A Mixed-Use Development Proposal

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Undergraduate Honors Theses

2020-03-18

Stadium Apartments: A Mixed-Use Development Proposal

Connor Lee Wen

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Honors Thesis

STADIUM APARTMENTS: A MIXED-USE DEVELOPMENT PROPOSAL

by Connor Lee Wen

Submitted to Brigham Young University in partial fulfillment of graduation requirements for University Honors

Economics Department Brigham Young University April 2020

ABSTRACT

STADIUM APARTMENTS: A MIXED-USE DEVELOPMENT PROPOSAL

Connor Lee Wen

Economics Department

Bachelor of Science

Stadium Apartments is a proposed class-A mixed-use development located on 4.3 acres of land at 88 W 1300 S, Salt Lake City UT. The single parcel is currently owned by

Salt Lake City and is being operated as a parking lot. Salt Lake City hopes to develop the parcel in order to provide stable income to maintain the Smith’s Ballpark across the street. A detailed market and financial feasibility analysis has determined that a development consisting of 448 dwelling units (319,176 rentable square feet) and 3,750 square feet of retail space will both meet the goals of the city and provide solid returns for a developer. The development will achieve a 3 FAR from 563,061 gross buildable square feet spread over six stories of construction. A 1.26 spaces per unit effective parking ratio will complement the proximity of the Ballpark TRAX station and 1300

South’s I-15 entrance ramp, allowing residents easy access to downtown and other parts of the Salt Lake Valley.

iii

ACKNOWLEDGEMENTS

I would like thank Dr. Michael Ransom, my faculty advisor; Dr. Barrett Slade, my faculty reader; Dr. John Stovall, my honors coordinator; as well as Steven Bond and

James Doolin, my industry readers, for their patience, trust, advice, and assistance throughout this process.

I would also like thank Danny Walz, Corinne Piazza, and Corey Rushton from

Salt Lake City Corporation for allowing me to use their site as a subject property.

I would like to thank Richard Bird and Steve Lowell from The Yellowstone

Group for their insight into the quality of my model and providing loan quotes and construction comparables.

I would also like to thank Vika Filimoeatu and the staff from the Brigham Young

University Honors Program for giving me the opportunity to conduct this creative thesis despite it not being directly related to my major or minor.

Finally, I would like to thank my family and all those who have supported and helped me along my journey in commercial real estate. I dedicate this project to you.

TABLE OF CONTENTS

Title …………………………………………………………………………...….………. i Abstract …………………………………...…………………………………………….. iii Acknowledgements …………………...…………………………………………...…….. v Table of Contents …………………………………………………………………….…. vii List of Tables and Figures ……………………………………………………………...... ix

I. Executive Summary …………………………………………………..………….. 1

II. Site Overview ………………………………………………………….……...…. 1

III. Location Analysis ……………………………………………………………...… 3

IV. Apartment Market Analysis …………………………………………………….. 23

V. Retail Market Analysis …………………………………………………………. 34

VI. Development Potential and Site Plan …………………………………………… 40

VII. Financial Analysis ……………………………………………………………… 47

VIII. Risks and Challenges …………………………………………………………… 56

IX. Conclusion ……………………………………………………………………… 58

Works Cited …………………………………………………………………………….. 59

Appendix A: Comparables and Unit Mix ……………………………………………….. 63

Appendix B: Financial Calculations ……………………………………………………. 67

Appendix C: Site Plan …………………………………………………………………... 91

Appendix D: Annual Cash Flow ……………………………………………………… 95

Appendix E: Summary ………………………………………………………………….. 97

vii viii

LIST OF TABLES AND FIGURES

Table 1: Commute Times...... 6

Table 2: Population By Race (CoStar)...... 22

Table 3: C9 Flats Unit Mix (CoStar) ...... 28

Table 4: The Ritz Classic Unit Mix (CoStar) ...... 29

Table 5: TenFifteen Apartments Unit Mix (CoStar) ...... 31

Table 6: Towers on Main Unit Mix (CoStar) ...... 32

Table 7: Park Vue Unit Mix (CoStar) ...... 34

Table 8: Retail Comparables ...... 36

Table 9: FAR Comps ...... 42

Table 10: Lot and Building Breakdown...... 44

Table 11: Space Breakdown ...... 44

Table 12: Parking Breakdown ...... 45

Table 13: Unit Mix...... 46

Table 14: Development Timeline ...... 46

Table 15: Land Comparables ...... 48

Table 16: Land Valuation ...... 49

Table 17: Tax Calculator ...... 49

Table 18: 2018 Development Cost Comparables ...... 50

Table 19: Permit & Impact Fees ...... 52

Table 20: IRR Waterfall...... 53

Table 21: Vacancy Sensitivity ...... 55

Table 22: Exit Cap Sensitivity ...... 55

Table 23: Income Growth Sensitivity ...... 56

Table 24: Expense Growth Sensitivity ...... 56

Figure 1: Site Overview (Google Maps) ...... 2

Figure 2: Site Photo (Connor Lee Wen) ...... 2

Figure 3: Distance to Ballpark Station (Google Maps) ...... 6

Figure 4: Adjacent Site 1 (Google Maps) ...... 7

Figure 5: Adjacent Site 2 (Google Maps) ...... 8

Figure 6: Adjacent Site 3 (Salt Lake County Assessor) ...... 8

Figure 7: Adjacent Property 4 (Google Maps) ...... 9

Figure 8: Adjacent Property 5 (Google Maps) ...... 10

Figure 9: Adjacent Property 6 (Google Maps) ...... 10

Figure 10: Adjacent Property 7 (Google Maps) ...... 11

Figure 11: Adjacent Property 8 (Google Maps) ...... 12

Figure 12: Adjacent Property 9 (Google Maps) ...... 12

Figure 13: Adjacent Property 9, Aerial (Google Earth) ...... 13

Figure 14: C9 Flats (CW Urban) ...... 14

Figure 15: Sears Warehouse (Salt Lake County Assessor) ...... 15

Figure 16: Central Community Master Plan (Salt Lake City) ...... 16

Figure 17: States with Strongest Job Growth (Gardner Institute)...... 18

Figure 18: Utah Components of Population Change (Gardner Institute) ...... 18

Figure 19: Utah Value of New Construction (Gardner Institute) ...... 19

Figure 20: Demographic Radius Rings (CoStar) ...... 20

Figure 21: Population & Education, 1 mile (CoStar) ...... 21

Figure 22: Asking Rents (IRR) ...... 24

Figure 23: Rent Comp Map (CoStar)...... 26

Figure 24: C9 Flats (C9 Flats) ...... 27

Figure 25: The Ritz Classic (Google Maps) ...... 28

Figure 26: TenFifteen Apartments (CoStar) ...... 30

Figure 27: Towers on Main (CoStar) ...... 31

Figure 28: Park Vue (CoStar) ...... 33

Figure 29: Retail Ask Rents (IRR)...... 35

Figure 30: Retail Vacancy Rates (IRR) ...... 35

Figure 31: Lease Comparable Map (CoStar) ...... 36

Figure 32: 259 W 900 S ...... 37

Figure 33: 877 S 200 W ...... 38

Figure 34: Lincoln Plaza ...... 39

Figure 35: FAR Comps ...... 42

Figure 36: Units Per Acre ...... 43

Figure 37: Ballpark Deferred Maintenance (Salt Lake City Corporation) ...... 47

xii

I. Executive Summary

Stadium Apartments is a proposed class-A mixed-use development located on 4.3 acres of land at 88 W 1300 S, Salt Lake City UT. The single parcel is currently owned by

South’s I-15 entrance ramp, allowing residents easy access to downtown and other parts of the Salt Lake Valley. This development proposal explores the highest and best use of the land as a mixed-use development.

II. Site Overview

The project site is located at 88 W 1300 S in Salt Lake City’s Ballpark neighborhood. The site is located on the north side of the arterial West 1300 South and is surrounded by South West Temple, Paxton Avenue, and Richards Street on the West,

North, and East sides, respectively.

Figure 1: Site Overview (Google Maps)

Figure 2: Site Photo (Connor Lee Wen)

The site is a single rectangular parcel (15-12-478-019-0000) owned by Salt Lake

City Corporation, the formal entity for Salt Lake City’s government. The tax assessor’s

2019 market value of the parcel appraises at $1,996,200 dollars. The parcel is zoned PL which is translated as ‘public land’. PL’s purpose is “to specifically delineate areas of public use and to control the potential redevelopment of public uses, lands and facilities.”

(SLCgov.com)

The site is currently being operated as a parking lot for the Smith’s Ballpark and contains approximately 420 spaces. While the lot can be seen at full capacity during any of the Salt Lake Bees’ 70 home games, the lot remains mostly vacant.

Walkscore.com gives the site very high ratings. They report the site having a walk score of “85: Very Walkable” and that “most errands can be accomplished on foot.” They also give the site a transit score of “73: Excellent Transit- transit is convenient for most trips.” Walkscore also gives the site a bike score of “74: Very Bikeable- biking is convenient for most trips.”

III. Location Analysis

The location offers great retail frontage on 1300 South across from the Smith’s

Ballpark. The property’s proximity to TRAX, I-15, downtown Salt Lake City, State

Street eateries, 300 West shopping, and Jefferson Park make it an ideal location for residents.

3.1 Regional Overview

The target site is located just south of Salt Lake City just outside of the de facto

“edge of downtown” on 900 South (see Figure 3). The property is also ideally located close to amenities on 300 West and State Street (see Figure 4). Groceries can be obtained at Walmart, Target, Costco, and Sam’s Club just minutes away from the site. State Street also features many restaurants and is transforming from an industrial area into a home for nicer retail and restaurants.

Figure 3: Regional Map (Google Maps)

Figure 4: Neighborhood Map (Google Maps)

3.2 Public Transit Options

The Utah Transit Authority (UTA) TRAX Light Rail Ballpark Station is located just a 6-minute walk from the site (Google Maps) and offers connections to the Blue,

Red, and Green lines. The TRAX lines offer connections to Salt Lake Central Station,

Draper Town Center Station, University Medical Center Station, Daybreak Parkway

Station, West Valley Central Station, and Airport Station from as early as 4:45 AM to

11:22 PM on weekdays (UTA). With over 20 years of service, UTA’s TRAX and related rail lines reliably serve over 78,000 people daily (UTA) and continue to be a preferred method of transit. Ballpark Station also offers connections to U Car Share carsharing services to the University of Utah, three secured bicycle lockers, and UTA Bus connections.

Figure 5: Distance to Ballpark Station (Google Maps)

3.3 Driving Commute Analysis

For those who opt to drive, the site is conveniently located a 3-minute drive to

Interstate-15 and a 1-minute drive to State Street (Google Maps) and provides easy access to popular commuting locations throughout Utah. The following table displays commute times for popular commuting destinations.

