Avalon in Teaneck: VP Ladell's presentation and Q&A 8 13 2015

My name is Ronald Ladell, L-A-D-E-L-L. I'm senior vice president for AvalonBay Communities. I am responsible as a senior executive in New Jersey for all the development activities that happen in New Jersey. It's an informal presentation; while we have an attorney here tonight, he's actually just assisting us. We have three people besides myself who will be making a quick presentation. Should you be favored, as Mr. Price indicated, we then would go back and help and assist in any way we can. You're professionals with regard to the master plan. Tonight we are here, as you may know, in front of the council. About two months ago we gave an overview; tonight we hear a little more detail. The council referred us to you, and thus we're here to help. Without further ado, very quickly: AvalonBay Communities is a public company on the New York Stock Exchange, listed as AVB, and we're fairly large, about $23 billion in market capitalization. We operate, construct, develop, and rental apartments from Virginia to Boston, Seattle, and northern and southern California. We don't operate in other states like Florida, Texas, Nevada, Arizona on purpose. It may sound a little oxymoronic; those are states that are very easy to get approvals. You actually heard Mr. Price and the chairman interject about how the process works in New Jersey. Not saying it's difficult, but it is time-consuming and challenging. We operate in states where it is valid in each market because we think when we build a community, we're not virtual flippers; we do not flip properties. We want to build something that lasts for decades. We want to be a member of the community for decades, and that's why we choose to operate in the states we do. AvalonBay does not borrow any money to build projects; we're a public company that has available equity to develop projects out of. So you don't go to any lenders with regard to that whatsoever. And AvalonBay acts as the general contractor for all of its projects, whether they are three-story single dwelling units or 50-story high-rises. We act as our own GC. We also manage all of our properties ourselves. So in reality, we say to the governing body members and planning board members, what you see a lot of today is what we're going to deliver a year or two from now, and then all those properties hopefully for decades. We've been in New Jersey since 1987, and properties that actually age over time, generally we don't sell; we actually spend a lot of money in rehabilitating and redeveloping those properties and holding them for decades, a much longer time period. I could go a lot longer about AvalonBay, but that's not really the focus of tonight. I wanted to give you some perspective of our company and what we do. Our offices are in Woodbridge, New Jersey, and all the management, construction, and development activities in New Jersey are run from the Woodbridge office. We are based in Arlington, Virginia on a national basis. Questions? The property of all of you are familiar with is known as the World of Wings property. It's been around for a little while. We went under contract recently earlier this year, and without getting into too much detail, the property owner marketed the property into a successful and sunny... the apartment property visit was not successful, and it's unfortunate the situation worked out the way it did, but it's not a situation where we felt it was ever going to be a success. We believe that it's an excellent site, as your own planner will speak a little later, for multi-family residential development because of its location, because of its neighbors, because of the part of town it's located in. Again, the planner will expand on that. If you need me to spin out, I'll do it also. When we went to the council months ago, we presented a concept plan. That's what was presented to the governing body. So the idea is a concept plan. Let's focus. So referring to the site, to put it in context, most people are familiar with the site: to the rear of the site are the railroad tracks, to the right of the site is the park, the front is Windsor Road. The site is on front up front here, the sign says Rev. Se Street, which is where you go into the World of Wings right now. What you're looking at is a four-story building with green courtyards in three different locations, with the ability to traverse the entire property for access to fire protection and things like that. In the rear of the site, it's a garage department with 481 spaces, and we're envisioning 248 residential units. We call this a wrap product, so the building actually wraps around the parking. This is in contrast to a podium where typically the parking deck is below the building and you go on top. This is a wrap, and there are a lot of reasons why we like to do a wrap. Particularly, the parking deck is open for light and air, so as people access the parking deck and come up through their way, they're able to park their car on level three, and if they typically live on level three, they don't have to go on the elevator; they just walk across the stairs to their particular unit. It's more pleasing, more aesthetically pleasing. That's one of the reasons. The other reason: we want to do whatever we can to minimize and mitigate the noise of the train tracks. This parking deck acts as a sound attenuation point of view to protect in some respects with regard to that. We have envisioned a lobby amenity area. Very quickly, we want on-site management, on-site maintenance, on-site leasing. Unlike a condominium association which typically has a third-party management association and there may not be employees there full time, AvalonBay has full-time employees at all of our sites, and in most cases a few of those employees are actually residents in that particular community where they work. That would be envisioned in this particular location too. So the lobby and amenity area is indicated here. There would be a fitness center and club room available to just our residents, and other amenities including the courtyard which we envision with a pool, and other courtyards which are activated with activities, grills, gazebos, and things like that. The rendering now referring to is shown here. Please don't focus on the architecture; we instructed the company on those renderings. That is not the concept; it's not indicating this is what it's going to look like. We just felt it would be helpful for the Planning Board and the governing body to see some aspect of it. I'm also going to hand out to the board a brand book. Are you familiar with that term? My mother recently... This is to indicate when we describe a mid-rise four-story building that we built. When you get those books, you'll see pictures of exterior, interior, community finishes, the amenity area, and life. We think this will be helpful to understand the type of communities that we know and it would be certainly represented over the division in Tbay. Again, we're at a concept stage, not for protection or anything like that. So we thought it'd be helpful to hand out this type of information, which was also handed out to the governing body back two months ago. As you're thumbing through that, most of those communities that we see are in New Jersey. We have communities recently built in North Bergen, Hackensack, Litters, Woodridge, Somerset, and those are some of the pictures that you've seen throughout that particular book. So just to show you, switching back to the rendering, what you're looking at here is this courtyard. This courtyard is this corner. So we showed you a view along this situation. Keep in mind how far back this is from Windsor Road; it's pretty far back. The distance to the second is not... It's a great one. The fire eater right here, thank you for pointing that out. Windsor Road is very, very far away. Look, I'm a wuss on the other side of all agreed. Keep in mind, by the way, this property is actually in two tents, slightly inverted from the back corner. The football actually the front up here and the side has a little bit of topography also. But everything that we're building serving the taxable portion. I'm showing you that yes, that's correct. It can be examined over zone. That's it actually. I wasn't used that term, but all the fur you we have no obligation good Bergenfield with regard to the application which will not delay anything. There go with the right side when you enter, it's got to be Tina correct revenue centerfold young surfer. Yeah, here cousin got it right. Yeah, the Bergenfield portion is also the one in front by Windsor Road and always the environmentalist when it gets up there's a slight street which we're not disturbing at all whatsoever. In addition, everything that's being built which was completely store of already existing building is in your vanity. So I just want you to see where this is and we activate and if you can see, there are gazebos and grills and sitting areas and umbrellas. That's the vision of these courtyards all through, and this courtyard will be slightly larger because the pool is going to be located here. Just a little bit of computer can clarify: their Windsor Road goes north-south, so if you're looking east to the building, are you saying that dirty fuel extends its nice inside that when I thrive on a job interview on the north side? What I tried to get is that when you're on Windsor Road and you get to the World of Wings, as you pull into the driveway, the first portion to the left of you that grassy area is garbage. This is actually a concentrated food, so that first portion if you followed it but a casa machinery not aggressive debris field black the structure itself. It's back to back with password. It's a little edge kept on his burgers know. So thank you. I'm pretty much done with the concept plan, the rendering, the overview of number of units, parking itself. I'm giving answer any questions or if not, I'll let our first time...

