Moran & Company understands that most new apartment communities lease-up at a discount to their fair market rents at stabilization in order to achieve maximum velocity. Investors need to understand the anticipated stabilized market rents in order to underwrite the highest stabilized value. Moran & Company excels at helping investors understand and underwrite this potential, resulting in value-maximization for our client.
The Challenge: Our client, a Fund manager, had acquired and master-planned a 45-acre former railyard in East Cambridge. With a proposed mixed-use build-out of more than five million square feet, in a then unproven location, the project needed a catalyst to demonstrate its viability and potential. However, in order to maintain prudent allocation ratios within the Fund, the client needed to be sensible with respect to the capital exposure of a single project.
The Solution: Our client elected to begin the master-plan development by constructing a 20-story, 355-unit luxury apartment tower as the lead project on the Northpoint site. Although our client needed to carefully manage their equity exposure to the Northpoint investment, they were not willing to dilute their ownership by offering a joint venture interest in the Twenty|20 building. While this would have been the more fluid execution, Moran & Company believed that the Property could be offered as an early sale by positioning it as a very rare and special opportunity to own one of the Boston area’s top high-rise apartment buildings in a uniquely walkable and highly desirable transportation-oriented location.
Notwithstanding a total investment size of approximately $200 million, Moran & Company generated significant investor interest and a highly-secured purchase commitment, 18 months prior to completion, for the purchase of the building at a pre-determined, fixed price upon delivery of the building’s final certificate of occupancy.