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Key Takeaways
- The $160 million CAPEX project requires careful management to cover a peak cash requirement of over $140 million before reaching financial breakeven in 26 months (February 2028).
- Despite the significant upfront investment, the phased development strategy is projected to generate a strong Return on Equity (ROE) of 39.78% over the five-year forecast period ending in 2030.
- The project's critical path relies heavily on the timely completion of the 18-month Skyline Residences construction and the 15-month Commerce Hub build to activate the $2.77 million annual rental stream.
- The financial model reveals a low Internal Rate of Return (IRR) of 0.02%, suggesting that the project's high ROE is primarily driven by the final disposition value rather than operational cash flow efficiency.
Step 1 : Legal Setup & Initial CAPEX
Entity & Viability
Before you commit capital to land or buildings, you must formalize the structure and prove the concept. Setting up the legal entity costs $30,000. This shields personal assets and sets up the tax structure. Next, the $60,000 spent on feasibility studies confirms if the site actually works for mixed-use zoning and projected Net Operating Income (NOI). Skipping this step means you might buy a site only to find regulatory hurdles kill the project later. That's defintely expensive risk.
Front-Load Due Diligence
Treat the $90,000 initial spend as insurance, not overhead. For legal setup, ensure the entity structure aligns with the planned capital partners mentioned in the investment model. For feasibility, prioritize environmental assessments and zoning reviews first. If those fail, you walk away before the $12 million acquisition target in Step 3 becomes relevant. This approach confirms site viability before major acquisitions.
Step 2 : Staffing & Fixed Overhead
Setting Initial Staff Costs
You need senior oversight immediately to manage the complex development strategies. Hiring the Development Director and Project Coordinator sets the execution stage for January 2026. These roles absorb $437,500 in wages for the year. This staffing commitment is required before locking in the Skyline Residences ($12M) and Commerce Hub ($15M) assets. This is your first major fixed cost.
Managing Monthly Burn
Set the $30,300 monthly fixed overhead budget now. This establishes your pre-revenue operational burn rate, covering salaries and general administration. Starting this in January 2026, you must ensure financing covers this cost until leasing begins in 2027. That’s over $360,000 in overhead before property income arrives. Defintely stress test the runway here.
Step 3 : Secure Core Properties
Locking Down Assets
Acquiring these two properties is the pivot point for Nexus Communities Development. If you miss the March 1, 2026 deadline for Skyline Residences or the May 15, 2026 date for Commerce Hub, your entire development timeline stalls. These $27 million purchases secure the physical land basis needed to generate the projected $277 million annual rental stream later. This step converts planning into tangible equity.
Closing Strategy
Focus diligence on securing financing commitments now, before the Q1 2026 hiring push. The $12M and $15M transactions need clean title reports and rapid due diligence closure. If the initial $90,000 spent on feasibility studies (Step 1) didn't flag majorr environmental issues, push for immediate closing conditions. Missing these dates defintely defers the August 2026 construction start date, costing you time and money.
Step 4 : Architectural Planning
Design Budget Lock
This phase turns owned land into shovel-ready plans. You need precise Architectural Design and Engineering Fees to avoid costly change orders later. Allocating the $150,000 budget between May and October 2026 is non-negotiable before starting construction in August 2026. Poor planning here stalls the entire timeline.
This work happens right after securing the primary assets in Step 3. You must finalize schematic designs and secure necessary permits based on these detailed engineering documents. If design review takes too long, you miss the August 2026 construction start date for the first asset.
Fee Management
Manage this $150,000 spend carefully. Since this covers design for two major projects, ensure the fee structure clearly delineates deliverables for each asset. Don't pay upfront; tie disbursements to milestone completion, like final zoning approval. You must defintely track this closely.
Watch out for scope creep. If the engineering team finds unforeseen subsurface issues during design, they will request change orders outside this initial budget. Track design progress weekly; delaying final sign-off past October 2026 burns valuable pre-construction runway.
Step 5 : Construction Phase 1
Groundbreaking Commitments
Starting construction locks in the $63 million budget for the core assets. This phase converts planning into physical reality, setting the schedule for revenue activation in Step 6. Skyline Residences begins its 18-month build in August 2026, followed by Commerce Hub’s 15-month schedule starting November 2026. Missing these dates defers your returns.
This is where the capital commitment becomes tangible, but watch the sequencing. Starting both projects within three months means significant, overlapping cash draws before any rent checks arrive. You need tight coordination between the design fees paid in Step 4 and the first construction invoices.
Managing the Draw Schedule
Construction draws dictate your short-term liquidity needs. You must align the $63M spend schedule with your financing milestones, especially anticipating the peak drawdown risk noted in Step 7. If draws accelerate faster than planned, you’ll hit that projected deficit sooner. Defintely review the General Contractor’s monthly payment schedule against your committed working capital line.
Step 6 : Revenue Activation
Activate Rental Income
You must secure the Leasing Manager starting in 2027. This hire is crucial for pre-leasing commercial and residential space before the $63 million construction finishes. Delaying this hire risks a slow lease-up period, which directly impacts when you start collecting the projected $277 million annual rental income. This activation speed determines your initial Net Operating Income (NOI) performance.
The goal is to minimize vacancy drag immediately after Certificate of Occupancy. If lease-up takes 18 months instead of a target 12, you lose six months of stabilized revenue. That’s real money lost against your projected returns for capital partners.
Pre-Leasing Targets
Focus the Leasing Manager on securing anchor tenants for the office space first. For the Skyline Residences (finishing early 2028), aim for 30% pre-leased occupancy by December 2027. For the Commerce Hub retail, target 50% commitment before final inspections. This early commitment defintely de-risks the financing covenants tied to stabilized occupancy rates.
Step 7 : Monitor Peak Drawdown
Watch the Cash Cliff
You must know when your project needs the most cash. For this development plan, the biggest cash hole hits in December 2028. That month shows a peak deficit of $140,567,000. This isn't just a budget line; it's the point where accumulated construction costs and overhead outpace early lease revenue. If financing isn't ready before this, the whole project stops dead. It's a make-or-break moment for liquidity management.
Line Up Capital Early
You can't wait until November 2028 to find $140 million. Capital partners need lead time. Start formalizing debt or equity commitments at least 12 months out, aiming for commitments by late 2027. This buffer accounts for lender due diligence, which can defintely take 90 days. Securing the bridge loan or construction finance well before the peak ensures you cover the $63 million construction spend plus ongoing overheads without panic.
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Frequently Asked Questions
Breakeven is projected for February 2028, requiring 26 months from the start of the 2026 financial model This assumes successful leasing activation across the six components, generating approximately $277 million in annual rental fees;