There's no plan to have any retail on this site. It would be one hundred percent residential.

So the first answer to your question should depend somewhat on the labor who scored with some pace. It's back to everybody. Let's say about the fallen trees owned it accords with the bold statements are requesting. We are going in for a site plan application during Q1 2016. Many by the time frame this board actually we get approved. I'm just picking up dates just to give your question more detail. Sometimes turn the end of Q2 we would then move forward with what's called schematic drawings, designed it on the drawings and CVS. They would likely finish by the end of 2016. Simultaneously we would be applying for water and sewer permits, which we don't originate; the developer goes through the water sewer on site. In addition, start construction probably Q2 of 2017. This product would take approximately well, to this way the first units will be delivered depend upon how your building department works. Sometimes if that's the start, about 14 to 15 months later after that, so you're in mid-2018. We would finish the project probably in Q2 2019. Well actually, we will be starting until 2020 but that we would be done and operating way long before that. A lot of that depends upon first to go the zone process and whether your building department is able to keep up with us. You make sure you are unit is just my cubicle? No, it's not a logical qubit delivered right. People believe live, I meant delivered because in most cases we deliver. I mean, let me give it away. We've got a little building at one time. It's not a phase project; it's one project. We go at one time. Typically what'll happen is the parking deck would get done first as a precast deck. Someone asked earlier about we built on site or something. The precast deck is actually manufactured off-site and brought on site and lifted and put into place. It's not modular, but that's our precast design works. Once that's done, it's a lot easier to build units around it, and as we build with the little four floors all involved together, what we hope to get is a temporary certificate of occupancy as we deliver units to the courts of your building department's requirements. We don't deliver 240 units on one day. We like to pre-lease at least throughout the process. One of those things a little quicker. We don't think we move into it for 40 people in one weekend, and that allows the town's benefit as we obviously...

