185 Units + Ground-Floor Retail · Bank Construction Loan → HUD 221(d)(4) Permanent Financing
Total Project Cost
Yield on Cost
5-Year Hold
5-Year Hold
Don Veasey / Kal Pacific, Inc. · Version 2 · March 2026
© 2026 Raymond Sweeney
A fully structured investment memorandum for 27th & Fletcher Phase I — Class A Multifamily, Boise, Idaho.
© 2026 Raymond Sweeney
A ground-up, Class A multifamily project in one of the nation's fastest-growing metros — 185 apartment homes, structured retail, and a 217-stall parking garage on a 58,370 sq ft site, financed through a bank construction loan converting to HUD 221(d)(4) permanent debt.
© 2026 Raymond Sweeney
The financing plan is engineered for capital efficiency and risk management. During the 24-month construction window, the bank loan capitalizes all interest — eliminating cash drag during the build. Upon certificate of occupancy, the HUD 221(d)(4) takes out the bank, delivering fixed-rate, non-recourse permanence for the full 40-year term.
© 2026 Raymond Sweeney
The project follows a disciplined five-stage schedule — from pre-closing through stabilized operations and an ultimate exit event. Each phase carries distinct risk and return characteristics, with personal recourse limited exclusively to the 24-month construction window and fully extinguished at HUD conversion.
Month 0. Bank loan closes. Land debt of $11.5M retired. Phases I–III cross-collateralized.
Months 1–24. Monthly draws. Interest capitalizes into loan balance. No cash carry required.
Month 25. HUD loan closes at $63.86M / 5.65% fixed. Phases II & III returned unencumbered.
Years 1–3+. Lease-up to stabilization. 2.5% annual rent growth assumption applied.
Year 5, 7, or 10. Sale or refinance. HUD loan balance paid off at disposition.
IRR: ~32% · MOIC: 3.48x
Highest IRR — development profit realized early relative to hold period.
IRR: ~28% · Greater Total Distributions
More operating cash flow years captured before the sale event.
IRR: ~24% · Maximum Wealth Accumulation
HUD loan ~8 years amortized at exit, maximizing equity build.
© 2026 Raymond Sweeney
All three plots are cross-pledged to the bank as construction loan collateral. The bank retires existing land debt at closing and holds a first-lien position across all parcels. At HUD permanent loan conversion (Month 25), Phase II & III plots are returned to Don free and clear — providing a built-in equity recovery mechanism for the sponsor.
Total Cross-Collateral Value
2026 updated appraisals across all three pledged parcels
Existing Land Debt Retired
Paid in full by the bank at construction closing
Don's Net Land Equity at Risk
Sponsor's net equity position secured across all three parcels
© 2026 Raymond Sweeney
100% Bank-Financed Construction → HUD 221(d)(4) Permanent Conversion at Month 25. The bank funds all hard, soft, and land debt costs during the 24-month construction period. At Month 25, HUD permanent loan proceeds of $63.9M retire the bank in full.
© 2026 Raymond Sweeney
Year 1 GPR: $6,560,295 · 5% Economic Vacancy · Year 1 EGI: $6,232,280. The unit mix is calibrated to Boise's demand profile, with 1BR units comprising the majority of the portfolio. Ancillary income from media services, structured parking, and utility billing (RUBS) contributes meaningfully to total revenue.
185 units × $75/mo × 95% occ.
$169,441/yr
217 stalls × $175/mo × 95% occ.
$463,749/yr
185 units × $69/mo × 90% occ.
$147,681/yr
Media + Parking + RUBS combined
$780,871/yr
© 2026 Raymond Sweeney
Expenses are calibrated to the Greystar Boise comparable asset at a 23.9% expense ratio — a conservative, market-validated benchmark. Year 1 NOI of $4,740,255 reflects disciplined cost management and strong top-line revenue, yielding a 7.70% yield on total project cost.
© 2026 Raymond Sweeney
The base case underwrites conservative lease-up assumptions at 5.0% economic vacancy, 2.5% annual rent growth, and a 5.0% exit cap rate. The resulting metrics demonstrate robust debt coverage, compelling spread to exit, and strong unleveraged returns relative to total project cost.
Net Operating Income at stabilization — the core earnings engine of the asset.
Year 1 NOI ÷ $61.59M total project cost — unleveraged build yield.
Yield on cost minus 5.0% exit cap rate — the fundamental value creation engine.
HUD minimum — sized to exact compliance with agency underwriting requirements.
Gross Potential Revenue at operations start — Month 25 (May 2028).
Land collateral net of $11.5M land debt retired at bank loan closing.
© 2026 Raymond Sweeney
Don Veasey / Kal Pacific, Inc. · 100% equity · No LP · No promote. The sponsor retains the entire economics of the project with no promoted interest or limited partner dilution. Returns are driven by strong NOI growth, disciplined leverage, and a favorable HUD exit structure.