Table 1: Commute Times

Commute Times Destination Public Transit Commute Driving Commute Salt Lake City (Temple Square) 17 Minutes 6-16 Minutes Salt Lake City Int'l Airport 48 Minutes 7-12 Minutes University of Utah 35 Minutes 8-20 Minutes Intermountain Medical Center (Murray) 19 Minutes 9-15 Minutes Thanksgiving Point 1 Hour, 26 Minutes 22-35 Minutes Provo 1 Hour, 40 Minutes 40-60 Minutes Departure time: 8:30AM, Wednesday. Source: Google Maps

3.4 Adjacent Properties and Land Uses

Adjacent land uses include single family housing, office, entertainment, and service uses. The following is an analysis of the adjacent properties:

The south-west corner of Stadium Apartment’s site contains event parking for the

Ballpark and is privately owned and operated (see Figure 6). There is potential that the owner could develop the property for commercial use, as it’s zoned as CN. The property is owned across 4 parcels and is currently not under development or construction.

Figure 6: Adjacent Site 1 (Google Maps)

The southernmost part of West Temple adjacent to Stadium Apartments’ site, is home to a 7-Eleven service station (see Figure 7). The single parcel is privately owned and operated. Zoned CN, the plot is dedicated to low intensity commercial uses that can be located within and serve residential neighborhoods.

Figure 7: Adjacent Site 2 (Google Maps)

Just north of the 7-11 on West Temple is a neighborhood of privately owned single-family homes (see Figure 8). Zoned RMF-35, these lots could be assembled and developed into moderate density multi-family up to a height of 35 feet. However, the number and small sizes of the parcels would give a developer a challenge in assembling for redevelopment.

Figure 8: Adjacent Site 3 (Salt Lake County Assessor)

On the corner of Paxton and South West Temple is a single 0.84 acre parcel owned by the Housing Authority of Salt Lake City (see Figure 9). It currently houses a vacant office-style structure with a large undeveloped side-yard. Zoned CC, the future use of the property could be commercial development. However, no known attempt to redevelop the plot has taken place.

Figure 9: Adjacent Property 4 (Google Maps)

On the corner of Paxton and Richards Street sits three privately owned parcels, totaling 0.68 acres of commercial land being used as a tow lot or salvage yard of some kind (see Figure 10). Like the Housing Authority site, but owned by Schneider

Properties, LLC, it is zoned CC and would need to be redeveloped into such a use. This site is the most unattractive of the adjacent uses. However, it is largely hidden from view.

Figure 10: Adjacent Property 5 (Google Maps)

On the north-east corner of the site lies another CC zoned privately owned parcel

(see Figure 11). Totaling 0.24 acres, this Oikos 8, LLC property seems to be operated as the warehouse for National Construction Specialties’ flooring and concrete business.

Figure 11: Adjacent Property 6 (Google Maps)

On the east side of the property, just south of the flooring business, lies the home of the Horizonte Instruction and Training Center (see Figure 12). The school offers a

10 variety of programs, including: certified teacher librarian program, after school programs, dance programs, JROTC programs, CTE Pathways, and concurrent enrollment classes for adults and youth as appropriate (slcschools.org). The parcel is owned by the Salt Lake

City Board of Education and is zoned as public land. The parcel totals 2.90 acres.

Figure 12: Adjacent Property 7 (Google Maps)

On the south-east side of the property at the intersection of Richards Street and

1300 South sits Spencer’s Car Wash (see Figure 13). Zoned CN, this 2 parcel 0.5 acre property owned by BFR, LLC offers self-wash options across 4 car stalls and 1 RV stall, and also operates 6 vacuums.

Figure 13: Adjacent Property 8 (Google Maps)

Finally, on the south side of the property sits the home to the Minor League

Baseball Salt Lake Bees, Smith’s Ballpark (see Figure 14 & Figure 15). Owned by Salt

Lake City Corporation on PL zoned land, this 6.48 acre stadium has been in operation since 1994 and seats 15,400. The average attendance in 2019 was 6,671 per game

(MILB).

Figure 14: Adjacent Property 9 (Google Maps)

Figure 15: Adjacent Property 9, Aerial (Google Earth)

3.5 Notable Nearby Developments

Located on the west side of Ballpark Station, CW Urban is in the process of developing theLUCY (see Figure 16), 35 modern townhome style condos. These condos are 3-4 bedrooms and 2.5-3.5 bathrooms, offer two floorplan variants, and each take up an area of 1603-1809 square feet. With plans to include a healthy amount of green space, these condos start at $375,000 and will create a healthy community on 1300 South. As of

2/29/2020, 3 of the 7 listed buildings have already sold.

Figure 16: C9 Flats (CW Urban)

Across the street on the south side of Ballpark Station sits the old 4.04-acre Sears warehouse (see Figure 17). Long owned by Gershman Properties, sources at Salt Lake

City state that there are plans to redevelop the site into a mixed-use project. Zoned CG, this commercial zoning provides opportunity for a mix of land uses including retail, entertainment, office, residential, and commercial.

Figure 17: Sears Warehouse (Salt Lake County Assessor)

3.6 Central Community Master Plan

The Stadium Apartments’ site lies within the Central Community section of Salt

Lake City. Adopted November 1st, 2005, the Central Community master plan aims to achieve four fundamental goals:

1) Livable communities and neighborhoods

2) Vital and sustainable commerce

3) Unique and active places

4) Increased pedestrian mobility and accessibility.

Furthermore, within the Peoples Freeway neighborhood, where the site is located, there are neighborhood specific plans. These include:

- Mitigating impacts relating to the adjacency of residential and non-residential /

heavy commercial land uses. And,

- Addressing ways of transitioning the northern portion of the neighborhood from

the historic character of low-density residential development to one of transit-

oriented development.

To achieve these goals, the community master plan has implemented a future land use plan to encourage zoning changes (see Figure 18).

Figure 18: Central Community Master Plan (Salt Lake City)

Stadium Apartments

TRAX Ballpark Station

From the community master plan, one can see that developing the site as mixed use would not be out of character with the vision for the neighborhood. The master plan suggests that the area surrounding the TRAX Ballpark Station be rezoned to Low,

Medium, or High-Density Transit Oriented Development or High Mixed Use. With this in mind, there should be little difficulty in having the site of Stadium Apartments be rezoned as either High Mixed Use or High-Density Transit Oriented Development since the surrounding zoning changes are of a similar nature. However, since the zoned area is

Institutional, the city may be able to approve of a variance instead of a zoning change,

16 thus allowing the improvements to conform to the surrounding zoning without changing the zone of the parcel itself.

3.7 Salt Lake City & Utah Economic Drivers

Home to firms such as Zions Bancorporation, Questar Corporation, Sinclair Oil

Corporation, and with presence from high caliber firms like Adobe, eBay, Micron, L-3

Communications, 3M, and Goldman Sachs, Salt Lake City has become a significant player in government, trade, transportation, utilities, and professional and business services sectors. Unemployment in the city is low at 2.0% compared to the national average of 3.5% (BLS) which is an indicator of a strong, competitive job market. This continues to attract talent into the city. Utah experienced one of the largest increases in tech jobs in the nation from 2015-2017 resulting in one of the highest concentrations of tech workers relative to the overall employment base (CoStar). The financial sector also continues to grow quickly in Salt Lake City with double-digit gains (CoStar). Salt Lake

City also enjoys high quality-of-life benefits from being so close to easily accessed natural amenities such as national parks, ski resorts, and hikes. The Salt Lake City metro was responsible for approximately 40% of the state’s tourist-generated tax revenue

(CoStar). The city’s strong investment in infrastructure with the $3.5 billion dollar renovation and expansion of the Salt Lake City International Airport, the relocating of the

Utah State Prison, and further developments in the northwest quadrant indicate a proactive move by the city and state to provide for continued economic growth. The growth isn’t confined to the city, however.

The Gardner Institute’s 2020 economic report to the Governor highlights Utah state’s overall strength compared to the national average. Utah added over 45,600 jobs from

2018-2019 with the highest increase being a 3.8% growth in the professional and business services sector. Furthermore, Utah ranked second in the nation for job growth at

3% compared to the national average of 1.6% (see Figure 19).

Figure 19: States with Strongest Job Growth (Gardner Institute)

Utah’s population continues to grow from a balance of fertility and immigration. In

2018, 47% of population growth came from a natural increase and 53% came from net migration (see Figure 20).

Figure 20: Utah Components of Population Change (Gardner Institute)

State tax cuts and infrastructure investment provide a favorable tailwind for 2020 growth while counteracting the headwinds from a tight labor market, increasing costs, housing affordability, declining fertility rates, and poor air quality. Despite the rising affordability crisis, Utah experienced “record-level residential and near-record commercial activity. . . The boom in the multifamily sector, primarily apartment construction, drove a 10.9 percent increase in the value of all permit-authorized residential construction to $5.7 billion” (Gardner). All these economic drivers have led

Utah to lead the nation in the Hachman Index of economic diversity with a #1 ranked score of 97.1. Scores closer to 100 indicate economic diversity which is an advantage against the volatility from globalization and tariffs.

Figure 21: Utah Value of New Construction (Gardner Institute)

3.8 Neighborhood Demographics & Affordability

CoStar data gives insight into the demographic makeup of the population within a

1, 3, and 5 mile radius from the site (see Figure 22).

Figure 22: Demographic Radius Rings (CoStar)

Within a 1-mile radius from the site, population is approximately 15,653 and is expected to grow 5.7% to a population of 16,538 by 2024. The average age of the population is 37 years old with median household income being $39,671. This supports average monthly rents of $991 (30% of AMI). Stadium Apartment’s average rent is

$1,358, or 41% of average median income (AMI). In 2019 there were 7,184 households that are also expected to grow at a rate of 5.7%. The average household size was 2.1 and each household had 1 vehicle on average. The majority of the population is White

(80.51%) and only 27% of the population identifies as Hispanic. The population is either well educated or in the process of receiving an education (see Figure 23).

Figure 23: Population & Education, 1 mile (CoStar)

Within a 3 mile radius, the population is approximately 149,617 individuals spread across 63,500 households and is growing at a rate of 5.2%. The median household income is markedly higher at $50,803. This supports average monthly rents of $1,270

(30% of AMI). Stadium Apartment’s average rent is $1,358, or 32% of average median income. The average household size is slightly larger at 2.2. Each household has on average 1 vehicle. The ethnic majority is White (83.35%).

Within a 5 mile radius, the population is approximately 314,312 individuals spread across 121,637 households. The population growth rate sits at 4.9% and the household growth rate is 4.7%. The median household income is not much different from the previous metric at $52,059. This supports average median monthly rents of $1,301 (30% of AMI). Stadium Apartment’s average rent is $1,358, or 31% of AMI. The average

21 household size is larger at 2.4 and the average household has 2 vehicles, rather than 1.

The ethnic majority is White (82.74%).

Table 2: Population by Race (CoStar)

Overall, the Ballpark neighborhood shows strong demographics for renters.

Median incomes, household sizes, and population growth suggest a young/early professional demographic who will benefit from access to public transit and jobs downtown.

RentCafé states that average rent in Salt Lake City is $1,248 and the Department of

Numbers states that the median per capita income in Salt Lake City is $31,039 making the current average rent being 48% of AMI. Stadium Apartments’ rents come in at 41%,

32%, and 31% of AMI at the 1-, 3- and 5-mile radii, respectively. This supports Stadium

Apartments being more affordable compared to the market average. Incomes are low enough to suggest that the majority of individuals prefer to rent rather than buy but are not so low as to eliminate a healthy demand for class A luxury product.

