5018 4TH AVE. - OFFERING MEMORANDUM
In this group project for NYU Stern’s Real Estate Development & Entrepreneurship, we were tasked with identifying a value-add investment opportunity with a total project cost under $20M, fleshing out the risks and merits of the property, and ultimately putting together a comprehensive analysis of submarket trends and financial drivers of value. The result was a creative pitch to invest capital in a play that would leverage sub-market population growth, fixed housing supply, and a unique
zoning/entitlement opportunity with a building zoned for residential despite current industrial usage.
In developing our thesis, we considered existing interest in the area from institutional investors, crucially, the previously failed forays into the Sunset Park submarket by developers trying to convert large industrial parks for residential and retail usage. We saw this as a strong indicator of our position’s viability and also a unique opportunity for the building to thrive amidst competitors’ inabilities to develop in the face of a strict municipality.
Additionally, the building boasted additional floors of air rights that we viewed as untapped potential for growth in the rentable area. With low-interest rates helping facilitate developer-friendly construction loans, the necessary construction and subsequent refinance debt in our analysis achieve positive leverage and help solidify the asset’s potential as a strong value-add investment. Our team developed a strong understanding of demographic and economic trends in the area to assume steady rent growth and continued momentum built off the existing housing demand.