Good afternoon, everybody. Welcome. We're going to start the webcast now. Welcome to everyone that just joined on the webcast, and welcome to Federal Realty Investment Trust's 2019 Investor Day. I'm Leah Brady with IR, and standing between me and these guys to tell you about our mixed-use properties is a lovely reminder that before we get started today, certain matters discussed today are reflected in the accompanying slide deck, may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or protected information, as well as statements referring to expected or anticipated events or results.
Although Federal Realty Investment Trust believes that expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty Investment Trust's future operations and its actual performance may differ materially from the information in our forward-looking statements, and we can give no assurance that these expectations can be attained. Our filings with the SEC provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations, and these documents can be found on the investor relations part of our website. Thank you all for joining us today. A few housekeeping items before we get started. We're going to have a short break after this presentation. It should be around 2:30 P.M. We'll have snacks out in the hallway, and there's coffee in the back of the room if you need it. There's also coffee and drinks outside. We ask that you hold your questions.
There'll be Q&A sessions throughout, you'll see a questions slide, and they'll direct you. Just hold till those sessions, and there'll be plenty of time for your questions, especially at the end. Thank you again for joining us, and I will turn the floor over to Jeff Berkes to talk about our mixed-use portfolio.
Great. Thanks a lot, Leah. Thank you all for being here today. Even though they're outside, I'm going to thank the prior panel, too. A lot of what they had to say is going to make the next hour or two easier for us up here. My name's Jeff Berkes. I'm our president of the Western Region based out in San Jose, California. I've been with Federal for 19 years, the last 15 in California, the first four at our headquarters in Rockville, Maryland. I started at the company as our chief investment officer, seven, eight years ago, took over a more operational role on the West Coast and really running that portfolio with my partner, Jan Sweetnam, who you'll hear from in a moment.
I want to show you a slide that you've probably seen before to kind of set up what we're going to talk about, not just in the next hour in our presentation before the break, but in the one that follows. Again, this is a slide you're probably all familiar with. This shows Federal's portfolio. The next two hours are really about our portfolio. This shows our portfolio broken down into open air product types. If you skip over mixed use for a minute, the grocery anchored centers, super regional centers, power centers, others, especially retail within our portfolio, that counts for about two-thirds of our POI. Dawn Becker and Wendy Seher are going to come up and speak to you about that when we're finished here.
This group, Jan, James, Stu, and Patrick, we're going to talk about our mixed use portfolio, but not all of it. We've stabilized, for the most part, Bethesda Row, Pentagon Row, we're not going to spend any time talking about those. We're really going to talk to you about what we call the big three, Santana Row out in San Jose, Assembly Row here in Somerville, and Pike & Rose. I want you to keep this in mind because what you're going to hear from these guys when I finish in a few minutes is about all the great and wonderful development opportunities that we have at the big three, about a huge amount of money that we have the ability to spend going forward, mostly on non-retail product. Okay.
Don't forget that two-thirds of the company comes from our core portfolio, and we're only talking about a segment of our mixed use portfolio. What do we mean when we say mixed use? In my role as Chief Investment Officer, I think I got on the email list of every single investment sales broker in the United States of America, and I get hundreds of emails every week from those brokers with offers to buy properties all over the country. It's amazing how in the last 5 or 6 years, almost every property is a mixed use property. If you've got a 30-story apartment building with a Starbucks on the ground floor next to a dry cleaner, that's mixed use.
Believe it or not, if you own a distribution warehouse in the Inland Empire and it has a Del Taco in the parking lot, that's also a mixed use property. Okay. That's not what we're here to talk about today, that's not how Federal defines mixed use. We also don't define mixed use as a shopping center where you build an apartment building or a medical office building or a limited service hotel in a parking lot. That's really smart, that's really a great way to densify your real estate and a great way to make money, it's still not mixed use. When we speak of mixed use, what we speak about is what Mary Currid-Halkett was talking about. It starts with a big site, whether that be 45 acres, 65 acres, 25 acres, it significantly involves the community. What's missing from that community?
What does that community need? How do we create an authentic neighborhood, a product that responds to and meets the needs of that community? That's what we say when we mean mixed use. We're creating places, not just financial assets. These are living, breathing, dynamic assets. Dynamic neighborhoods, I'll just call it an asset, that are going to be here for decades and decades to come and take decades to evolve and build out. Obviously, because each one of these is different, because every community has a different unmet need, needs a different thing woven into the fabric of what's there today. Each of these communities is unique. This is not a scalable business. It's not like the mall business, the power center business, the grocery-anchored neighborhood shopping center business, where you take the same group of tenants and the same basic prototype and stamp it out all over the country.
That's not what this is about. We've belabored the difficulty of mixed use, so I won't spend much time on that. What matters, though, when you think about the next three, that the guys are going to come up here and talk about in the next few minutes, is we've done that heavy lift already. At each of these projects, the place has been created. Really what we're doing now and what we're going to talk to you about in a few minutes is taking advantage of that, leveraging that place, and harvesting value in future phases. Here's an equation we all love at Federal Realty. One plus one plus one equals four. What does that mean?
That means if you do a good job of figuring out what that community needs, if you do a good job of creating the place, creating the ground floor with retail and restaurants, on the residential and office uses, on the upper floors above the retail or on the sites adjacent to the place that you've created within the neighborhood, you can get a premium. It's why at Pike & Rose, we get a 15% rent premium in our apartments in a market where admittedly a lot of supply has come online, and it's been somewhat difficult to absorb, but we're still outpacing the market by 15%. It's why at Assembly Row, we sold 107 market-rate condos, sight unseen, for $900 a foot.