IV. Apartment Market Analysis

4.1 Market Trends

Data from Integra Realty Resources, Real Capital Analytics, and Reis Services suggest that the multifamily market in Salt Lake City is one of the strongest sectors in the area (IRR). Despite 3,000 units being delivered in 2019 and more than 10,000 under construction (4.7% increase), Salt Lake City has maintained solid rent growth, low vacancy, and high absorption. The presence of an affordable housing crisis has provided high demand for new deliveries and absorption is expected to remain steady through

2020 with stable vacancy and increasing rents. Cap rates for both urban and suburban class A product are predicted to remain stable at 4.8% and 5.0%, respectively. Vacancy is also expected to remain stable at 5% for all urban and suburban class A and class B product types. Rents for urban and suburban class A and class B product are predicted to experience 2%-3.9% growth and .1%-1.9% growth in the next 12 months, respectively.

However, compared to the western regions of the United States as well as the national average, Salt Lake City still has room to grow (Figure 24). While 7,000 units are expected to be delivered in 2020, urban and suburban class A product is still expected to take an additional 12 months to reach equilibrium.

Figure 24: Asking Rents (IRR)

A 36-month forecast by IRR suggests average market and expense rates of 2% and urban class A annual absorption of 400 units and suburban class A annual absorption of 500 units.

Stadium Apartments can be described as being located just outside the edge of downtown (900 South). Also, despite not being fully in a suburban area such as

Sugarhouse, the site is not in the West Temple Gateway area or Central Business District.

Based on this unique location one can assume that the site will take on growth rates that lie somewhere between the urban and suburban averages.

4.2 Rent Comparable Analysis

Rents from 5 comparable multifamily and mixed-use buildings ranging from 0.5 miles away to 2 miles away support high rents per square foot. A comprehensive table comparing rents across these 5 properties can be found in Appendix A. Asking rents were used in the rent comparable analysis as opposed to effective rents since they reflect the current state of the market. Effective rents would include leases made 12 months ago, and since rent growth in Salt Lake City has been so high these leases would skew what rents

24 actually are today. Rents from C9 flats and The Ritz Classic were used to set asking rents due to their being the strongest of all rent comparables. Properties were chosen based on the following criteria:

- Age of Construction: In order to select properties that would be in a similar state

of repair as new construction, properties built before 2000 were excluded without

question. Properties older than 10 years were included if they were strong

contenders in other criteria. Preference was given to new properties since they

would likely have similar construction, style, amenities, and pricing as Stadium

Apartments.

- Location: Properties were excluded if they were located in the central business

district or north of 900 South. This is because the demographic, neighborhood,

and floor area ratios of those properties change dramatically. 900 South has

received significant amounts of infrastructure investment and is considered the

edge of downtown. Properties were given priority if they were located in the 300

West corridor between 900 South and Interstate-80. This is because the

demographic and neighborhood dynamic are similar up and down this corridor.

Furthermore, the surrounding property usages and zoning are similar between 300

West and State Street, making properties in those areas experience similar

circumstances as Stadium Apartments.

- Amenities: Stadium Apartments is a mixed-use modern apartment community. To

predict what demand for this style of product, properties that were amenity rich or

have quality-of-life amenities (in-unit washers and dryers, exercise centers,

community areas, etc.) were preferred.

- Income and/or Age Restrictions: Properties that were income restricted (MoDa

Granary Place) or age restricted (Ballpark Apartments) were not included in the

rent comparable analysis since Stadium Apartments does not contain income or

age restricted units.

The following is an analysis of the chosen comparable properties. Properties are presented based on subjective importance.

Figure 25: Rent Comp Map (CoStar)

1: C9 Flats- 1075 South 200 West

Figure 26: C9 Flats (C9 Flats)

“Integrating seamlessly with one of Salt Lake City’s most eclectic neighborhoods, C9

Flats, located in Central and Ninth District, fuses modern design elements and luxe finishes for the ultimate boutique living experience. Here, an inviting, urban chic aesthetic is prominent throughout the stunning apartments and art-filled community spaces.”

- https://www.c9flats.com/

C9 Flats was chosen as the most important comparable due to it meeting all of the key criteria. Built in 2018, this 97-unit property contains basic amenities such as a fitness center, dog wash, on-site parking, controlled access, package lockers, rooftop deck, and a yoga / cycling room. The property is located 0.5 miles north of Stadium Apartments site

27 and is under the same market influences. Construction and style of Stadium Apartments will likely be of a similar make to C9 flats and thus this property is the strongest comparable.

Table 3: C9 Flats Unit Mix (CoStar)

2: The Ritz Classic- 2265 South State Street

Figure 27: The Ritz Classic (Google Maps)

“Come home to relaxed, elegant living at The Ritz Classic Apartments in Salt Lake City,

UT. Located in the enviable South Salt Lake neighborhood near prime shopping, dining and entertainment options, The Ritz offers modern apartments with opulent amenities and a warm and active community.”

- https://utah.weidner.com/apartments/ut/salt-lake-city/the-ritz-classic/

The Ritz Classic was chosen because of its age and size. This 287-unit property was delivered in 2019 and has a healthy mix of studios, 1 bedroom, and 2 bedroom units.

Amenities include in-unit washers and dryers, a pool, a fitness center, kitchen and dining facilities, a yoga studio, a reservable club room, and a bocce ball court. Despite this property being the furthest away (2 miles south from the site and 5.3 miles from downtown), its strong rental rates give good evidence of healthy demand for new construction.

Table 4: The Ritz Classic Unit Mix (CoStar)

3: TenFifteen Apartments

Figure 28: TenFifteen Apartments (CoStar)

“Located in the heart of Salt Lake City, TenFifteen is the newest luxury mixed use community. Conveniently located close to TRAX, and I-15, plenty of shopping, TenFifteen is the place to call home.”

- https://www.emg-apts.com/tenfifteen.htm

Though it lacks community amenities, this 54-unit mixed-use building was delivered in 2018 and is only 0.5 miles from the site. Since this property will be below the quality of Stadium Apartments, this comparable acts as a good baseline for minimum rents.

Table 5: TenFifteen Apartments Unit Mix (CoStar)

4: Towers on Main

Figure 29: Towers on Main (CoStar)

“Nestled in the heart of Salt Lake City, Towers on Main offers all the rewards and comforts of high-class living. Whether it be a relaxing night of beautiful Salt Lake City views or a night out on the town, Towers on Main gives you the neighborhood you’re looking for at the price you want.”

- https://www.towersonmainapts.com/amenities

Towers on Main is a 176-unit apartment community delivered in 1963 yet recently updated to modern luxury standards. While the U-shaped layout shows its age, the interiors and amenities do not. With a heated pool, fitness center, game area, outdoor pet area, and outdoor barbeque spaces, this community contains many luxury standards except for in-unit washers and dryers. This property is 1 mile south from the site and its

1-bedroom heavy unit mix acts as a solid comparable.

Table 6: Towers on Main Unit Mix (CoStar)

5: Park Vue

Figure 30: Park Vue (CoStar)

“Park Vue boasts affordable urban apartments in the Ballpark neighborhood of downtown SLC, just steps from public transit options, Smith’s Ballpark and nightlife on

State Street. Stay close to home with thoughtful community amenities or head out to explore the best of Salt Lake City, all at Park Vue.”

- https://www.parkvueslc.com

Though not a luxury, amenity rich, new building. This 286-unit class B garden style complex was delivered in 2008 and represents an alternative to the luxury lifestyle.

Table 7: Park Vue Unit Mix (CoStar)

V. Retail Market Analysis

5.1 Market Trends

Despite large vacancies, Salt Lake City retail ended 2019 with a strong year.

Rental rates are increasing in top tier locations but are flat in others. This has led cap rates and rents to stay stable on the average. Integra Realty Resources report average rents per square foot being at $28 dollars for community retail and $22 for neighborhood retail (see

Figure 31). Vacancy rates for these locations are predicted to increase but currently sit at

6% for community retail and 8% for neighborhood retail (see Figure 32). As it stands today, there is approximately 28,700,000 square feet of retail inventory which is expected to grow by 0.1% over the next 12 months. This inventory is distributed as 57.5% community retail, 28.6% neighborhood retail, and 13.9% in regional malls. Though

Integra Realty Resources expect supply and demand to be in equilibrium over the next 12 months, they forecast 50,000 square feet on average to be absorbed annually over the next 36 months. Overall, retail is in early stages of hypersupply.

Figure 31: Retail Ask Rents (IRR)

Figure 32: Retail Vacancy Rates (IRR)

5.2 Lease Comparable Analysis

A total of 3 lease comparables were used in the lease analysis. All leases were

NNN and within 1 mile in order to capture the local competitiveness of retail. Higher quality buildings were preferred. Since mixed-use within this range is scarce, only one of the three leases were in a comparable building. Despite each comparable not being equal in quality, they were weighted as such in the average for setting rents in an effort to be conservative. This is because there is a lack of quality comparable leases. 900 South’s

Mixed Use development property is the most comparable, however it’s location on 900

South directly adjacent to the TRAX station would have the lease be higher in value than one at Stadium Apartments. The following leases are presented by distance; furthest to nearest. A summary of the leases is seen below (see table 8):

Table 8: Retail Comparables

Retail Comparables SF/YR Type 900 S Café 25.00$ NNN 900 S Mixed Use (New) 26.50$ NNN 1300 S Strip Mall 19.00$ NNN Average: 23.50$

Figure 33: Lease Comparable Map (CoStar)

1: 259 West 900 South

Figure 34: 259 W 900 S

This class C 2,013 square feet restaurant was on the market for 1 month before signing a NNN lease on Feb 27, 2020 at $25.00 per square foot. This was a new lease, not a renewal. Despite the low quality of this building, the high price per square foot is likely due to its location on 900 South; though, the building or sign is not easily seen from 300

West. The property is 1 mile away from the site.

2: 877 South 200 West

Figure 35: 877 S 200 W

This class A 1,500 square foot mixed-use multifamily-retail space was on market for 12 months before being leased. The building itself was delivered in December 2018 and the lease was signed April 10th, 2019. The NNN lease was for retail space at $26.50 per square foot. This supports retail demand for mixed-use spaces in Utah. There are 24 units on the site and the property is adjacent to the TRAX station. The site also fronts 900

South. The property is 0.8 miles away from the site.

3: Lincoln Plaza- 145 E 1300 S

Figure 36: Lincoln Plaza

On July 2, 2019 a $19 a month NNN lease was signed for 1,540 square feet at

Lincoln Plaza on 1300 South. This was a new lease and represents competition with established mall space. The strip mall fronts 1300 South but has exposure on State Street.

There is no anchor tenant and the majority of the tenants are restaurants. The property is

0.5 miles away from the site.

