Agenda Kearny Point Overview Market Research Comparable Projects - - PowerPoint PPT Presentation

KEARNY POINT: FROM SHIPYARD TO FULLY INTEGRATED COMMUNITY PHASES 3 & 4 REDEVELOPMENT PLAN

HIGHBRIDGE PARTNERS

FRANK FARINELLA JR., ALEX KESZELI, SARAH ANN ROZSA, MATTHEW FANELLI, STEPHEN ALY, CHRISTOPHER BOYLAN

Strictly Confidential

Agenda

• Kearny Point Overview
• Market Research
• Comparable Projects
• Phase 3 and 4 Development
• Construction Timelines
• Financials
• Investment Conclusion
• Appendix

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• I. Kearny Point Overview

Kearny Point, a former site of Amer erica ican industria ialism ism and home of the Federal Shipbuilding and Drydock Company, is being transformed into an innovative hub for modern workspace. Through its evolution, it is now seen as a place of flexibi xibilit lity, inventio ion and entrepr epren eneu eursh ship ip, attracting tenants from various industries. Along with its history and future potential, Kearny Point will provide tenants of all sizes the opportunity to be part of a develo lopin ing g ecosyst stem

• em. From startups

and non-profits to industry leading companies, Kearny Point will provide space for office, laboratory, artwork, hospitality, dining, and recreational enjoyment for all of the employees in the community, allowing this opportunity zone to take its new form.

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• II. Location
• Kearny Point is centrall

lly y located ed within the New York Metropolitan Area

• Easy access to the major population center

ers s of Newark, , Jerse sey y Ci City, , and Manhattan

• 10 minutes from Newark Liber

erty y Inter ernatio ional l Airport

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• II. Transportation
• Cl

Close e proxim imit ity to multiple highways and local thoroughfares including: New Jersey turnpike via the Lincoln Highway, Route 9, Interstate 280, and Interstate 78

• Multip

iple le transit sit options s in Newark and Jersey City including: New Jersey Transit Passenger Rail, Hudson-Bergen Light Rail, PATH, and Hudson River Ferries

• New Jersey Transit Bus Services are available in the area, while new stops and

expanded schedules will be added for the future redevelopment of Kearny Point

• KPIP is working with NJ Transit to arrange a shuttle bus service that would link with the

Light Rail l station at West Side and Claremont Avenue in Jersey City

• The redeveloped site will be pedest

stria ian and bike frien endly ly with walking paths and designated bike lanes

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• II. Greater Kearny Market
• With investments surpassing $1 billion over the next several years in Kearny, NJ, 10,000 new jobs

will be generated, accumulating millions of Local, County and State tax revenues

• Household Income: $61,558 Kearny to $59,039 (US)
• The surrounding workforce will increase dramatically in step with the revitalization of Kearny Point

causing highly skilled individuals to move to Kearny because of its opportunistic environment

• Dynamic spaces will attract forward thinking companies and entrepreneurs who value innovation
• Close proximity to renowned colleges and universities, Kearny Point will benefit from an incr

crea eased sed talen ent pool in STEM and business programs

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• II. Economic Initiatives
• New Jersey offers numerous initiatives that help promote economic

c growth and

• pportunit

ity for entrepreneurs, startups, as well as established companies

• The NJ Ignite

e program provides grants that subsidize the rent of early stage technology and life sciences companies in collaborative workspaces

• NJ Co-Ves

est Fund and NJ Founders s and Funders s programs help propel innovative

• pportunities with various grants
• Grow NJ

NJ Assistance Programs offer tax credits to businesses that create and help retain jobs in New Jersey

• The Technolo

logy y Business ess Tax Certific ificate e Transf sfer er (NOL) L) Program enables qualified, unprofitable technology or biotechnology companies to sell a percentage

• f net operating losses and research and development tax credits

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• II. Sustainability

The development will seek LEED Campus s Certif ific icatio ion for phases 3 and 4 of development by implementing various sustainability initiatives and practices including:

• Green

en Ro Roofs fs – Reduces “heat island effect”, rainwater overflow collected into cisterns for reuse in the building's cooling system

