Advisory | Proforma Modeling of Mixed Use Development
The Brief:
A master-developer of a proposed mixed-use development needed assistance in the financial modeling so as to provide a concise and clear projection for both internal and external investors and lenders.
The Objective:
Provide various financial models that incorporated the proposed complex financing arrangements as well as the economic development tools being utilized. The model had to be flexible and incorporate various sensitivity analyses.
Our Services:
LDG Consulting provided advisory services to the client. In a clear and quantifiable way, we showed that the potential deal, although doable had several key areas that were very sensitive to changes in assumptions. By identifying these areas, the client was able to redirect its efforts to ensure that said areas were better defined and had less chance of variability. In addition, we provided guidance as to how the financial markets would view the particular deal structure and thus represented the same in the models; providing real world / real-time expertise.
The Outcome:
This engagement is still on-going. However, the client is continuing to focus their efforts on resolving conflicts and aligning the needs of various financial partners and lenders.
Advisory | Return on Cost Analysis for Cost Segregation
The Brief:
An owner entity of a 592-unit market rate apartment complex in downtown Atlanta was in the process of completing construction and was approached by a consulting firm that provides cost segregation, a service that allows for faster depreciation of the physical asset according to IRS rules.
The Objective:
Assist the owner in determining if it would be beneficial to enter into a contract for a cost segregation analysis. The owner was concerned that they might divest of the property prior to receiving the full benefit of the service.
Our Services:
LDG Consulting provided advisory services to the owner contemplating cost segregation as one of several cost saving mechanisms. Utilizing Owner’s assumptions for income growth in the near term, LDG Consulting provided cost benefit analysis in the context of a minimum hold time horizon. Factors included annual increases in income and expenses, ownership structure, minimum sales price at divestiture, projected cap rates and 10-year NPV calculations.
The Outcome:
LDG provided an analysis that recommended that the owner entity proceed with the consultant providing cost segregation services. The owner entity partners (investor and operator members) would each receive financial benefits in excess of six figures in the first three years after the analysis was complete and submitted to the IRS.
Advisory | Proforma Analysis of Development Program
The Brief:
A heavy-civil contractor in the United States was able to leverage personal relationships in the country of Ghana (West Africa) to position itself and a consortium of partners to partner with the Government of Ghana in delivering several thousand affordable housing units as part of the government’s Affordable Housing Program.
The Objective:
Provide a financial overview of what the potential revenue, expenses and financial risks could be based upon business plans and agreements provided by the consortium. The work-product from LDG Consulting will be used by management to make a “go / no go” decision.
Our Services:
LDG Consulting provided proforma assumptions; aggregate costs per construction, development and administrative categories; outlined managing partner and investor responsibilities; and provided projected program timelines. In addition, we proposed a management structure and delved into the potential risks and rewards if the client decided to pursue this most unique opportunity.
The Outcome:
The management team of the client, after weighing the information, eventually decided not to move forward due to the credit-restrained environment and global uncertainty.
Construction Management | Construction Change Order Investigation
The Brief:
A developer concerned with the “continuous drip” of change orders on a multi-family rehab project required assistance in understanding if the costs were necessary.
The Objective:
Provide a third-party investigation of cost over-runs, reasons given for said over-runs, and confirm the justifications given.
Our Services:
LDG Consulting provided construction management services to the client. Although the developer had a construction background, he was too removed from the day to day project management and he did not have the time to dive into the weeds. The project manager for the developer did not have a construction background and the general contractor may have taken advantage of that situation.
The Outcome:
LDG Consulting provided an analysis that determined that the general contractor a) stated that the project was in budget when it was not, b) padded numbers and c) provided inflated costs. We recommended to the client that a hard conversation with the general contractor was necessary; the data culled and analyzed during our investigation should be front and center during that conversation. Incidentally, the general contractor filed for bankruptcy within three months of the conclusion of our investigation.
Construction Management | Development & Construction Representation
The Brief:
With the recent departure of a development staff person, the client needed additional experienced staff for a project that was to begin construction immediately on a 40 unit age-restricted affordable housing project.
The Objective:
Act as an extension of staff and manage both development and construction activities.
Our Services:
LDG Consulting oversaw development activities for six months until development staff was hired. We provided construction management oversight for the length of the entire project. We provided site inspections, monthly reports, directed draw request meetings with CM, and developed and updated the construction budget.
The Outcome:
Although massive amounts of rock and unsuitable soils were discovered, we were able to bring the project in slightly over budget. The resulting community was well received by the community which had a lack of affordable senior projects and was recently devastated by a EF4 tornado.
Construction Management | Development & Construction Representation
The Brief:
An owner, utilizing federal government funds targeting affordable housing, required an experienced team to lead the development and owner’s representative activities for an extensive rehabilitation of a 24 unit, two building complex.
The Objective:
Act as an extension of staff and manage a successful redevelopment with minimal day-to-day input from the owner entity; allowing it to focus on other projects.
Our Services:
LDG Consulting provided RFQ development and selection of Architectural and Construction Management services. We performed review and analyses of Architectural and Construction Manager proposals. We negotiated contracts, provided design directives, value engineering, site inspections, monthly reports, directed draw request meetings with CM, and developed and updated development budget and proforma. We recommended the Guaranteed Maximum Price contract with preconstruction activities during design development and construction documents to help facilitate collaborative efforts on a project with limited financial resources. Lastly, we coordinated the hand-off from construction to property management.
The Outcome:
LDG Consulting provided services that allowed the owner to spend more time on other projects. The owner was able to bring an affordable housing product to fruition that was superior in finishes and aesthetics to the competition in the submarket. Prospective residents eagerly inquired about occupancy months before delivery, leading to a swift lease-up of units.
Program Management | New Student Center Addition
The Brief:
As a sub-consultant to the prime Program Manager, we assisted the university administration in the design, pre-construction, and budgeting activities of adding a 37,000 sf addition to the existing student center.
The Objective:
Provide program management services that took the vision from concept to completed student center.
Our Services:
LDG Consulting provided program management services to the prime program management consultant. We assisted in running the meetings with the administration to determine scope, budget, spaces (new or rehab), that would be incorporated into the new facility that was to be adjacent to the existing. Although the administration had already chosen the architecture team, we were instrumental in the selection of the general contractor; interviewed all departments to determine their space and operational needs; critical review of all stages of drawings, providing feedback to the design and construction team; coordinated fixtures, furnishings and equipment vendors and consultants; provided value-engineering services; maintained the overall project schedule; coordinated budgeting and legal concerns with the university system’s real estate, finance and legal teams; and prepared the team for the financial closing.
The Outcome:
LDG Consulting assisted the prime program manager in getting the engagement from concept to full permit drawings. Our assignment concluded just prior to the construction of the facility which was a completed and is currently one of the newest and most visible additions to the campus.
