Sample Business Plan - Real Estate Development

XXX Properties, LLC ____________________________________

TABLE OF CONTENTS EXECUTIVE SUMMARY..............................................................................1

Legal Business Description......................................................................................................2 Mission ...................................................................................................................................2 Present Situation.....................................................................................................................2 Goals & Objectives ..................................................................................................................3 Products & Services.................................................................................................................3 Overview of the Market ............................................................................................................4 Marketing & Sales Strategy ...................................................................................................15 Required Capital Requested...................................................................................................18 Financial Summary ...............................................................................................................18

PRODUCTS AND SERVICES .....................................................................19 MARKET ANALYSIS .................................................................................21 Target Market........................................................................................................................21 Total Market..........................................................................................................................23 Industry Analysis ..................................................................................................................39 Competitive Analysis .............................................................................................................47

FACILITIES AND OPERATIONS ................................................................48 Location ................................................................................................................................48 Facilities ...............................................................................................................................51 Operations ............................................................................................................................52 Capital Equipment ................................................................................................................54 Sources of Supply .................................................................................................................54 Availability of Labor...............................................................................................................54

MARKETING AND SALES STRATEGIES ....................................................55 Marketing Objectives .............................................................................................................55 Strategies ..............................................................................................................................56 MarCom Strategies ................................................................................................................58

MANAGEMENT ........................................................................................63 Ownership and Legal Form....................................................................................................63 Management Team and Responsibilities ................................................................................63 Personal History & Related Experience ..................................................................................64

FINANCIALS ............................................................................................66 Pro Forma Income Statement ................................................................................................66 Pro Forma Income Statement Quarterly.................................................................................67 Pro Forma Balance Sheet ......................................................................................................68 Pro Forma Statement of Cash Flows ......................................................................................69 Break Even Analysis / Ratio Analysis ....................................................................................70 Capital Acquisitions, Working Capital & Project Costs ...........................................................72 Capital Acquisitions, Working Capital & Project Costs Monthly..............................................73 Capital Acquisitions, Working Capital & Project Costs Quarterly............................................74

APPENDIX ...............................................................................................75

Appendix 1 – Project Timeline ................................................................................................75 Appendix 2 – Conceptual Rendering ......................................................................................76

This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

EXECUTIVE SUMMARY XXX Properties, LLC’s general business concept is to construct and sell infill commercial office buildings within the core city of Brighton, Colorado. Infill locations will be in the Brighton Enterprise Zone and Brighton Urban Renewal Areas. The infill lots may be vacant or occupied with 40+ year old houses, 800 to 1,000 square feet in size, that are rundown, unattractive, or an eyesore to the neighbors. XXX Properties, LLC (previously doing business as XXX Homes, LLC) is an existing company having started operations in April 200X. The firm is currently based in Brighton, Colorado, and is located at XXX, Brighton, Colorado 80601. The firm is owned by Jane Doe (80%) and John Doe (20%). Through the development of property in the Brighton Colorado Enterprise Zone, XXX Properties, LLC will provide commercial space for sale to professionals in the area. The reason that XXX Properties, LLC is targeting Brighton, Colorado, is that according to XXX, as of 2006 the five-mile radius of Brighton, Colorado, has an estimated total of 33,047 people. This population is projected to grow over 15% by 2011. The 2006 average household income for this area was $66,452, compared to the US average which was $63,629. With population increase comes an increase in demand for various professional services. The owners of XXX Properties, LLC have identified three groups of customers for their new XXX Avenue Center’s prime office space:   

Professional, Scientific, and Technical Services Administrative and Support Services Ambulatory Health Care Services

The State of Colorado projects a 57% increase statewide in these three industries: Professional, Scientific, and Technical Services, Administrative and Support Services, and Health Care & Social Assistance. More locally, the state projects increases of 54.4%, 44.3% and 33.3% for the same industries, respectively. The owners of XXX Properties, LLC have over 45 years of combined experience in semi-custom home building, interior design, commercial and industrial project development, and residential development and sales in California and Colorado. XXX Properties, LLC’s first year funding totals $3,460,000. The owner will finance $50,000 of this total and is seeking $2,725,000 of the total in Construction Loans, with the remainder, $685,000, to be in the form of a Term Loan. These funds will be used for furniture and fixtures, software, the XXX Avenue Center construction, refinancing outstanding debt, and to provide for working capital. Additional funding of $959,865 for advertising, construction and build-out of office space, will be required in the second year, but will be funded through business operations. The firm expects to realize a profit of $1,765,099 in 2008. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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Legal Business Description XXX Properties, LLC (previously doing business as XXX Homes, LLC) is an existing home-based company having begun operations in April 200X in Brighton, Colorado. The firm is presently formed as a limited liability company and is currently located at XXX, Brighton, Colorado 80601. XXX Properties, LLC is owned by Jane Doe (80%) and John Doe (20%). A limited liability company, commonly called an "LLC," is a business structure that fits somewhere between the partnership or sole proprietorship and the corporation. Like owners of partnerships or sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; the LLC itself is not a separate taxable entity. Like a corporation, however, all LLC owners are protected from personal liability for business debts and claims -- a feature known as "limited liability." This means that if the business owes money or faces a lawsuit for some other reason, only the assets of the business itself are at risk. Creditors normally can't reach the personal assets of the LLC owners, such as a house or car. Both LLC owners and corporate shareholders can lose this protection by acting illegally, unethically, or irresponsibly. For these reasons, many people say the LLC combines the best features of both the partnership and corporate business structures.

Mission Our mission is to be an integral commercial redevelopment partner in the revitalization of Brighton’s core city Enterprise Zone and Urban Renewal Area. Our goal is to bring new jobs into the area, improve where we live, work and play, retain a small town identity and quality, while meeting the needs of a city of tomorrow.

Present Situation Company XXX Properties, LLC is an existing company, having begun operations in April 200X in Brighton, Colorado, and is currently located at XXX, Brighton, Colorado 80601. Offering Through the development of property in the Brighton Colorado Enterprise Zone, XXX Properties, LLC will provide commercial space for sale to professionals in the area.


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Market Environment According to XXX, as of 2006 the five-mile radius of Brighton, Colorado, has an estimated total of 33,047 people. This population is projected to grow over 15% by 2011. With population increase comes an increase in demand for various professional services. Pricing and Profitability XXX Properties, LLC seeks to price their offering competitively within the Brighton, Colorado area with planned profits in 2008.

Goals & Objectives The principle business objective of XXX Properties, LLC is to work with the City of Brighton, future neighbors, and the community to revitalize the core city area of Brighton, Colorado, one commercial building project at a time, while bringing new jobs into the city. These commercial developments will respect the historic architectural character of the city and foster a healthy, vibrant, exciting, safe, and appealing presence. The second objective is to meet or exceed the financial performance illustrated in the pro forma financial statements accompanying this plan. The third objective is to meet or exceed the scheduling timelines illustrated in Appendix 1 accompanying this plan. The fourth objective is to continue to redevelop commercial properties along South X Avenue between XXX Lane and XXX Street once the X Avenue XXX Center is completed.

Products & Services Company Concept XXX Properties, LLC’s general business concept is to construct and sell infill commercial office buildings within the core city of Brighton, Colorado. Infill locations will be in the Brighton Enterprise Zone and Brighton Urban Renewal Areas. The infill lots may be vacant or occupied with 40+ year old houses, 800 to 1,000 square feet in size, that are rundown, unattractive, or an eyesore to the neighbors. X Avenue XXX Center Description XXX Properties, LLC is excited about our latest project – X Avenue XXX Center – to be built at XXX South X Avenue in Brighton. The property has been purchased and the land has been cleared. XXX Properties, LLC will construct a 26,600 square foot, two-story building with 20 office units averaging 1,200 square feet. The lot will include landscaping and a 118-space parking lot, providing ample off-street parking. The X Avenue XXX Center building (the ‘Center’) will be designed to be architecturally consistent with the historical This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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character of an older city building but slightly upscale in appearance. A conceptual elevation of the building is attached as Appendix 2 and a Site Plan is attached as Appendix 3. The Center building will be split-face concrete block core and shell construction. The ground floor offices will open to four entrances, on each side of the building. The second floor offices will open into a common hallway, with stairways on each end. The parking lot will be asphalt surface with concrete drain pans emptying into an onsite detention basin connected to the city storm water drainage system. South X Avenue (State Highway X) will be widened acceleration/deceleration lane across the front of the property to ease any property ingress/ egress concerns and minimize the impact on traffic flow.

with

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Acquisition Modes XXX Properties, LLC will offer these modern, high-quality offices for sale. Our proposed acquisition categories and rates are: 

Purchase - $205/sq. ft. – Those entities who desire to purchase one or more of the 20 units in the Center building

Pre-qualified customers will be able to put office space under contract before the Center office space is available, if they so desire. Additionally, XXX Properties, LLC’s attractive rates for Common Area Maintenance - $2/sq. ft. and Build-outs - $45/sq.ft. - are competitive with other commercial offerings in the area. Our X Avenue XXX Center project website will be up and running soon and will contain detailed information about our beautiful new building.

Overview of the Market Target Market The anticipated Primary Market Area (PMA) for XXX Properties, LLC encompasses an approximately five-radius of the Brighton, Colorado, building site located at XXX South X Avenue. Brighton, Colorado, is located in the Denver metro area.


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Denver Metro

Five-mile radius of X Avenue XXX Center XXX Properties, LLC will place its emphasis upon exploiting the opportunities it sees within this geographic area and will promote its new commercial office building - X Avenue XXX Center - as providing high-quality, affordable new office space managed by property experts. As such, the firm’s primary target market can be defined as: 

Professionals in NAICS 541, 561, and 621 having the desire for office space in the Primary Market Area Total Market

The State of Colorado Colorado ranked 12th in the 2006 State Business Tax Climate Index compiled by the Tax Foundation. The Index is comprised of five sub-indexes for which Colorado’s rank is reported in parenthesis: Business Tax Index (6), Individual Income Tax (14), Sales and Gross Receipts Tax Index (26), Unemployment Insurance Tax (21), and Wealth and Property Tax Index (14). Venture capital funding awarded to Colorado companies increased 48 percent in 2005 to $661.7 million which accounted for 2.8 percent of total funding awarded to U.S. companies. The National Association of Seed and Venture Funds also reported that the total number of Colorado deals increased from 68 in 2004 to 75 in 2005.


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The Denver International Airport was named the No.1 airport in the country for customer satisfaction and ranked No. 2 in the world by J.D. Power & Associates. Colorado has the most educated workforce in the country with 64% of its residents having attended college. Metro Denver Market The Metro Denver Economic Development Corporation recently reported that strong retail sales pushed retails to nearly $72.9 billion in 2005, a 6.7 percent increase over 2004 annual sales. The strongest gains occurred throughout the year in Adams county (+16.5%), Douglas County (+13.8%), and the City and County of Denver (+8.7%). Denver ranked 2nd in the ‘Best Cities to Live and Work’ as ranked by Employment Review and BestJobsUSA.com. Denver was named America’s Top Sports City with seven major sports teams and two new stadiums by Sports Journal in 2004. Brighton – five-mile radius of X Avenue XXX Center Current Geography Selection: (1 Selected) 5 mile radius: XXX S X AVE, CO 80601

BRIGHTON,

Lat: 39.973067 Long: -104.818308 City: Brighton Pop: 24,455 County: Adams County Pop: 406,547 Zip: 80601 Pop: 25,891

Current Index Base: Entire US Population The current year population in this selected geography is 33,047. The 2000 Census revealed a population of 26,744, and in 1990 it was 18,189 representing a 47.0% change. It is estimated that the population in this area will be 38,027 in 2011, representing a change of 15.1% from 2006. The current population is 52.4% male and 47.6% female. In 2006, the median age of the population in this area was 33.3, compared to the US median age, which was 36.5. The population density in your area is 420.8 people per square mile. Households There are currently 10,752 households in this selected geography. The Census revealed household counts of 8,659 in 2000, up from 6,105 in 1990, representing a change of 41.8%. It is estimated that the number of households in this area will be 12,492 in 2011, representing a change of 16.2% from the current year. For the current year, the average household size in this area is 3.07 persons. In 2006, the median number of years in residence in this geography's population is 2.61. The average household size in this geography was 2.95 people and the average family size was 3.48 people. The average number of vehicles per household in this geography was 2.2.


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Income In 2006, the median household income in this selected geography was $58,924, compared to the US median, which was $48,271. The Census revealed median household incomes of $49,843 in 2000 and $29,456 in 1990 representing a change of 69.2%. It is estimated that the median household income in this area will be $65,521 in 2011, which would represent a change of 11.2% from the current year. In 2006, the per capita income in this area was $23,963, compared to the $US per capita, which was $24,529. The 2006 average household income for this area was $66,452, compared to the US average which was $63,629. Race & Ethnicity In 2006, the racial makeup of this selected area was as follows: 80.6% White; 1.1% Black; 0.7% Native American; 1.6% Asian/Pacific Islander; and 13.3% other. Compare these to the US racial makeup which was: 75.9% White, 12.1% Black, 0.7% Native American, 4.5% Asian/Pacific Islander and 4.5% other. People of Hispanic ethnicity are counted independently of race. People of Hispanic origin make up 42.0% of the current year population in this selected area. Compare this to the US makeup of 14.9%. Changes in the population within each race and ethnicity category from the 1990 Census to the 2000 Census are as follows: 219.8% American Indian, Eskimo, Aleut Population; 15.9% Asian, Pacific Islander; 45.0% Black; 66.3% Hispanic Ethnicity; 58.2% Other; White 39.2%. Housing The median housing value in this area was $75,343 in 1990; compare this to the US median of $78,382 for the same year. The 2000 Census median housing value was $160,336, which is a 112.8% change from 1990. In 1990, there were 4,153 owner occupied housing units in this area vs. 6,439 in 2000. Also in 1990, there were 1,951 renter occupied housing units in this area vs. 2,220 in 2000. The average rent in 1990 was $362 vs. $633 in 2000. Employment In 2006, there were 16,790 people over the age of 16 in the labor force in our geography. Of these 91.7% were employed, 8.2% were unemployed, 32.0% were not in the labor force and 0.1% were in the Armed Forces. In 1990, unemployment in this area was 7.5% and in 2000 it was 6.3%. In 2006, there were 12,613 employees in this selected area (daytime population) and there were 1,212 establishments. For this area in 1990, 49.9% of employees were employed in white-collar occupations and 50.1% were employed in blue-collar occupations. In 2000, white-collar workers made up 53.9% of the population, and those employed in blue-collar occupations made up 46.1%. In 1990, the average time traveled to work was 13 minutes and in 2000 it was 28 minutes.