• Greywater storage and irrigation utilization
• Bio walls – Allows for a vertical orientation aesthetic while reducing the need for expensive mechanical air filtration systems
• Sustainably Sourced Insulation
• Semco

co Ch Chilled led Beams s - Provide superior indoor air quality; quiet operation, and no draft

• Solar Panels – Reduces campus power consumption
• View Dynamic

ic Windows s - Eliminates the need for blinds/shades and allows in abundant light without excessive heat and glare

• Solar-and Wind-powered street lamps
• Permea

eable le Asphalt lt – Reduces stormwater runoff rate and incidences of flooding

• EV Charging Stations
• Bike Storage and Designated Bike Lanes – Encourages sustainable transportation and healthy living
• Eco-Friendly Cleaning Products
• Pl

Plastic ic Bottle le Re Restrict iction – Employers provide refillable containers to be used at filling stations, reducing plastic usage and on-site litter

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• II. Sustainability

Su Susta taina inabilit bility is one of Kearny Point’s core values and focuses. Why is susta taina inabilit bility importa tant nt?

• According to the USGBC, “The new Class A office space is green; lease

se-up rates es for green buildings typically range from average to 20% above average.”

• According to the USGBC, “The overall vacancy

cy rate for green buildings was 4% lower er than for non-green properties – 11.7%, compared to 15.7%”

• Happier and healthier employees lead to increa

ease sed product ctiv ivit ity, top talen ent attract ctio ion and reten entio ion, less frequent sick days, and decreased medical costs

Ph Phil iladelphia adelphia Navy Yard

• The Philadelphia Navy Yard is located in the Southern

part of the city and provides new life to the historic site

• 1,200 acre site consists of 7.5 million sf with a total of

13 million sf in the masterplan

• The campus consists of office, research &

development, industrial, and recreational space

• 13,000 employees from companies such as GSK, Urban

Outfitters, and Tasty Baking Company

• The Brooklyn Navy Yard is currently undergoing a $2.5

billion redevelopment of the 330 acre property

• There is a total development amount of 2 million sf, which

will add close to 10,000 jobs by 2020

• The property provides space for office, laboratory,

manufacturing, technology, and food service tenants

• Over 400 tenants, with a 90% retention rate. Tenants

include, Wegmans Food Store, which will have a 79,000 sf store located and Steiner Studios adding 180,000 sf

Bro rookly

• klyn

n Navy Yard rd

• III. Comparable Projects

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• IV. Phase 3 - Building 82
• Collaborative 120,000 sf will hold: art studio

ios, flex exib ible le office ce space ce, and commer ercia cial l kitch chen en space

• Seeking a partner

ersh ship ip with 1776, offering an advanced co-working environment for its tenants

• The 7-story building will consist of 30,000 sf floorplates (300 x 100),

16 foot exposed ceilings, two service elevators, and three levels of parking

• 30,000 sf of art studio

io/galler gallery space will create the ideal environment for the crea eativ ive e energy y at Kearny Point to flourish

• 30,000 sf of clean, health department certified commercial kitchen

space will allow chef efs, s, restaurants, s, baker ers, s, fo food artisa isans, s, consultants, s, and culinary y teach cher ers Re Render erin ing g of Exter erio ior

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• IV. Phase 4 - Parking Structure
• The podium garage will establish a foundation for which

the life sciences, office, restaurants, conference center, and hotel will stand upon, totaling:

• 445,000 sf
• 1,369 spaces

es

• $225/month
• Elevator and stair access to each building
• Roof of the structure will act as a green

en roof, featuring landsc scapin ing g and hardsc scapin ing

• Parking structure will feature 5 entry

y doors, allowing ingress and egress for employees and hotel/restaurant guests

• Sides of the garage will feature walkable

le ramps s leading up from the center of Kearny Point

• Multiple terraces facing the Hackensack River, will offer

breathtaking views from the property Ingres ess/ s/Egr gres ess Green en Ro Roof View

• IV. Phase 4 - Office
• 12-story office space will provide tenants high quality and

luxurious amenities within the building

• Partner

ershi ship with Conven ene e to occupy two floors of the space will create a vertically integrated community

