Chicago Motor Club Boutique Hotel Redevelopment 68 East Wacker I Place Chicago, Il.

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1 Chicago Motor Club Boutique Hotel Redevelopment 68 East Wacker I Place Chicago, Il. Interested parties should contact: Andrew Wilson, Aries Real Estate Fund, LLC. 520 W. Erie St. Ste#300s Chicago, Il P (312) awilson@ariescapital.com ariescapital.com/site3/our-portfolio/

2 IMPORTANT NOTICE The document has been issued by Aries Real Estate Fund, LLC. (collectively the Sponsor ) These materials do not constitute an offer to sell or solicitation of an offer to buy any interest in the Sponsor. Any such offer or solicitation may only be made by means of the delivery of an applicable Confidential Private Placement Memorandum and/or other documents associated with the investment, each of which should be reviewed in its entirety prior to investment. This presentation is being made solely for the purpose of gathering indications of interest in the opportunity described herein. The information presented herein is intended to be a summary only and the Sponsor makes no representation as to the accuracy or completeness of such information. Certain information contained in this presentation constitutes targeted returns and forward looking statements. Investors are cautioned not to place undue reliance on such targeted returns and forward looking statements, as actual returns and results could differ materially due to various risks and uncertainties that could affect the assumptions upon which such returns and statements are based. Further, any forward looking statement speaks only as of the date on which it is made and the Sponsor undertakes no obligation to update any forward looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. The law may restrict distribution of this document in certain jurisdictions therefore; persons into whose possession this document comes should inform themselves about and observe any such restrictions. 3/14/2012 Equity Investment Opportunity 2

3 TABLE OF CONTENTS Executive Summary.. 4 Location Property Description... 8 Opportunity Renderings and Views Investment Summary Investment Overview...18 Schedule Milestones.21 Return Metrics.22 Comparable Sales 23 Press..24 Historic Location 28 Demand Generators 29 3/14/2012 Equity Investment Opportunity 3

4 EXECUTIVE SUMMARY Preserve the past. Define the future. 89,000 Sq. Ft. Gross Building Area on Historic Fort Dearborn 4,500 Sq. Ft. Adjacent Lot Included Stunning Rooftop Food & Beverage Opportunity Eligible for Historic Tax Credits and Class L Property Tax Reduction Steps to Magnificent Mile, Millennium Park & Theater District Grand Two-Story Art Deco Lobby 3/14/2012 Equity Investment Opportunity 4

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6 EXCEPTIONAL LOCATION The site is located at the northwest corner of Wacker Place and MacChesney Court, between Michigan Avenue and Wabash avenues in Chicago s Central Business District. This exceptional location is within very close walking distance to the Michigan Ave. Magnificent Mile, the Theater District, River North, and Millennium Park. Motor Club 3/14/2012 Equity Investment Opportunity 6

7 AERIAL 3/14/2012 Equity Investment Opportunity 7

8 PROPERTY DESCRIPTION The Chicago Motor Club is an art deco 17-story building with a gross-building area of 89,000 square feet. There are 3 basement levels, a lobby and mezzanine floor, and 14 floors above the lobby area. Originally constructed in 1928 by Hollabird and Root, the building was completely renovated in 1989 for office use. Conversion Characteristics The building has excellent character and utility, offering a variety of beneficial conversion characteristics including: Floor plates of 5,055 square feet 11 foot clear heights 96 feet of frontage Column spacing circa 20 by 20 Unobstructed window-views to the west along the Chicago River, and to the east towards the Illinois Center Complex development Aggregate site size is 9,555 square feet, with excess land of 4,500 square feet located along the west side of the building. Zoning The paved lot has a zero lot line requirement with the 17 th Church of Christ Scientist to the west, and is currently being utilized for surface parking. The Chicago Motor Club is zoned DX-16 which is characteristic of the major shopping streets and financial sections of the Central Business District. Permitted Uses Permitted uses include hotels, dwelling units, office space, restaurants, retail, and numerous other commercial operations. Potential layouts within the existing building and adjacent vacant lot allow for 212 hotel rooms on 14 floors. The lower levels allow for back of the house operations, gym, and storage. The first floor art deco lobby is one of the few remaining in the City of Chicago and has a 33-foot clear height. In addition, there are two balconies located on the mezzanine level overlooking the lobby. 3/14/2012 Equity Investment Opportunity 8

9 Vacant Lot 3/14/2012 Equity Investment Opportunity 9

10 PROGRAM OVERVIEW 212 Key Boutique Hotel on 15 floors New 14 story tower on vacant lot utilizing the existing elevator core of the historic building Top Floor and Roof F&B Venue 4,350 s.f. 4 lofted suites within the existing historic building with 17 ceilings Lobby Restaurant and bar - 7,385 s.f. Event Space 4,960 s.f. Coffee, Apparel, and Salon Space 1,350 s.f. Basement BOH, Spa, and Gym 16,658 s.f. 3/14/2012 Equity Investment Opportunity 10