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Trade Area Growth Potential Within a 10-minute drive of Brighton, the trade area currently includes 148,600 persons and 51,900 households. The trade area is rapidly growing. Within the city of Brighton, more than 15,300 new housing units are either under construction, approved or in the planning process. Nearly 24,500 new residential units have been permitted in northern Commerce City, the majority within five miles of Brighton. More than 4,000 new units are planned in Lochbule, adjacent to Brighton to the northeast. In unincorporated Adams County just west of Brighton, more than 8,300 dwelling units are under construction or approved. As a result, the trade area has nearly 52,100 new residential unites under construction, approved, or being planned. This will result in trade area growth in the future of an additional 156,300 new residents, more than double the current trade area population. We project the trade area to include 304,300 residents in 103,100 households within the next 20 years. Residential Development Brighton has experienced significant residential growth over the past five years. More than 4,200 residential units have been permitted since 1997. On an annual basis, this equates to an average of 525 units each year. During 2002, a number of developers recognized the local multifamily market opportunities. Five major multifamily projects began construction during 2002, which provide house at price ranges affordable to a wide range of incomes. Single-family housing construction was also strong. New housing ranges in price from the high $100,000s for town houses to more than $500,000 for executive housing. Buyers found that Brighton still provides a significant housing value over other parts of the Denver metro area. Retail Trade Area Demographics Brighton retailers attract consumers in all age and income categories. Surveys of Brighton shoppers show that those who are younger and have higher household incomes tend to shop more frequently in Brighton. Brighton is the nearest and largest retail center for many communities to the north and east. Many of these communities have limited retail services, and Brighton has long been the dominant trade center. Transportation The central location of metro Denver to the western United States makes the area one of the country’s most important transportation hubs. Brighton sits in a transportation triangle bordered on three sides by major highways (I-25, I-70 and I-76, with access to I-80), and two rail lines. These routes provide superior access to all major transportation corridors in the metro area. 

Trucking - More than 160 motor freight companies provide trucking services in the area. Backhaul rates out of the area remain lower than the national average.


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Airports – Denver International Airport is 15 minutes from Brighton and is the 17th busiest cargo hub, with 30 passenger airlines, 6 flying internationally and 9 cargo carriers.



Rail – Brighton is bordered on both the east and west by major rail lines: Burlington-Northern and Union Pacific.

(Source: Brighton Economic Development Corporation, Brighton Community Profile 2006) The owners of XXX Properties, LLC have identified three groups of customers for their new X Avenue XXX Center’s prime office space: 

NAICS 541: Professional, Scientific, and Technical Services



NAICS 561: Administrative and Support Services



NAICS 621: Ambulatory Health Care Services

The State of Colorado projects a 57% increase statewide in these three industries: Professional, Scientific, and Technical Services, Administrative and Support Services, and Health Care & Social Assistance. More locally, the state projects increases of 54.4%, 44.3% and 33.3% for the same industries, respectively. With a robust growth pattern and strong projections for future economic development in Brighton, Colorado, XXX Properties, LLC has indeed chosen a prime target market in which to build its first infill commercial project – X Avenue XXX Center. Industry Analysis XXX Properties, LLC is in the business of developing and managing commercial properties. The construction sector comprises establishments primarily engaged in the construction of buildings or engineering projects. Establishments primarily engaged in the preparation of sites for new construction and establishments primarily engaged in subdividing land for sale as building sites also are included in this sector. Construction work done may include new work, additions, alterations, or maintenance and repairs. Activities of these establishments generally are managed at a fixed place of business, but they usually perform construction activities at multiple project sites. The construction sector is divided into three sub sectors of construction activities: (1) building construction and land subdivision and land development; (2) heavy construction (except buildings), such as highways, power plants, and pipelines; and (3) construction activity by special trade contractors. Establishments classified in Sub sector 233, Building, Developing, and General Contracting and Sub sector 234, Heavy Construction, usually assume responsibility for an entire construction project, and may subcontract some or all of the actual construction work. Operative builders who build on their own account for sale, and land sub dividers and land developers, who engage in subdividing real property into lots for sale, are included in Sub sector 233, Building, Developing, and General Contracting. (Special trade contractors are This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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included in Sub sector 234, Heavy Construction, if they are engaged in activities primarily relating to heavy construction, such as grading for highways.) Establishments included in these sub sectors operate as general contractors, design-builders, engineer-constructors, joint-venture contractors, and turnkey construction contractors. Establishments identified as construction management firms are also included. (Source: US Bureau of Labor Statistics) Office Construction The 1980s saw tremendous growth in new office construction, but the overproduction and subsequent economic recession resulted in such a glut that vacancy rates became a nationwide problem. In 1983, the national metropolitan office vacancy rate stood at approximately 12 percent; by 1990, that rate had risen to 17 percent and peaked at 19 percent two years later. In 1998 the rate was at its lowest mark since the early 1980s, at 8.9 percent. However, by early 2003, the office vacancy rate had jumped back up to 16.5 percent. Office construction spending experienced a long-awaited resurgence in the late 1990s, from $36.2 billion in 1997 to $47.5 billion in 1999. While this was excellent news for contractors, 1999 revenues were still 35 percent below their record 1985 level. As the economy as a whole cooled off from its late 1990s surge, the rate of office building construction growth slowed considerably to roughly $43 billion in 2002 and to $39 billion in 2003. Meanwhile, lending institutions, which had eased some of their restrictions on commercial real estate loans, began to tighten up lending requirements. Eyeing the slower growth rate for white-collar employment, as well as the economic trend toward downsizing, builders wary of a repeat of the late 1980s disaster were expected to try and rein in runaway construction.

Buildings can be homes, stores, or offices to those who use them. To businesses and investors, properly managed real estate is a potential source of income and profits, and, to homeowners, it is a way to preserve and enhance resale values. Property, real estate, and community association managers maintain and increase the value of real estate investments. Property and real estate managers oversee the performance of income-producing commercial or residential properties and ensure that real estate investments achieve their expected revenues. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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When owners of apartments, office buildings, or retail or industrial properties lack the time or expertise needed for day-to-day management of their real estate investments or homeowners’ associations, they often hire a property or real estate manager. The manager is employed either directly by the owner or indirectly through a contract with a property management firm. Property and real estate managers held about 293,000 jobs in 2002. Forty percent worked for real estate agents and brokers, lessors of real estate, or property management firms. Others worked for real estate development companies, government agencies that manage public buildings, and corporations with extensive holdings of commercial properties. Forty-six percent of property, real estate, and community association managers were selfemployed. Competitive Analysis There is very little competition to be found in the PMA for this offering. An online search of the Verizon yellow pages yielded the following results when the keywords ‘commercial office space’ and ‘five-mile radius of XXX S. X Avenue, Brighton, Colorado, 80601’ were entered as search criteria:

All categories related to "commercial office space" in Brighton CO 80601 2 listings in 2 categories Real Estate

o o

Commercial & Industrial Rental & Leasing (1) General Real Estate (1)

While these companies may not all be direct competitors of XXX Properties, LLC, they are presented here to give scale to the level of competition in the area. Additionally, the owners of XXX Properties, LLC have observed that other commercial office buildings have quickly filled up before construction or renovation has even completed. Most of the other commercial buildings are over 50 years old – X Avenue XXX Center will be one of the few new office buildings in the area.


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Facilities & Operations Facilities & Location The current location for XXX Properties, LLC is XXX, Brighton, Colorado 80601. The firm intends to establish a trailer at the building site on XXX South X Avenue in Brighton to serve as office space during construction.

The primary requirements for the location are: 

Convenient and accessible location – in the core city area of Brighton



Adequate space for operations – 26,600 square feet, 20 – 1,200 square foot offices for sale



Located in Adams County in the City of Brighton Enterprise Zone



Adjacent to Denver Metro area and all major modes of transportation

The location is accessible and on one of the three major highways through the city (Colorado State Highway X) allowing for ease in XXX Properties, LLC’s management team meeting with subcontractors and customers at that location.


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Adams County Enterprise Zone

Colorado's Urban and Rural Enterprise Zone Act of 1986 established a program to encourage new capital investment and job growth in economically distressed areas of the state. The three criteria used to determine these areas are high unemployment rates, slow population growth and low per capita income. Adams County was originally designated in 1988. Companies located in an Enterprise Zone area are eligible for various state income tax credits. The Adams County zone includes portions of unincorporated Adams County, Arvada, Aurora, Bennett, Brighton, Commerce City, Federal Heights, Northglenn, Thornton and Westminster. City of Brighton, Colorado Brighton is located just 20 miles northeast of downtown Denver on the edge of the eastern Colorado plains. Boasting a small town atmosphere and rich cultural and historic roots makes Brighton an ideal place to live, work and play. Incorporated on July 26, 1887, the city of Brighton's founding fathers were determined that there should be a town that would "do credit to the splendid valley". The city was named the permanent county seat of Adams County in 1904. By the 2000 census, the "town" had grown to more than 20,000 people.


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Brighton was included in the original designation to the enterprise zone in February 1988 and is denoted in red in the map below.

The administrative facility for XXX Properties, LLC is currently home-based in Brighton, Colorado, and will be relocated to the on-site project trailer on X Avenue in Brighton. XXX Properties, LLC’s management team intends to outfit the administrative facility with the appropriate room furnishings and office equipment including computers with necessary peripherals, telephones, Internet connection, office furniture, record storage, and normal office supplies inventory. X Avenue XXX Center The property at XXX South X Avenue was re-zoned from Residential (R-1) to Commercial Office (C-O) during a Brighton City Council meeting on September 19, 2006. The X Avenue XXX Center building (the ‘Center’) will be designed to be architecturally consistent with the historical character of an older city building but slightly upscale in appearance. A conceptual rendering of the building is attached as Appendix 2 and a Site Plan is attached as Appendix 3. The Center building will be split-face concrete block core and shell construction. The ground floor offices will open to four entrances, on each side of the building. The second floor offices will open into a common hallway, with stairways on each end. The parking lot will be asphalt surface with concrete drain pans emptying into an onsite detention basin connected to the city storm water drainage system.


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The Colorado Department of Transportation requires that South X Avenue (State Highway X) be widened with an acceleration/deceleration lane across the front of the property to ease any property ingress/ egress concerns and minimize the impact on traffic flow. The disadvantages of the location are related to timing of large truck ingress and egress as well as sidewalk traffic safety. South X Avenue is a major artery through the city and the Center location borders existing residential and retail buildings. Traffic control personnel will mange short-term traffic delays and sidewalk safety as a daily ongoing activity. The street widening will be subcontracted to one of three City-approved contractors and will be competitively bid based on civil engineering drawings approved by the City. Capital Expenditures XXX Properties, LLC requires the acquisition of general equipment and furnishings for the successful expansion of the business. The cost to obtain operational equipment, office equipment, and furnishings required for the expansion of XXX Properties, LLC is estimated to be approximately $12,200. Sources of Supply XXX Properties, LLC will use a combination of the Internet and local stores for purchase of its capital equipment. Office and computer-related equipment can easily be ordered via the Internet. Computer peripherals and supplies such as printer/fax/copiers, ink cartridges, office supplies and furniture can be purchased locally from such stores as Staples, Office Max and Office Depot. Construction materials for all phases of the project are available from suppliers within a six-mile radius. Efforts will be made to give preference to local, qualified suppliers. Availability of Labor XXX Properties, LLC subcontracts out 100% of its work. The firm does not anticipate hiring any direct employees in the foreseeable future. There is an abundant supply of labor in the Denver metro area. According to the United States Bureau of Labor Statistics, there were 64,170 individuals employed in Construction and Extraction Occupations in the Denver Metropolitan Statistical Area as of May 2005.

Marketing & Sales Strategy XXX Properties, LLC intends to market its new commercial office building - X Avenue XXX Center - with office space for sale to professionals including doctors, attorneys, accountants and others interested in working in Brighton, Colorado.


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Marketing Overview and Objectives 

Raise prospective customer awareness of XXX Properties, LLC’s new office building and the advantages of locating a business there;



Differentiate XXX Properties, LLC and its’ offering from the competition in order to better compete against other office space providers. Our Market Philosophy

Our market philosophy has three facets: The first is brand performance: our promise is that we will do what we say and what our customers expect of us. Brand performance is what drives our company. The second is listening to our customer: Our customers are an integral part of how we perform. Customers will choose our company because of what we offer and how we relate to their needs. When we are successful, it makes our customers our advocates and helps to increase business and form new relationships. We leverage the insight gained through listening and interaction to help maintain our relevancy and build potential strategic advantages. The third is our company view: It is critical that we know what attributes are associated with us, and how this understanding contributes to business growth. Promotional Strategies, Distribution, and Marketing Communications XXX Properties, LLC’s promotional strategy for providing new commercial office space will most likely employ a combination of traditional ad placements in local newspapers; developing brochures, flyers, signage and business cards; leveraging local real estate agencies and posting on commercial real estate websites; developing and updating their project website; along with word-ofmouth referrals. XXX Properties, LLC will pursue a distribution strategy that includes the management team personally meeting with prospective customers. Pricing & Profitability XXX Properties, LLC will pursue a comparable pricing strategy in order to remain competitive with the other office space providers in the local area. The firm currently plans on charging $205 per square foot for purchase, $2 per square foot for Common Area Maintenance, and $45 per square foot for buildouts.

Management Summary Management Responsibilities Owners Jane Doe and John Doe recognize that business success is at least partially dependent upon the advice and counsel of outside subject matter experts. Therefore, they have assembled a core, ongoing talented team for their X Avenue XXX Center project:


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Team Role

Team Member

Team Member’s Company

Project Administrator

Jane Doe

XXX Properties, LLC

Project Manager

John Doe

XXX Properties, LLC

City Planner

Jason Bradford

City of Brighton Planning Dept

Civil Engineering

Josh Cruz

Western Engineering Brighton, CO

Commercial Office Association Manager

TBA

Management Specialist Inc. Broomfield, CO

Commercial Real Estate Agent

XXX

Hepp Realty Brighton, CO

CPA

XXX

XXX, CPA Lafayette, CO

General Contractor

XXX

DCB Construction Denver, CO

Insurance

XXX

State Farm Insurance Thornton, CO

Real Estate Attorney

XXX

Rautenstraus & Joss Louisville, CO

Soils Testing/Foundatio n Engineer

XXX

High Plains Engineering Fort Lupton, CO

Surveyor

XXX

American West Land Survey Brighton, CO

Management Team Backgrounds

Jane Doe - Majority Owner Jane Doe has been involved in housing and interior design as a high school teacher for over 25 years and small business owner for over 2 years. Mrs. Doe holds Bachelor of Arts and Master of Arts degrees.

John Doe – Minority Owner John Doe has 25 years experience in all facets of project development of commercial and industrial facilities with special emphasis in electrical engineering and project management. Additionally, Mr. Doe has four years of experience in residential development and sales. Mr. Doe holds Bachelor of Science and Master of Science degrees.


