22.6.12
[Update] Sweet News On the Waterfront

In the Full Story below we find the conclusion to a story we posted on back in March.  Two Trees has purchased the Domino Sugar site for $185M.  The Katan Group seems to be unwilling to let it go, but short of a specific term of contract, it is looking like a done deal.
That is a shockingly cheap price at only $40/SF buildable.  Even so, it is still a likely break-even for the sellers (CPC and Katan) who owed their lenders in excess of the $130M or recorded debt.  The low $/SF buildable price is a bit of a discount that takes into account the condition of the site.  As we mentioned in our blog post of March, there is enough work to do to get the site 'shovel ready' to last at least a year.  A year and a half would not be surprising at all. Because of this, the project carries a large cash burn before it can begin to make it's money back.  It will be an interesting project to watch going forward for the same reasons we brought up previously, of funding, tax breaks, waterfront development, etc.
At Cubed Advisory, we are expecting the construction bill to top $1B and likely push $1.5B by the time it is done.  Our Cubed Advisory 'back-of-the-napkin-estimate' is suggesting that residential is going to occupy around 2.8MSF with only 1.8M - 2MSF of that producing rents that will sustain the development.  Expect as much retail as possible to be packed into the site to carry some of the financial load.  Given the dearth of proper grocery facilities to serve the ever burgeoning Williamsburg neighborhood, a Whole Foods or similar brand would surely flourish and provide a solid rental income.

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