11 PROGRAM OVERVIEW 18 month redevelopment period Tax Credits sold by the end of the first year of operations 3 year operations ramp-up Refinancing after 2 nd year of operations Sale/ Recapitalization in Year 5 Package appendices show floor-by-floor program plan, sample floor plan sketches and analysis 3/14/2012 Equity Investment Opportunity 11

12 Building Cross Section 3/14/2012 Equity Investment Opportunity 12

13 Typical Floor Layout Ground Level Layout 3/14/2012 Equity Investment Opportunity 13

14 Tower Rendering looking east from State and Wacker intersection shown above. Existing building shown to right. 3/14/2012 Equity Investment Opportunity 14

15 Adjacent Tower Rendering at street level shown above. Existing Building shown to right. 3/14/2012 Equity Investment Opportunity 15

16 VIEW FROM PROPOSED ROOFTOP FOOD AND BEVERAGE SPACE VIEW 3/14/2012 Equity Investment Opportunity 16

17 INVESTMENT SUMMARY Summary of Terms Purchase Price: $13.5 million Anticipated Closing First Quarter 2012 Location 68 E. Wacker Place Chicago, IL Property The historic Chicago Motor Club Building site consists of an existing 17-story, 89,000 s.f. art deco building completed in 1928 by Hollabird and Root. The total site is approximately 9,555 s.f. in size, which includes a 4,500 s.f. vacant lot to the west which will be utilized. Zoning DX-16, Downtown Mixed Use District. A hotel use is allowable as of right. Vacant Lot Vacant land parcel can be utilized in redevelopment. Tower shown is within existing zoning and FAR limitations. Proposed Use 212 key upscale boutique hotel with full Food and Beverage operation on the rooftop. Total Capitalization 212 key Equity - $26,599,303 (37.8%) Historic Tax Credit - $5,100,00 (7.2%) Debt - $38,743,593 (55%) Total $70,442,896 3/14/2012 Equity Investment Opportunity 17

18 INVESTMENT OVERVIEW Tax Incentives The property is listed in the National Register of Historic Places, which is a prerequisite for obtaining historic tax credits. The property is eligible to receive 20% of total hard costs and soft costs within the existing building as a tax credit which can be offset against project costs or sold to a third party tax credit investor. This equates to approximately $5.1 million using our hard and soft cost budget. In addition, the property is in the process of being designated as a Chicago Landmark. Once designated, our property tax assessment levels are reduced to 10% of tax bills provided by assessor for ten years, 15% for year eleven, and 20% for the final year of the 12 year program. The program is also renewable through the Cook County Assessor s office. 3/14/2012 Equity Investment Opportunity 18

19 INVESTMENT OVERVIEW Project Costs The total project costs are estimated to be $70,442,896. The construction documents will be put out to bid upon completion. Hartshorne and Plunkard has been retained as the architect of record. Bovis, McHugh, Walsh, and Berglund construction all have bid the schematic project plans and desire to move forward as the general contractor for the job under a guaranteed maximum price structure. Operations and Management We have a draft management agreement for the hotel with a best in class operator excited to open in this location. Upon successful consummation of a purchase and sale agreement, the ownership entity will have multiple options for moving forward with the user of their choice. Financing Situation/Assumptions The terms of financing for the project are assumed to be the following: 55% loan to cost Amortization starting after opening based on 25 year amortization 5-year Term 7.0% interest rate One point origination fee 3/14/2012 Equity Investment Opportunity 19

20 INVESTMENT OVERVIEW SITE Competitive Hotels There are 6 hotels comprising the competitive set within a 3/4 mile radius of the site with a total of approximately 2,200 hotel rooms: Hard Rock Hotel Chicago The Wit Renaissance Chicago Downtown Hotel Kimpton Monaco Hotel Hotel Sax Westin Chicago River North The competitive set of hotels achieved an average rate of $203 and occupancy of 72.3% for the year ending We expect the proposed Hotel to perform at a 10% premium to the 2011 competitive set at stabilization. This is due to the competitive advantage of a newly renovated hotel, less discounted group and SMERF business due to a lower room count, the allure of the hotel lobby and rooftop F&B operation and the overall economic recovery. Additionally, a comprehensive, independent third party feasibility study was done by TR Mandigo and Co, which indicated that ADR s for this property would well exceed the STR competitive set. The TR Mandigo and Co. report projected a 2013 ADR of $268, ramping up to $310 by Both the STR report and the feasibility study are included in the Appendix. 3/14/2012 Equity Investment Opportunity 20

21 SCHEDULE MILESTONES Property/Equity Close Month 0 Development Period Months 1-18 Beginning of Hotel Operations Month 19 Refinancing Month 43 Stabilization Period Months Sale Month 78 3/14/2012 Equity Investment Opportunity 21

22 RETURN METRICS Aries projects that the hotel will stabilize(year 3) at 71% occupancy and a $228 average daily rate. The stabilized projections are as follows: Total Revenue $21,365,935 Gross Operating Profit $7,953,483 NOI $6,415,720 Cash on Cash Return 10.0% Leveraged Project IRR 21.5% Total Equity Whole Dollar Proceeds $37,260,606 Total Equity Whole Dollar Multiple 2.14 * the complete financial model is available upon request 3/14/2012 Equity Investment Opportunity 22