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Compensation There are no immediate plans to hire direct employees at XXX Properties, LLC. The firm currently subcontracts out 100% of its work. However, should the situation require, any employees engaged by XXX Properties, LLC will be paid at prevailing market rates, for their respective jobs, in the Brighton, Colorado area. The owners of XXX Properties, LLC will be paid directly as part of project funding for X Avenue XXX Center. The remainder of the management team will be compensated for services rendered in their performance as a licensed entity and/or a City of Brighton-approved contractor or subcontractor.

Required Capital Requested XXX Properties, LLC requires first year funding totaling $3,460,000. The owner will finance $50,000 of this total and is seeking $2,725,000 of the total in Construction Loans, with the remainder, $685,000, to be in the form of a Term Loan. These funds will be used for furniture and fixtures, software, the X Avenue XXX Center construction, refinancing outstanding debt, and to provide for working capital. The firm will require additional funding of $959,865 in the second year to complete construction of the Center building; however, this will be funded through business operations.

Financial Summary The financial projections for XXX Properties, LLC are quite encouraging. The firm projects strong financial performance within the three-year period covered in the pro forma financial statements accompanying this plan. Some of the assumptions made in the preparation of the income statement include that: 

There will be 20 Office Units Sold in 2007 and 2008



The Average Selling Price of Office Units is $205/sf plus Build-Out Charges of $45/sf



Fees for Common Area Maintenance (CAM) Average $2/sf

XXX Properties, LLC’s sales Revenue is projected to be $6.033 million in 2008 Operating Expenses will ramp up sharply from $7,549 in 2006 to $62,460 in 2008, as that will coincide with the X Avenue XXX Center’s occupancy ramping up. As the primary goal of XXX Properties, LLC is to complete construction of the Center building and get tenants in quickly, the firm’s breakeven point, in terms of units, will occur at 1.84 units and will be achieved in Q1 2008. The firm’s Debt to Equity ratio is naturally initially very top-heavy ($1,179,204/$-663) for 2006, but then begins to right itself for the remainder of this plan. Net income rises from a deficit of $-10,263 in 2006 to a profit of $1,765,099 in 2008.


18

PRODUCTS AND SERVICES Description Company Name: Address:

XXX Properties, LLC XXX, Brighton, Colorado 80601

X Avenue XXX Center: Phone:

Coming Soon to XXX S. X Avenue Brighton, Colorado 80601 XXX-XXX-XXXX Company Concept

XXX Properties, LLC’s general business concept is to construct and sell infill commercial office buildings within the core city of Brighton, Colorado. Infill locations will be in the Brighton Enterprise Zone and Brighton Urban Renewal Areas. The infill lots may be vacant or occupied with 40+ year old houses, 800 to 1,000 square feet in size, that are rundown, unattractive, or an eyesore to the neighbors. X Avenue XXX Center Description XXX Properties, LLC is excited about our latest project – X Avenue XXX Center – to be built at XXX South X Avenue in Brighton. The property has been purchased and the land has been cleared. XXX Properties, LLC will construct a 26,600 square foot, two-story building with 20 office units averaging 1,200 square feet. The lot will include landscaping and a 118-space parking lot, providing ample off-street parking. The X Avenue XXX Center building (the ‘Center’) will be designed to be architecturally consistent with the historical character of an older city building but slightly upscale in appearance. A conceptual rendering of the building is attached as Appendix 2 and a Site Plan is attached as Appendix 3. The Center building will be split-face concrete block core and shell construction. The ground floor offices will open to four entrances of the building. The second floor offices will open into a common hallway. The parking lot will be asphalt surface with concrete drain pans emptying into an onsite detention basin connected to the city storm water drainage system. South X Avenue (State Highway X) will be widened with an acceleration/deceleration lane across the front of the property to ease any property ingress/ egress concerns and minimize the impact on traffic flow


19

Acquisition Mode XXX Properties, LLC will offer these modern, high-quality offices for sale. Our proposed acquisition categories and rates are: 

Purchase - $205/sq. ft. – Those entities who desire to purchase one or more of the 20 units in the Center building

Pre-qualified customers will be able to put office space under contract before the Center office space is available, if they so desire. Additionally, XXX Properties, LLC’s attractive rates for Common Area Maintenance - $2/sq. ft. and Build-outs - $45/sq.ft. - are very competitive with other commercial offerings in the area. Our X Avenue XXX Center project website will be up and running soon and will contain detailed information about our beautiful new building. Unique Selling Points / Value Proposition XXX Properties, LLC prides itself on providing the best new commercial office space in the heart of Brighton, Colorado.


20

MARKET ANALYSIS Target Market The anticipated Primary Market Area (PMA) for XXX Properties, LLC encompasses an approximately five-radius of the Brighton, Colorado building site located at XXX South X Avenue. Brighton, Colorado is located in the Denver metro area. Denver Metro


21

Five-mile radius of X Avenue XXX Center 80530 80530 Frederick Frederick Frederick 80514 80514 Dacono Dacono Dacono

Fort Fort Lupton Lupton

52

Dacono Dacono 80621 80621 Fort Fort Lupton Lupton Lupton 80516 0516 Erie Erie

o Huds 80642 Hudso 80642 Hudso Hudso o

Lochbuie Lochbuie

85 80603 80603 80603 Brighton Brighton Brighton

Todd Creek

Broomfield Broomfield Broomfield 80602 80602 Brighton Brighton Brighton

Brighton Brighton

80241 Denv 80241 Denv Denver er

Thornton Thornton 80640 80640 Henderson Henderson Henderson

80022 80022 Commerce Commerce Commerce City City City

44

80229 Denv er 80229 Denv Denver

Commerce Commerce 80249 80249 D 80249 D D

XXX Properties, LLC will place its emphasis upon exploiting the opportunities it sees within this geographic area and will promote its new commercial office building - X Avenue XXX Center - as providing high-quality, affordable new office space managed by property experts. As such, the firm’s primary target market can be defined as: 

Professionals in NAICS 541, 561, and 621 having the desire for office space in the Primary Market Area


22

Total Market The State of Colorado Colorado ranked 12th in the 2006 State Business Tax Climate Index compiled by the Tax Foundation. The Index is comprised of five sub-indexes for which Colorado’s rank is reported in parenthesis: Business Tax Index (6), Individual Income Tax (14), Sales and Gross Receipts Tax Index (26), Unemployment Insurance Tax (21), and Wealth and Property Tax Index (14). Venture capital funding awarded to Colorado companies increased 48 percent in 2005 to $661.7 million, which accounted for 2.8 percent of total funding awarded to U.S. companies. The National Association of Seed and Venture Funds also reported that the total number of Colorado deals increased from 68 in 2004 to 75 in 2005. The Denver International Airport was named the No.1 airport in the country for customer satisfaction and ranked No. 2 in the world by J.D. Power & Associates. Colorado has the most educated workforce in the country with 64% of its residents having attended college. Metro Denver Market The Metro Denver Economic Development Corporation recently reported that strong retail sales pushed retails to nearly $72.9 billion in 2005, a 6.7 percent increase over 2004 annual sales. The strongest gains occurred throughout the year in Adams county (+16.5%), Douglas County (+13.8%), and the City and County of Denver (+8.7%). Denver ranked 2nd in the ‘Best Cities to Live and Work’ as ranked by Employment Review and BestJobsUSA.com. Denver was named America’s Top Sports City - with seven major sports teams and two new stadiums - by Sports Journal in 2004. Brighton– five-mile radius of X Avenue XXX Center Current Geography Selection: (1 Selected) 5 mile radius: XXX S X AV BRIGHTON, CO 80601

Lat: 39.973067 Long: -104.818308 City: Brighton Pop: 24,455 County: Adams County Pop: 406,547 Zip: 80601 Pop: 25,891

Current Index Base: Entire US

Population The current year population in this selected geography is 33,047. The 2000 Census revealed a population of 26,744, and in 1990 it was 18,189 representing a 47.0% change. It is estimated that the population in this area will be 38,027 in 2011, representing a change of 15.1% from 2006. The current population is 52.4% male and 47.6% female. In 2006, the median age of the population in this area was 33.3, compared to the US median age, which was 36.5. The population density in your area is 420.8 people per square mile.


23

Percent Change 1990 Census

2000 Census

2006 Estimate

2011 Projection

1990 to 2000

2006 to 2011

Total Population

18,189

26,744

33,047

38,027

47.0%

15.1%

Total Households

6,105

8,659

10,752

12,492

41.8%

16.2%

Age Groups


%

2000 Census

%

2006 Estimate

%

2011 Projection

%

1990 to 2000

2006 to 2011

0 to 4

1,387

7.6%

2,182

8.2%

2,789

8.4%

3,123

8.2%

57.3%

12.0%

5 to 14

2,971

16.3%

4,112

15.4%

5,104

15.4%

5,774

15.2%

38.4%

13.1%

15 to 19

1,398

7.7%

2,003

7.5%

2,340

7.1%

2,774

7.3%

43.3%

18.6%

20 to 24

1,114

6.1%

1,824

6.8%

2,114

6.4%

2,225

5.9%

63.8%

5.3%

25 to 34

3,141

17.3%

4,147

15.5%

5,115

15.5%

5,111

13.4%

32.0%

-0.1%

35 to 44

2,823

15.5%

4,522

16.9%

5,191

15.7%

5,946

15.6%

60.2%

14.5%


24

45 to 54

1,955

10.7%

3,383

12.7%

4,353

13.2%

5,252

13.8%

73.0%

20.6%

55 to 64

1,400

7.7%

2,093

7.8%

2,998

9.1%

3,997

10.5%

49.5%

33.3%

65 to 74

1,089

6.0%

1,267

4.7%

1,568

4.7%

2,084

5.5%

16.3%

32.9%

908

5.0%

1,210

4.5%

1,475

4.5%

1,741

4.6%

33.2%

18.0%

75 +

Race & Ethnicity In 2006, the racial makeup of this selected area was as follows: 80.6% White; 1.1% Black; 0.7% Native American; 1.6% Asian/Pacific Islander; and 13.3% other. Compare these to the US racial makeup which was: 75.9% White, 12.1% Black, 0.7% Native American, 4.5% Asian/Pacific Islander and 4.5% other. People of Hispanic ethnicity are counted independently of race. People of Hispanic origin make up 42.0% of the current year population in this selected area. Compare this to the US makeup of 14.9%. Changes in the population within each race and ethnicity category from the 1990 Census to the 2000 Census are as follows: 219.8% American Indian, Eskimo, Aleut Population; 15.9% Asian, Pacific Islander; 45.0% Black; 66.3% Hispanic Ethnicity; 58.2% Other; White 39.2%.

Race & Ethnicity


%

2000 Census

%

2006 Estimate

White

15,071

82.9%

20,972

78.4%

26,646

80.6%

Black

172

0.9%

249

0.9%

361

1.1%

American Indian or Alaska Native

109

0.6%

348

1.3%

230

0.7%

%

2011 Projection

%

1990 to 2000

2006 to 2011

30,884

81.2%

39.2%

15.9%

448

1.2%

45.0%

24.3%

156

0.4%

219.8%

-32.2%


25

Asian or Pacific Islander Other Race

268

1.5%

311

1.2%

526

1.6%

711

1.9%

15.9%

35.3%

2,569

14.1%

4,065

15.2%

4,404

13.3%

4,875

12.8%

58.2%

10.7%

800

3.0%

880

2.7%

953

2.5%

Two or More Races

Hispanic Ethnicity Not Hispanic or Latino

8.3%

5,643

31.0%

9,386

35.1%

13,886

42.0%

17,327

45.6%

66.3%

24.8%

12,548

69.0%

17,359

64.9%

19,161

58.0%

20,701

54.4%

38.3%

8.0%

Households There are currently 10,752 households in this selected geography. The Census revealed household counts of 8,659 in 2000, up from 6,105 in 1990, representing a change of 41.8%. It is estimated that the number of households in this area will be 12,492 in 2011, representing a change of 16.2% from the current year. For the current year, the average household size in this area is 3.07 persons. In 2006, the median number of years in residence in this geography's population is 2.61. The average household size in this geography was 2.95 people and the average family size was 3.48 people. The average number of vehicles per household in this geography was 2.2. Income In 2006, the median household income in this selected geography was $58,924, compared to the US median, which was $48,271. The Census revealed median household incomes of $49,843 in 2000 and $29,456 in 1990 representing a change of 69.2%. It is estimated that the median household income in this area will be $65,521 in 2011, which would represent a change of 11.2% from the current year. In 2006, the per capita income in this area was $23,963, compared to the $US per capita, which was $24,529. The 2006 average household income for this area was $66,452, compared to the US average which was $63,629.


26

.

HH Income Categories


%

2000 Census 873

% 10.1%

2006 Estimate 904

% 8.4%

2011 Projection 969

%

1990 to 2000

2006 to 2011

7.8%

-42.6%

7.1%

$0 - $15,000

1,520

24.9%

$15,000 - $24,999

1,068

17.5%

852

9.8%

839

7.8%

853

6.8%

-20.2%

1.7%

$25,000 - $34,999

969

15.9%

1,200

13.9%

1,194

11.1%

1,286

10.3%

23.8%

7.8%

$35,000 - $49,999

1,252

20.5%

1,418

16.4%

1,591

14.8%

1,601

12.8%

13.3%

0.7%

$50,000 - $74,999

902

14.8%

2,156

24.9%

2,487

23.1%

2,650

21.2%

139.0%

6.6%

$75,000 - $99,999

255

4.2%

1,190

13.7%

1,756

16.3%

2,156

17.3%

366.4%

22.8%

$100,000 $149,999

108

1.8%

728

8.4%

1,379

12.8%

1,976

15.8%

573.2%

43.3%

$150,000 +

19

0.3%

243

2.8%

603

5.6%

1,000

8.0%

1,196.6%

65.9%

Average Hhld Income

$34,132

$57,347

$66,452

$72,131

68.0%

8.5%

Median Hhld Income

$29,456

$49,843

$58,924

$65,521

69.2%

11.2%

Per Capita Income

$12,493

$18,568

$23,963

$25,782

48.6%

7.6%


27

Housing The median housing value in this area was $75,343 in 1990; compare this to the US median of $78,382 for the same year. The 2000 Census median housing value was $160,336, which is a 112.8% change from 1990. In 1990, there were 4,153 owner occupied housing units in this area vs. 6,439 in 2000. Also in 1990, there were 1,951 renter occupied housing units in this area vs. 2,220 in 2000. The average rent in 1990 was $362 vs. $633 in 2000. Employment In 2006, there were 16,790 people over the age of 16 in the labor force in our geography. Of these 91.7% were employed, 8.2% were unemployed, 32.0% were not in the labor force and 0.1% were in the Armed Forces. In 1990, unemployment in this area was 7.5% and in 2000 it was 6.3%. In 2006, there were 12,613 employees in this selected area (daytime population) and there were 1,212 establishments. For this area in 1990, 49.9% of employees were employed in white-collar occupations and 50.1% were employed in blue-collar occupations. In 2000, white-collar workers made up 53.9% of the population, and those employed in blue-collar occupations made up 46.1%. In 1990, the average time traveled to work was 13 minutes and in 2000 it was 28 minutes.

