Lucas Lindsey

Development Manager

Venue Projects

@urbnist | urbnist.com

Today's Agenda

1. Some Context

2. Some Examples
3. Some Discussion

1 Some Context

1 Real estate development is urban planning in action.

A developer creates (and works to capture) value within regulatory constraints

Driven by the mindset of an entrepreneur: Constructive Discontent

From criticism to collaboration, from problems to solutions

1 Developers are diverse (just not in the way we need).

Takeaway: Radically different scales, motivations, perspectives, product types, capital sources, and definitions of success along the spectrum.

2 Form follows finance.

"Current American architecture is not a matter of art, but of business... This is at once the curse and the glory of American architecture."

-Barr Ferrce, in 1893

1 Form follows finance.

1

"The insistence on the linkage between profit and program is fundamental to commercial architecture, where... economic considerations govern design decisions... Cities are competitive commercial environments where buildings are businesses and space is a commodity."

-Carol Willis, 1995

1 Finance takes many forms.

Cash on Cash Return: Method of communicating investor return and comparing investment opportunity relative to other competing vehicles (stocks, bonds, crypto, etc.).

Monthly Rents	$2400
Operating Expenses (7.7%)	$185
Net Operating Income	$2,235
Mortgage Payment	$1,653
Net Monthly Income	$582
Annual Income	$6,984
Equity Cash	$67,090
Cash on Cash Return	10.4%

1 Finance takes many forms.

Stabilized Unlevered Yield on Cost: Common way to screen for and project forced apprecation in value add CRE
- Numerator is Net-Operating-Income (NOI) after rehab and lease up (stabilization).
- Dominator is Purchase Price + Rehab Costs + Deal Costs
- Goal is to see basis point spread above Market Cap Rate; Justifies the brain damage and risk inherent in development versus purchasing a pre-stabilized asset as pure investment

"If you can't get the rent don't build the building." - IncDev Alliance

2 Finance takes many forms.

A note on what Venue calls Holistic ROI: Unconvential qualitative metrics like Emotional, Social, Cultural, and Environmental returns alongside Economic returns. Because properties may come with rights, but they also come with responsibilities.

The 1% Rule: Back of the napkin rule stating a viable cashflow investment should return $1/mo for every $100 spent. Example: $250,000 in cost requires rent of $2,500/mo