Equity Multiple (MOIC): 3.45x
Net Profit: $44.7M
Net Sale Proceeds: $46.5M
Equity Invested (Year 0): ($18.25M)
Yield on Cost: 7.70%
Equity Multiple (MOIC): 4.29x
Net Profit: $60.0M
Net Sale Proceeds: $61.3M
Equity Invested (Year 0): ($18.25M)
Yield on Cost: 7.70%
Equity Multiple (MOIC): 5.64x
Equity Invested (Year 0): ($18.25M)
Yield on Cost: 7.70%
© 2026 Raymond Sweeney
Returns are modeled across three hold periods to give investors a complete view of the risk-return profile. All three scenarios use identical equity of $18.25M, a 5.0% base exit cap rate, and a 270 bps development spread — the only variable is time. Shorter holds maximize IRR; longer holds maximize total wealth accumulation through additional operating distributions and loan amortization.
© 2026 Raymond Sweeney
Build at a 7.70% unleveraged yield — Year 1 NOI of $4.74M on $61.59M total project cost.
Institutional buyers in Boise Class A multifamily underwrite to ~5.0% — implying a $94.8M stabilized value.
The gap between build yield and market cap rate is the fundamental engine of development profit. Build cheaper than the market values.
Year 1 NOI of $4.74M divided by a 5.0% exit cap rate implies a stabilized asset value of approximately $94.8M — against a total project cost of $61.59M. That delta is real, realized value created through the development process itself, not through market appreciation or leverage engineering.
Building at a yield materially above the market's pricing cap rate is the foundational thesis of ground-up development. At 270 bps, this project sits well within institutional standards for a viable development spread.
At Month 25, the bank releases Phases II & III from the cross-collateral pledge. Combined appraised value: $20.55M. The HUD takes a first lien on Phase I only.
Don begins stabilized operations with $20.55M in fully unencumbered land — available for Phase II development, new debt collateral, or outright sale. This materially enhances total sponsor returns beyond what Phase I alone generates.
© 2026 Raymond Sweeney
The scenario matrix stress-tests the three variables most sensitive to market conditions: achieved rents, economic vacancy, and exit capitalization rate. The base case reflects conservative Boise Class A underwriting. The stress case illustrates conditions under which HUD sizing would require recalibration; the bull case reflects upside achievable in a tightening supply environment.
0% GPR growth · 6% vacancy · 6.0% exit cap
Conservative downside — HUD debt still serviceable
2.5% GPR growth · 5% vacancy · 5.0% exit cap
Primary underwriting scenario — $4.74M Year 1 NOI
3.0% GPR growth · 4% vacancy · 4.5% exit cap
Upside scenario — tighter caps, stronger rents
The bank holds a first-lien position on Phase I plus cross-collateral security over Phase II ($16.05M) and Phase III ($4.5M), providing $29.75M in total pledged collateral against a $61.6M construction draw. The bank is taken out in full by the HUD 221(d)(4) permanent loan at Month 25.
© 2026 Raymond Sweeney
27th & Fletcher Phase I represents a compelling, fully structured financing opportunity for a lender seeking strong collateral coverage, a clearly defined HUD permanent takeout, and a proven sponsor with 100% equity at risk.
185-unit development with a 24-month construction period and a defined HUD 221(d)(4) permanent conversion at Month 25. Non-recourse, 5.65% fixed, 40-year fully amortizing.
All three parcels pledged; $11.5M existing debt retired at closing. Don's net equity at risk: $18.25M — recovered in full at HUD conversion.
Bank funds all hard, soft, land debt, and carry costs at 8.25%. No LP, no promote, no sponsor equity drawn during the build period.
5.0% exit cap rate · 1.176x DSCR (Year 1, HUD minimum). Expenses benchmarked to Greystar Boise comp at 23.9% expense ratio.
5-Year IRR: 32.9% / 3.45x MOIC · 7-Year IRR: 28.8% / 4.29x · 10-Year IRR: 24.4% / 5.64x. Sole sponsor: Don Veasey / Kal Pacific, Inc. · 100% equity ownership.
Don Veasey / Kal Pacific, Inc. · Confidential · March 2026
© 2026 Raymond Sweeney
27th & Fletcher Phase I is a single-sponsor, single-tier structure. All equity, risk, and returns flow directly to Don Veasey through Kal Pacific, Inc. — there is no LP partner, no promote structure, and no waterfall split. This simplicity benefits institutional lenders by eliminating subordinate capital complexity and aligning all decision-making authority with a single accountable principal.
Ground-up Class A multifamily in Boise's high-growth corridor — one of the top-performing Sun Belt markets
HUD 221(d)(4): 40-year non-recourse, fixed-rate permanence — eliminates refinancing and balloon risk
270 bps development spread — strong, institutional-grade value creation against a 5.0% exit cap rate
~32% IRR / 3.48x MOIC at 5-year base case — compelling risk-adjusted return profile
$20.55M unencumbered land returned at HUD close — Phase II optionality materially enhances total program value
Bank funds 100% of construction — no equity cash calls during the 24-month build period
27th & Fletcher Phase I · Confidential Investment Memorandum · March 2026 · Don Veasey / Kal Pacific, Inc.
© 2026 Raymond Sweeney