VI. Development Potential and Site Plan

6.1 R-MU Requirements & Restrictions

While the property is currently zoned PL, it would not be out of character with the community master plan to rezone the site as R-MU (Residential/Mixed Use District). The city code defines the purpose of R-MU being “to reinforce the mixed use character of the area and encourage the development of areas as high density residential urban neighborhoods containing retail, service commercial, and small scale office uses. This district is appropriate in areas of the City where the applicable master plans support high density, mixed use development. The standards for the district are intended to facilitate the creation of a walkable urban neighborhood with an emphasis on pedestrian scale activity while acknowledging the need for transit and automobile access.” The standards are listed below:

- Minimum Lot Area: No minimum lot area required

- Minimum Lot Width: 50 feet

- Setback:

o No setback required for front, corner side, or interior side yards

o Rear Yard Setback: 25% of lot depth, but need not exceed 30 feet

- Parking Setback: Surface lots need a 30-foot landscape setback from the front

property line or be located behind the primary structure. Parking structure shall

maintain a 45-foot minimum setback from a front or corner side yard property

line or be located behind the primary structure. There are no setbacks for

underground parking.

- Maximum Building Height: 75 feet

- Minimum Open Space Area: Not less than 20% of the lot area shall be maintained

as an open space area. This open space area may take the form of landscape yards

or plazas and courtyards, subject to site plan review approval.

- Minimum Off-Street Parking: 0.5 space per multi-family dwelling unit.

Both the community master plan and zoning code do not specify restrictions on floor area ratios.

6.2 Floor Area Ratio Comparable Analysis

Since there is no floor area ratio (FAR) requirement/maximum outlined in code, a

FAR comparable analysis was conducted on surrounding property to ensure that Stadium

Apartments is not out of character when it comes to density. Both FAR and units per acre were examined. Properties within a mile radius of a similar character were selected. It is important to note that Ball Park Apartments is an age restricted community, and

GreenPrint Apartments is mostly micro units and studios. 365 Paxton Ave, a mixed-use community, is also under development.

In order to not exceed local densities, but in order to maximize site potential, a

FAR of 3 was selected at 104 units per acre. This FAR exceeds the average FAR (2.49) by 0.51 but is below the average units per acre (194) at 104. This combination of high

FAR and lower units per acre lands Stadium Apartments in an average density range that is not out of character with the neighborhood.

Table 9: FAR Comps

FAR Comps Property Land Area GBA FAR Units Units/Acre C9 Flats 0.68 68580 2.32 97 143 365 Paxton Ave 1 103000 2.36 121 121 Ball Park Apartments 0.36 53000 3.38 62 172 TenFifteen Apartments 0.81 54000 1.53 54 67 GreenPrint Apartments 0.2 22000 2.53 60 300 844-856 S W Temple 0.4 48951 2.81 145 363 Avg 0.58 58255 2.49 90 194 Min 0.20 22000 1.53 54 67 Median 0.54 53500 2.44 80 157 Max 1.00 103000 3.38 145 363 Stadium Apartments 4.31 563061 3.00 448 104

Figure 37: FAR Comps

Figure 38: Units Per Acre

6.3 Development Plan and Timeline

The site is 187,687 square feet. In order to achieve desired densities and have room for surface parking, a lot coverage of 50% was selected. The number of floors was maximized at 6 stories. With an average of 11 feet between slabs, this puts the building height at 66 feet; below the height limit of 75 feet.

Table 10: Lot and Building Breakdown

Lot and Building Lot SF 187687 Max Lot Coverage 50% Open Space 93844 Surface Parking Space 47250 Effective Open Space 25% 46594 Max Footprint 93844 # of Stories 6 Avg. Slab to Slab Height 11 Height Limit 75 Building Height 66 Height Limit (stories) 6.82 Gross Buildable Area 563061 FAR 3 Less Retail SF 9.3% 8750 Less Above Ground Garage SF 178810 Residual GSF 375501 Efficiency Factor 85% Rentable SF 319176

Table 11: Space Breakdown

Space Breakdown Open Space 25% Surface Parking 25% Building Footprint 50%

Parking will accompany retail and leasing office & amenities on the first floor.

Parking will fully occupy the second floor. Rentable space will fill the other 4 floors with an 85% efficiency factor. This leads to 319,176 square feet of rentable space.

A parking ratio of 1.2 was desired since the average car per household is 1. In the garage parking there is 1 spot for every unit. Surface parking of .2 spots per unit. as well as an additional .1 spot per unit for visitors, retail, and leasing, was included. In the parking garage a gross-up of 15% was applied. Each spot is 350 square feet which is a

44 comfortable size for mid-size vehicles. In total, 178,810 square feet of covered parking and 47,250 square feet of surface parking will be deployed on site.

No parking will be used for the Ballpark. According to Corey Rushton from Salt

Lake City, they are not opposed to a loss of parking since there is still parking left on the

West side of the Ballpark. The loss of parking would be beneficial for 1300 South and the city since it will encourage more people to use TRAX and public transit to get to the stadium. This use of public transit will alleviate stress on the roads and expose more individuals to TRAX. Furthermore, since the average attendance at a home game is 6,671 individuals, a loss of ~420 spaces is marginal and many people commute via TRAX to the games already.

Table 12: Parking Breakdown

Parking Spots/Unit 444 0.99 Surface Spots 135 30.4% Ballpark Spots 0 Total Spots 579 Covered Spots 444 Effective Spots/Unit 1.29 SF per Spot 350 Spots GSF 202650 Surface Spots GSF 47250 Covered Spots GSF 155400 Gross-Up 15% Total Covered Spots GSF 178710 Above Ground Floorplate 93844 Above Ground Levels 2.00 Above Ground Above Ground SF 178810 Below Ground Floorplate 93844 <- Podium / Underground Needed Below Ground Levels 0.00 Below Ground SF 0

Since the average household size is 2, a mix of Studios, 1 Bedroom, and 2

Bedroom apartments were chosen. See table 13 below or in Appendix A for a breakdown

45 of the unit mix. Rents and square footages were decided upon based on market averages.

2 bedroom, 2 bathroom units were included based on the number of individuals who have

“some college”.

Table 13: Unit Mix

Unit Mix Unit Type Rent/SF SF Avg Rent % of Rentable SF Rentable SF # of Units Monthly Rev Revenue Share Studio $ 2.00 500 $ 1,000 10% 31918 64 $ 64,000 11% 1 Bed / 1 Bath $ 1.92 650 $ 1,250 45% 143629 221 276,250$ 45% 1 Bed / 1 Bath with Den $ - 650 $ - 0% 0 0$ - 0% 2 Bed / 1 Bath $ 1.88 850 $ 1,600 30% 95753 113 180,800$ 30% 2 Bed / 2 Bath $ 1.84 950 $ 1,750 15% 47876 50 $ 87,500 14% 3 Bed / 1.5 Bath $ - 850 $ - 0% 0 0$ - 0% 100% 319176 448 608,550$ 100%

Retail will be broken up into 3 suites and a detailed breakdown of the retail component can be found in Appendix B.

The start date for the project was set as 5/1/2020 and reversion will occur

5/31/2031. A detailed breakdown of the development timeline is included below in table

14:

Table 14: Development Timeline

Development Timeline Start Finish RDA Request for Proposals 5/1/2020 8/1/2020 Contract Ratification 8/1/2020 10/1/2020 Feasibility/Due Diligence/Partnership Agreement 10/1/2020 12/1/2020 Entitlements: Rezoning/Site Plan/Construction Plans 12/1/2020 6/1/2021 Close Development/Construction Loan 6/1/2021 Construction 6/1/2021 11/30/2022 First Delivery to Stabilization 12/31/2022 11/30/2023 Close Permanent Loan 12/1/2023 Reversion 5/31/2031

VII. Financial Analysis

7.1 Site Acquisition

Conversation with Corey Rushton from Salt Lake City Corporation revealed that they want to use the site to provide funds for deferred maintenance or ongoing maintenance demands at the ballpark. Currently, the Salt Lake City Bees team is deploying capital towards deferred maintenance and improvements and the city wants to cover those expenses. It’s estimated that there is $8,804,973 in deferred maintenance (see

Figure 39) at the ballpark and there will be $400,000 to $500,000 in annual maintenance costs in the future.

Figure 39: Ballpark Deferred Maintenance (Salt Lake City Corporation)

A comparable analysis of 3 recent land sales in the vicinity revealed that the average price per acre for commercial property is $1,400,346 (see table 15). The tax assessed value of the property is $1,901,200. It could be concluded then that an outright purchase would not be sufficient to cover the deferred maintenance at the ballpark. A

47 ground lease might be more favorable for the city since it can allow them to prevent future deferred maintenance issues, although they will need to come up with funds for the immediate demands.

Table 15: Land Comparables

Land Comparables Location Size Price Price per Acre Zoning The Granary Building (600S) 1.63$ 5,400,000 $ 3,312,883 Commercial 300 W 1.13$ 138,200 $ 122,301 Commercial Target Lot 0.82$ 628,000 $ 765,854 Retail Pad $ 1,400,346

A comparison of land values (see table 16) uses average price per acre, tax assessed value, and various present values (8% discount rate suggested by a local market expert) for different ground leases was conducted to determine what options could provide the city with what they need. It was decided $2.50 per square foot ground lease would be ideal. This would be able to not only cover most of the ongoing maintenance for the ballpark but also allow Stadium Apartments to hit a high IRR for developers and investors. The $2.50 per square foot ground lease’s present value also lands the ground lease close to the average price per acre. The ground lease term is 99 years so that the project will be able to secure financing and the city will have long term control over the site.

Discussion with the city shows that they are open to the idea of a ground lease, however further discussion is needed to determine their level of comfort with subordinating the ground lease to the lender. Subordination is required by the lender, and while it seems far from ideal, the ground lease solution would allow the city to receive income to solve their maintenance issues.

Table 16: Land Valuation

Subject Property Acres Payment Land Value Price per Acre At avg. price per acre 4.31 $ - $ 6,033,672 $ 1,400,346 Tax assessed value 4.31 $ - $ 1,901,200 $ 441,247 PV $2.50/sf Ground Lease 4.31$ 469,218 $ 5,212,585 $ 1,209,416 PV $2/sf Ground Lease 4.31$ 375,374 $ 4,170,068 $ 967,825 PV $1/sf Ground Lease 4.31$ 187,687 $ 2,085,034 $ 483,912 PV $1.5/sf Ground Lease 4.31$ 281,531 $ 3,127,551 $ 725,869

7.2 Real Estate Taxes

Assuming a ground lease, the land will have no taxable value on the developer or investors. Furthermore, since the parcel is owned by the city it is 100% tax exempt. To calculate the effective tax on the property, the stabilized untrended value of the building was used at a 4.80% cap rate. Then, a deduction from the stabilized value based on the present value of the ground lease was applied to get the value of the improvements. From this value, a 45% deduction was given for the property being residential. The local mill rate was then applied to get the annual tax. This amount was rounded up to the nearest ten thousand ($630,000) and applied to the profit and loss analysis.

