Town Homes | Two Unit Beachside Investment

Hermosa Beach (945 15th St.)

Summary

Beach City Capital is pleased to present the development of two towhomes located at 945 15th Street, Hermosa Beach, CA (the “Project”).

The development will include two 3,200 sf ocean view townhomes, each with two car garages, a grand living space on upper level to take advantage of the ocean view, and a roof top terrac

The Project will benefit from Hermosa’s accredited high schools, beautiful beaches, affluent demographic, and new family dynamic in the South Bay. The Sponsor entered a JV land partnership with the existing owner, which highly benefited the economics of the Entitlement Period.

Site Context

Located in the heart of the South Bay Beach Communities, Hermosa Beach is bordered by Manhattan Beach to the North and Redondo Beach to the Southeast. Hermosa Beach is a world class beach destination with high residential demand. The local culture is vibrant, family oriented and enjoys many beach activities. With bike paths connecting to Santa Monica, local music venues, farmer markets and the popular Hermosa Pier known for its shopping, dining and annual street fairs, Hermosa Beach offers a laid-back and casual lifestyle and is a destination spot for many tourists. The Hermosa Pier affords great views and is an ideal area for local fishing. The Stand, which is a paved beachfront sidewalk, offers a place for bicyclists, runners, skateboarders, rollerbladers and walkers. On Pier Avenue, there are elegant boutique shops conveniently located for a sunny day out!

This project will be managed by Beach City Capital Management LLC and offers a risk adjusted return with a 24 month timeframe. The project utilized sophisticated underwriting and offers a tiered structure for investment. To illustrate, Tier 1 offers a 15% return and Tier 2, with the most risk, offers returns North of upside return. Market Sales for this type of product are currently $2.5M to $2.6M, allowing for high profit margins.

Project Overview

  • Steeply Discounted Basis:

Beach City Capital acquired an underutilized lot in Hermosa Beach for $318 psf, in a high demand area where land is scarce and demand is high. We were able to locate this property off-market through personal relationships.

  • Seller Financing:

The Seller has agreed to hold the property under a recorded option agreement and PSA. Once sponsor receives permits and construction loan, seller will receive equity into the project as an investment along with payout.

  • Streamlined Process:

The business plan is to construct a by-right development project; no zone changes required. We will take advantage of the lot, location, and work with city planning to design an extraordinary project.

  • Construction/Sale Management:

Beach city will leverage industry knowledge, experience and technology to monitor, report on and manage the delivery of this project from construction to disposition.

  • Exit:

Listing will be with the most respected local Real Estate Brokerage Firm Beach City Brokers.

 

 

Investment Deal Points

Commercial Financing

Land Acquired using JV partnership. Once project is entitled and permitted Beach City will take project to market and select the best option for construction financing.

Investment Highlights

The Sponsor’s conservative underwriting yields levered returns of 21% IRR. Market comparables, within a 1/4 mile, average $870 psf and new 3,000 sf homes have recently sold for greater than $2.7M. Our financial analysis assumes a highly conservative $815 psf. This project is fully funded.

Projected Sale Matrix

Current comparable sales in the Hermosa Beach submarket are in the $870 psf range with and without ocean views. New 3,200 sf Townhomes in the submarket have recently sold for north of $2.6MM. The business plan is to follow current price points within a 1⁄4 mile. We will be using the lower end of the comp set and place $770 sf as a base.

Entitlement & Construction

Beach City Capital is on schedule to receive planning approval in April, 2018. groundbreaking is projected to occur in November, 2018 with substantial completion in November, 2019. Beach City Capital will leverage industry knowledge, experience and technology to monitor, report on and manage the delivery of this project from construction to disposition.

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