Solicitation for a Feasibility Study for Cherry Creek Apartments LLC

In this case study, you will create a feasibility and constructability document to present to the stakeholders of the Cherry Creek LLC group. This group is a consortium of Real Estate investors who have decided to build a project in South-Western Florida, approximately 5 miles north of the city of Naples Florida.

The Cherry Creek partnership is a sophisticated group of investors who construct apartment luxury homes across the country in prime locations adjacent to “up and coming” clean cities, with a stable and growing professional base. The group has built 9 complexes over the last 12 years and has been able to fund 80% of all deals from within the group account, using bank financing for the remaining 20%. These projects are well planned, gated rental communities with pool; club house; tennis courts; tot lots and basketball court. The use of green belts is a required feature along with landscaping to buffer on visual lines from the 2 streets that border the parcel. The city has also stipulated that there shall be a parking space for each unit, plus 20 spare for visitors.

Cherry Creek constructs these complexes using outside architects, outside general contractors and outside construction management consultants. The only “in-house” employees are the President of the company, VP of Finance and Real Estate, VP of development; and 10 other professionals involved with the management of this Real Estate Limited partnership..

Below are some financial statistics of the company.

Assets:

Long term:……….. $190 million (Existing developed Real Estate) Short Term ……….$30 million in cash and short term treasuries Debt:
Long term: ………$25 million 20 year permanent financing with JP Morgan Chase 5.69%

Short term…………$5 million prior construction loan on a $100 million credit loan facility with JP Morgan Chase.. 6.76%

Note: No income statement was provided by the stakeholders

Scope of Study

The stakeholder association (Cherry Creek LLC) has asked you to come up with a feasibility study for the construction of 80 unit luxury apartment homes in the Naples, Florida area. They request the basic building architecture to be 8 units per building. The company has purchased 22 acres from WCI Communities back in 2009 before WCI went bankrupt for $200,250 an acre. The land was paid off last month, and is free and clear to be developed.

Cherry Creek has spent 2 years getting this parcel re-zoned for multifamily use, but to this date, has only acquired the Zoning approval and the Environmental wetlands & land use permit
which is on file with the county and State.

In the solicitation, Cherry Creek states that they are still in need of the following:

Impact fee assessment
Legal studies of Florida covenant association rule changes
Full Geotech Engineering bores and sample wells
Agreement with a utility company for power
Lease consumer Demand studies
Risk Analysis of the project
Constructability analysis
Insurance coverage to build the project
Financial pro forma
Architectural drawings and specifications

What has been described in the solicitation, by Cherry Creek to you, the developer is given here:

Land description

The parcel is mostly all green meadow land with natural rolling small hills and a creek in the center
Natural stands of trees remain and are in good health, furthermore the parcel has been “scrubbed of all exotic vegetation” and the spread of these wild plants are contained.
A natural drainage system is/has been developed by nature over the years and 2 small lagoons are located across the property.
The elevation of the property is 20 ft above mean sea level, which is 4 feet higher than most of Naples
This parcel is bordered by another meadow on the north side separated by trees

On the east and west side of the parcel, are asphalt roads used by the neighboring subdivisions for communal travel.
The south side is a 15 acre parcel “up for sale” but no contract yet, and has been listed
for over a year.
Preliminary topographic studies performed show that a net import of fill will be needed to balance the site after clear and grub operations are complete. It is estimated that
5,000 CY of clean sand/fill will need to be brought in at $9.00/yd. in-place
It is also estimated that 1500 CY of topsoil will need to be imported at $15.00 CY
Preliminary soil bearing capacity is 2200 PSF
Hydro-studies show a water table at 10 feet, with 10 gpm well head flow rate on a 2 inch pipe.
The top 2 feet of soil is comprised of sand and loamy sand with native vegetation
The next 6 to 8 feet down is calcified coral known as lime rock
Under that lies the water table
The lagoons have capacity to accept more water , but a retention pond may be needed.

The Buildings

In the solicitation, Cherry Creek has stipulated that 80 units are to be built in a ten building configuration around/ adjacent to the 2 lagoons on the 22 acre site. Each building shall have 4 single bedrooms; 4 double bedrooms, and finally 2 three bedroom units per building.

They request that the building conform to the 2002 Florida Building Code which was amended after many hurricanes damaged Florida buildings throughout the State.

Exterior design intent

The partnership has requested the use of reinforced CMU block wall, or (C-I-P walls) as a more costly alternative if a “case can be made” by the developer. Light-gauge steel trusses are to be used on the roof ILO of wood trusses. Brick wainscoting or synthetic stone may be used as an appearance enhancer on the exterior. The roof composition is to have 3 tab, Class A fire, dimensional asphalt shingles, or to substitute, the more costly light-weight concrete barrel shaped tile roof system. (No clay tile). Minimize the use of wood for fire and wind rating.
Building must meet Dade County 90MPH wind rating.