Table 17: Tax Calculator

Tax Calculator Stabilized Value $ 98,532,389 Value of Improvements $ 93,319,804 % Appraised 55% Appraised Value $ 51,325,892 Mill Rate 0.012908 Annual Tax $ 662,515

7.3 Costs: Overview

Since the calculation and determination of hard and soft costs are difficult to acquire without actual quotes, data was used from online in conjunction with actual data

49 from a nearby mixed-use property under construction. Data from Integra Realty

Resources (see table 18) was also consulted to ensure that, if anything, the cost per unit is in accordance with local averages.

Table 18: 2018 Development Cost Comparables

2018 Development Cost Comps (Soft & Hard, no land, no contingency) LocationUnitsTotal CostsCost/Unit Notes Clearfield, UT 123$15,777,726128,274$ Parking on main floor, apartments above Draper, UT 120$21,485,997179,050$ Mid-Rise/Parking level Lehi, UT 330$48,198,111146,055$ High-rise Midvale, UT 190$26,098,800137,362$ LIHTC Midvale, UT 374$56,700,000151,604$ Townhomes and garden Midvale, UT 206$34,650,594168,207$ LIHTC Provo, UT 67$11,668,664174,159$ Parking garage Roy, UT 75$12,442,338165,898$ Townhouse/Garage Sandy, UT 264$45,517,988172,417$ Parking garage Vineyard, UT 468$51,625,400110,311$ Garden/Walk-up Avg $ 153,334 Salt Lake City, UT* 61$10,360,545169,845$ Parking on main floor, apartments above Salt Lake City, UT* 139$27,362,203196,850$ Parking structure included Salt Lake City, UT* 53$11,921,897224,941$ Townhomes and garden Salt Lake City, UT* 95$24,822,019261,284$ High Rise, garage, CityLift system Salt Lake City, UT* 272$98,293,266361,372$ High Rise *SLC CBD Avg $ 242,858 Total Avg $ 183,175 Stadium Apartments 44878,207,358$ $ 174,570High Rise, mixed use, 4 on 2

7.4 Hard Costs

(See Appendix B for breakdown)

Demo and grading was calculated at $2 a square foot due to the fact that the current use of the property is a parking lot and there are no other improvements. This price was estimated from https://demolition.promatcher.com/cost/utah.aspx

Direct building cost was calculated at $150 a square foot of rentable and efficiency space, and the direct parking structure cost was calculated at $50 a square foot.

These Figures were decided upon by consulting data from

50 https://ccorpinsights.com/costs-per-square-foot/ and https://evstudio.com/construction- cost-per-square-foot-for-multifamily-housing-based-on-construction-type/. CUMMING suggested costs for above grade parking structures in Denver to range from $51-$67 dollars a square foot. EVStudio suggested costs for Suburban 3-6 story wood frame with podium or wrap to be from $150-$180 dollars per square foot. FF&E was calculated at $2,500 a unit.

An additional 3.5% general contractor fee and 5% hard cost contingency was included in the calculation of hard costs. In total, hard costs land at $71,989,218, or $160,690 a unit, or

$225.53 per rentable square foot.

7.5 Soft Costs

Architecture and Engineering costs were set at 3.5% of direct building cost and was compared with a nearby mixed-use property’s cost per unit to ensure that the estimate was correct.

Marketing was priced at $250 a unit.

Impact Fees and Permits were calculated using city metrics and calculations (see table

19)

Table 19: Permit & Impact Fees

Permit Calculator First $M $ 8,427 After first $M $ 507,666 Total Building Permit Fee $ 516,093 Plan Review Fee $ 335,460.33 State Surcharge $ 5,160.93 Total Permit Fees $ 1,372,807

Impact Fee Calculator Fee Cost per Unit or 1000sf Total Public Saftey- Fire Residential $ 171 $ 76,608 Comercial/Retail $ 250 $ 2,188 Public Saftey- Police Residential $ 59 $ 26,432 Comercial/Retail $ 86 $ 753 Roadways Residential $ 231 $ 103,488 Comercial/Retail $ 1,650 $ 14,438 Park Residential $ 3,078 $ 1,378,944 Total Impact Fees $ 1,602,850

Total Permits & Impact Fees $ 2,975,656

A developer fee of 3% and construction management fee of 0.25% was included alongside a 5% soft cost contingency.

No capitalized real estate taxes during construction were applied due to the ground being leased from the city.

7.6 Construction Financing

Construction debt Figures were confirmed as accurate by Steve Lowell, Capital

Markets Director for The Yellowstone Group. Construction debt is set at 65% loan to

52 cost at a 5.50% annual rate. A 1% loan origination fee is applied to the property in month

0 as well.

7.7 Permanent Financing

Permanent financing Figures were confirmed as accurate by Steve Lowell, Capital

Markets Director for The Yellowstone Group. Loan funding replaces construction financing in month 30. The loan to value ratio is 70% of stabilized vale (83.3% of cost) at a 3.70% interest rate amortized over 30 years. This allows for almost a full return of equity to the developer and investors in month 30. The average debt coverage ratio

(DCR) is 1.28

7.8 Equity Terms

GP and LP contributions were 20% ($6,032,423) and 80% ($24,129,692), respectively. Equity returns were distributed across a 4 tier IRR hurdle (see table 20).

Table 20: IRR Waterfall

IRR Hurdle GP Promote Dist. % to GP Dist. % to LP up to 9.0% 0% 20.0% 80% up to 12.0% 15% 32% 68% up to 15.0% 30% 44% 56% above 15.0% 40% 52% 48%

7.9 Market & Vacancy Rates

Market growth rates are set to 3% as suggested by market data and reports described earlier in this report. An analysis of the average consumer price index was conducted for 5- (1.55%), 10- (1.77%), and 20-year (2.17%) periods in an attempt to determine expense growth rates (FRED). A 2% expense growth rate was decided on

53 based on these CPI averages. Retail growth rate was set at 0% as suggested from market data. Based on market information, a general vacancy rate of 5% was applied.

7.10 Operating Expenses & Capital Expenditures

(see Appendix B)

Operating expenses were determined based on Yardi data and comparable property data. A management fee of 2.50% was applied. The ground lease costs $469,218 annually and there are $200 per unit in capital reserves.

7.11 Disposition Strategy

A 10-year period from month 0 to disposition was decided upon in order to maximize income. Entry cap rate was determined based on market data as 4.80% for class A multifamily, and a 0.5% increase in cap rate was applied to have the disposition cap be 5.30%. At sale, 3.50% selling costs were applied. This leads to a sale value of

$121,243,071, or $270,632 per unit. At sale, a 7.46% yield-on-cost is achieved with a development spread of 215.6 bps.

7.12 Return Metrics

Investors contribute $24,129,692 and gain a net profit of $35,363,946. This equates to a ROI of 146.6%, an equity multiple (EMx) of 2.47X, and an IRR of 13.61%.

Developers contribute $6,032,423 and gain a net profit of $17,202,844. This equates to a ROI of 285.2%, an EMx of 3.85X, and an IRR of 26.90%.

On a property level, there is a net profit of $52,566,791. This equates to an EMx of 2.66X and an IRR of 14.61%

7.13 Sensitivity Analysis

Vacancy sensitivity shows metrics supporting high long-term average vacancies

(10%) and still receiving solid returns and a high development spread. Breakeven vacancy is extremely high at 62.58%.

Table 21: Vacancy Sensitivity

SENSITIVITY #1 Vacancy Dev. Spread Levered EMx Base Case 5.00% 215.6 bps 2.66X Downside #1 6.00% 204.6 bps 2.59X Downside #2 7.00% 193.6 bps 2.52X Downside #3 8.00% 182.5 bps 2.45X Downside #4 9.00% 171.5 bps 2.38X Downside #5 10.00% 160.4 bps 2.31X

Exit cap rate sensitivities ensure the return of capital through 6.05% cap rates and provide security in the case of large market swings. Higher exit cap rates also lower the development spread significantly, but levered EMx is still over 1x.

Table 22: Exit Cap Sensitivity

SENSITIVITY #2 Exit Cap Rate Dev. Spread Levered EMx Base Case 5.30% 215.6 bps 2.66X Downside #1 5.55% 190.8 bps 2.50X Downside #2 5.80% 141.1 bps 2.21X Downside #3 6.05% 66.6 bps 1.85X Downside #4 6.30% -32.8 bps 1.49X Downside #5 6.55% -157.2 bps 1.16X

Income growth sensitivity assumes expense growth stays the same (2%). Even if income begins to fall, equity will be returned, despite a negative development spread.

Table 23: Income Growth Sensitivity

SENSITIVITY #3 Inc. Growth Dev. Spread Levered EMx Base Case 3.00% 215.6 bps 2.66X Downside #1 2.50% 171.1 bps 2.39X Downside #2 2.00% 128.3 bps 2.13X Downside #3 1.50% 87.2 bps 1.87X Downside #4 1.00% 47.7 bps 1.63X Downside #5 0.50% 9.7 bps 1.39X

Like income growth sensitivity, expense growth sensitivity assumes income growth stay constant (3%). Since there is a conservative expense growth assumed despite lower CPI levels on the 5- and 10-year averages, if expense growth is actually higher predicted EMx and development spread is still able to maintain high metrics.

Table 24: Expense Growth Sensitivity

SENSITIVITY #4 Exp. Growth Dev. Spread Levered EMx Base Case 2.00% 215.6 bps 2.66X Downside #1 2.50% 200.2 bps 2.56X Downside #2 3.00% 184.1 bps 2.46X Downside #3 3.50% 167.3 bps 2.35X Downside #4 4.00% 149.7 bps 2.24X Downside #5 4.50% 131.4 bps 2.12X

VIII. Risks and Challenges

8.1 Timing

Due to the tight construction market, working with the city, and the need for a zoning change or variance, this development could be pushed back significantly. The average delivery of product over the past year has averaged 12 months (CoStar) but working with the city council and planning takes time and could be lengthy if concerns and delays arise.

Another risk is from oversupply. Since this project is expected to take 30 months to stabilize, rent growth might be lower and vacancies might be higher than expected.

However, as seen in the sensitivity analysis, if rent growth falls and vacancies rise, equity will still be returned to investors.

8.2 Market Risks

Multifamily construction is at record high rates and this could lead to a decrease in demand. Furthermore, uncertainty with the trade war with China and speculation as to when the market will tip into the next recession makes a development this late into the expansionary period risky. If the market collapses and individuals lose their jobs, luxury apartments will suffer as people move from class A to B and from class B to C. Stadium

Apartments is equipped to deal with this since it is on the lower end of class A and does not feature amenities typically found in luxury apartments.

The area around 1300 South is also still in its early stages of growth. A downward shift in the market could significantly deter investment in this area which would stall rent growth and appreciation. However, Stadium Apartments still shows strong equity multiples in the event of low rent growth and high vacancy.

8.3 Interest Rate Risks

The interest rate market is currently very volatile due to market risks. With interest rates being at record low levels, it is difficult to assume that interest rates will go much lower. Thus, if there is movement, it will be horizontal or upwards towards higher rates. Higher interest rates could impact the development’s cashflow significantly.