Traffic Counts (GDT) 5 mile radius: XXX S X AVE, BRIGHTON, CO 80601 Street

Cross Street

Traffic Count

Dist.*

Dir.*

State Hwy 2

Voiles St

7,100 Year: 1995

0.17

N

State Hwy 2

Laurel St

8,200 Year: 1995

0.40

N

State Hwy 2

Mather St

8,200 Year: 1995

0.53

N

US Hwy 85

W Bromley Ln

12,873 Year: 1999

0.48

W

US Hwy 85

Ramp

12,873 Year: 1999

0.49

W

State Hwy 2

Driveway

5,950 Year: 1995

0.68

S

State Hwy 2

E Egbert St

8,400 Year: 1995

0.68

N

US Hwy 85

Connecting Road

11,110 Year: 1999

0.62

NW

US Hwy 85

Ramp

11,110 Year: 1999

0.71

NW

State Hwy 2

Bush St

8,716 Year: 1999

0.85

N


28

State Hwy 7

S 3rd Ave

15,400 Year: 1996

0.95

N

State Hwy 7

N 6th Ave

20,272 Year: 1999

0.96

N

State Hwy 7

S 9th Ave

18,300 Year: 1996

1.03

NE

US Hwy 85

Ramp

8,443 Year: 1999

1.28

N

US Hwy 85

Denver St

8,443 Year: 1999

1.33

N

State Hwy 7

S 13th Ave

20,100 Year: 1996

1.20

NE

US Hwy 85

Ramp

13,500 Year: 1995

1.21

SW

US Hwy 85

E 144th Ave

13,500 Year: 1995

1.28

SW

State Hwy 2

E 140th Ave

6,000 Year: 1995

1.51

S

State Hwy 7

Tucson St

10,200 Year: 1996

1.37

NW

US Hwy 85 Bus

Ramp

7,074 Year: 1999

1.74

N

State Hwy 7

N 23rd St

8,250 Year: 1996

1.55

NE

County Hwy 2

Ramp

3,326 Year: 1999

1.89

N

US Hwy 85

County Road 2

9,208 Year: 1999

2.10

N

US Hwy 85

County Road 2 1/2

9,208 Year: 1999

2.18

N

State Hwy 7

E 160th Ave

5,650 Year: 1996

2.10

E

State Hwy 2

Driveway

6,700 Year: 1996

2.79

S

I 76

E 136th Ave

6,050 Year: 1995

2.65

SE

I 76

E 136th Ave

6,050 Year: 1995

2.66

SE

US Hwy 85

E 132nd Ave

12,250 Year: 1996

2.92

SW

US Hwy 85

E 132nd Ave

12,250 Year: 1996

2.93

SW

I 76

State Hwy E 470

6,100 Year: 1995

3.24

SE

I 76

State Hwy E 470

6,100 Year: 1995

3.28

S

State Hwy 7

Driveway

3,000 Year: 1995

2.79

E


29

E 124th Ave

Sable Blvd

810 Year: 1996

3.56

S

County Hwy 23 1/2

County Road 4 1/2

317 Year: 1999

3.59

NW

State Hwy 2

Sable Blvd

3,605 Year: 1999

3.82

S

State Hwy 2

Sable Blvd

3,605 Year: 1999

3.82

S

I 76

E 144th Ave

6,000 Year: 1995

3.01

E

County Road 21

E 168th Ave

175 Year: 1999

3.23

NW

State Hwy 7

Elmira St

8,100 Year: 1996

3.05

W

I 76

E 144th Ave

6,000 Year: 1995

3.03

E

I 76

E 120th Ave

6,408 Year: 1999

4.03

S

I 76

E 120th Ave

6,408 Year: 1999

4.03

S

E 120th Ave

Potomac St

1,363 Year: 1999

4.09

S

E 124th Ave

Driveway

1,750 Year: 1996

3.91

SW

State Hwy 2

Ramp

3,500 Year: 1996

4.20

S

State Hwy 2

Ramp

3,500 Year: 1996

4.23

S

I 76

E 120th Ave

11,619 Year: 1999

4.24

S

E 120th Ave

Laredo St

5,800 Year: 1995

4.17

S

I 76

Highway 2

11,619 Year: 1999

4.26

S

E 120th Ave

Oakland St

2,188 Year: 1999

4.41

SW

I 76

Highway 2

8,419 Year: 1999

4.64

S

I 76

Highway 2

8,419 Year: 1999

4.64

S

E 124th Ave

Henderson Rd

6,750 Year: 1996

4.32

SW

E 120th Ave

Ramp

2,500 Year: 1995

4.53

SE

E 120th Ave

E 120th Ave

2,500 Year: 1995

4.55

SE

E 120th Ave

Ramp

6,037 Year: 1999

4.67

SW


30

County Hwy 19

E 168th Ave

550 Year: 1996

4.06

W

County Road 21

County Road 6

174 Year: 1996

4.62

NW

US Hwy 85

E 120th Ave

14,200 Year: 1995

4.84

SW

E 160th Ave

Prairie Falcon Pkwy

1,426 Year: 1999

4.17

E

E 160th Ave

Golden Eagle Pkwy

1,426 Year: 1999

4.17

E

County Hwy 19

County Road 4

413 Year: 1998

4.62

NW

I 76

E 160th Ave

5,226 Year: 1999

4.48

E

I 76

E 160th Ave

5,226 Year: 1999

4.50

E

State Hwy 7

Monaco St

8,050 Year: 1996

4.99

W

(Source: XXX) Trade Area Growth Potential Within a 10-minute drive of Brighton, the trade area currently includes 148,600 persons and 51,900 households. The trade area is rapidly growing. Within the city of Brighton, more than 15,300 new housing units are either under construction, approved or in the planning process. Nearly 24,500 new residential units have been permitted in northern Commerce City, the majority within five miles of Brighton. More than 4,000 new units are planned in Lochbule, adjacent to Brighton to the northeast. In unincorporated Adams County just west of Brighton, more than 8,300 dwelling units are under construction or approved. As a result, the trade area has nearly 52,100 new residential unites under construction, approved, or being planned. This will result in trade area growth in the future of an additional 156,300 new residents, more than double the current trade area population. We project the trade area to include 304,300 residents in 103,100 households within the next 20 years.


31

Residential Development Brighton has experienced significant residential growth over the past five years. More than 4,200 residential units have been permitted since 1997. On an annual basis, this equates to an average of 525 units each year. During 2002, a number of developers recognized the local multifamily market opportunities. Five major multifamily projects began construction during 2002, which provide house at price ranges affordable to a wide range of incomes. Single-family housing construction was also strong. New housing ranges in price from the high $100,000s for town houses to more than $500,000 for executive housing. Buyers found that Brighton still provides a significant housing value over other parts of the Denver metro area.


32

Retail Trade Area Demographics Brighton retailers attract consumers in all age and income categories. Surveys of Brighton shoppers show that those who are younger and have higher household incomes tend to shop more frequently in Brighton. Brighton is the nearest and largest retail center for many communities to the north and east. Many of these communities have limited retail services, and Brighton has long been the dominant trade center. Transportation The central location of metro Denver to the western United States makes the area one of the country’s most important transportation hubs. Brighton sits in a transportation triangle bordered on three sides by major highways (I-25, I-70 and I-76, with access to I-80), and two rail lines. These routes provide superior access to all major transportation corridors in the metro area. 

Trucking - More than 160 motor freight companies provide trucking services in the area. Backhaul rates out of the area remain lower than the national average.



Airports – Denver International Airport is 15 minutes from Brighton and is the 17th busiest cargo hub, with 30 passenger airlines, 6 flying internationally and 9 cargo carriers.



Rail – Brighton is bordered on both the east and west by major rail lines: Burlington-Northern and Union Pacific.

(Source: Brighton Economic Development Corporation, Brighton Community Profile 2006) Target Customers The owners of XXX Properties, LLC have identified three groups of customers for their new X Avenue XXX Center’s prime office space: 

NAICS 541: Professional, Scientific, and Technical Services



NAICS 561: Administrative and Support Services



NAICS 621: Ambulatory Health Care Services

This section shall describe these customer groups and their projected growth rates as provided by the United States Census Bureau and Bureau of Labor Statistics, and the Colorado Department of Labor. National Data NAICS 541: Professional, Scientific, and Technical Services Industries in the Professional, Scientific, and Technical Services subsector group establishments engaged in processes where human capital is the major input. These establishments make available the knowledge and skills of their employees, often on an assignment basis, where an individual or team is responsible for the delivery of services to the client. The individual industries of this subsector are defined on the basis of the particular expertise and training of the services provider. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

33

The distinguishing feature of the Professional, Scientific, and Technical Services subsector is the fact that most of the industries grouped in it have production processes that are almost wholly dependent on worker skills. In most of these industries, equipment and materials are not of major importance, unlike health care, for example, where "high tech" machines and materials are important collaborating inputs to labor skills in the production of health care. Thus, the establishments classified in this subsector sell expertise. Much of the expertise requires degrees, though not in every case.

5411 Legal Services 5412 Accounting, Tax Preparation, Bookkeeping, and Payroll Services 5413 Architectural, Engineering, and Related Service 5414 Specialized Design Services 5415 Computer Systems Design and Related Services 5416 Management, Scientific, and Technical Consulting Services 5417 Scientific Research and Development Services 5418 Advertising and Related Services 5419 Other Professional, Scientific, and Technical Services

NAICS 561: Administrative and Support Services Industries in the Administrative and Support Services subsector group establishments engaged in activities that support the day-to-day operations of other organizations. The processes employed in this sector (e.g., general management, personnel administration, clerical activities, cleaning activities) are often integral parts of the activities of establishments found in all sectors of the economy. The establishments classified in this subsector have specialized in one or more of these activities and can, therefore, provide services to clients in a variety of industries and, in some cases, to households. The individual industries of this subsector are defined on the basis of the particular process that they are engaged in and the particular services they provide. Many of the activities performed in this subsector are ongoing routine support functions that all businesses and organizations must do and that they have traditionally done for themselves. Recent trends, however, are to contract or purchase such services from businesses that specialize in such activities and can, therefore, provide the services more efficiently. The industries in this subsector cannot be viewed as strictly "support." The Travel Arrangement and Reservation Services industry group includes travel agents, tour operators, and providers of other travel arrangement services, such as hotel and restaurant reservations and arranging the purchase of tickets, This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

34

serves many types of clients, including individual consumers. This group was placed in this subsector because the services are often of the "support" nature (e.g., travel arrangement) and businesses and other organizations are increasingly the ones purchasing such services. The administrative and management activities performed by establishments in this sector are typically on a contract or fee basis. These activities may also be performed by establishments that are part of the company or enterprise. However, establishments involved in administering, overseeing, and managing other establishments of the company or enterprise, are classified in Sector 55, Management of Companies and Enterprises. These establishments normally undertake the strategic and organizational planning and decision-making role of the company or enterprise. Government establishments engaged in administering, overseeing and managing governmental programs are classified in Sector 92, Public Administration.

5611 Office Administrative Services 5612 Facilities Support Services 5613 Employment Services 5614 Business Support Services 5615 Travel Arrangement and Reservation Services 5616 Investigation and Security Services 5617 Services to Buildings and Dwellings 5619 Other Support Services

NAICS 621: Ambulatory Health Care Services Industries in the Ambulatory Health Care Services subsector provide health care services directly or indirectly to ambulatory patients and do not usually provide inpatient services. Health practitioners in this subsector provide outpatient services, with the facilities and equipment not usually being the most significant part of the production process.

6211

Offices of Physicians

6212

Offices of Dentists

6213

Offices of Other Health Practitioners

62131 Offices of Chiropractors


35

62132 Offices of Optometrists 62133 Office of Mental Health Practitioners 62134 Offices of Physical, Occup. & Speech Therapists & Audiologists

Projected Growth Service-Providing Industries The long-term shift from goods-producing to service-providing employment is expected to continue. Service-providing industries are expected to account for approximately 18.7 million of the 18.9 million new wage and salary jobs generated over the 2004-14 period (Chart 4).

Education and Health Services This industry super-sector is projected to grow faster, 30.6 percent, and add more jobs than any other industry supersector. About 3 out of every 10 new jobs created in the U.S. economy will be in either the healthcare and social assistance or private educational services sectors.


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Professional and Business Services This industry supersector, which includes some of the fastest growing industries in the U.S. economy, will grow by 27.8 percent and add more than 4.5 million new jobs. Employment in administrative and support and waste management and remediation services will grow by 31 percent and add 2.5 million new jobs to the economy by 2014. The fastest growing industry in this sector will be employment services, which will grow by 45.5 percent and will contribute almost two-thirds of all new jobs in administrative and support and waste management and remediation services. Employment services ranks among the fastest growing industries in the Nation and is expected to be among those that provide the most new jobs. Employment in professional, scientific, and technical services will grow by 28.4 percent and add 1.9 million new jobs by 2014. Employment in computer systems design and related services will grow by 39.5 percent and add almost one-fourth of all new jobs in professional, scientific, and technical services. Employment growth will be driven by the increasing reliance of businesses in information technology and the continuing importance of maintaining system and network security. Management, scientific, and technical consulting services also will grow very rapidly, by 60.5 percent, spurred by the increased use of new technology and computer software and the growing complexity of business.


