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8.A. - Pag9R?xP9ie3o6randum <br />Financial Review of Proposed Sequoia Station Development <br />Figure 2; Summary Sequoia Station Development Feasibility Analysis <br />$800 <br />$640 <br />$600 - $620 <br />$400 <br />$200 <br />$20 <br />$0 <br />($200) <br />($400) <br />($600) <br />($800) <br />$655<g?n <br />$291 <br />$620 <br />($329) <br />High Density Office High Density Office Lower Density <br />W / Housing Office <br />■ Residual Land Value Per Land Sq. Ft. <br />$620 <br />($99) <br />($719) <br />High Density <br />Housing <br />■ Site Acquisition and Improvement Costs per Land Sq. Ft. <br />■ Net Development Value per Land Sq. Ft. <br />Key Assumptions and Analysis <br />September 28, 2020 <br />Page 5 <br />$620 <br />($504) <br />Lower Density <br />Housing <br />As described above, this financial analysis compares the residual land value generated by five <br />development alternatives against the expected cost of acquiring the Sequoia station site <br />(currently owned by three separate entities) and preparing it for vertical development. EPS has <br />developed a financial model to estimate and compare these development alternatives using <br />readily available information and assumptions related to project valuation (e.g. likely lease and <br />occupancy rates, development costs, and return thresholds needed to attract capital). The <br />detailed assumptions and calculations are further described below. <br />Site Acquisition and Improvement <br />Before vertical development of any proposed land use alternative can proceed, the Sequoia <br />Station site will need to be acquired, largely demolished, and improved to accommodate a <br />substantial increase in density. As detailed in the Appendix, the total cost of site acquisition <br />and site preparation is estimated at about $326 million (or $620 per square foot). By way of <br />comparison, vacant or under-utilized land in the DTPP area currently sells for about $180 to $500 <br />per square foot. <br />Because Sequoia Station is and active and highly successful retail center, site control and <br />acquisition will require 'buying out" an existing cash-flow. This cost is estimated based on the <br />capitalized value of the net operating income from the site. The estimate also includes and "off <br />market premium" of 20 percent to reflect the additional incentive that will likely be needed to <br />create the sale (and to also account for the strong market position of the center and highly <br />desirable location of the site). It should also be noted, if existing leases do not expire during the <br />=:\Sh.�W�j.�\�ka.dVOl000„zoos .�.o Ci, R,c. S�..ia­d..,=. a b ce =.-,.- M.-28-2-.2 <br />