8.4 Construction Cost Risks

Construction costs are at highs due to the high demand for development. If the expansionary period continues and development keeps pace, the market could see even higher prices per square foot or costs of materials. Increases in these costs will impact the returns significantly since Stadium Apartments is such a large project with a high FAR.

Furthermore, competition for labor can result in higher than predicted costs to contractors which could result in bids for construction being higher than expected.

IX. Conclusion

It can be concluded that 88 West 1300 South, “Stadium Apartments”, will be developed into a mixed-use building featuring multifamily dwelling units and street-level retail. Based on the evidence presented in this paper, this will be the highest and best use of the site. The project is contingent on the hard and soft costs, market demand and supply, the city, and financial markets supporting the assumptions made for the project.

Any change of these factors would necessitate a reevaluation of the project. However, current market data supports the conclusion that now is an ideal time to develop the site into a mixed-use project. This will not only lead to the achievement of the central community master plan, but a beneficial investment for Salt Lake City, the developer, and investors.

Works Cited

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costar.com

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on Construction Type”. EVstudio. Feb 16, 2018. Retrieved from

https://evstudio.com/construction-cost-per-square-foot-for-multifamily-housing-

based-on-construction-type/

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Average”. Last accessed 3/3/2020. Retrieved from

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Retrieved from https://gardner.utah.edu/economics-and-public-policy/2020-

economic-report-to-the-governor/

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Integra Realty Resources (2020). “VIEWPOINT: 2020 Salt Lake City, UT Multifamily

Annual Report”. Retrieved from irr.com

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Report”. Retrieved from irr.com

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http://www.milb.com/milb/stats/stats.jsp?t=l_att&lid=112&sid=l112

ProMatcher (2020). “Utah Demolition Costs & Prices”. last accessed 3/3/2020. Retrieved

from https://demolition.promatcher.com/cost/utah.aspx

Salt Lake City Corporation (2020). “Salt Lake City Zoning Lookup Map”. Last Accessed

3/3/2020. Retrieved from https://maps.slcgov.com/mws/zoning-lg.htm

Salt Lake City Corporation (2020). “BSCE- Fee Schedules”. Last Accessed 3/3/2020.

Retrieved from https://www.slc.gov/buildingservices/bsce-fee-schedules/

SterlingCodifiers (2020). “Salt Lake City, Utah: City Code”. last accessed

3/3/2020. Retrieved from

https://www.sterlingcodifiers.com/codebook/index.php?book_id=672

UTA (2020). “TRAX” Last Accessed 3/3/2020. Retrieved from

https://www.rideuta.com/Services/TRAX

WalkScore.com (2020). “88 West 1300 South”. last accessed 3/3/2020. Retrieved from

https://www.walkscore.com/score/88-w-1300-s-south-salt-lake-ut-84115

Appendix A: Comparables and Unit Mix

Rent Comparables Studio 1 bed / 1 bath 2 bed / 1 bath 2 bed / 2 bath 3 bed / 2 bath Name Rent SF R/SF Rent SF R/SF 2b/1ba SF R/SF 2b/2ba SF R/SF 3b/2ba SF R/SF C9 Flats - - - $ 1,245 659 $ 1.89 - - - $ 1,735 1045 $ 1.66 -- - The Ritz Classic $ 1,000 497 $ 2.01 $ 1,255 674 $ 1.86 $ 1,544 885 $ 1.74 $ 1,604 993 $ 1.62 -- - TenFifteen Apartments 641$ 477 $ 1.34 $ 1,062 692 $ 1.53 ------Towers on Main 850$ 302 $ 2.81 $ 910 568 $ 1.60 $ 1,048 770 $ 1.36 -- - 2400 2048 $ 1.17 Park Vue - - - $ 794 665 $ 1.19 $ 1,173 800 $ 1.47 $ 1,210 860 $ 1.41 $ 1,179 1033 $ 1.14 830$ 830$ 425 $ 2.06 $ 1,053 652 $ 1.62 $ 1,255 818 $ 1.52 $ 1,516 966 $ 1.56 $ 1,790 1541 $ 1.16

Retail Comparables SF/YR Type 900 S Café 25.00$ NNN 900 S Mixed Use (New) 26.50$ NNN 1300 S Strip Mall 19.00$ NNN Average: 23.50$ Add Retail Tenant Del. Retail Tenant SUITE TENANT LEASE START SF RENT START ANNUAL BUMPS RENT/SF/YR ANNUAL RENT (YR 1) 110 Tenant 1 Month 19 1,000 Month 22 3.00% 24.00 24,000 120 Tenant 2 Month 22 1,250 Month 25 3.00% 23.50 29,375 130 Tenant 3 Month 25 1,500 Month 28 3.00% 23.00 34,500 100 Leasing & Amenities Month 19 5,000 Month 19 0.00% 0.00 - 8,750 Month 19 3.00% 10.04 87,875

Appendix B: Financial Calculations

USES START END METHOD /RENTABLE SF /UNIT AMOUNT Land Costs Add Item Del. Item Land Costs Month 0 Month 0 Straight-Line - - - Closing Costs Month 0 Month 0 Straight-Line - - - Demo & Grading Month 0 Month 1 Straight-Line 1 838 375,374 Total Land Costs Month 0 Month 1 1.18 838 375,374

Hard Costs Add Item Del. Item Direct Building Cost Month 1 Month 18 S-Curve 176.46 125,726 56,325,133 FF&E Month 15 Month 18 S-Curve 3.51 2,500 1,120,000 GC Fee (3.5%) Month 1 Month 18 S-Curve 7.16 5,099 2,284,297 Hard Cost Contingency (5%) Month 1 Month 18 S-Curve 10.40 7,409 3,319,282 Direct Parking Structure Costs Month 1 Month 18 S-Curve 28 19,956 8,940,506 Total Hard Costs Month 1 Month 18 225.53 160,690 71,989,218 Soft Costs Add Item Del. Item Architecture & Engineering 0.29 Month 1 Month 6 S-Curve 7.16 5,099 2,284,297 Surveys & Studies (Predevelopment) 0.01 Month 1 Month 1 Straight-Line 0.31 223 100,000 Insurance, Bonds & Misc. Taxes 0.05 Month 1 Month 18 Straight-Line 1.57 1,116 500,000 Marketing 0.01 Month 16 Month 18 S-Curve 0 250 112,000 Impact Fees & Permits 0.41 Month 0 Month 0 Straight-Line 9 6,642 2,975,656 Developer Fee (3%) 0.30 Month 1 Month 18 S-Curve 7 5,325 2,385,496 CM Fee (.25%) 0.02 Month 1 Month 18 S-Curve 1 402 179,973 Developer Pre-Construction Cost 0.05 Month 1 Month 1 Straight-Line 2 1,116 500,000 General & Administrative 0.05 Month 1 Month 18 Straight-Line 2 1,116 500,000 Capitalized Real Estate Taxes 0.00 Month 1 Month 18 S-Curve - - - Soft Cost Contingency (5%) 0.04 Month 1 Month 18 Straight-Line 1 778 348,598 Total Soft Costs Month 0 Month 18 30.97 22,067 9,886,020

Total Project Cost before Financing $ 174,570 257.68 183,595 82,250,612

Carry Costs % of Lease-Up Income to Use to Pay Interest Capitalized Construction Interest 100.0% 9.21 6,559 2,938,625 Financing Fees Month 0 Month 0 Straight-Line 2.66 1,897 850,000 Operating Shortfall 0.43 309 138,358 Total Carry Costs 12.30 8,766 3,926,983

Total Uses Month 0 Month 18 269.98 192,361 86,177,595

SOURCES LTC FUNDING ORDER ANNUAL RATE % OF SOURCES /RENTABLE SF /UNIT AMOUNT Equity 1 See Waterfall 35.0% 94.49 67,326 30,162,115 Construction Debt 65.0% 2 5.50% 65.0% 175.49 125,035 56,015,480 Total Sources Fixed Variable 100.0% 269.98 192,361 86,177,595

CASH FLOW OF SOURCES % OF SOURCES /RENTABLE SF /UNIT AMOUNT Total Equity 35.0% 94.49 67,326 30,162,115 Construction Debt Construction Debt before Reserves 61.4% 165.85 118,166 52,938,497 Interest Reserve 3.4% 9.21 6,559 2,938,625 Operating Shortfall Reserve PAYOFF MONTH 0.2% 0.43 309 138,358 Total Construction Debt Month 30 65.0% 175.49 125,035 56,015,480 Total Sources 100.0% 269.98 192,361 86,177,595

INCOME Basic Lease Up Method Operation Begin Month Month 19 Basic Detailed Annual Income Growth Rate 3.0% Begin Month 0 % Pre-Leased 15% 1st Stabilized Month Month 30 Lease-up Pace (Units/Mo) 38 units Lease Contract Length 12 Months RENTAL INCOME Add Unit Type Del. Unit Type 319,200 NRA 56.7% EFF. 563,061 GBA UNIT TYPE UNITS AVG. SF INITIAL FREE RENT STAB. FREE RENT RENT/SF/MO RENT/UNIT/MO TOTAL RENT/YR Studio 64 500 1.0 Months 1.0 Months 2.00 1,000 768,000 1 Bd/1 Bth 221 650 1.0 Months 1.0 Months 1.92 1,250 3,315,000 1 Bd/1.5 Bth 0 650 1.0 Months 1.0 Months - 0 - 2 Bd/1 Bth 113 850 1.0 Months 1.0 Months 1.88 1,600 2,169,600 2 Bd/2 Bth 50 950 1.0 Months 1.0 Months 1.84 1,750 1,050,000 3 Bd/2 Bth 0 850 1.0 Months 1.0 Months - - - GROSS RENT 448 713 1.0 Months 1.0 Months 1.91 1,358 7,302,600 - Concessions (Free Rent) (0.16) (113) (608,550) - Gain/Loss-to-Lease (0.02) (14) (73,026) - Non-Revenue (Model) Units 2 unit(s) (2,717)/Mo (0.01) (6) (32,601) TOTAL RENTAL INCOME 1.72 1,226 6,588,423 OTHER INCOME Add Item Del. Item % FIXED % OF TOTAL RENT /SF/MO UNIT/MO AMOUNT/YR RUBS 0% 4.08% 0.07 50 268,800 Other Income 0% 4.93% 0.08 60 324,800 Parking Income 0% 0.12% 0.00 2 8,064 Cable Income (Net of Expenses) 0% 2.72% 0.05 33 179,200 Ballpark Parking Income 0% 0.00% - - $0 TOTAL OTHER INCOME 11.85% 0.20 145 780,864 No Retail Incl. Retail 1,743 RETAIL INCOME (Net of Expenses) 7.99 /SF/YR 0.02 13 69,900 TOTAL POTENTIAL INCOME 1.94 1,384 7,439,187 - General Vacancy and Credit Loss (Excluding Retail Income) 5.00% (0.10) (69) (368,464) EFFECTIVE GROSS REVENUE 1.85 1,315 7,070,723