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Professional and Related Occupations Professional and related occupations will grow the fastest and add more new jobs than any other major occupational group. Over the 2004-2014 period, a 21.2-percent increase in the number of professional and related jobs is projected, which translates into 6 million new jobs. Professional and related workers perform a wide variety of duties, and are employed throughout private industry and government. About three-quarters of the job growth will come from three groups of professional occupations—computer and mathematical occupations, healthcare practitioners and technical occupations, and education, training, and library occupations—which will add 4.5 million jobs combined. Service Occupations Service workers perform services for the public. Employment in service occupations is projected to increase by 5.3 million, or 19 percent, the second largest numerical gain and second highest rate of growth among the major occupational groups. Food preparation and serving related occupations are expected to add the most jobs among the service occupations, 1.7 million by 2014. However, healthcare support occupations are expected to grow the fastest, 33.3 percent, adding 1.2 million new jobs. Management, business, and financial occupations Workers in management, business, and financial occupations plan and direct the activities of business, government, and other organizations. Their employment is expected to increase by 2.2 million, or 14.4 percent, by 2014. Among managers, the numbers of preschool and childcare center/program educational administrators and of computer and information systems managers will grow the fastest, by 27.9 percent and 25.9 percent, respectively. General and operations managers will add the most new jobs, 308,000, by 2014. Farmers and ranchers are the only workers in this major occupational group whose numbers are expected to decline, losing 155,000 jobs. Among business and financial occupations, accountants and auditors and management analysts will add the most jobs, 386,000 combined. Employment, recruitment, and placement specialists and personal financial advisors will be the fastest growing occupations in this group, with job increases of 30.5 percent and 25.9 percent, respectively. Local Data The State of Colorado projects a 57% increase statewide in these three industries: Professional, Scientific, and Technical Services, Administrative and Support Services, and Health Care & Social Assistance. More locally, the state projects increases of 54.4%, 44.3% and 33.3% for the same industries, respectively. Market research, including interviews of regional real estate agencies and commercial office building owners, identified decision priorities of potential customers. The first priority is location. Potential customers want to be near the center of their market, located on a major traffic artery that gives business presence exposure, and plenty of off-street parking. The second priority is price. Potential customers desire comparable square footage rates and may be willing This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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to pay a $1 to $2 premium for highly desirable office space locations. The third priority was the tax benefits of being in an enterprise zone. The X Avenue XXX Center is in the Brighton Enterprise Zone. Additionally, the local Brighton hospital has been sold to a private college, and most of the hospital staff is relocating to a new facility five miles away. Offices will be needed by doctors to serve their local core city residents. With a robust growth pattern and strong projections for future economic development in Brighton, Colorado, XXX Properties, LLC has indeed chosen a prime target market in which to build its first infill commercial project – X Avenue XXX Center.

Industry Analysis XXX Properties, LLC is in the business of developing and managing commercial properties. This section shall examine aspects and trends in construction and property management. Nonresidential Construction The construction sector comprises establishments primarily engaged in the construction of buildings or engineering projects. Establishments primarily engaged in the preparation of sites for new construction and establishments primarily engaged in subdividing land for sale as building sites also are included in this sector. Construction work done may include new work, additions, alterations, or maintenance and repairs. Activities of these establishments generally are managed at a fixed place of business, but they usually perform construction activities at multiple project sites. Quarterly Census of Employment and Wages data show the following: Construction employment is 30 percent of total employment in the goodsproducing sectors (which also include manufacturing, and natural resources and mining), while construction establishments account for 62 percent of goods-producing establishments. In the economy as a whole (goods-producing and service-providing sectors), construction employs about 5.4 percent of all workers and accounts for 9.8 percent of all establishments. Current Employment Statistics estimates show total annual average construction employment rising from 5,274,000 in 1995 to a high of 6,964,000 in 2004, surpassing the previous high achieved in 2001.


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Employment of production workers in construction has also increased over the past 10 years, beginning at 4,113,000 in 1995 and rising to 5,332,000 in 2001. In 2004, employment of production workers in construction averaged 5,300,000. Average weekly hours of production workers in construction were 38.3, well above the 2004 private industry average of 33.7 for production and nonsupervisory workers. The average hourly earnings of production workers in construction were $19.23 in 2004, compared to an average of $15.67 for production and non-supervisory workers in all private industry.

In 2004, the unemployment rate of persons most recently employed in construction was 8.4 percent, according to the Current Population Survey. The overall unemployment rate was 5.5 percent that year. Data from the Mass Layoff Statistics program show that in construction, there were 870 extended mass layoff events in 2004, resulting in 118,998 separations of workers from their jobs and 135,574 initial claimants for unemployment insurance. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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Wages and employment by occupation for the construction sector are available from the Occupational Employment Statistics program. The most common occupation in construction: carpenters. In November 2004, there were 748,450 carpenters in construction and their average annual wages were $38,940. Employment Projections data indicate that construction employment will increase 11.4 percent over the 2004-14 period. Construction is the only goodsproducing sector in which employment is projected to grow. Total employment for all industry sectors is projected to grow 14.8 percent. (Source: US Bureau of Labor Statistics) As with the construction industry in general, nonresidential construction had benefited from a surging U.S. economy in the late 1990s. The demand and spending for all types of construction in this sector was commensurate with general economic strength, measured by gross domestic product and interest rates. When the economy began to falter at the turn of the twenty-first century, the nonresidential construction began to feel the pinch. Although residential construction was bolstered by interest rates that dipped to lows not seen since the 1950s, nonresidential construction experienced no such cushion. Businesses of all kinds began to curb spending on new and existing construction projects. Along with economic strength, the specific construction categories of this sector are further affected by a range of variables, such as demographic trends, legislation regarding public expenditures and business developments, and social trends. Private nonresidential construction in the United States has fluctuated according to the success of key sectors such as office buildings and institutions. Nonresidential construction spending dropped by 6 percent in 2003 as even the strongest sectors, such as healthcare construction, began to see previously rapid growth rates slow. The states that experienced the greatest levels of construction activity in this sector included California and Texas. Office Construction The 1980s saw tremendous growth in new office construction, but the overproduction and subsequent economic recession resulted in such a glut that vacancy rates became a nationwide problem. In 1983, the national metropolitan office vacancy rate stood at approximately 12 percent; by 1990, that rate had risen to 17 percent and peaked at 19 percent two years later. In 1998 the rate was at its lowest mark since the early 1980s, at 8.9 percent. However, by early 2003, the office vacancy rate had jumped back up to 16.5 percent. Office construction spending experienced a long-awaited resurgence in the late 1990s, from $36.2 billion in 1997 to $47.5 billion in 1999. While this was excellent news for contractors, 1999 revenues were still 35 percent below their record 1985 level. As the economy as a whole cooled off from its late 1990s surge, the rate of office building construction growth slowed considerably to roughly $43 billion in 2002 and to $39 billion in 2003. Meanwhile, lending institutions, which had eased some of their restrictions on commercial real estate loans, began to tighten up lending requirements. Eyeing the slower This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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growth rate for white-collar employment, as well as the economic trend toward downsizing, builders wary of a repeat of the late 1980s disaster were expected to try and rein in runaway construction. Retail Construction In contrast to office construction, the retail construction market has remained strong since the 1980s. Spending on retail construction rose steadily during the late 1990s, from $42 billion in 1996 to $55.4 billion in 1999. About half the value in this category is related to the construction of shopping centers. Especially in recent years, such construction was geared toward big box stores—large non-mall discount stores specializing in focused product categories. According to a December 2002 issue of Chain Store Age, the 25 largest U.S. retailers opened a total of 5,935 new stores in 2002, compared to 5,843 in 2001. In addition, square footage in these new stores reflected a 6.4 percent increase over the size of existing stores. Leading U.S. retailers also continued to spend construction dollars on remodeling existing stores. Supermarkets, in particular, were investing more capital into improving existing stores than on opening new units. Supermarket companies engaged in store remodeling grew from 22 percent to 38 percent between 1997 and 2001. In fact, supermarket store openings fell to a ten-year low in 2001. Offsetting the impact of this decline, however, was the fact that store closings had also reached a decade low rate. The new supermarkets that did open in 2001 boasted square footage of 46,750, compared to 44,072 a year earlier.

Institutional Construction This sector includes a wide range of building types, including hospitals, schools, prisons, government buildings, and others. This type of construction has generally been more stable than all other sectors of nonresidential construction. As a result, it commands an increasing share—more than 60 percent as of the early 2000s—of total industry spending. Compared to industrial construction spending, which declined by 3.2 percent in 2001, and to commercial construction spending, which dipped 1.6 percent that year, spending on institutional construction grew 10 percent in 2001.


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Educational building construction was very healthy in the late 1990s, with optimistic forecasts into the following decade. Sales in 1998 reached $39.5 billion and were expected to increase to $44.0 billion by 2000. Furthermore, as more schools placed a priority on full Internet service and technological facilities, the construction of new buildings and remodeling of existing ones was expected to follow. However, drastic cuts in educational funding in the early 2000s curtailed construction considerably in this sector. Seventy percent of this construction was of primary and secondary schooling facilities, while colleges, universities, and other educational institutions accounted for the remainder. The vast majority of this construction (80 percent) was for public institutions, though that figure was likely to diminish as state and local budgets continued to be strained while calls for voucher programs and other shifts toward private schooling increased. The construction of healthcare facilities was largely dependent on legislative activity, which was in an uncertain state of limbo in the late 1990s. As a result, spending was down slightly in this sector, though much less for private hospitals than for public care facilities. Seventy percent of spending in this sector went toward hospitals and clinics, though nursing homes and outpatient centers claimed an increasing proportion of the market. More optimistically, however, analysts expect healthcare facilities to be among the fastest-growing sectors in the entire construction industry in the early 2000s. An aging population is a prime factor for this projected growth, especially as nursing homes and similar facilities flourish. Another indicator for growth is the age of existing facilities. According to an August 2002 issue of Heath Care Strategic Management, "In many cities, hospital plants are decaying beneath the surface, with out-of-date chillers and boilers, asbestos in the walls, and outdated signage … now it's time for hospital to play catch-up." Industry Leaders While the majority of companies engaged in nonresidential construction other than industrial buildings and warehouses employed fewer than 8 workers, a handful of firms commanded a substantial market share; however, most of those firms' operations included construction activity that extended beyond what fits into this industry. HBE Corporation was established in 1960 and employed 9,100 workers in 2002. Its flagship operation is HBE Hospital Building and Equipment Company, which designs, plans, and builds healthcare facilities. HBE also performs construction activity for the financial services industry, building banks and credit unions. Sales totaled $625 million in 2002, compared to $1.3 billion in 1998. Hellmuth, Obeta, and Kassabaum, otherwise known as HOK Group, Inc., engaged in a wide range of construction activities, including commercial, recreational, and institutional facilities, including U.S. government buildings. The firm maintains a payroll of more than 1,600 workers and posted sales of $309 million in 2002. Other leading firms in 2002 included: Clark Construction Group of Bethesda, Maryland, with 4,000 employees and sales of $2 billion; Perini Corporation of Framingham, Massachusetts, with 2,400 employees and sales of $1.4 billion; This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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and Turner Corporation of New York, New York, with 4,700 employees and $6.0 billion in sales. (Source: Encyclopedia of American Industries) Property Management Buildings can be homes, stores, or offices to those who use them. To businesses and investors, properly managed real estate is a potential source of income and profits, and, to homeowners, it is a way to preserve and enhance resale values. Property, real estate, and community association managers maintain and increase the value of real estate investments. Property and real estate managers oversee the performance of income-producing commercial or residential properties and ensure that real estate investments achieve their expected revenues. When owners of apartments, office buildings, or retail or industrial properties lack the time or expertise needed for day-to-day management of their real estate investments or homeowners’ associations, they often hire a property or real estate manager. The manager is employed either directly by the owner or indirectly through a contract with a property management firm. Generally, property and real estate managers handle the financial operations of the property, ensuring that rent is collected and that mortgages, taxes, insurance premiums, payroll, and maintenance bills are paid on time. Some property managers, called asset property managers, supervise the preparation of financial statements and periodically report to the owners on the status of the property, occupancy rates, dates of lease expirations, and other matters. Often, property managers negotiate contracts for janitorial, security, grounds keeping, trash removal, and other services. When contracts are awarded competitively, managers solicit bids from several contractors and recommend to the owners which bid to accept. They monitor the performance of contractors and investigate and resolve complaints from residents and tenants when services are not properly provided. Managers also purchase supplies and equipment for the property and make arrangements with specialists for repairs that cannot be handled by regular property maintenance staff. In addition to these duties, property managers must understand and comply with provisions of legislation, such as the Americans with Disabilities Act and the Federal Fair Housing Amendment Act, as well as local fair housing laws. They must ensure that their renting and advertising practices are not discriminatory and that the property itself complies with all of the local, state, and federal regulations and building codes. Onsite property managers are responsible for day-to-day operations for one piece of property, such as an office building, shopping center, community association, or apartment complex. To ensure that the property is safe and properly maintained, onsite managers routinely inspect the grounds, facilities, and equipment to determine if repairs or maintenance are needed. They meet not only with current residents when handling requests for repairs or trying to resolve complaints, but also with prospective residents or tenants to show vacant apartments or office space. Onsite managers also are responsible for enforcing the terms of rental or lease agreements, such as rent collection, This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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parking and pet restrictions, and termination-of-lease procedures. Other important duties of onsite managers include keeping accurate, up-to-date records of income and expenditures from property operations and submitting regular expense reports to the asset property manager or owners. Property managers who do not work onsite act as a liaison between the onsite manager and the owner. They also market vacant space to prospective tenants through the use of a leasing agent or by advertising or other means, and establish rental rates in accordance with prevailing local economic conditions. Some property and real estate managers, often called real estate asset managers, act as the property owners’ agent and adviser for the property. They plan and direct the purchase, development, and disposition of real estate on behalf of the business and investors. These managers focus on long-term strategic financial planning rather than on day-to-day operations of the property. When deciding to acquire property, real estate asset managers take several factors into consideration, such as property values, taxes, zoning, population growth, transportation, and traffic volume and patterns. Once a site is selected, they negotiate contracts for the purchase or lease of the property, securing the most beneficial terms. Real estate asset managers periodically review their company’s real estate holdings and identify properties that are no longer financially profitable. They then negotiate the sale of or terminate the lease on such properties. Property and real estate managers who work for homebuilders, real estate developers, and land development companies acquire land and plan construction of shopping centers, houses, apartments, office buildings, or industrial parks. They negotiate with representatives of local governments, other businesses, community and public interest groups, and public utilities to eliminate obstacles to the development of land and to gain support for a planned project. It sometimes takes years to win approval for a project and managers may have to modify plans for the project many times. Once cleared to proceed with a project, managers may help to negotiate short-term loans to finance the construction of the project, and later negotiate long-term permanent mortgage loans. They then help to choose, assist, and advise the architectural firms that draw up detailed plans and the construction companies that build the project. Onsite managers may spend a large portion of their workday away from their office, visiting the building engineer, showing apartments, checking on the janitorial and maintenance staff, or investigating problems reported by tenants. Property and real estate managers frequently visit the properties they oversee, sometimes on a daily basis when contractors are doing major repair or renovation work. Real estate asset managers may spend time away from home while traveling to company real estate holdings or searching for properties to acquire. Property and real estate managers often must attend evening meetings with residents, property owners, community association boards of directors, or civic groups. Not surprisingly, many managers put in long workweeks, especially before financial and tax reports are due. Some apartment managers are This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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required to live in the apartment complexes where they work so that they are available to handle any emergency that occurs, even when they are off duty. Property and real estate managers held about 293,000 jobs in 2002. Forty percent worked for real estate agents and brokers, lessors of real estate, or property management firms. Others worked for real estate development companies, government agencies that manage public buildings, and corporations with extensive holdings of commercial properties. Forty-six percent of property, real estate, and community association managers were selfemployed. Most employers prefer to hire college graduates for property management positions. Entrants with degrees in business administration, accounting, finance, real estate, public administration, or related fields are preferred, but those with degrees in the liberal arts also may qualify. Good speaking, writing, computer, and financial skills, as well as an ability to tactfully deal with people, are essential in all areas of property management. Many employers encourage attendance at short-term formal training programs conducted by various professional and trade associations active in the real estate field. Completion of these programs, related job experience, and a satisfactory score on a written examination lead to certification, or the formal award of a professional designation, by the sponsoring association. In addition to these qualifications, some associations require their members to adhere to a specific code of ethics. Managers of public housing subsidized by the Federal Government are required to be certified, but many property, real estate, and community association managers, who work with all types of property, choose to earn a professional designation voluntarily because it represents formal recognition of their achievements and status in the occupation. Real estate asset managers who buy or sell property are required to be licensed by the State in which they practice. Employment of property, real estate, and community association managers is projected to grow at a rate of 10%-20% through the year 2012. Additional job openings are expected to occur as managers transfer to other occupations or leave the labor force. Opportunities should be best for those with a college degree in business administration, real estate, or a related field, and for those who attain a professional designation. Job growth among onsite property managers in commercial real estate is expected to accompany the projected expansion of the real estate and rental and leasing industry. An increase in the Nation’s stock of apartments, houses, and offices also should require more property managers. The changing demographic composition of the population also should create more jobs for property, real estate, and community association managers. The number of older people will grow during the 2000-12 projection period, increasing the need for various types of suitable housing, such as assistedliving facilities and retirement communities. Accordingly, there will be demand for property and real estate managers to operate these facilities, and especially


