The Property received Planning Commission approval for a Tract Map, Plan Development Permit, Site Development Permit and EIR, which entitles the lots to 20 DU/ACRE. Beach City Capital is in a contract to sell two of the three lots for $12.8M. The builder is also going to grade Lot 1 for Beach City Capital and provide the infrastructure and utility hookups for that property. In the meantime, we will be re-entitling lots 1A and 1B, whereby we plan to build units with an affordable housing component, and will receive the benefit for the density bonus to entitle a total of 250 units.
Beach City Capital will also perform the required environmental mitigation for the entire site. By the time the builder has entitled Lots 2 and 3, we will also have re-entitled Lots 1A. The next phase will be to build 250 units on Lot 1A. Once those are built and leased up, we will then proceed to entitle and build an additional 225 units on Lot 1B.
Beach City Capital will raise equity for each phase separately as follows:
Beach City Capital will self fund equity for the entitlements, the environmental mitigation process under Phase 1, and will raise $18M in two phases for the permitting and construction of the 250 units under Phase 2. Beach City Capital will also raise $17M ($5M in September 2019 and $13M in March 2020)for the additional 225 units under Phase 3 after 2021.
Otay Mesa, California is the second busiest border crossing in all of North and South America (behind San Ysidro) and plans to grow substantially by adding another border crossing location in the near future. It is the busiest land port of entry in California and has produced record shattering amounts of trade in 2017. A $1B expansion of Brown Field Airport, including the Cross Border Xpress, allows international air travel, including travel from Tijuana airport. According to Community Planning, because of booming industrial job growth and the 905 freeway expansion, Otay Mesa housing needs to quadruple from 4,125 units to 18,000 units according to San Diego Community Planning.
Otay Mesa is located approximately 20 minutes from downtown San Diego. San Diego recently experienced the worst housing crisis of it’s history. Home values rose faster than any other metropolitan area in the country in 2016. The population of San Diego is slated to grow to 4.07 million by 2050. Apartment occupancy is at an all time high (98.54%). Almost 0% vacancy means, in order to keep up with demand, San Diego must build 15,000 housing units/year (current yearly pipeline is approximately 3,000). San Diego rent growth has averaged an astounding 4.8% in the past two years.
Beach City Capital will self fund $1M in equity for the entitlements, the environmental mitigation process under Phase 1, and will raise $18M in two phases for the construction of the 250 units under Phase 2 in 2020. Beach City Capital will also raise $17M for the additional 225 units under Phase 3 in 2021.