EXPENSES BASIC EXPENSE UNDERWRITING Annual Expense Growth Rate 2.0% Begin Month 0 Prop. Tax (Operation Yr 1) % of Full 50.0% Prop. Tax (Operation Yr 2) % of Full 75.0% Basic Detailed Prop. Tax (Operation Yr 3) % of Full 100.0% OPERATING EXPENSES % FIXED % OF EGR UNIT/YR AMOUNT/YR Repairs and Maintenance 50% 2.85% 450 201,600 Payroll 100% 7.92% 1,250 560,000 General & Administrative 75% 1.27% 200 89,600 Marketing 100% 1.58% 250 112,000 Utilities 50% 3.80% 600 268,800 Contract Services 75% 1.43% 225 100,800 Turnover 0% 1.58% 250 112,000 Management Fee 2.50% 395 176,768 Insurance 100% 1.27% 200 89,600 Property Taxes 0.61% Mill Rate 8.91% 1,406 630,000 TOTAL OPERATING EXPENSES 33.11% 5,226 2,341,168

NET OPERATING INCOME 10,557 4,729,555

CAPITAL EXPENDITURES % FIXED % OF EGR UNIT/YR AMOUNT/YR Capital Reserves 0% 1.27% 200 89,600 Ground Lease 0% Straight-Line 5.31% 838 375,374 Retail Leasing Cost Reserves 3.83 /SF/YR 0.47% 75 33,521 TOTAL CAPITAL EXPENDITURES 7.05% 1,113 498,495

CASH FLOW FROM OPERATIONS 4,231,059 Debt Service (Permanent Debt) 3,964,319 CASH FLOW AFTER FINANCING 266,741

TIMING REVERSION (SALE) ASSUMPTIONS Construction End Month 18 Market Cap Rate Today 4.80% Operation Begin Month 19 Cap Rate at Sale (Terminal Cap) 5.30% 1st Stabilized Month Month 30 Selling Costs 3.50% Sale Month Month 120 As of Today Month 30 - 41 Month 120 - 131

SALE PROCEEDS /Unit Amount VALUATION Gross Sale Proceeds (Direct Cap) 270,632 121,243,071 UNTRENDED TRENDED SALE - Selling Costs @ 3.50% (9,472) (4,243,507) Cap Rate 4.80% 4.93% 5.30% Net Sale Proceeds 261,160 116,999,563 NOI 4,729,555 4,972,858 6,425,883 Permanent Loan Payoff (132,946) (59,559,693) Stabilized Value 98,532,389 100,971,744 121,243,071 Equity Proceeds from Sale 128,214 57,439,870 /Unit 219,938 225,383 270,632 /SF 308.69 316.33 379.83

PROPERTY-LEVEL CASH FLOWS Amount Total Project Cost (Before Carry Costs) 82,250,612 Total Construction Loan Interest (Before Lease-up Income) 4,746,538

Total Construction Loan Draws 56,015,480 Permanent Loan Funding 71,773,214

Cash Flow from Operations 40,014,470 Permanent Loan Debt Service 29,732,390

DCR 1.28 Net Sale Proceeds 110,731,730 - Construction Loan Payoff (56,015,480) - Permanent Loan Payoff (60,480,720) Equity Proceeds from Capital Event(s) 66,008,744

EQUITY MULTIPLE IRR NET PROFIT Net Unlevered Cash Flow 1.83X 7.78% 68,495,588 Net Levered Cash Flow 2.47X 14.02% 44,459,154 Levered Cash on Cash Return UNTRENDED TRENDED SALE Yield-on-Cost 5.49% 5.77% 7.46% Market Cap Rate 4.60% 4.85% 5.60% Development Spread 88.8 bps 92.0 bps 185.7 bps

RETURNS SUMMARY Contributions Net Profit ROI EMx IRR Investors 24,129,692 35,363,946 146.6% 2.47X 13.61% Developer 6,032,423 17,202,844 285.2% 3.85X 26.90%

WATERFALL (GP AND LP) GP-LP CONTRIBUTIONS Share Amount GP Developer 20% 6,032,423 LP Investors 80% 24,129,692 Total 100% 30,162,115

DISTRIBUTION WATERFALL IRR Hurdle GP Promote Dist. % to GP Dist. % to LP Pref. Return up to 9.0% 0% 20.0% 80% 2nd Tier up to 12.0% 15% 32% 68% 3rd Tier up to 15.0% 30% 44% 56% 4th Tier above 15.0% 40% 52% 48%

GP-LP DISTRIBUTIONS Share Amount GP Developer 28% 23,235,267 LP Investors 72% 59,493,638 Total 100% 82,728,906

GP-LP NET CASH FLOW EMx IRR Share Amount GP Developer 3.85X 26.90% 33% 17,202,844 LP Investors 2.47X 13.61% 67% 35,363,946 Total 2.74X 16.04% 100% 52,566,791

SENSITIVITY #1 SENSITIVITY #2 Vacancy Dev. Spread Levered EMx Exit Cap Rate Dev. Spread Levered EMx Base Case 5.00% 215.6 bps 2.66X Base Case 5.30% 215.6 bps 2.66X Downside #1 6.00% 204.6 bps 2.59X Downside #1 5.55% 190.8 bps 2.50X Downside #2 7.00% 193.6 bps 2.52X Downside #2 5.80% 141.1 bps 2.21X Downside #3 8.00% 182.5 bps 2.45X Downside #3 6.05% 66.6 bps 1.85X Downside #4 9.00% 171.5 bps 2.38X Downside #4 6.30% -32.8 bps 1.49X Downside #5 10.00% 160.4 bps 2.31X Downside #5 6.55% -157.2 bps 1.16X SENSITIVITY #3 SENSITIVITY #4 Inc. Growth Dev. Spread Levered EMx Exp. Growth Dev. Spread Levered EMx Base Case 3.00% 215.6 bps 2.66X Base Case 2.00% 215.6 bps 2.66X Downside #1 2.50% 171.1 bps 2.39X Downside #1 2.50% 200.2 bps 2.56X Downside #2 2.00% 128.3 bps 2.13X Downside #2 3.00% 184.1 bps 2.46X Downside #3 1.50% 87.2 bps 1.87X Downside #3 3.50% 167.3 bps 2.35X Downside #4 1.00% 47.7 bps 1.63X Downside #4 4.00% 149.7 bps 2.24X Downside #5 0.50% 9.7 bps 1.39X Downside #5 4.50% 131.4 bps 2.12X

RETAIL INCOME RETAIL BASE RENTAL INCOME Add Retail Tenant Del. Retail Tenant 4 Suites SUITE TENANT LEASE START SF RENT START ANNUAL BUMPS RENT/SF/YR ANNUAL RENT (YR 1) 110 Tenant 1 Month 19 1,000 Month 22 3.00% 24.00 24,000 120 Tenant 2 Month 22 1,250 Month 25 3.00% 23.50 29,375 130 Tenant 3 Month 25 1,500 Month 28 3.00% 23.00 34,500 100 Leasing & Amenities Month 19 5,000 Month 19 0.00% 0.00 - 8,750 Month 19 3.00% 10.04 87,875

RECOVERY INCOME RECOVERY START RECOVERY % PRO RATA SHARE REC./SF/YR AMOUNT/YR Tenant 1 Month 19 100% 26.7% 24.50 24,500 Tenant 2 Month 22 100% 33.3% 24.50 30,625 Tenant 3 Month 25 100% 40.0% 24.50 36,750 Leasing & Amenities Month 19 100% 0.0% 0.00 - RECOVERY INCOME Month 19 10.50 91,875

POTENTIAL RETAIL INCOME 179,750 - Retail Vacancy and Credit Loss 10.00% /SF/YR (17,975) EFFECTIVE GROSS REVENUE 18.49 161,775 RETAIL EXPENSES RETAIL OPERATING EXPENSES % FIXED Expense Growth UNIT/YR /SF/YR AMOUNT/YR Common Area Maintenance 0% 2.00% 39 2.00 17,500 Management Fee 0% 2.00% 29 1.50 13,125 Insurance 0% 2.00% 20 1.00 8,750 Property Taxes 0% 2.00% 117 6.00 52,500 TOTAL OPERATING EXPENSES 10.50 91,875 RETAIL INCOME (Net of Expenses) 7.99 69,900

RETAIL LEASING COST RESERVE New Lease Renewal Lease New Lease Renewal Lease ASSUMPTIONS CALCULATION Renewal Probability 30.0% 70.0% Tenant Improvements 65,625 122,500 Average Retail Market Rent 23.50 23.50 /SF Leasing Commissions 37,013 40,303 Tenant Improvements 25.00 20.00 /SF Total Leasing Costs 102,638 162,803 Leasing Commissions 6.0% 4.0% Leasing Cost/Yr 10,264 23,258 Lease Term 10 Years 7 Years

Retail Leasing Cost Reserves 3.83 33,521

Tax Calculator Returns (Levered) Stabilized Value $ 98,532,389 NPV $33,036,986 Value of Improvements $ 93,319,804 Net Profit $ 50,181,918 % Appraised 55% IRR 14.61% Appraised Value $ 51,325,892 EMX 2.66 Mill Rate 0.012908 Average Cash on Cash 7.63% Annual Tax $ 662,515

Permenant Debt Stabilized Value $ 100,971,744 Construction Loan 56,017,715 LTV 70% DCR 1.27 Refi Amount $ 70,680,221 Property IRR 14.61% Type Perm Mezz TIF % of Refi 100% 0% 0% 100% Amount $ 70,680,221 $ - $ - Interest Rate 3.70% 10.00% 3.43% Blended Rate 3.70%

Permit Calculator First $M $ 8,427 After first $M $ 507,666 Total Building Permit Fee $ 516,093 Plan Review Fee $ 335,460.33 State Surcharge $ 5,160.93 Total Permit Fees $ 1,372,807

Total Permits & Impact Fees $ 2,975,656

Appendix C: Site Plan

Lot and Building Parking Lot SF 187687 Spots/Unit 444 0.99 Max Lot Coverage 50% Surface Spots 135 30.4% Open Space 93844 Ballpark Spots 0 Surface Parking Space 47250 Total Spots 579 Effective Open Space 25% 46594 Covered Spots 444 Max Footprint 93844 Effective Spots/Unit 1.29 # of Stories 6 SF per Spot 350 Avg. Slab to Slab Height 11 Spots GSF 202650 Height Limit 75 Surface Spots GSF 47250 Building Height 66 Covered Spots GSF 155400 Height Limit (stories) 6.82 Gross-Up 15% Gross Buildable Area 563061 Total Covered Spots GSF 178710 Above Ground FAR 3 Above Ground Floorplate 93844 Less Retail SF 9.3% 8750 Above Ground Levels 2.00 Space Breakdown Less Above Ground Garage SF 178810 Above Ground SF 178810 Residual GSF 375501 Below Ground Floorplate 93844 <- Podium / UndergroundOpen Space 25% Efficiency Factor 85% Needed Below Ground Levels 0.00 Surface Parking 25% Rentable SF 319176 Below Ground SF 0 Building Footprint 50%

