $83,571,029 $83,571,029 75.0%

5.8% N/A

7% 360

16.5% 0.6x 100

8.0% 1.5x 100

Original Basis Accum. Depr.

Adjusted Basis

$93,914,160.78 $8,978,190.0 $84,935,970.79

Sale Price Selling Costs Adjusted Basis Total Gain

$146,044,529 $7,302,226.5 $84,935,970.8 $53,806,332.08

Depreciation Ͳ 25% Capital Gains Ͳ 15% Tax Liability

$2,244,547.50 $8,070,949.81 $10,315,497.31

Sale Price Selling Costs Net Cash Ͳ Unlevered

$146,044,529 $7,302,226.5 $138,742,302.88

Mortgage Balance Net Cash Ͳ Levered

$79,789,059.5 $58,953,243.40

Total Tax Net Cash Ͳ After Taxes

$10,315,497.3 $48,637,746.09

FINANCIALS

Parcel Acquisition

Note: only one property had delinquent property taxes, and these were immaterial.

A B C D E F G H I J K L M

To determine an acquisition price for each parcel of land, we analyzed what had been previously paid for the lots and compared this to their assessed value by the city. We found a ratio of 2.6:1, market value to assessed value and applied this to the assessed value of each plot to find the total market value of the entire parcel.

With this number we ran a sensitivity analysis to account for a control premium and an interest rate that each parcel owner expected to generate long term. We assumed a 10% interest rate, compounded this interest rate for 10 years, and applied a 25% control premium to arrive at our acquisition price of nearly $17 million.

Annual Interest Rate

Years of Compounding

6540 Cass 3092 W Grand Blvd 6565 Woodward Ave See C 6549 Woodward Ave 6545 Woodward Ave 6541 Woodward Ave 6531 Woodward Ave 6513 Woodward Ave 6505 Woodward Ave 22 W Milwaukee 40 W Milwaukee 6540 Cass

NW Corner Lot

Sold - Year Sold - Amount 2010 $100,000.00 $0.00 $1,450,000.00

Vacant Interior Lot Vacant Interior Lot Parking Deck

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 1999 $75,000.00 2002 $42,000.00 2004 $2,350,000.00 $4,017,000.00

3100

SF Ownership 10,000.00 ARA VARTABEDIAN REVOCABLE TRUST 12,110.00 VARTABEDIAN, ARTHUR 15,594.00 Woodward Parking Company Inc

$28,180.00 2,744.00 $25,178.00 1,655.00 $52,590.00 2,788.00 $59,479.00 3,615.00 $147,756.00 3,920.00 $60,135.00 2,831.00 $64,242.00 19,994.00 $16,551.00 5,445.00 $1,175,000.00 30,000.00 $2,019,091.00 110,696.00

Woodward Parking Company Inc Mr. & Mrs. Suh Kim Young Kim B. Young Woodward Parking Company Inc. Woodward Parking Company Inc. RAGOSA INV -RALPH SACHS New Center LLC New Center LLC NEW CENTER PARKING DECKS VENTURES

10 $5,242,988.69 1% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%

5% $6,081,097.38 $6,710,732.66 $7,398,445.30 $8,148,949.25 $8,967,289.92 $9,858,863.94 $10,829,439.94 $11,885,180.32 $13,032,664.03 $14,278,910.51 $15,631,404.73 $17,098,123.39 $18,687,562.37 $20,408,765.41 $22,271,354.14

10.0% $6,370,673.45 $7,030,291.36 $7,750,752.22 $8,536,994.46 $9,394,303.72 $10,328,333.65 $11,345,127.56 $12,451,141.29 $13,653,267.08 $14,958,858.63 $16,375,757.34 $17,912,319.75 $19,577,446.29 $21,380,611.38 $23,331,894.82

