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We believe Chip and Steve should recommend to the HMC Investment Committee a Nineteen Million Dollar investment to finance the redevelopment of Meyerland Plaza. There are two main reasons we believe this to be a profitable investment. First, the location is obviously great and the tenants that have already committed are very attractable. Second, the cost projections are very conservative and seem as if they should have a much higher return than stated. We believe the risks involved are calculated risks and all have a realistic solution. Wulfe & Co. only has leases and letters of intent for 53% of the leasable space, which leads us to the greatest appeal of the project, the site’s in-fill location and proximity to a large and growing base of middle-class consumers, which in return we feel will attract businesses to fill the vacancy. There is a current portion of the site that is being remediated for hydrocarbon contamination, but Chevron agreed to assume all risk and duties to fixing this problem. The financing used will be a floating rate construction/mini-perm loan, which in return will leave the project vulnerable to significant swings in short term interest rates, but the land is severely undervalued according to the comparable recent land sales (EXHIBIT 1), which should provide a very well protected investment. Last, the major portion of the project returns will be realized upon sale or refinancing, which a plan has been put into place to sell after three to four years. Below are some numbers W&C came up with that seem very realistic and quite intriguing about the surrounding area.
• Surrounded by upscale neighborhoo ...