Milwaukee has yet to see a luxury high-rise building be traded. The four main comparables to The Edison in Milwaukee are Ascent, 7Seventy7, 333 Water, and The Couture. The Ascent is stabilized and recently refinanced at a debt basis of over $370K/Unit. 7Seventy7 is owned by Northwestern Mutual, who has stabilized the asset and plans to hold rather than sell. 333 Water and Couture were both delivered in the Spring of 2024 and are currently in lease-up, and both have set the top of market in terms of rental pricing.
Below is a list of recent sales comparables in Chicago:

Despite the availability of sales compos in Milwaukee, The Edison is poised to be a unique addition to Milwaukee's real estate market as the tallest mass-timber high-rise in the state, offering 378 luxury apartments along the riverfront and steps away from Fiserv Forum. This distinctive combination of sustainable construction, prime location, and luxury amenities positions The Edison to attract discerning tenants and investors, commanding premium pricing. Neutral's confidence in achieving these prices stems from the project's innovative design, sustainable features, and the growing demand for upscale, environmentally conscious living spaces in urban settings.

Neutral, founded in 2020, is actively engaged in several projects, including two mass-timber mixed-use developments in downtown Madison, Wisconsin: Bakers Place, comprising 206 residential units, and 517 W Main St, featuring 33 residential units. Both of these projects are currently on schedule and on budget, and both will be completed this year in 2025.
‍
Neutral did successfully exit one development project in the past in Monona, WI, The Bloom. Neutral closed on the land and successfully went through the entitlement process before selling the project to a family office to finish the development. Neutral and the project’s investors made approximately a 3x multiple on their investment over the short investment period.

C.D. Smith, our General Contractor, has a multitude of experience in constructing high-rise and mass timber developments in Wisconsin and across the Midwest. For example, C.D. Smith was the general contractor of Ascent, the world’s tallest mass timber building, with 259 residential units in Downtown Milwaukee. C.D. Smith is also the general contractor for our two other mass timber developments, Bakers Place and 517 W Main, located in Madison, WI and slated to open this year. Other notable projects of C.D. Smith include 7Seventy7 in Milwaukee, WI and EO Yards in Madison, WI, both of which are luxury high-rise development projects.

The Edison's riverfront location at 1005 N. Edison St. offers several advantages:

Pros:
- Scenic Views: Residents can enjoy picturesque views of the Milwaukee River, enhancing the property's appeal.
- Milwaukee Riverwalk: The Edison is along the Milwaukee Riverwalk, which offers connectivity and commuting access to the major F&B hubs in Milwaukee, such as the Deer District and the Historic Third Ward. It also allows for activities such as walking, jogging, and boating, promoting an active lifestyle in the River.
- Premium Pricing: Waterfront properties often command higher rental rates due to their desirable location.

Cons:
- Environmental Regulations: Development near water bodies require adherence to strict environmental guidelines, slightly increasing project complexity and costs. These have been worked through with the City of Milwaukee and the WDNR.
- Flood Risk: Proximity to the river necessitates flood prevention and mitigation measures to protect the property. The Federal Emergency Management Agency (FEMA) Flood Map Service Center allows you to enter the address into their search tool to access the relevant Flood Insurance Rate Map (FIRM) to identify the property's flood zone classification. The designation for the project site shows no risk of flooding. In addition, The City of Milwaukee is providing funds to the project for renovating the Riverwalk to mitigate any future risks and for aesthetic purposes.

Overall, the benefits of a waterfront location enhances the project's attractiveness and value, provided that environmental and safety considerations will be effectively managed during the development period. The Riverwalk access provides a scenic 3.1-mile pedestrian-friendly walkway along the Milwaukee River, featuring restaurants, public art, recreational spaces, and docking stations, enhancing the value of The Edison.

The senior debt for The Edison is provided by Bank OZK for $98M. Pearlmark is providing the mezzanine debt, which collectively secured $133.3 million in construction financing for the development.

The equity raised to date is primarily from retail and high-net worth individuals, with a small portion coming from project team members such as C.D. Smith, the General Contractor. Of the retail investors, the single largest investor is a partner of Neutral, who has invested approximately 30% of the total equity.

In real estate developments, the capital stack hierarchy determines the order of repayment in the event of a project failure:
‍
- Senior Debt Lender: Bank OZK would be repaid first.
- Mezzanine Debt Lender: Pearlmark is next in line after senior debt is settled.
- Equity Investors: The equity positions are last in line to be repaid, therefore bearing the highest risk while yielding the highest return.

As an equity investor, there is always a risk of partial or total capital loss if the project's proceeds are insufficient after satisfying debt obligations. This is, however, highly unlikely due to the conservative leverage on the project. The development has a cost value of $200M, with only $133M of debt to repay before equity investors will begin to see returns.

- Potential risks associated with The Edison project include:
- Construction Delays or Cost Overruns: Unexpected issues could lead to increased costs or extended timelines.
- Market Demand Fluctuations: Changes in the local real estate market could affect rental rates and occupancy levels.
- Regulatory Changes: New laws or regulations could impact project viability or profitability.
- Environmental Concerns: Proximity to the river may pose environmental challenges or require additional compliance measures. We advise that our investors conduct comprehensive due diligence and consider these factors when evaluating the project.

Upon completion and stabilization, The Edison will likely be sold to institutional investors such as real estate investment trusts (REITs), pension funds, or private equity funds. Neutral is currently projecting the building to sell at a 5.00% exit cap rate, which is on par with comparable sales in other Midwest markets. At this cap rate, the sale price would be $274M, meaning that $74M would be the profits above the development cost. With the total cost being $200M, the project would need to sell at that level for repayments to break even.