South Bend Adaptive Reuse Feasibility Report: Club Fever to Multifamily Conversion 

Date: 05/10/25

📅Project Milestones & Timeline

Phase 1: Property Acquisition & Due Diligence (Months 1-3)

📌Milestone 1.1: Complete property inspection and structural assessment
📌Milestone 1.2: Finalize purchase agreement for 222 S Michigan St ($800K target)
📌Milestone 1.3: Complete environmental assessment and identify remediation needs
📌Milestone 1.4: Consult with South Bend Historic Preservation Commission (574-235-9371)
📌Milestone 1.5: Secure $3M bridge loan with FMC Lending (10.5%, 18 months, interest-only)

Phase 2: Design & Permitting (Months 4-7)

📌Milestone 2.1: Finalize architectural plans for 50-unit layout (30 studios, 20 one-bedrooms)
📌Milestone 2.2: Submit historic review application for exterior modifications
📌Milestone 2.3: Secure building permits with South Bend Building Department
📌Milestone 2.4: Obtain UEZ credit approval ($100K over 5 years)
📌Milestone 2.5: Finalize amenity plans for 15,960 SF basement (gym, storage, co-working)

Phase 3: Construction & Renovation (Months 8-18)

📌Milestone 3.1: Complete structural reinforcement work ($500K)
📌Milestone 3.2: Install new HVAC, plumbing, and electrical systems ($1.5M-$2M)
📌Milestone 3.3: Complete interior unit builds (studio and one-bedroom layouts)
📌Milestone 3.4: Install modern finishes and energy-efficient windows ($1.5M-$1.8M)
📌Milestone 3.5: Complete basement amenity spaces and rooftop deck ($300K)

Phase 4: Pre-Leasing & Marketing (Months 16-21)

📌Milestone 4.1: Develop marketing materials highlighting proximity to Notre Dame, Amazon, GM/Samsung
📌Milestone 4.2: Launch website and social media campaign targeting young professionals
📌Milestone 4.3: Begin pre-leasing activities (target 30% occupancy before completion)
📌Milestone 4.4: Host open house events for local employers and Notre Dame housing office
📌Milestone 4.5: Establish property management relationship with Cressy & Everett (574-271-3440)

Phase 5: Building Launch & Stabilization (Months 19-24)

📌Milestone 5.1: Obtain certificate of occupancy
📌Milestone 5.2: Complete move-ins for pre-leased units
📌Milestone 5.3: Achieve 60% occupancy
📌Milestone 5.4: Implement tenant retention program
📌Milestone 5.5: Reach 85% occupancy threshold

Phase 6: Financial Optimization & Refinancing (Months 25-36)

📌Milestone 6.1: Achieve 95% occupancy target for standard scenario
📌Milestone 6.2: Optimize rental rates to $1,200-$1,350 per unit
📌Milestone 6.3: Refinance with permanent loan ($3.56M through New American Funding)
📌Milestone 6.4: Implement operational efficiencies to reach 38-40% expense ratio
📌Milestone 6.5: Evaluate hold vs. sell strategy based on market conditions

💲Market & Financial Analysis:

📌Property: 222 S Michigan St, South Bend, IN 46601

📌Building Size: 31,920 SF (three floors) + 15,960 SF basement

📌Unit Mix:

50 units total

▫️30 studios @ 500-600 SF,

▫️20 one-bedrooms @ 700-800 SF)

📌Target Rents: 

▫️Studios:$1,000-$1,200/month, 

▫️One Bedroom:$1,300-$1,500/month

📌Total Investment: $5.13M-$6.09M (average $5.61M)

💳Financing Structure:

▫️Bridge Loan: $3M (55% LTC, 10.5% interest, 18 months)

▫️Permanent Loan: $3.56M (65% LTV, 6.25%, 30-year amortization)

▫️Equity Required: $2.61M (reduced to $2.46M with incentives)

▫️Annual Debt Service: $284K (1.25x DSCR with $410K NOI)

⚡Risk Assessment & Mitigation:

⓵Historic Review Process

⚠️Risk: 30-60 day delay for exterior modifications

✅Mitigation: Early engagement with Historic Preservation Commission, $10K budget allocation

⓶Construction Cost Overruns

⚠️Risk: $120/SF vs. $150/SF renovation costs

✅Mitigation: 10% contingency ($500K), phased approvals

⓷Lease-Up Delays

⚠️Risk: Below 95% occupancy target

✅Mitigation: Pre-leasing strategy, partnerships with Notre Dame, Amazon, GM/Samsung

⓸Financing Constraints

⚠️Risk: Developer's 600 FICO score

✅Mitigation: FMC Lending bridge loan (no FICO minimum),

🌍Opportunity Zone investor attraction

⓵Market Demand:

43% renter occupancy in South Bend

10% YoY rent growth, $1,272 average monthly rent

2,500-unit affordable housing shortage

⓶Economic Drivers:

Amazon data center ($11B, 1,000 jobs)

GM/Samsung EV battery plant ($3.5B, 1,600 jobs)

University of Notre Dame (5 miles, 15,000 students/faculty)

⓷Incentive Programs:

Urban Enterprise Zone credits ($100K)

Opportunity Zone tax benefits (10-15% equity reduction)

Sewer reimbursement program ($50K)

🔑Critical Path Items:

▫️ Historic review approval (Month 5)

▫️ Structural reinforcement completion (Month 10)

▫️ Mechanical systems installation (Month 14)

▫️ Pre-leasing 30% threshold (Month 18)

▫️ Certificate of occupancy (Month 19)

▫️ 95% occupancy achievement (Month 30)

▫️ Permanent financing placement (Month 36)

📊Key Performance Indicators:

▫️ Construction: Cost per square foot vs. $120-$150 target

▫️ Leasing: Units leased per month vs. 5-unit target

▫️ Financial: Actual NOI vs. $410K-$482K projection

▫️ Operational: Expense ratio vs. 38-40% target

▫️Valuation: Exit cap rate vs. 6.75-7.5% projection

Next Steps:

⓵ Schedule property tour with owner Dee Davis

⓶ Engage structural engineer for detailed assessment

⓷ Initiate discussions with FMC Lending for bridge loan

⓸ Contact South Bend Historic Preservation Commission

⓹ Consult with Cressy & Everett regarding property management

⓺ Prepare capital raise documentation for Opportunity Zone investors

⓻ Submit initial architectural plans for city review

☎️Project Contact Information:

✔️South Bend Historic Preservation Commission: 574-235-9371

✔️South Bend Building Department: 574-235-9555

✔️Property Management (Cressy & Everett): 574-271-3440

✔️FMC Lending (Bridge Loan): 800-555-1212

✔️New American Funding (Permanent Loan): 800-555-2121

✔️Urban Enterprise Association (UEZ Credits): 574-235-5846