505 Congress Street South Boston R E C REATE, LLC Tim Johnson, Jennifer Balkcom, Scott Nguyen, Arvind Pai, Alison Novak, Charu Singh Re-imagining the Boston Waterfront

Introduction Multi-family rental as the highest and best use Central location in a growing neighborhood Challenging site conditions Negative land value!!! This is where it gets interesting! MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

The Boston Economy Recovering from a period of negative growth All demand drivers are stable Vacancy rate is forecasted at less than 5% Positive real rent growth projected Leading growth industries Stable economy. Source: Torto-Wheaton Research 2005 MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Supply Limited Existing Supply Little hotel and office space Even less multi-family residential Convention center Potential oversupply of office and hotel products. Extensive Development in the Pipeline 9M sf of retail, office, cultural and residential uses Most residential development slated for sale MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Market Summary Multi-family rental opportunity. Boston office market is saturated but improving. South Boston provides significant opportunities for retail. Hotel market improving in Boston but will be oversupplied in S. Boston. Residential demand in the area is a stable option. However, condominium market has peaked. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Regulatory Process Article 80: BRA Review Large Project Review Boston Civic Design Commission Area is slated for large-scale development, site use flexible Article 27P Flexible open space and FAR requirements due to IPOD zoning Affordable housing and street improvement requirements MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Regulatory Analysis Areas of concern FAR and site coverage ratio relief may trigger exaction fee Meeting EPA & HUD standards for air quality and noise Unspecified fee schedule But challenges exist. Strategies Foster relationships with relevant BRA staff, neighborhood groups, and environmental NGOs Look to comparable projects MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

505 Congress St. is well-located but has many challenging site conditions. Site Specifics Adjacent to Central Artery Tunnel Vent Building High Traffic Flows Odd-shaped parcel Shallow depth 100’ T T T MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

The most common issue is access. Site Suitability T Office: FAIR Retail: POOR Hotel: GOOD Residential: FAIR T T MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Highest and Best Analysis Multi-family rental is the highest and best use. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Residential Market Area The target population is well represented within a 5 mile radius of the site. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Residential Target Market Greater Boston Target Group $65, ,000 income range Service-based employment Upwardly mobile, well-educated Target: young, urban, service-based professionals. Immediate Vicinity Target Group Convention center visitors Start-up companies MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Site Design Residential Tower 107 units 98,900 net rentable sf Service Area Ingress 70 parking spaces Egress Drop Off Point Office-on-Demand 19,190 net rentable sf Retail Ground Floor Uses Landscaped Park Creative design optimizes this constrained site. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Site Design LEED rated design. Photovoltaic panels Green roof Low-E glass Energy efficient systems Energy Star appliances Dual-flush toilets Maximizing daylighting Indoor air quality improvement systems Indoor Technologies MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Project Development Timeline We anticipate 3 years for project development. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Capital Budget Total Development Costs are $262/sf. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Project Level Financing Total Development Cost: $39,300,438. Construction Loan Equity Contribution Permanent Loan MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY Key Bank; 18 month term, 75% LTC, floating Interest rate 6.54% Key Bank, Investor’s Circle, Team; 13.6% blended return Deutsche Bank; 10 year balloon, 30 year amortization, 80% LTC, fixed interest rate 5.6%

Project Feasibility Current Scenario: FAR 4, 107 residential units Land Residual: -$6.4M Possible Strategies: Increase FAR Build over highway? Remove Green Features Decrease construction costs Get rose colored glasses Based on as-of-right FAR, project is not feasible. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

505 Congress Street Q & A MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

Thank you.

Pipeline Supply