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for those who have a background in the operation and administrative aspects of running a health unit. (Source: Bureau of Labor Statistics)

Competitive Analysis There is very little competition to be found in the PMA for this offering. An online search of the Verizon yellow pages yielded the following results when the keywords ‘commercial office space’ and ‘five-mile radius of XXX S. X Avenue, Brighton, Colorado, 80601’ were entered as search criteria: All categories related to "commercial office space" in Brighton CO 80601 2 listings in 2 categories Real Estate

o o

Commercial & Industrial Rental & Leasing (1) General Real Estate (1)

While these companies may not all be direct competitors of XXX Properties, LLC, they are presented here to give scale to the level of competition in the area. Additionally, the owners of XXX Properties, LLC have observed that other commercial office buildings have quickly filled up before construction or renovation has even completed. Most of the other commercial buildings are over 50 years old – X Avenue XXX Center will be one of the few new office buildings in the area. Conclusion XXX Properties, LLC will expand its operation by offering a new commercial office building that will draw customers from a five-mile radius of Brighton, Colorado. Households in Brighton have an average income that is higher than the United States’ aggregate and the local population is expected to grow over 15% by 2011. As the population increases, so does the demand for professional services. XXX Properties, LLC has identified several categories of professionals that will increase in numbers over the next few years and is targeting these individuals as likely tenants for their new project – X Avenue XXX Center. XXX Properties, LLC expects to differentiate itself from its competitors on the merits of providing new, high-quality office space in the heart of downtown Brighton. As such, XXX Properties, LLC: 

Will expand in a sufficiently large concentrations of the target market;



Will participate in a growth industry;



Will continue to exhibit compelling and sustainable competitive differentiation, allowing the firm to acquire significant market share.

market

area,

with

proven


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FACILITIES AND OPERATIONS Location The current location for XXX Properties, LLC is XXX, Brighton, Colorado 80601. The firm intends to establish a trailer at the building site on XXX South X Avenue in Brighton to serve as office space during construction.

The primary requirements for the location are: 

Convenient and accessible location – in the core city area of Brighton



Adequate space for operations – 26,600 square feet, 20 – 1,200 square foot offices for sale



Located in Adams County in the City of Brighton Enterprise Zone



Adjacent to Denver Metro area and all major modes of transportation

The location is accessible and on one of the three major highways through the city (Colorado State Highway X) allowing for ease in XXX Properties, LLC’s management team meeting with subcontractors and customers at that location. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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Adams County Enterprise Zone

Colorado's Urban and Rural Enterprise Zone Act of 1986 established a program to encourage new capital investment and job growth in economically distressed areas of the state. The three criteria used to determine these areas are high unemployment rates, slow population growth and low per capita income. Adams County was originally designated in 1988. Companies located in an Enterprise Zone area are eligible for various state income tax credits. The Adams County zone includes portions of unincorporated Adams County, Arvada, Aurora, Bennett, Brighton, Commerce City, Federal Heights, Northglenn, Thornton and Westminster. City of Brighton, Colorado Brighton is located just 20 miles northeast of downtown Denver on the edge of the eastern Colorado plains. Boasting a small town atmosphere and rich cultural and historic roots makes Brighton an ideal place to live, work and play. Incorporated on July 26, 1887, the city of Brighton's founding fathers were determined that there should be a town that would "do credit to the splendid valley". The city was named the permanent county seat of Adams County in 1904. By the 2000 census, the "town" had grown to more than 20,000 people.


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Brighton was included in the original designation to the enterprise zone in February 1988 and is denoted in red in the map below.


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Facilities Administrative The administrative facility for XXX Properties, LLC is currently home-based in Brighton, Colorado and will be relocated to the on-site project trailer on X Avenue in Brighton. XXX Properties, LLC’s management team intends to outfit the administrative facility with the appropriate room furnishings and office equipment including computers with necessary peripherals, telephones, Internet connection, office furniture, record storage, and normal office supplies inventory. X Avenue XXX Center The property at XXX South X Avenue was re-zoned from Residential (R-1) to Commercial Office (C-O) during a Brighton City Council meeting on September 19, 2006. The X Avenue XXX Center building (the ‘Center’) will be designed to be architecturally consistent with the historical character of an older city building but slightly upscale in appearance. A conceptual rendering of the building is attached as Appendix 2 and a Site Plan is attached as Appendix 3. The Center building will be split-face concrete block core and shell construction. The ground floor offices will open to four entrances on each side of the building. The second floor offices will open into a common hallway with stairways on each end. The parking lot will be asphalt surface with concrete drain pans emptying into an onsite detention basin connected to the city storm water drainage system. The Colorado Department of Transportation requires that South X Avenue (State Highway X) be widened with an acceleration/deceleration lane across the front of the property to ease any property ingress/ egress concerns and minimize the impact on traffic flow. The disadvantages of the location are related to timing of large truck ingress and egress as well as sidewalk traffic safety. South X Avenue is a major artery through the city and the Center location borders existing residential and retail buildings. Traffic control personnel will mange short-term traffic delays and sidewalk safety as a daily ongoing activity. The street widening will be subcontracted to one of three City-approved contractors and will be competitively bid based on civil engineering drawings approved by the City. Construction Schedule The construction schedule for the Center building, located in Appendix 1, encompasses seven phases: Phase 1: Land Acquisition & Site Clearing – Complete – After the 1.99 acre lot was acquired, a house, detached garage and a detached shed were demolished and removed from the lot. The lot is now clear for construction. Phase 2: Engineering & Entitlements – 3 to 5 Months - The civil engineering is approximately 70% complete. The city of Brighton’s Planning Department, all This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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responsible departments within the city, along with contract civil engineering firms, are reviewing and recommending changes and/or additions to the civil engineering drawings. A traffic study and a waste water control study have been completed and approved by the City. Phase 3: South X Avenue Widening – 2 to 3 Months – The civil engineering plans are approximately 80% complete. The City of Brighton’s Planning Department and Colorado Department of Transportation will be requested to review and approve these plans. The City of Brighton Planning Department and their contract civil engineering firm are reviewing these plans. The Planning Department is primarily concerned with the infrastructure under the street, specifically the infrastructure taps into the X Avenue XXX Center property. Phase 4: Marketing and Sales – Advertising of the Center will commence with the completion of Phases 2 and 3, and will be ongoing through November 2008, or until the building is fully occupied. Phase 5: Center Building Construction – 4 to 6 Months - Will start 45 to 60 days after completion of Phases 2 and 3. During this intervening time, bids will be solicited, analyzed, and awarded to successful subcontractors. The construction schedule will also be finalized. Budgets will also be analyzed in detail and solidified. The split-face block building will be constructed and utility taps extended to the building. Phase 6: Parking Lot and Landscaping – 1 Month – The detention basin and related storm water piping will begin shortly after the building tilt-up wall and up, second floor steel framing is installed, and the building roof completed. Phase 6 is expected to start 2 months after the start of Phase 5. Phase 7: Build-out of Office Space – Can commence as early as 3 months after the start of Phase 5 work. Phase 7 work will continue on an as-contracted basis until all office space is built out. Based on market research finding and analysis, all office space should be built out within two months after Phase 6 is completed. The facility will conform to, and comply with, all local, State and federal regulations relevant to the business and its related industries.

Operations XXX Properties, LLC’s management team will continue to engage and manage the appropriate and necessary subcontractors and consultants for the successful construction of X Avenue XXX Center. This will include operating from the home office in Brighton, Colorado, as well as onsite visits to the construction site to maintain quality control and project schedules. XXX Properties, LLC will provide new commercial office space for sale to clients in and around a five-mile radius of Brighton, Colorado. The following is a matrix that shows the overall process employed by XXX Properties, LLC.


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Category Inputs Processes Outputs

Operations/Process Matrix Specification Labor Materials Sales Contract supervision Satisfied Clients with commercial office space

Equipment Construction & Engineering Tools Office Equipment

Customers Support Services Accountant Attorney Insurance

XXX Properties, LLC

Professionals primarily in NAICS 541, 561 and 621

Agents Subcontractors Advertising Channels Referrals


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Capital Equipment XXX Properties, LLC requires the acquisition of general equipment and furnishings for the successful expansion of the business. The cost to obtain operational equipment, office equipment, and furnishings required for the expansion of XXX Properties, LLC is estimated to be approximately $12,200. List of Equipment

Price

Office Equipment

$3,400

Office Furniture

$4,000

Drafting Table

$1,800

TOTAL:

$12,200

Sources of Supply XXX Properties, LLC will use a combination of the Internet and local stores for purchase of its capital equipment. Office and computer-related equipment can easily be ordered via the Internet. Computer peripherals and supplies such as printer/fax/copiers, ink cartridges, office supplies and furniture can be purchased locally from such stores as Staples, Office Max and Office Depot. Construction materials for all phases of the project are available from suppliers within a six-mile radius. Efforts will be made to give preference to local, qualified suppliers.

Availability of Labor XXX Properties, LLC subcontracts out 100% of its work. The firm does not anticipate hiring any direct employees in the foreseeable future. There is an abundant supply of labor in the Denver metro area. According to the United States Bureau of Labor Statistics, there were 64,170 individuals employed in Construction and Extraction Occupations in the Denver Metropolitan Statistical Area as of May 2005. Naturally, XXX Properties, LLC will carefully review the credentials of any subcontracting firm engaged in support of their business initiatives. This will be important in instances where proper bonding and licensure requirements must be verified.


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MARKETING AND SALES STRATEGIES XXX Properties, LLC intends to market its new commercial office building - X Avenue XXX Center - with office space for sale to professionals including doctors, attorneys, accountants and others interested in working in Brighton, Colorado. As such, XXX Properties, LLC must place a great deal of emphasis upon educating the target market regarding the advantages of doing business with their firm. The focus of XXX Properties, LLC marketing and sales plan will therefore be on defining the appropriate strategy for success and expansion to accommodate the steady demand for commercial office space seen in the Brighton, Colorado Enterprise Zone – a very attractive location for businesses. Currently, buildings in this zone are filled with tenants before construction and renovations are even completed, due to the following advantages: Businesses located within an Enterprise Zone that make capital 1. investments, create new jobs, contribute to economic development plans, rehabilitate old buildings, and do research and development in the Adams County Enterprise Zone have the potential to save thousands of dollars on their Colorado income tax bill each year. 2. Any Taxpayer-regardless of their location-can make a contribution to a qualified enterprise zone contribution project. Taxpayers that make an in-kind or monetary contribution to a qualified Enterprise Zone program may claim a state income tax credit up to $100,000. (Source: Adams County Economic Development official website)

Marketing Objectives Based on the Market Analysis described previously, XXX Properties, LLC has identified the following marketing objectives: 

Raise prospective customer awareness of XXX Properties, LLC’s new office building and the advantages of locating a business there;



Differentiate XXX Properties, LLC and its’ offering from the competition in order to better compete against other office space providers. Our Market Philosophy

Our market philosophy has three facets: The first is brand performance: our promise is that we will do what we say and what our customers expect of us. Brand performance is what drives our company. The second is listening to our customer: Our customers are an integral part of how we perform. Customers will choose our company because of what we offer and how we relate to their needs. When we are successful, it makes our customers our advocates and helps to increase business and form new relationships. We leverage the insight gained through listening and interaction to help maintain our relevancy and build potential strategic advantages. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

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The third is our company view: It is critical that we know what attributes are associated with us, and how this understanding contributes to business growth.

Strategies Strategy guides the marketing plan by defining which marketing tools will be utilized to accomplish the above objectives for the current market environment. Effective strategy design must take into consideration which of several different approaches is best suited and properly aligned with the marketing objectives. Below are six different core strategies for consideration: Inform: This strategy focuses on communicating information to the target market. The information can vary widely, but in all cases, marketing communications are vital to this strategy’s success. Inform strategies are used to introduce a new product or service, raise awareness or position the product or service favorably in the customers’ eyes. Compete: This strategy focuses on out-selling against rivals, in general by offering better prices or by demonstrating a better value proposition for the product/service in question. Reach: This strategy focuses on building links to customers in order to develop incremental business with them. It may involve expansion of the customer base or expansion into new markets and territories. Its goal is to increase the size of the customer base and develop new markets for the product/services. Focus: This strategy focuses on growing business with a specific type or group of customers. It may involve targeting customers of a certain size or type or customers located in a certain region in order to specialize in doing business with them. When a specific group of customers has unique needs, the focus strategy can be used to tailor offerings specific to their needs—and thereby exclude more generalized competitors. Enhance: This strategy focuses on improving, or enhancing, the product/service offerings in the eyes of the customers. It may involve improving the quality of products or services or it may involve positioning the offering as better on a specific feature or attribute of importance to customers. It often uses new technology to enhance the offering too. Process: This strategy focuses on improving the sales and marketing business processes in order to increase sales and marketing performance. It may involve improving the way inquiries and leads are handled, responding to customer complaints or developing better customer relationships. It often increases the yield or return on marketing investments. Core Strategy Since the selection of a core marketing strategy is a function of alignment with stated marketing objectives, it can be either one core strategy or a hybrid combination of the above.