I do. I wasn't asked that question. We are envisioning having studios, one-bedroom, two-bedroom, and very few three-bedrooms. Generally speaking, to give you some percentages because you may ask me some, I'll answer anyway. The three-bedrooms will probably not exceed eight to ten percent of the overall number. Studios we envision probably about fifteen percent. Ones and twos would split the rest. Now when I say ones and twos, some ones will have a den and a two-bedroom a den, so there will be significant diversity of units throughout the community. If you want sizes, just ballpark square footage, I'm happy to do that. Studios would probably about 550 to 600 square feet. One-bedrooms would be about 725 to about 900 square feet. Two-bedrooms would start at about 925 to about 1,100 square feet. And the three-bedrooms would be about 1,100 square feet to about 1,300. We would envision a little... not designed again. I spent architectural comments whether you are able to do a flat roof or a pitched roof is undetermined at this point. But if we did potentially a pitched roof, you know we'd like to do a loft experience instead. It's pleasing, provides an opportunity for people to have an area to look below, and the building codes limit the size with regard to that. That's on a concept basis at this stage.

Well, last 100 Romans above and any resident the weather from Teaneck, Bergen County, or New Jersey, any side of the state that wants to live in AvalonBay is certainly invited to live. But what we find in New Jersey are three types of groups. People wonder: active adults that have grown up in Teaneck, Bergen County, that work, they don't want to leave the area because children and grandchildren are there, or they work in the shop here and they don't want to move to an age-restricted community. Or young marrieds, they are 32 looking very much later now, right? Average age 29 or so. They're young marrieds. If they have a child, they're usually not higher than this table, there a toddler. And ultimately as they stay with us for four years thinking that, they may move into Teaneck or Jason's thousand light, but for now renting makes excellent. And the third group are the term you probably heard: Millennials, which are by the way 21 to 34 years old, that want to be in this area now in Teaneck space in any cases because of your proximity to the city and you don't later work and live in an environment like this. I have communities in Somerset without really communities of New York City, but they've been commuting to New Brunswick or train. Those three types generally with us. But as you indicated, it is open to the public. We have a lot of... I wanted to mention, by the way, probably twenty percent seniors. I say that just because, actually, when we presented to the council, I made the newspaper. I received three phone calls from residents. All three asked me when we're building and when their mother-in-law or father-in-law could move into my community. I haven't had that happen too often by the way, but it showed there was some kind of demand in that particular area. In all three sets, it's the first time an opportunity like this has existed. Tonight you're in a great location with internet, and please tell me you're putting me on the list. Put me on a list to let us know.

All right, so here's the rents that we can get in this community. In order to get those rents, we have to put in this building. If we put in more building, we're getting higher rents, and we may not rent out the buildings there. Like I do, I would... I could always rent a building just by changing the amount of rent that I charge. So I can rent it just by adjusting the rent. But just to give you broad numbers, if my construction costs go up about fifty percent, which is about what I would do, I'm not going to get fifty percent more in rent. And keep in mind, by the way, I know this is obvious, I'm going to point it out: if I go two stories, it's not just the two stories above that have additional construction; it's all six. It goes back to story one. That's the other component, remember. So just by adding two or one or whatever, I notice I've addition plus in that one story, the entire building is redone with a higher cost, and it will not support virtually everywhere in the state of New Jersey, with some exceptions.

Okay, I will respond to this gentleman's comment. We, I'm talking to the board people, have EV charging stations. We put in every one of our new communities that support in at this point. In fact, there are different levels of charging stations that I'm sure its individual may know about. We actually choose this week that the market is lots of recharge after two hours for six hours, 10 hours. The demand is really not there yet in most of our communities. We want to put it in now as we expect the demand to increase over time. That may be one example of what you're referring to. But if you let people forget to that cycling situation, less someone to talk to. All the ones that we do, we design a building in New Jersey house so do you. And currently have LEED-certified buildings we have. But if you know the term LEED-certified, just as an aside, what else? That's not a nice family of different levels of LEED. Like that's a complete... Look, leaders to a black architects. I don't like architects, but I'd rather frankly not burn points to LEED and pay a lot of money. I'd like to do sustainable situations which benefit my residents more than just earning points and getting a notch to be deterred. I think it's better for sustainability point of view. I want to focus on the per se. We look for sustainable opportunities wherever we can, whether they be charging stations, in some case solar, in some cases energy storage, and other things. So those are things that will be considered when you get the site plan process. How you will build this? Probably absolutely.

If the governing bodies will have any requests for you right now, the property generates $197,000 a year of taxes. We envision the property will generate just under $1.1 million in taxes. So it's about a figure out that that's about $900,000 plus thousand dollars. Now these are estimates. One thing you should realize: property is assessed in three different ways for income-producing properties. We would be what's called a capitalization rate on the net operating income. So until you know that the an alliance, you really do some estimates. Intensively, just cleared the average length of leases in these long term or ever done. This is one year, definitely. Perfect. Yeah, it's a one-year term.