Joint Venture Development Team

Land Owner (Sears)Office, Retail & Residential Developer (Nichols Partnership Inc.)Hotel Developer (Sunstone/Westbrook)City of Denver (Parking)

LocationUniversity and 1st AvenueCherry Creek Shopping District

Cherry Creek MallCherry Creek North Retail District

One of Denver’s Only Urban PlacesLocated on the corner of “Main and Main”

Cherry Creek

The DevelopmentUrban Village ConceptMixed Use – Retail, Office, Residential, Hotel490,000 SF of New Construction1,600 Parking Spaces180,000 SF of Existing Buildings

Whole FoodsSears

Uses Established by Users

Development Model

Site Plan

Second Floor Plan

Parking Level B-1

Janus World Headquarters

JW Marriott Hotel

Entitlement Issues

Politically Active NeighborhoodLast Large Parcel of Land in Cherry CreekRezoned to CMU-10 from CCNTraded Height Restriction for Hotel“Clayton Lane” = Private Street

Clayton Lane

Clayton Lane – “Placemaking”

2-Way Traffic with Street ParkingSidewalks – 13’-28’ Wide Plaza & CourtyardStone & Brick PavingSignage, Lighting, Street Furniture, Banners, MusicPrivate Street – Festivals, Farmer’s Market

Landscape Design

Architectural Intent

Urban CharacterArticulate StorefrontsModern and Traditional MaterialsParking – Out of SiteEstablish Identity... but Tie into the DistrictLight and AirClayton Lane = Gateway to Cherry Creek North

Phase I – Parking Structure/Retail

Phase I – Parking Structure /Retail

Crate and Barrel

Crate and Barrel

Hotel and Retail

Residential/Retail

Schedule

Phase I – Parking Structure/Retail = January 2003Janus World Headquarters = December 2003JW Marriott Hotel = June 2004Clayton Lane Retail, Grand Opening = Nov. 2004Residential = December 2004

“Lifestyle Retail”Housewares – Crate & Barrel, Design Within Reach, Bose, HW Home, ArhausFashion/Jewelry – Orvis, White House/Black Market, John Atencio JewelersRestaurants – North, Bob’s Steak House, MirepoixLuxury Services – The Spa at Cherry Creek, La Fontaine, Antoine du ChezConvenience – Whole Foods, Peet’s Coffee, ColdstoneCreamery, The Bike RackFinancial Services – Wells Fargo

Retail DemographicsAvg. Household Income = $105,000!Avg. Age = 43Highly Educated and Skilled Workforce

Traffic Count1st Avenue = 60,000 cars/dayUniversity = 46,000 cars/day

Development CostsParking Structure/Retail - $18MJanus Office/Retail - $61MRetail – $30MResidential - $14M

Total Cost = $123M

Hotel - $40M

Initial Equity Financing

Land - $16MCash - $6.85MDeferred Development Fee - $1M Mezzanine Debt - $3M

Total Equity = $26.85M

(Subsequent Phases are Financed from Ongoing Operations)

Risks – Mixed Use

Zoning/Approval: Additional Uses = ControversyFinancing: Loan Size = Syndication

Multiple Uses = Limits LendersConstruction: Complexity, Different Building TypesTiming: Interest Rate Exposure, Cost IncreasesAll Components Must WorkDevelop Unfamiliar Building Types“Ready, Fire, Aim”

Risk MitigationParking Structure/Retail: 65% Pre-leasedJanus Building: 86% Pre-leased, 10% Return on CostRetail: 52% Pre-leased, 77% Pre-Lease RequirementResidential: 50% Pre-Sale RequirementHotel: Sold to Hotel Developer

Exit Strategy

Office: Sell 15 yr. BBB+ Credit Lease at 7.4% CAPRetail & Parking: Hold and Finance, 6%Residential: Sell Condominiums, $435 psfHotel: Sold Pad and Parking to Hotel Developer, $36,000/key

Synergy of Mixed Use

Office Tenants: Walking Distance to ServicesResidential: Premium Sales PricesHotel: “Built-in” Room NightsRestaurants: Lunch Customers (Office & Retail)

Dinner Customers (Hotel)Retail: Other Uses “Feed” the RetailParking: Shared Usage“The Whole is Greater than the Sum of the Parts”

Key Developer Relationships

Joint Venture PartnersPlannerCity Councilman/Neighborhood AssociationsConstruction LenderEquity InvestorsArchitectConstruction ManagerLeasing Agents

“Managing Conflict”

Developer/Neighborhood AssociationsDeveloper/LendersContractor/ArchitectContractor & Architect/City AgenciesArchitect/EngineerConstruction Manager/ContractorDeveloper/Leasing Agent

Site Aerial

Questions and Answers

Project Poster