15.0% $6,660,249.51 $7,349,850.06 $8,103,059.14 $8,925,039.66 $9,821,317.53 $10,797,803.36 $11,860,815.17 $13,017,102.25 $14,273,870.13 $15,638,806.75 $17,120,109.95 $18,726,516.10 $20,467,330.21 $22,352,457.35 $24,392,435.49

20.0% $6,949,825.58 $7,669,408.75 $8,455,366.06 $9,313,084.86 $10,248,331.33 $11,267,273.07 $12,376,502.79 $13,583,063.22 $14,894,473.18 $16,318,754.87 $17,864,462.55 $19,540,712.45 $21,357,214.14 $23,324,303.32 $25,452,976.16

Control Premium 25.0% 30.0% $7,239,401.64 $7,528,977.71 $7,988,967.45 $8,308,526.15 $8,807,672.98 $9,159,979.90 $9,701,130.06 $10,089,175.27 $10,675,345.14 $11,102,358.95 $11,736,742.78 $12,206,212.49 $12,892,190.41 $13,407,878.02 $14,149,024.19 $14,714,985.16 $15,515,076.23 $16,135,679.27 $16,998,702.99 $17,678,651.11 $18,608,815.16 $19,353,167.77 $20,354,908.80 $21,169,105.15 $22,247,098.06 $23,136,981.98 $24,296,149.29 $25,267,995.27 $26,513,516.84 $27,574,057.51

Above: our site laid over on Why Don’t We Own This. Each letter corresponds to a particular property, each of which is listed in the table above.

west grand

Assessment $49,115.00 $98,814.00 $242,051.00

35.0% $7,818,553.77 $8,628,084.85 $9,512,286.82 $10,477,220.47 $11,529,372.75 $12,675,682.20 $13,923,565.64 $15,280,946.12 $16,756,282.32 $18,358,599.23 $20,097,520.37 $21,983,301.51 $24,026,865.90 $26,239,841.24 $28,634,598.18

40.0% $8,108,129.84 $8,947,643.55 $9,864,593.74 $10,865,265.67 $11,956,386.56 $13,145,151.92 $14,439,253.26 $15,846,907.09 $17,376,885.37 $19,038,547.35 $20,841,872.98 $22,797,497.86 $24,916,749.82 $27,211,687.21 $29,695,138.86

45.0% $8,397,705.91 $9,267,202.24 $10,216,900.65 $11,253,310.87 $12,383,400.36 $13,614,621.63 $14,954,940.87 $16,412,868.06 $17,997,488.42 $19,718,495.47 $21,586,225.58 $23,611,694.21 $25,806,633.75 $28,183,533.18 $30,755,679.53

50.0% $8,687,281.97 $9,586,760.94 $10,569,207.57 $11,641,356.08 $12,810,414.17 $14,084,091.34 $15,470,628.49 $16,978,829.03 $18,618,091.47 $20,398,443.59 $22,330,578.19 $24,425,890.56 $26,696,517.67 $29,155,379.15 $31,816,220.20

PROGRAMMING LONG TERM:

3100 W. Grand will become a key asset of the New Center community. The human-scale courtyard space will play host to programming from many community members. Though possibilities are nearly endless, we have a few ideas to convey our vision. One event would be to host youth performers from the Max & Marjorie Fischer Foundation in summer concert events. Staging for these events would be designed and built by students at the College for Creative studies. This gives two local groups an opportunity to showcase their talents and hard work in the public sphere; it also brings new groups to our site as well as giving those already present a reason to linger. Activities such as these will make our development a place community members feel a connection, and develop it as a hub of activity in New Center.

West grand 3100

Fisher Building - Albert Kahn

Above: Outdoor games give site visitors reason to linger. Informal, low-cost activities such as chess in the park can build relationships and create community that gets formalized long-term.

Source: PPS.org

Above: Lunchtime food carts in Portland, OR provide an opportunity to get outside, stretch your legs, and interact with other members of the community. It is also evident that these kind of places draw a diverse crowd, with customers of all ages and from all walks of life.