0 SF

19 SF

108 SF

93844 SF

14077 SF

79767 SF

93844 SF

14077 SF

79767 SF

93844 SF

14077 SF

79767 SF

93844 SF

14077 SF

79767 SF

93844 SF

93717 SF

93844 SF

15%

85%

15%

85%

15%

85%

15%

85%

9.3% 8750 SF

100%

90.7% 85094 SF

Floor

Total

Efficiency Loss

Rentable

Garage

Total

Efficiency Loss

Rentable

Garage

Total

Efficiency Loss

Rentable

Garage

Total

Efficiency Loss

Rentable

Garage

Total

Efficiency Loss

Rentable

Garage

Total

Efficiency Loss

Rentable

Garage Retail FloorArea Breakdown

Appendix D: Annual Cash Flow

STADIUM APARTMENTS DEVELOPER, LLC Salt Lake City, UT ANALYSIS START - JAN-2019 ANNUAL CASH FLOW Analysis Month Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Analysis Date May-2021 May-2022 May-2023 May-2024 May-2025 May-2026 May-2027 May-2028 May-2029 May-2030 May-2031 ANNUAL DEVELOPMENT CASH FLOWS Land Costs 187,687 187,687 ------Hard Costs - 59,690,931 12,298,287 ------Soft Costs 2,954,890 5,942,960 965,743 ------TOTAL PROJECT COST BEFORE FINANCING 3,142,577 65,821,578 13,264,029 ------Carry Costs 850,000 347,656 2,698,435 55,555 ------TOTAL PROJECT COST 3,992,577 66,169,234 15,962,464 55,555 ------SOURCES 3,992,577 66,169,234 15,962,464 55,555 ------USES 3,992,577 66,169,234 15,962,464 55,555 ------

ANNUAL OPERATING CASH FLOWS Rental Income - - 1,041,150 6,335,734 7,048,764 7,260,226 7,478,033 7,702,374 7,933,445 8,171,449 8,416,592 Other Income - - 146,752 771,317 855,404 881,066 907,498 934,723 962,765 991,648 1,021,398 Retail Income (Net of Expenses) - - (15,324) 62,208 71,929 74,182 76,504 78,897 81,365 83,908 86,530 TOTAL POTENTIAL INCOME - - 1,172,578 7,169,258 7,976,097 8,215,475 8,462,035 8,715,995 8,977,575 9,247,005 9,524,520 - General Vacancy and Credit Loss - - (58,629) (358,463) (398,805) (410,774) (423,102) (435,800) (448,879) (462,350) (476,226) EFFECTIVE GROSS REVENUE - - 1,113,949 6,810,795 7,577,292 7,804,701 8,038,934 8,280,195 8,528,696 8,784,655 9,048,294

OPERATING EXPENSES Repairs and Maintenance - - 70,290 202,603 214,296 218,582 222,954 227,413 231,961 236,600 241,332 Payroll - - 286,552 583,595 595,267 607,172 619,316 631,702 644,336 657,223 670,367 General & Administrative - - 38,544 91,711 95,243 97,148 99,091 101,072 103,094 105,156 107,259 Marketing - - 57,310 116,719 119,053 121,434 123,863 126,340 128,867 131,445 134,073 Utilities - - 93,720 270,138 285,728 291,443 297,272 303,217 309,281 315,467 321,776 Contract Services - - 43,362 103,174 107,148 109,291 111,477 113,706 115,980 118,300 120,666 Make Ready Cost - - 20,790 108,396 119,053 121,434 123,863 126,340 128,867 131,445 134,073 Management Fee - - 27,849 170,270 189,432 195,118 200,973 207,005 213,217 219,616 226,207 Insurance - - 45,848 93,375 95,243 97,148 99,091 101,072 103,094 105,156 107,259 Property Taxes - - 161,186 410,477 586,105 683,069 696,730 710,665 724,878 739,376 754,163 TOTAL OPERATING EXPENSES - - 845,452 2,150,458 2,406,569 2,541,838 2,594,629 2,648,533 2,703,576 2,759,782 2,817,177

NET OPERATING INCOME - - 268,498 4,660,337 5,170,723 5,262,862 5,444,305 5,631,662 5,825,120 6,024,872 6,231,117

CAPITAL EXPENDITURES - - 109,798 572,297 628,544 641,114 653,937 667,015 680,356 693,963 707,842

CASH FLOW FROM OPERATIONS - - 158,700 4,088,041 4,542,180 4,621,748 4,790,368 4,964,646 5,144,764 5,330,909 5,523,275

ANNUAL PROPERTY-LEVEL CASH FLOWS

Net Unlevered Cash Flow (3,142,577) (65,821,578) (13,105,329) 4,088,041 4,542,180 4,621,748 4,790,368 4,964,646 5,144,764 5,330,909 122,522,838 Net Levered Cash Flow (3,992,577) (26,169,538) 0 15,313,911 638,231 717,800 886,420 1,060,698 1,240,816 1,426,961 59,059,196

Appendix E: Summary

STADIUM APARTMENTS DEVELOPER, LLC Salt Lake City, UT ANALYSIS START - JUN 2021 INVESTMENT DESCRIPTION Address 88 W 1300 S, Salt Lake City UT STRENGTHS Units 448 Units Location next to ballpark NRA (SF) 319,200 Transit oriented with TRAX station nearby Land Area 4.3 Acres Easy access to I-15 Building(s) 1 Bldg 85 Walk Score, 73 Transit Score, 74 Bike Score Height 6-Story High demand and rent growth Parking Spaces 579 Strong demographic trends INSERT IMAGE/MAP Parking Ratio 1.29/Unit WEAKNESSES Analysis Start Month 1 Jun-2021 Market risk due to oversupply Construction Start Month 1 Jun-2021 Area in early growth stages Construction End Month 18 Nov-2022 Will deplete a lot of parking for ballpark 1st Unit Delivered Month 19 Dec-2022 Ground lease will need to be subordinated for debt Stabilization Month 30 Nov-2023 Lack of control from ground lease Sale Date Month 120 May-2031 Unattractive surrounding property uses

KEY ASSUMPTIONS & RETURN METRICS Growth Rates - Income / Expense 3.00% / 2.00% PRO FORMA Untrended Trended Sale PARTNERSHIP RETURNS ROI EMx IRR Effective Rent - PSF / Per Unit 1.72 / 1,226 Effective Gross Revenue 7,070,723 7,449,851 9,296,692 Investors 146.6% 2.47X 13.61% General Vacancy & Credit Loss 5.00% - Operating Expenses (2,341,168) (2,476,992) (2,870,809) Developer 285.2% 3.85X 26.90% Operating Expense Ratio 33.11% Net Operating Income 4,729,555 4,972,858 6,425,883 Breakeven Occupancy (Untrended) 84.39% - Capital Expenditures (592,339) (621,343) (720,798) PROPERTY RETURNS ROI EMx IRR Reversion Net Proceeds (After Selling Costs) 116,999,563 Cash Flow from Operations 4,137,216 4,351,515 5,705,085 Unlevered 89.9% 1.90X 8.20% Permanent Loan Payoff (59,559,693) Cap Rate 4.80% 4.93% 5.30% Levered 166.4% 2.66X 14.61% Equity Proceeds from Sale 57,439,870 Valuation 98,532,389 100,971,744 121,243,071 DEVELOPMENT RETURNS Untrended Trended Sale % of Total Project Cost 114.3% 117.2% 140.7% Yield-on-Cost 5.49% 5.77% 7.46% Valuation/Unit 219,938 225,383 270,632 Market Cap Rate 4.80% 4.93% 5.30% Development Spread 68.8 bps 84.5 bps 215.6 bps SOURCES % /Unit Amount USES % /Buildable SF /Unit Amount Construction Debt 65.0% 125,040 56,017,715 Land Costs 0.4% 0.67 838 375,374 SENSITIVITY Exit Cap Rate Dev. Spread Levered EMx Investors 28.0% 53,861 24,129,692 Hard Costs 83.5% 127.85 160,690 71,989,218 Base Case 5.30% 215.6bps 2.66X Developer 7.0% 13,465 6,032,423 Soft Costs 11.4% 17.52 22,017 9,863,592 Downside #1 5.55% 190.8bps 2.50X Total Sources 100.0% 192,366 86,179,830 Carry Costs 4.6% 7.02 8,821 3,951,646 Downside #2 5.80% 141.1bps 2.21X Total Uses 100.0% 153.06 192,366 86,179,830 Downside #3 6.05% 66.6bps 1.85X

PROPERTY-LEVEL CASH FLOW ANNUAL CASH FLOW REPORT: Hide Show Total Project Costs by Month Development Spread 12,000,000 8.00% 215.6 bps 250.0 bps 7.00% 200.0 bps 10,000,000 6.00% 8,000,000 5.00% 150.0 bps 4.00% 6,000,000 84.5 bps 3.00% 68.8 bps 100.0 bps 4,000,000 2.00% 50.0 bps 2,000,000 1.00% 0.00% 0.0 bps - Untrended Trended Sale

Yield-on-Cost Market Cap Rate Month 0 Month 3 Month 6 Month 9 Month

Month 12 Month 15 Month 18 Month 21 Month 24 Month 27 Month 30 Month 33 Month 36 Month 39 Month 42 Month 45 Month 48 Month 51 Month 54 Month 57 Month 60 Month 63 Month 66 Month 69 Month 72 Month 75 Month 78 Month 81 Month 84 Month 87 Month 90 Month 93 Month 96 Month 99 Month Development Spread Month 102 Month 105 Month 108 Month 111 Month 114 Month 117 Month 120 Month

Equity (Blue) and Debt (Green) Cash Flows by Month Equity IRR by Partner 12,000,000 30.00% 26.90% 10,000,000 25.00% 8,000,000 20.00% 6,000,000 15.00% 13.61% 4,000,000 10.00% 2,000,000 5.00% - 0.00% 0.00% Investors Developer Month 0 Month 3 Month 6 Month 9 Month Month 72 Month 75 Month 78 Month 81 Month 84 Month 87 Month 90 Month 93 Month 96 Month 99 Month Month 12 Month 15 Month 18 Month 21 Month 24 Month 27 Month 30 Month 33 Month 36 Month 39 Month 42 Month 45 Month 48 Month 51 Month 54 Month 57 Month 60 Month 63 Month 66 Month 69 Month Equity IRR Month 102 Month 105 Month 108 Month 111 Month 114 Month 117 Month 120 Month

Net Operating Income Equity Multiple by Partner 600,000 4.50X 3.85X 4.00X 500,000 3.50X 400,000 3.00X 2.47X 2.50X 300,000 2.00X 200,000 1.50X 100,000 1.00X 0.50X 0 0.00X 0.00X (100,000) Investors Developer Month 0 Month 3 Month 6 Month 9 Month Month 99 Month Month 12 Month 15 Month 18 Month 21 Month 24 Month 27 Month 30 Month 33 Month 36 Month 39 Month 42 Month 45 Month 48 Month 51 Month 54 Month 57 Month 60 Month 63 Month 66 Month 69 Month 72 Month 75 Month 78 Month 81 Month 84 Month 87 Month 90 Month 93 Month 96 Month Equity Multiple Month 111 Month 114 Month 117 Month 120 Month (200,000) 102 Month 105 Month 108 Month