bae Real Estate Asset Management Plan FMFADA Board May 15, 2009 Today’s Agenda Fort Monroe real property portfolio Real estate goals and objectives (Action Item) Interim leasing program Pre-paid residential leaseholds bae New development on ground leases Monetizing real estate RFQ/P Strategy Fort Monroe Real Property Portfolio Fort Monroe and Old Point Comfort are significant assets: bae • 570 acres on Hampton Roads/ Chesapeake Bay • 1.9M sq.ft. existing structures • Rich natural and cultural resources • The “key” to the South Real Estate Challenge Fort Monroe is a large-scale, mixed use project • 127 single-family homes and duplexes & 168 historic and non-historic apartments • 197,500 square foot Chamberlin Hotel offering senior housing lease with a private party. • 758,500 square feet of existing office space • 95,800 square feet of storage and industrial shop space bae • • 324,800 square feet of community and recreational facilities 332 slip marina with 31,400 square feet of support space • Special event venues/ Casemate Museum, Fort Monroe Moat, and coastal defense batteries • New construction opportunities in the Historic Village, Entry Gate, and North Gate planning areas No existing residential or commercial identity Leasing and development to occur in a highly visited, publicly accessible location Balancing the interests of stakeholders and FMFADA’s financial sustainability Asset Management Plan is Key Driver The Fort Monroe Real Estate Asset Management Plan: • Sets the goals and objectives • Identifies key challenges • Formulates strategies to realize goals and objectives • Provides a direction and road map for FMFADA staffing and leasing bae activities FMFADA Real Estate Staffing EDC Application Real Estate Asset Management Plan RFQs/RFPs Lease/Contract Terms Goals and Objectives Need final feedback and approval of Goals and Objectives Five focus areas: • Summary of Overall Goals and Objectives bae • Financial • Historic Preservation • Operational • Economic Development Revised draft based upon comments and suggestions made in March 2009 meeting Interim Leasing Challenge: Balance need for early revenue and historic preservation with protection of Fort Monroe/Old Point Comfort image bae Lessons Learned: Presidio of San Francisco • Vandalism and theft of appliances • Homeless encampments • Higher rehabilitation costs Interim Leasing Concepts - Residential Proposed concept: Fort Monroe Residential Rental Program Target market segments: • Military families renting “on the economy” bae • • 81,000 military personnel in area Foreign personnel assigned to Tidewater area military commands • 200-300 annual inflow of families • Visiting faculty & graduate students at area colleges & universities • Other federal agencies with “detail” employees • Local public safety agency employee households Seeking short-term tenancies to give FMFADA flexibility to implement long term rehabilitation and residential leasehold program Interim Leasing – Residential (continued) Required improvements: • Limit to units requiring only cosmetic Improvements – “paint and patch” bae • Improve landscaping at Wherry Housing Implementation: • RFP for residential property manager • Master lease with Army pending transfer • Start mid- to late 2010 Interim Leasing Concepts - Commercial Identify buildings that are ADA compliant and require minimal investment for occupancy, including: • 13 recently constructed “butler” buildings with flexible floor plans (85,000 sq.ft. total) • Building 100 (25,900 sq.ft.) bae Target existing office tenants in local market Target technology and clean-tech firms needing shop and storage space Lay marketing and “proof of concept” ground work for identification of anchor tenant Residential Leasehold Program Proposed concept: Offer long-term (50+ year) leases of historic residences with pre- payment of rent Establish endowment/pay for capital costs with proceeds Issues: bae • • Pioneering product in Hampton Roads Need to develop support infrastructure (e.g, local lenders, brokers, title companies) • Avoiding fixed rental rates/avoiding “surprises” to leaseholders • Capturing future property appreciation Examples: • Sea Colony, Delaware • Hawaii • Pensacola, Florida • Santa Inez, California • Jekyll Island, Georgia • Universities/Colleges • Palm Desert/Palm Springs, California • Land Trusts New Construction - Ground Leases New development proposed in Entry Gate, North Gate and Historic Village (infill) Lead for infrastructure planning, design, financing and bae construction • Cost sharing agreements Long term leases (50+ years) required Potential structures: • Base rent with reappraisals • Participation leases • LLC or JV Capital Requirements: “Three Buckets” Reuse and redevelopment of Fort Monroe will require significant capital at three levels: Low Medium High Residential bae Interim Leasing •Own land and improvements “free & Leasehold • Own land and New Construction • Own land only • New construction of clear” improvements “free & improvements & •Minor upgrades clear” infrastructure •Little capital at risk • Moderate unit rehab • Highest capital • Exposure to “market” • Site & parking requirement risk improvements • Highest level of risk • Leasing and property • 3rd-party capital • 3rd-party capital management functions required required This suggests different contractual arrangements and deal structures with private management and development entities. Monetizing Fort Monroe’s Real Estate To maximize revenue flow to FMFADA, need to structure public-private partnerships carefully: • No “one-size fits all” solution • Segregate projects by capital requirements and risk • Minimize lease “sandwiches” or developer “spin-offs” ( e.g., master bae • developer-sub-developer master lease/sublease arrangements) Segregate projects based on unique uses (e.g., marina and resort) • Leverage tax-exempt debt-issuance capacity of FMFADA to enhance revenues RFQ/RFP Strategy RFP for leasing and property management entity • Flexible outcomes (e.g., one or more firms) • Ability to segregate commercial leasing from property management • Action: Fiscal year 2010 bae RFQ, RFP, and ENA for Master Developer • National outreach • Experience and financial resources key criteria • Use selection process to get up front concessions • Action: Fiscal year 2010 RFP for marina operator in partnership with U.S. Army • Element of negotiated fair-market value Economic Development Conveyance • Upgrade and expand marina operations • Action: Fiscal year 2011 Master Developer Panel Structure Top developer talent required to make Fort Monroe/Old Point Comfort a world class destination Convene national panel of experts • Commercial Lending/Finance bae • • Real estate Historic preservation • Economic development • Planning/architecture Three panel meetings #1: Review all Request for Qualification submittals • Select 3 to 5 qualified finalists #2: Review proposals and invite “final offer” or “final business terms” • Master Developer interviews and economic proposals #3: Make final developer selection and recommendation to FMFADA Board
"Real Estate Asset Management Plan"