Source: Travel Portland

Campus Martius, shown in photos above, has become a popular lunch spot for employees of the area. Our courtyard will become the Campus Martius of New Center, providing people with a sunny and inviting place to relax during lunch hour. The courtyard location was chosen to utilize the low rising buildings to the east and south, which provide added sunlight during morning hours and through lunch, the hours when light is in shortest supply. Seating spaces will be augmented by more active amenities such as outdoor games, small concert performances, and food and retail vendors.

APPENDIX

WEST GRAND 3100

FIN 517 Allen

Nora Johnson Mark Knutson Danielle Thoe David Guenther

FINANCIALS

Sensitivity Analysis Sensitivity Analysis Ͳ Annual Rent Increase

Sensitivity Analysis Ͳ Rent ($/sf) Component Downside 2 Downside 1 MultiͲFamily $2.50 $2.75 Parking Income $85 $100 New Retail $27 $30 Target $15 $17 Woodward Retail $24 $27 Office $21 $24 Project IRR Unlevered 7.0% 11.5% Levered 7.0% 13.8% After Taxes 4.9% 11.0%

Base $3.00 $115 $33 $19 $30 $27

Upside 1 $3.30 $130 $36 $21 $33 $30

Upside 2 $3.50 $145 $39 $23 $36 $33

15.8% 20.4% 17.3%

20.3% 27.6% 24.2%

23.7% 33.2% 29.7%

Sensitivity Analysis Ͳ Cap Rate on Sale Component Downside 2 Downside 1 Base Upside 1 Upside 2 MultiͲFamily 9.0% 8.0% 7.0% 6.0% 5.0% Parking Income 11.0% 10.0% 9.0% 8.0% 7.0% New Retail 11.0% 10.0% 9.0% 8.0% 7.0% Target 10.0% 9.0% 8.0% 7.0% 6.0% Woodward Retail 12.0% 11.0% 10.0% 9.0% 8.0% Office 12.0% 11.0% 10.0% 9.0% 8.0% Project IRR Unlevered 12.5% 14.0% 15.8% 17.9% 20.5% Levered 12.2% 16.3% 20.4% 24.7% 29.5% After Taxes 9.1% 13.2% 17.3% 21.6% 26.3%

west grand 3100

MultiͲFamily Parking Income New Retail Target Woodward Retail Office Project IRR Unlevered Levered After Taxes

Downside 3 Downside 2 Downside 1Current Values Upside 1 4% 6% 8% 10% 12% 4% 6% 8% 10% 12% 4% 6% 8% 10% 12% 4% 6% 8% 10% 12% 4% 6% 8% 10% 12% 4% 6% 8% 10% 12% 1.6% (2.0%) (3.0%)

6.4% 5.4% 3.3%

11.1% 12.8% 10.1%

Sensitivity Analysis Ͳ Construction Costs ($/sf) Component Downside 2 Downside 1 Base Upside 1 Upside 2 Studio 1 BR/1 BA 2 BR/1 BA Common Area Health Club Retail New Retail Target Common Area Woodward Retail Office 6505 Woodward Common Area Courtyard Project IRR Unlevered Levered After Taxes

$226 $188 $161 $155 $165

$206 $168 $141 $135 $145

$186 $148 $121 $115 $125

$166 $128 $101 $95 $105

$146 $108 $81 $75 $85

$182 $145 $140 $151

$162 $125 $120 $131

$142 $105 $100 $111

$122 $85 $80 $91

$102 $65 $60 $71

$140 $140 $140

$120 $120 $120

$100 $100 $100

$80 $80 $80

$60 $60 $60

9.7% 11.7% 9.0%

12.5% 15.7% 12.8%

15.8% 20.4% 17.3%

19.6% 25.8% 22.5%

24.1% 32.1% 28.7%

15.8% 20.4% 17.3%

20.5% 28.1% 24.7%