56

The hybrid core strategy for XXX Properties, LLC is as follows: 

Inform



Compete



Reach



Focus

In our marketing we will: 

“Inform” prospective customers about the market location, market size, market growth, street traffic volumes, ease of street access, on-site parking, and benefits of being located in the Brighton Enterprise Zone.



“Compete” with our rivals by demonstrating a better value proposition for office space



“Reach” our prospective customers by building links to prospective customers in order to develop incremental business with them



“Focus” on growing business with a specific group of prospective customers Product Strategy

XXX Properties, LLC will provide new commercial office space by constructing a 26,600 square foot, two-story building in Brighton, Colorado, with a 118-car parking lot. There will be 20 offices averaging 1,200 square feet that will be available for sale. The variety of financial options, off-street parking availability, and the fact that this will be one of only a few new buildings, will all serve to differentiate this product offering from other office space in the Brighton Enterprise Zone. Target customers will be from the Professional, Scientific & Technical Services Industry Sector, Administrative & Support Services Sector, and Health Care & Social Assistance - all within a five-mile radius. Pricing Strategy The proper pricing strategy determines the velocity of initial market share and long-term profitability for a company. Below are some commonly used pricing strategies. Skimming Strategy If the offering has enough differentiation to justify a high price and the organization desires cash flow and has minimal desires for significant market penetration and control, then the prices are set at a premium for the market. Market Penetration Strategy If short-term income is not so critical and rapid market penetration for eventual market control is desired, then prices are set very low compared to the market.


57

Comparable Pricing Strategy If the company is not perceived the market leader in the industry then the price offering will be comparably priced to that of the competition. Core Pricing Strategy XXX Properties, LLC will pursue a comparable pricing strategy in order to remain competitive with the other office space providers in the local area. The firm currently plans on selling office space at $205 per square foot, with a $2 per square foot for Common Area Maintenance fee, and charging $45 per square foot for build-outs. Distribution (Place) Strategy XXX Properties, LLC will pursue a distribution strategy that includes the management team personally meeting with prospective customers.

MarCom Strategies Overview XXX Properties, LLC’s promotional strategy for providing new commercial office space will employ a combination of traditional ad placements in local newspapers; developing brochures, flyers, signage and business cards; leveraging local real estate agencies and posting on commercial real estate websites; developing and updating their project website; along with word-ofmouth referrals. Mass Media Advertising XXX Properties, LLC may place promotional ads in both local and target metropolitan newspapers to test effectiveness throughout the year. Below is a sample listing of the newspapers for the target area. The highlighted newspapers may be the first to advertise X Avenue XXX Center. Local Newspapers within 100 miles of Brighton, Colorado

Newspaper The Denver Post Rocky Mountain News The Gazette Fort Collins Coloradoan Brighton Standard Blade Greeley Daily Tribune Daily Times-Call Colorado Daily Loveland Daily ReporterHerald Wyoming Tribune-Eagle Brighton Buzz Vail Daily

M-F Sunday Circulation Circulation 255,452 704,806 255,427 704,806 99,362 110,820

Location Denver, CO Denver, CO Colorado Springs, CO Fort Collins, CO Brighton, CO Greeley, CO Longmont, CO Boulder, CO Loveland, CO

28,032 33,000 25,734 21,361 20,000 17,632

Cheyenne, WY Brighton, CO Vail, CO

15,667 12,500 10,525

33,420 28,612 23,149 18,149 16,784 9,332


58

Summit Daily News Laramie Daily Boomerang Fort Morgan Times

Frisco, CO Laramie, WY Fort Morgan, CO

9,725 5,286 4,629

8,821 5,084

Local Real Estate Agent XXX Properties, LLC will use an independent commercial real estate agent as their sales force. The agent will contact other agents to find prospective customers, use direct mail to contact prospective customers, and sell office space units to customers. The agent will use the Center website to provide email services between the agent and prospective customers to ask and answer questions, communicate documents and agreements. The owners of XXX Properties, LLC will be kept informed with blind carbon copies of all correspondence. The agent will begin selling office space units immediately after all projectrelated approvals have been received from the City of Brighton. All construction is anticipated to be completed within 10 months, after approvals are received. The first contracts for sales are expected to be low (one or two) in the first three months and increase rapidly as construction nears completion. It is expected that only two of the office units will be available after the construction completion date. Marketing Brochure XXX Properties, LLC will develop a one-page color flat flyer for use as a tri-fold direct mailer and for project website use. The flyer will show a rendering of the X Avenue XXX Center building, name and address of the Center, a map of the area, a project overview table - including the number of available units and their sizes, square foot price, City/County location, zoning, access street, number of parking spaces, and tenant finish allowance, a price/payment table (including price for various size units, a 10% down payment plan, and a 20% down payment plan), and a building floor plan. Signage XXX Properties, LLC will place on-site signs adjacent to South X to heighten public awareness (12,000 passenger cars pass by daily) of their firm’s new office building.


59

Business Cards XXX Properties, LLC will design and distribute Center-specific business cards. These cards will be given in multiples to real estate agents, project team members, and current and prospective clients as another medium to ‘spread the word’. Direct Mail Direct Marketing will be an important component of XXX Properties, LLC’s Marketing Communications plan. A tri-fold one-page mailer will be sent to all businesses in the three industry subsectors, NAICS 541, 561, and 621, once the project has been approved by the City of Brighton. Follow-up mailers will be sent at three-month intervals should this tactic prove worthwhile. Internet XXX Properties, LLC recognizes that the Internet serves a vital communications role in virtually every industry today. The firm intends to develop and support its own project website as an online communications and marketing channel concurrent to the initial direct mailings and contact with real estate agents. XXX Properties, LLC’s website will provide detailed information about the offerings, completion dates, contact email address and phones numbers. The website will remain in service until all units are sold. The project website will include information as illustrated on the one-page flyer, layout plans for the first and second floors, construction schedule and status, pricing tables, rates and conditions, contact e-mail address to answer questions, a FAQ page for viewing, and links to project team member websites and advertiser websites. XXX Properties, LLC will also explore advertising and subscriptions to such websites as www.LoopNet.com, www.dmcar.com, www.Catylist.com, and www.yellowpages.com for posting information about their new commercial office building - X Avenue XXX Center. These sites provide regional, state and national reach for commercial real estate.


60

LoopNet is a leading information services provider that offers a suite of products and services tailored to the national and local needs of the commercial real estate industry. LoopNet operates the largest and most heavily trafficked commercial real estate listing service online with more than 1.5 million registered members and 775,000 unique visitors monthly. The LoopNet online marketplace contains more than $370 billion of property available for sale. LoopNet covers all commercial real estate property categories including commercial land, office space, industrial, multifamily (apartments) and retail. LoopNet attracts the largest community of commercial real estate professionals including brokers, investors, tenants, property managers, landlords, and appraisers. LoopNet's market-leading LoopLink product powers the websites of more than 1,000 commercial real estate organizations and seamlessly integrates their websites with LoopNet's listing service at www.LoopNet.com. (Source: www.LoopNet.com)

Denver Metro Commercial Association of REALTORS® (DMCAR) DMCAR is one of the oldest and largest commercial real estate trade associations in the United States. Consisting of over 2,000 commercial real estate professionals, DMCAR provides timely industry information, effective political advocacy, and the professional designations needed to provide the best possible service to clients. Members enjoy a special rate on database products and other essential business tools. They also have access to world-class continuing education and fun, productive networking events. The annual Heavy Hitters awards event, held in collaboration with the Denver Business Journal, enables members to celebrate extraordinary production and industry leadership. DMCAR has an extremely effective Government Affairs program. Coordinating with the Colorado Association of REALTORS® and the National Association of REALTORS®, DMCAR's Governmental Affairs committee monitors policies or actions that could change property rights or affect the value of real property. Active at the local, state, and national level, DMCAR has enjoyed a highly successful program with the support of the renowned lobbying firm CRL Associates. DMCAR members are dedicated to the highest ethical standards and uphold a strict Code of Ethics. DMCAR members are highly ethical, successful, and knowledgeable practitioners of commercial real estate. (Source: www.dmcar.com)


61

Founded by several CCIM designees, Catylist Real Estate Software Inc. provides commercial information exchange solutions to commercial real estate communities and brokerage firms. We developed our first commercial information exchange (CCIMNet) in 2002 for the 17,000 members of the CCIM Institute. We then set out to build exchanges in local markets around the country, creating a national network from the ground-up. Over the last three years we've added over 40 new CIEs to the family, as well as new products to serve the industry, new partnerships to provide our members with the best services, and cutting edge technology. (Source: www.catylist.com) Additionally, XXX Properties, LLC will provide links to their general contractor DCB Construction’s website. Word-of-Mouth Referrals Development and maintenance of relationships with contacts within the target market area is of critical importance. By working hard to satisfy each customer, XXX Properties, LLC will naturally get more business over time. Studies have shown that a satisfied customer typically tells three others about their experience, while an unsatisfied customer typically tells 10. XXX Properties, LLC will work hard to ensure that no customer has an unsatisfactory experience with the firm or its services. Such relationships foster strong “word-of-mouth” advertising and references, and that sort of advertising – although free – will provide the greatest positive impact on future sales success of all.


62

MANAGEMENT Ownership and Legal Form XXX Properties, LLC (previously doing business as XXX Homes, LLC) is an existing home-based company having begun operations in April 2004 in Brighton, Colorado. The firm is presently formed as a limited liability company and is currently located at XXX, Brighton, Colorado 80601. XXX Properties, LLC is owned by Jane Doe (80%) and John Doe (20%). A limited liability company, commonly called an "LLC," is a business structure that fits somewhere between the partnership or sole proprietorship and the corporation. Like owners of partnerships or sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; the LLC itself is not a separate taxable entity. Like a corporation, however, all LLC owners are protected from personal liability for business debts and claims -- a feature known as "limited liability." This means that if the business owes money or faces a lawsuit for some other reason, only the assets of the business itself are at risk. Creditors normally can't reach the personal assets of the LLC owners, such as a house or car. Both LLC owners and corporate shareholders can lose this protection by acting illegally, unethically, or irresponsibly. For these reasons, many people say the LLC combines the best features of both the partnership and corporate business structures.

Management Team and Responsibilities The XXX Properties, LLC’s senior management team is comprised of two individuals possessing strong qualifications and valuable experience in their respective fields. Owners Jane Doe and her husband John Doe are dedicated to this expansion and its potential for both tremendous success and community impact. The Does jointly oversee all business operations for XXX Properties, LLC, including finances, construction management, marketing, contract management and many other administrative functions. Naturally, the Does will be flexible in their roles, and will modify their focus at any given point in time in order to address the firm’s most pressing needs. Owners Jane Doe and John Doe recognize that business success is at least partially dependent upon the advice and counsel of outside subject matter experts.


63

Therefore, they have assembled a core, ongoing talented team for their X Avenue XXX Center project: Team Role

Team Member

Team Member’s Company

Project Administrator

Jane Doe

XXX Properties, LLC

Project Manager

John Doe

XXX Properties, LLC

City Planner

Jason Bradford

City of Brighton Planning Dept

Civil Engineering

Josh Cruz

Western Engineering Brighton, CO

Commercial Office Association Manager

TBA

Management Specialist Inc. Broomfield, CO

Commercial Real Estate Agent

XXX

Hepp Realty Brighton, CO

CPA

XXX

XXX, CPA Lafayette, CO

General Contractor (design-builder)

XXX

DCB Construction Denver, CO

Insurance

XXX

State Farm Insurance Thornton, CO

Real Estate Attorney

XXX

Rautenstraus & Joss Louisville, CO

Soils Testing/Foundatio n Engineer

XXX

High Plains Engineering Fort Lupton, CO

Surveyor

XXX

American West Land Survey Brighton, CO

Personal History & Related Experience Jane Doe - Majority Owner Jane Doe has been involved in housing and interior design as a high school teacher for over 25 years and small business owner for over 2 years. Mrs. Doe holds Bachelor of Arts and Master of Arts degrees.

John Doe – Minority Owner John Doe has 25 years experience in all facets of project development of commercial and industrial facilities with special emphasis in electrical engineering and project management. Additionally, Mr. Doe has four years of experience in residential development and sales. Mr. Doe holds Bachelor of Science and Master of Science degrees. This sample business plan is for demonstration purposes only. It is the property of NGC and is not to be copied or distributed.

64

Management Team Combined Talent The Does’ backgrounds shall certainly prove useful in their roles during the expansion of XXX Properties, LLC. Before moving to Colorado, the Does’ prior experience was in Southern California in residential, commercial, and industrial projects. A relocation and business change was in order. The Doe’s became builders of semi-custom homes in the unincorporated area of Adams County, Colorado. After several years in residential construction the couple made the decision to re-enter commercial development and focus on communities that need revitalization. This change in development focus was based on four major market analysis findings: 1) the housing market in the greater Denver area is flat and highly competitive; 2) the development entitlement process and timeframes are very similar; 3) the competition is significantly less for infill and/or redevelopment projects; 4) the profit potential for commercial projects is approximately twice that of residential projects.

Compensation There are no immediate plans to hire direct employees at XXX Properties, LLC. The firm currently subcontracts out 100% of its work. However, should the situation require, any employees engaged by XXX Properties, LLC will be paid at prevailing market rates, for their respective jobs, in the Brighton, Colorado area. 

The owners of XXX Properties, LLC will be paid directly as part of project funding for X Avenue XXX Center. The remainder of the management team will be compensated for services rendered in their performance as a licensed entity and/or a City of Brighton-approved contractor or subcontractor.


