Newport Beach, CA
Land
The Ask
The client, a legacy restaurant-operator, wanted a comprehensive investment and
development plan targeting an 18-20% IRR on a family-owned parcel of mostly vacant land.
Overview
The subject site was owned by a group of family members in trust. The family members had been in the restaurant business for 50 years, and operated a legacy restaurant on a separate site. The subject site, on the other hand, was being operated as an offsite parking lot that was not bringing much value to the owners. As a result, the owners wanted to demolish the parking lot and redevelop the site, while targeting an 18-20% IRR and low-to-modest leverage. However, redevelopment of the site posed certain challenges. Zoning regulations imposed minimum parking requirements that considerably lowered building cover, and height restrictions limited upward expansion. The site was also subject to the California Coastal Act, which added an additional layer of land use complexity. The uneven terrain and other site schematics also required extensive and careful site planning. The family members were ultimately looking for the perfect plan that would align with their legacy, vision, and the site logistics. Quasar stepped up to the challenge.
Our Solution
The Quasar team executed a detailed highest and best use analysis for the site. We
produced an array of possible development paths, while generating robust feasibility studies for every single pathway. We ultimately crafted a development proposal with investment recommendations that would see true to the client’s legacy and vision, and successfully tackled the challenges presented.
The Breakdown:
Legal Feasibility
Developed list of permitted and non-permitted uses (site zoned
Commercial Corridor), as impacted by local and state restrictions and requirements.
Market Analysis
Community Outreach
Site Concepts and Planning
Site plan and project delivery
Financial Analysis
Business Planning
Deal Structuring and Underwriting
Final Recommendation
Based on a thorough and conservative review of construction
cost/financials, completion timeline, cap rates, vacancies, and interest rates, economic drivers, and community sentiments, we proposed the development of a Luxury-Experience Restaurant. Such a proposal not only took advantage of the prime location of the site and the prevailing trend towards experiential spending, and boasted an unlevered IRR of 20%, but most importantly, would uphold the client’s legacy with dignity, for generations.