• Total of 360,000 sf, offering larger tenants the potential to
• ccupy large portions of the 30,000 sf floorplate
• Will feature a service elevator to help move tenants in

efficiently

• Class-A Philadelphia Navy Yard space lends support for

rents s in $40-$45 PS PSF range Re Render erin ing g of Exter erio ior

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• IV. Phase 4 - Amenity and Conference Space
• Located between the Office and Life Science building
• Upper level will feature amenities including:
• 10,000 sf fitnes

ess

• 5,000 sf quick service

ice café

• 5,000 sf of open floor plan for collaborativ

ive e workin ing g and relaxation

• Lower level will include:
• 20,000 sf of confer

eren ence ce rooms varying in size, allowing companies to use this space at their convenience

• Potentially can provide ancilla

llary y income e for the owners

• Each room will feature flat screen televisions, telecommunication

services, and noise proofing to allow complete focus

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• IV. Phase 4 - Life Sciences
• NJIT Tower will be a hub of research and breakthrough in the life

sciences community, conducting chemist istry y resea earch ch, , biology y resea earch ch, and analy lytic ical l chemist istry y rese search ch

• According to NJIT’s 2020 vision, Kearny Point will offer

undergraduate students the opportunity to use this innovative space

• Building will total 150,000 sf, with a blend of 60% office

ice and 40% lab designation on each floor plate, featuring two service elevators for tenants

• The qualit

ity y and design gn of the space will allow for higher rents, starting near $35 PSF Re Render erin ing g of Exter erio ior

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• IV. Phase 4 - Restaurants
• The inclusion of higher quality dining options than a typical

cafeteria will provide employees and guests healthy and enjoyable food options

• Two restaurants will total 10,000 sf and be centrally

lly located ed between the office tower, life sciences building, and hotel

• We decided to include options that coincide with the sustainable

and environmental standards of Kearny Point

• Bryn & Danes

es will provide healt lthy, quick-se service ice options, with a relaxing atmosphere

• Iron Hill

l Brewer ery y will provide a sit-down option, where employees can network and share an after work drink Re Render erin ing g of Exter erio ior

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• IV. Phase 4 - Hotel
• A hotel will be convenient for on-site employees and those from the

surrounding area

• The hotel anticipates significant demand from tenants using the

film studio space ce planned for phase 2 of the development.

• Will provide services such as a small

ll fitnes ess s center er, café é and bar area, along with a small ll business ess center er.

• Total of 125 rooms, averaging 325 square feet.
• The interiors of the rooms will feature industry-leading amen

enit ities ies, such as a glass shower with ceramic tiling, in-room check out, and laundry services.

• Potential hotel developers include Hilton, Sheraton, and Study

Hotels. Re Render erin ing g of Exter erio ior

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Examples les of Select ect Service ice Brands

• V. Phase 3 - Timeline
• The construction timeline of Building 82 will start in 2019 as the building is being turned over
• Maximum time of construction is 42 months from permits and approvals to building completion
• The construction period includes the completion of the podium parking garage, followed by the completion of the

collaborative office, commercial kitchen, and art studio space.

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• V. Phase 4 - Timeline
• At year end 2021, permits and approvals begin immediately, and are anticipated to take 21 months
• Next phase will include the demolition of the previous three industrial buildings, allowing for the completion of the

parking garage

• Once the parking garage is complete, the office, amenity and conference space, life sciences, restaurant and hotel will

be completed in that respective order

• Over the final three years of the project, landscaping of the green roof will take place, corresponding with building
• completions. The total completion time of phase 4 is 60 months.

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• VI. Base Case Return

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• VI. Sensitivity Analysis

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Three outcomes were considered, all else held equal, by adjusting cap rates on refinancing and ultimate sale from 7.75% in the worst case, 6.75% for the base case, and 5.75% for the best case

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• VII. Investment Overview

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Appendix

Appendix – Site Renderings

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Pro Forma

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Appendix - Development Costs

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Appendix - Inputs and Assumptions

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Appendix - Worst Case Return

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Appendix - Best Case Return

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Appendix – Product Costs

Life fe Scien ence ces

Appendix - Product Costs

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An adjustment factor of 12.5% was applied to the gross number of spaces needed to account for shared parking and increased future utilization of public transportation.

Appendix – Product Costs

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Appendix – Relevant Market Information

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Q4 2018 Cushman & Wakefield Report CBRE 1st ½ 2018 Study