65

FINANCIALS Pro Forma Income Statement Pro Forma Income Statement

Assumptions: Number of Office Units Sold:

-

-

20

2007

2008

Average Selling Price of Office Units is $205/sf plus Build-Out Charges of $45/sf Fees for Common Area Maintenance (CAM) Average $2/sf 2006 Revenues Office Unit Sales

$

-

$

CAM Charges

$

-

$

33,600

$

-

$

6,033,600

Cost Basis of Office Units Sold

$

-

$

3,253,625

Build-Out Costs of Office Units Sold

$

-

$

840,000

Total Revenues

$

-

6,000,000

Cost of Sales

Total Cost of Sales

$

-

$

-

$

4,093,625

Gross Profit

$

-

$

-

$

1,939,975

Operating Expenses: Administrative

$

-

$

-

$

2,500

Audit/Tax Preparation

$

-

$

-

$

600

Common Areas Maintenance

$

-

$

-

$

900

Depreciation and Amortization

$

4,839

$

7,206

$

7,680

Elevator Maintenance

$

-

$

-

$

500

Insurance

$

-

$

-

$

4,100

Landscape Maintenance

$

-

$

-

$

4,800

Legal & Professional Fees

$

-

$

-

$

2,000

Miscellaneous

$

-

$

-

$

1,000

Parking Lot Clean-Up

$

-

$

-

$

4,800

Electricity

$

-

$

-

$

5,100

Parking Lot Lighting Maintenance

$

-

$

-

$

800

Perimeter Fence Maintenance

$

-

$

-

$

800

Postage

$

-

$

-

$

300

Processing Fees

$

-

$

-

$

400

Security System Maintenance

$

-

$

-

$

2,500 3,000

Snow Removal

$

-

$

-

$

Sprinkler/Drip System Maintenance

$

-

$

-

$

500

Telephone

$

2,396

$

5,980

$

6,200

Trash Removal

$

-

$

-

$

4,800

Travel, Meals & Entertainment

$

313

$

6,000

$

6,180

Water for Sprinkler/Drip System

$

-

$

-

$

2,200

Website Maintenance

$

-

$

-

$

800

Total Operating Expenses

$

7,549

$

19,186

$

62,460

Interest Expense

$

2,714

$

165,381

$

112,417

Net Income (Loss)

$

(10,263) $

(184,567) $

1,765,099


66

Pro Forma Income Statement Quarterly Pro Forma Income Statement

Assumptions: Number of Office Units Sold:

5

11

4

0

20

Q4-08

2008

Average Selling Price of Office Units is $205/sf plus Build-Out Charges of $45/sf Fees for Common Area Maintenance (CAM) Average $2/sf Q1-08

Q2-08

Q3-08

Office Unit Sales

$ 1,500,000

$ 3,300,000

$ 1,200,000

$

-

CAM Charges

$

$

$

$

12,000

Revenues

Total Revenues

1,800

7,800

12,000

$ 1,501,800 $ 3,307,800 $ 1,212,000 $

$ 6,000,000 $

33,600

12,000 $ 6,033,600

Cost of Sales Cost Basis of Office Units Sold

$

813,406

$ 1,789,494

$

650,725

$

-

$ 3,253,625

Build-Out Costs of Office Units Sold

$

210,000

$

$

168,000

$

-

$

-

$ 4,093,625

462,000

Total Cost of Sales

$ 1,023,406 $ 2,251,494 $

818,725 $

Gross Profit

$

393,275 $

478,394 $ 1,056,306 $

840,000

12,000 $ 1,939,975

Operating Expenses: Administrative

$

625

$

625

$

625

$

625

$

2,500

Audit/Tax Preparation

$

-

$

-

$

-

$

600

$

600

Common Areas Maintenance

$

225

$

225

$

225

$

225

$

900


$

1,920

$

1,920

$

1,920

$

1,920

$

7,680

Elevator Maintenance

$

125

$

125

$

125

$

125

$

500

Insurance

$

1,025

$

1,025

$

1,025

$

1,025

$

4,100

Landscape Maintenance

$

400

$

2,000

$

2,000

$

400

$

4,800

Legal & Professional Fees

$

500

$

500

$

500

$

500

$

2,000

Miscellaneous

$

250

$

250

$

250

$

250

$

1,000

Parking Lot Clean-Up

$

1,200

$

1,200

$

1,200

$

1,200

$

4,800

Electricity

$

1,275

$

1,275

$

1,275

$

1,275

$

5,100

Parking Lot Lighting Maintenance

$

200

$

200

$

200

$

200

$

800

Perimeter Fence Maintenance

$

200

$

200

$

200

$

200

$

800

Postage

$

75

$

75

$

75

$

75

$

300

Processing Fees

$

100

$

100

$

100

$

100

$

400

Security System Maintenance

$

625

$

625

$

625

$

625

$

2,500

Snow Removal

$

2,250

$

-

$

-

$

750

$

3,000

Sprinkler/Drip System Maintenance

$

125

$

125

$

125

$

125

$

500

Telephone

$

1,550

$

1,550

$

1,550

$

1,550

$

6,200

Trash Removal

$

1,200

$

1,200

$

1,200

$

1,200

$

4,800

Travel, Meals & Entertainment

$

1,545

$

1,545

$

1,545

$

1,545

$

6,180

Water for Sprinkler/Drip System

$

550

$

550

$

550

$

550

$

2,200

Website Maintenance

$

200

$

200

$

200

$

200

$

800

15,265

Total Operating Expenses

$

16,165

$

15,515

$

15,515

$

Interest Expense

$

67,811

$

41,473

$

3,132

$

Net Income (Loss)

$

394,418 $

999,318 $

374,628 $

-

$

62,460

$

112,417

(3,265) $ 1,765,099


67

Pro Forma Balance Sheet Pro Forma Balance Sheet

Assumptions: Depreciation on Equipment is Computed over 7 Years Depreciation on Furniture & Fixtures is Computed over 5 Years Depreciation on Software is Computed over 3 Years Cost of Capital for Existing 30 Year Loans Totaling $888,800 is 8.375% Cost of Capital for a 30 Year Refinance Loan of $685,000 Termed out in March 2007 is 8% Cost of Capital for Short-Term Construction Loans is 8.75% Outstanding Debt as of July 2008 is Retired 2006

2007

2008

Current Assets Cash and Cash Equivalents

$

9,059

$

21,687

$

1,018,841

Total Current Assets

$

9,059

$

21,687

$

1,018,841

Equipment

$

19,623

$

19,623

$

19,623

Furniture & Fixtures

$

9,516

$

18,716

$

18,716

Software

$

400

$

3,400

$

$

(4,839) $

Non-Current Assets Fixed Assets

Accumulated Depreciation Net Fixed Assets

$

24,700

$

16696 Poplar

$

539,014

4th Avenue Gateway Center

$

605,769

(12,045) $

3,400 (19,725)

29,693

$

22,014

$

539,014

$

539,014

$

3,133,760

$

Other Assets -

Total Other Assets

$

1,144,783

$

3,672,774

$

539,014

Total Non-Current Assets

$

1,169,482

$

3,702,467

$

561,027

Total Assets

$

1,178,541

$

3,724,154

$

1,579,869

Liabilities Credit Cards

$

55,032

$

51,878

$

Owner Loan(s)

$

235,372

$

-

$

-

Construction Loans Payable

$

2,725,000

$

-

-

$

-

Current Portion of Notes Payable & LT Debt

$

436,557

$

6,992

$

-

Total Current Liabilities

$

726,961

$

2,783,870

$

-

Long-Term Portion of Notes Payable & LT Debt

$

452,243

$

1,125,514

$

-

Total Liabilities

$

1,179,204

$

3,909,384

$

-

Owner's Equity Retained Earnings (Deficit)

$

(663) $

(185,230) $

1,579,869

Total Owner's Equity

$

(663) $

(185,230) $

1,579,869

Total Liabilities & Owner's Equity

$

1,178,541

$

3,724,154

$

1,579,869


68

Pro Forma Statement of Cash Flows Pro Forma Statement of Cash Flows

2007 Net Income (Loss)

2008

$

(184,567) $

1,765,099


$

7,206

$

7,680

Reduction in Property Basis from Office Unit Sales

$

-

$

4,093,625

Operating Activities

Changes in Operating Assets & Liabilities: Credit Cards

$

(3,154) $

$

(180,515) $

Acquisition of Furniture & Fixtures

$

(9,200) $

-

Acquisition of Software

$

(3,000) $

-

Total (Acquisition) and Disposition of Fixed Assets

$

(12,200) $

-

4th Avenue Gateway Center Expenditures

$

(2,527,991) $

(959,865)

Net Cash Provided by (used in) Investing Activities

$

(2,540,191) $

(959,865)

Proceeds from (Repayment of) Owner Loans

$

(235,372) $

Proceeds from (Repayment of) Construction Loans

$

2,725,000

$

Proceeds from Notes Payable and Long-Term Debt

$

685,000

$

Repayment of Notes Payable and Long-Term Debt

$

(441,294) $

Net Cash Provided by (used in) Financing Activities

$

2,733,335

$

Net Change in Cash

$

12,628

$

Cash and Cash Equivalents at Beginning of Period

$

9,059

$

21,687

Cash and Cash Equivalents at End of Period

$

21,687

$

1,018,841

Net Cash Provided by (used in) Operating Activities

(51,878) 5,814,525

Investing Activities

Financing Activities (2,725,000) (1,132,506) (3,857,506) 997,154


69

Break Even Analysis / Ratio Analysis Break Even Analysis

2008 Per Unit Selling Price (incl. Build-Out Charges) @ $250/sf

$

300,000

Per Unit Cost (incl. Build-Out Costs) @ ~ $170.60/sf

$

204,700

Per Unit Gross Profit

$

95,300

Average Fixed Cost

$

174,900

Break Even Point (Units)

1.84

Average Fixed Cost

$

Number of Office Units to be Sold

174,900 20

Per Unit Cost (incl. Build-Out Costs) @ ~ $170.60/sf

$

204,700

Per Unit Cost Coverage

$

213,445

Break Even Point (Unit Selling Price per Square Foot)

$

178.00

Breakeven Selling Price $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000

$150 $160 $170 $180 $190 $200 $210 $220 $230 $240 $250

Selling Price per Square Foot


70

End of Year Cash $1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$2006

2007

2008

Debt to Equity

$4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $$(500,000)

Debt Equity

2006

2007

2008

$1,179,204 $(663)

$3,909,384 $(185,230)

$$1,579,869


71

Capital Acquisitions, Working Capital & Project Costs Capital Acquisitions, Working Capital & Project Costs

2007

2008

Furniture & Fixtures Office Equipment

$

3,400

$

-

Office Furniture

$

4,000

$

-

Drafting Table

$

1,800

$

-

Total Furniture & Fixtures

$

9,200

$

-

Software

$

3,000

$

-

Complete Entitlements

$

220,327

$

-

South 4th Avenue Widening

$

144,600

$

-

Marketing, Advertising & Sales

$

55,850

$

16,755

Office Building Construction

$

1,683,990

$

187,110

Parking Lot and Landscaping

$

339,224

$

Build-Out of Office Space

$

84,000

$

756,000

$

2,527,991

$

959,865

4th Avenue Gateway Center Expenditures

Total 4th Avenue Gateway Center Expenditures

-

Working Capital Requirements Working Capital

$

234,437

$

-

Toward Refinance Outstanding Debt

$

685,372

$

-

Total Working Capital Requirements

$

919,809

$

-

Financing from Owner

$

50,000

$

Financed Through Operations

$

-

$

Construction Loans

$

2,725,000

$

-

Term Loan

$

685,000

$

-

$

3,460,000

$

Financing Requirements

Total Financing Requirements

959,865

959,865


72

Capital Acquisitions, Working Capital & Project Costs Monthly Capital Acquisitions, Working Capital & Project Costs

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

2007


$

-

$

-

$

3,400

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

3,400

Office Furniture

$

-

$

-

$

4,000

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

4,000

Drafting Table

$

-

$

-

$

1,800

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

1,800


$

-

$

-

$

9,200

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

9,200

Software

$

-

$

-

$

3,000

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

3,000

99,147

-

4th Avenue Gateway Center Expenditures Complete Entitlements

$ 44,065

$

77,115

$

$

-

$

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

220,327

South 4th Avenue Widening

$

-

$

-

$

-

$

72,300

$

72,300

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

144,600


$

-

$

-

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

5,585

$

55,850


$

-

$

-

$

-

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 187,110

$ 1,683,990


$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ 169,612

$ 169,612

$

339,224


$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

$

$

84,000

$

77,115

$ 104,732

$ 264,995

$ 264,995

$ 192,695

$ 192,695

$ 192,695

$ 192,695

$ 192,695

$ 362,307

$ 446,307

$ 2,527,991

$ 698,068

$

$

$

17,305

$

17,305

$

22,305

$

22,305

$

$

$

$

$

$

$

-

$

-

$

-

$

-

$

$

17,305

$

17,305

$

22,305

$

22,305

$

Total 4th Avenue Gateway Center Expenditures $ 44,065

-

84,000


$

5,935

$

22,885


$

-

$

-


$

5,935

$

22,885


$ 50,000

$


$

-

$

Construction Loans

$

-

$ 100,000

$ 130,000

Term Loan

$

-

$

$ 685,000

$

$ 815,000

$ 275,000

-

10,005 10,005

$ $

15,005 15,005

22,305 22,305

$ $

27,693 27,693

$ $

38,693 38,693

234,437

$

685,372

$

919,809

50,000

$ 698,068

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$



$ 50,000

-

$ 100,000

$ 275,000 -

$ 280,000 $

-

$ 280,000

$ 210,000 $

-

$ 210,000

$ 210,000 $

-

$ 210,000

$ 215,000 $

-

$ 215,000

$ 215,000 $

-

$ 215,000


$ 215,000 $

-

$ 215,000

$ 390,000 $

-

$ 390,000

$ 485,000 $

-

$ 485,000

-

$ 2,725,000 $

685,000

$ 3,460,000

73

Capital Acquisitions, Working Capital & Project Costs Quarterly Capital Acquisitions, Working Capital & Project Costs

Q1-08

Q2-08

Q3-08

Q4-08

2008


$

-

$

-

$

-

$

-

$

-

Office Furniture

$

-

$

-

$

-

$

-

$

-

Drafting Table

$

-

$

-

$

-

$

-

$

-


$

-

$

-

$

-

$

-

$

-

Software

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

4th Avenue Gateway Center Expenditures Complete Entitlements South 4th Avenue Widening

$

-

$

-

$

-

$

-

$

-


$

16,755

$

-

$

-

$

-

$

16,755


$ 187,110

$

-

$

-

$

-

$

187,110


$

$

-

$

-

$

-

$


$ 336,000

$ 420,000

$

-

$

-

$

756,000

Total 4th Avenue Gateway Center Expenditures $ 539,865

$ 420,000

$

-

$

-

$

959,865

$

-

$

-

$

-

-


$

-

$

-

-


$

-

$

-

$

-

$

-

$

-


$

-

$

-

$

-

$

-

$

-


$

-

$

-


$ 539,865


$ 420,000

$

-

$

-

$

$

-

$

-

$

959,865

Construction Loans

$

-

$

-

$

-

$

-

$

-

Term Loan

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$


$ 539,865

$ 420,000

959,865


74

APPENDIX

Appendix 1 – Project Timeline

Project Schedule: X Avenue XXX Center XXX S. X Avenue, Brighton, Colorado 80601

Construction

J

F

M

2

0

0

7

A

M

J

J

A

S

O

N

D

J

F

M

2

0

0

8

A

M

J

J

A

Land Acquisition (Completed) Entitlements South X Avenue Widening Marketing, Advertising & Sales Office Building Construction Parking Lot and Landscaping Build-out of Office Space

75

S

O

N

D

Appendix 2 – Conceptual Rendering

76

77

Sample Business Plan - Real Estate Development

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