Facade and Side Elevations for Beacon Street, Somerville

First iterations on the façade and programming for our project on Beacon Street in Somerville are posted below. The design has some similarities to that of our Porter Square project, presently at ~50% completion. The residential lobby will be located amid the entrances for the retail/local service spaces.
Thoughts and comments?

The side elevation feature an angled oriel window for each unit.

Just commenced zoning and design review, so much could change but we like the direction!

Steel Up, Exterior Framing Almost Complete

Cranking along on White Street....this is a bit dated, as the exterior framing for the five-story structure is near completion.

Although we have not yet marketed, we are receiving quite a few inquiries - should be a good spring 2014 market.

Crowd-sourcing Investment Flows in Real Estate

As someone who has worked on both the GP and LP sides of real estate development, I am always interested in the nexus -- the point where the deal meets the money. Of course, there are many established and traditional means of joining the deal and the money. They tend to be either very entrepreneurial ie. the classic "friends and family, pass the hat" fund raise; or to be quite structured and institutional.
Is there a new way? A middle ground?
A couple new businesses have risen to the fore with the premise of "crowd-sourcing" real estate deals. Recently, graduate students at the MIT Center for Real Estate, Bonnie Burgett and John MacDonald, submitted a thesis assessing the demand and viability for these websites.
I am on the fence....my biggest concern is the "quality" of the deals being submitted for consideration. Investors, from an individual to the largest PE shops and REITs, want to focus on properly underwritten investments. The promise of digging through thousands of submissions, the majority of them not financially sound nor properly analyzed, would seem to dim interest quickly.
On the other hand, the most interesting deals are often found at ground level and as often by motivated, under-funded sponsors as by anyone else.
Maybe the trade-off of a better risk-adjusted return is digging through countless listings on websites?
Please share your thoughts and comments.
MSB

Highland Development Breaks Ground on Eight Unit Development in Porter Square

My business partner, Ben Rogan, just broke ground on a very cool looking new 8-unit development in the heart of Porter Square.

Porter Square Lofts will feature eight units averaging 990 nsf with covered parking, an elevator and a clean, modern interior design by Peter Quinn & Associates architects.

Needless to say, it is in the heart of Porter Square - 1 minute to the Exchange, 2 minutes to the T station, 1 minute to the supermarket. An ideal transit-oriented location.

MSB

What is a Fair Return Nowadays?

Just reviewed a couple PPMs -- from established international institutions and from small, regional start-ups. The one thing that jumps out to me is the Expected Returns are all over the map, seemingly regardless of the level of macro (asset sector and class) and micro (geographic focus, experience of GPs, risks, term/liquidity) factors that are typically collapsed into a return.

Having been in the market for the last nine months, raising investment capital and under-writing asset acquisitions, it has become clear to me that:

THERE NEEDS TO BE A RE-CALIBRATION OF RISK/REWARD EXPECTATIONS!

Sounds obvious, I know, but there are no longer "signs" available to investors that give them a sense of the reasonable return they should expect for the level of risk they will incur in a given investment.

If the last four years have taught us anything, they certainly proved that investors were carrying considerably more risk than they realized, although arguably the returns in the mid 2000s for some PERE investments reflected that risk i.e. IRRs in the mid- to high-20s. Ten to twenty years ago, if you offered an investment with a 25%+ IRR for a moderate term hold (say, 3-5 years), you were proposing a fairly risky investment. And I believe that investors understood that then. Hence, their expectations were reasonable --there was some possibility of total loss or outperformance, and a more likely expectation that the investment, if properly underwritten, would perform about as projected. What is important is that these investors understood that total loss was a small but real possibility -- and in exchange for taking on the relative risk of the project, they would be, more than likely, rewarded.

From 2005 to Lehman, it seemed as if investors took a projected 25+% IRR to be a rock-solid, iron clad return, devoid of any risks, systematic or otherwise. No one likes to lose money and no one invests money with the great expectation of losing it, but as you move out on the return spectrum, an investor is, by default, incurring an increasingly higher level of risk. Its a trade-off, and a fair one at that.

This could be true of the broader investment world, but it is certainly true in my observations that there are few, if any, good signposts as to what the "right" return should be for a given level of risk. I suspect it will take another 12-18 months of transaction volume, with winners and losers at various risk/return strata, to glean what is right. In the meantime, investors and advisors will continue their dance, underwriting and analyzing various acquisitions, trying to find the middle ground that will create the aforementioned transaction volume.

It should be an interesting 18 months.