23 COMPARABLE SALES SALES COMPS Property Location Sale Date Keys SF Sale Price Price/Key Price/SF W Chicago 172 W Adams ST 5/10/ ,478 $ 128,800,000 $ 350, Hotel Burnham 1 W Washington St 2/23/ ,788 $ 37,000,000 $ 303, Westin River North 320 N Dearborn St 8/11/ ,800 $ 165,000,000 $ 389, Hotel Monaco Chicago 225 N Wabash Ave 8/27/ ,400 $ 76,122,853 $ 396, Hotel E Wacker Dr 7/16/ ,900 $ 104,214,553 $ 229, James Hotel 616 N Rush St 1/3/ ,950 $ 136,550,000 $ 459, Silversmith Hotel S Wabash Ave 2/23/ ,154 $ 34,500,000 $ 241, Average $ 338, Aries Total Costs After Sale of Historic Tax Credits $ 308, % 88% 3/14/2012 Equity Investment Opportunity 23

24 THE MOTOR CLUB WAS THE MEDIA KICK-OFF HEADQUARTERS FOR THE CHICAGO ARCHITECTURE FOUNDATION S HISTORIC BUILDING TOUR IN OCTOBER OF OVER 2,000 PEOPLE VISITED THE SITE, INCLUDING TEN REPORTERS AND TWO TV STATIONS. Bastiaan Bouma, Managing Director of openhousechicago 2011 at Chicago Architecture Foundation, explaining the unique history and architecture of the Motor Club to Fox news. The building was built as a temple to transport during the emerging auto-culture. It was designed by Hollabird & Root and completed within 265 days in Having been granted National Register status in 1978, the building is widely regarded as one of Chicago s finest Art Deco style skyscrapers. The interior has many original, highly stylized art deco features, including a twenty-nine foot wide mural of popular road destinations, designed by John Warner Norton. 3/14/2012 Equity Investment Opportunity 24

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28 MOTOR CLUB S HISTORIC LOCATION The Chicago Motor Club s survey indicates its location on the site of Fort Dearborn, one of the first military outposts in the Chicago region. The fort was built in 1803 beside the Chicago River and played a key role in the War of 1812 between the United States and Great Britain. Fort Dearborn was constructed by troops under Captain John Whistler and named in honor of Henry Dearborn, then United States Secretary of War. The fort was decommissioned by 1837; however its location is now a Chicago Landmark, and a part of the Michigan Wacker Historic District. Daniel Burnham s 1909 plan for the City of Chicago also highlighted the original location of Fort Dearborn. Commercial development grew exponentially in this area upon the plan s adoption. Office buildings, residences, shopping, restaurants and theater facilities sprouted up almost immediately as the plan called for the widening of Michigan Avenue north of the Motor Club and the construction of a larger bridge to cross the Chicago River. This historic location, at the nexus of Michigan Avenue s Magnificent Mile and Wacker Drive, steps to the Theater District and Millennium Park, represents a unique opportunity to live, work, and play in Chicago. 3/14/2012 Equity Investment Opportunity 28

29 DEMAND GENERATORS Chicago, the third largest city in the United States, is centrally located between the east and west coasts, allowing it to thrive as a hub for finance, securities, insurance, wholesale/retail trade and manufacturing, in addition to most other areas of business. Chicago is also one of the nation s shopping and tourism capitals, hosting over 40 million tourists per year. Below are a sample of Chicago s many demand generators: Business Chicago is home to 9 Fortune 500 companies, with an additional 23 in the metro area, including Boeing, Kraft, Motorola, Sears and Walgreen s. O Hare Airport is the 4th busiest airport in the world. In 2009, it had 68,198,310 passenger arrivals. Midway Airport reported 17,089,356 passengers. The site is located on the northeast part of Chicago s CBD, which is the second largest CBD in the nation. It houses 3 major financial exchanges: the Chicago Stock Exchange, the Chicago Board of Options Exchange and the Mercantile Exchange. McCormick Place is the largest convention center in the world, with over 3 million sf of meeting space. Tourism The site is in close proximity to world class museums, parks and shops including: 25-acre newly built Millennium Park and Grant Park (over 4 million visitors per year), the world famous Art, Field and Science and Industry Museums, and the Magnificent Mile shopping district on Michigan Avenue. Other major tourist attractions include Navy Pier (over 8 million visitors per year), as well as an abundance of cultural, sports, dining, and entertainment options. The two largest annual tourism events held in Chicago are the Taste of Chicago in Grant Park and the Air and Water Show, attracting more than 6.5 million people combined. Education Chicago is well known for its high quality healthcare and educational institutions, including the University of Chicago, Northwestern University, DePaul University, University of Illinois at Chicago, Rush University, Roosevelt University, School of the Art Institute, Columbia College of Chicago, Kendall College, and North Park College. 3/14/2012 Equity Investment Opportunity 29

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