It's why at Montage, the first big apartment building we built here, we leased that up at pro forma or better rents in 12 months, which is very quick for a building that size. It's why at Santana Row we have market-leading rents and market-leading retention in our residential units. Office. Santana Row's office space is virtually always 100% leased. Each time we've broken ground on a big building, we've leased that building quickly, well before construction. Why? Because we've created a great environment. At Pike & Rose, we have Merrill Lynch Wealth Management as a key tenant in the first office building we built there. They could be across the street paying $15, $20 a foot less, but they're not. They're at Pike & Rose because they need an environment like Pike & Rose to present themselves properly to their customer and grow their customer base.
That's the magic of mixed-use. That's why when we say one plus one plus one equals four, there's upside in that math. Okay. How do we go about doing this? It starts with, again, that big site, that well-located site. It starts with listening to the community, listening to our retailers. We have 3,000 retailers, 2,500 or something like that, different retailers in our portfolio. It's about talking and listening to them, talking and listening to the community, figuring out what's needed, and then responding to it. It's the same with food and beverage. Food and beverage in a mixed-use environment is an anchor. You used to basically give away land and building to a department store, and that was your anchor, and you made your money off your small shops. Not the case anymore, and particularly not the case at mixed-use.
There's a lot of thought that goes into creating a great balance and great offering of food and beverage at each of our mixed-use properties. We want local operators that the community can connect with. We want different cuisines. We want different price points. We want different service models. When you take the restaurants and the other food service providers, and you mix that with a great merchandising mix, you have the ability to create something that the customer really, really enjoys, that they will come to, that they will come back to often, where they will spend more time and where they will spend more money. There's also a lot of thought that goes into the design and development of one of these mixed-use neighborhoods. They're exceptionally complicated to design and build.
The length of the street, the width of the sidewalk, the height of the buildings, the distance from one storefront to the other. There's another part of this that's very, very important and very, very important to do right, and that's the operating side of the business, right? These things don't operate themselves. You can't be in the grocery-anchored business on Friday, decide you want to be in the mixed-use business on Monday, and execute it. Certainly not from a design and development perspective, but even more importantly, not from an operating perspective. Little things like, how do you get trash off of a property without waking up somebody who's sleeping in a hotel room? How do you get somebody in and out of their apartment without conflicting with the evening traffic that's coming in to enjoy the bars and restaurants?
All that kind of stuff is very, very important. In operating our mixed-use neighborhoods, which we've now been operating for over 20 years, we've learned a lot. Each time we learn something, or each time we go to add a phase at one of our projects, the development team is working with the operating team to figure out how to maximize that and make the experience the best it can be for the customer. Because it's not about doing the transaction anymore like you would do at a mall or a power center. It's about having an experience. Having that operating team and development team working together is hugely important. You want people to come to your property, and you want them to feel safe. If they feel safe, they'll come back. You want the environment to be clean. You want it to be convenient.
More importantly, you want it to be fun. If you can deliver an experience that's safe, clean, convenient, and fun, you get that repeat shopper, you get them spending more time, you get the apartment dweller that wants to renew their lease, not move down the road, and you get office tenants that are happy because their employees are in a great place, and it's easy to keep their employees around. Our track record in this business, if you look over at the blue box on the right and total all that up, it's probably 7 million-7.5 million square feet. We've been doing this for 20+ years, and we've constructed and developed and operate now eight mixed-use neighborhoods. We've invested $3.5 billion in this business.
Within Federal, in the course of doing this, we've developed a highly evolved design, development, and construction team, and a highly evolved operating team. There's 40 people within Federal Realty that do nothing but work on our mixed-use properties. There's probably another 40 people within Federal that some way or another touch those mixed-use properties. Again, in order to be in this business successfully, in order to make one plus one plus one equal four, you need that team. It's not like you can just go shake the tree and have those team members fall to the ground and sweep them up. It really is a skill set that's unique and important and different at Federal than it is at anywhere else. The future. This is what Jan, James, Stu, and Patrick are going to talk about in a few minutes.
Santana Row, Pike & Rose, Assembly Row. Aggregate remaining entitlements at these properties of 3.5 million square feet commercial and just shy of 1,500 residential units. Nearly 5 million square feet of entitled opportunities at each of these three properties. We have the ability to spend over the next 10 years or so close to $3 billion taking advantage of that. It's a huge development pipeline. I love this chart. There's a couple takeaways from this chart. If you look at the columns 2004 through 2023, you can see what I spoke about a few minutes earlier. Early on in the life cycle of this business at each of these three properties, we are creating the place. When you create the place, that's primarily retail. Right?
You can see this is the amount of POI at the big three properties aggregated that comes from each of the three primary uses, retail, office, residential. In the early stages, it's overweighted towards retail. Then as we move forward with future phases of the property, we're able to leverage off of the place we've created and accretively build office space and residential space. If we look at what's in front of us today, basically what's under construction here at Pike & Rose and the new building we just approved at Santana Row, 1 Santana West, you can see how we mature through the development cycle and end up with about a third, a third, a third of POI from each of the big three uses.
It's important to see how the properties transition over time, and how you create the place up front and then leverage off of that to accretively build out the other uses. The other thing that's great about this chart is the lower right-hand corner. By 2023, if we execute what's in front of us on budget and as expected from a rent perspective, we'll have created $1.8 billion of value at these three properties. $1.8 billion. Huge number. Again, stepping back. Today, four-fifths of the POI at Federal Realty comes from retail space. Even after we build out the future phases between now and 2023 that I just mentioned at the Big Three, retail shifts from 80% down to 72%. The retail contribution in 2023 would likely be higher than that because this doesn't assume that we do any acquisitions.
Roughly 80% is going to go to, call it 75%. Federal is and always will be a retail-based company. I don't want that to get lost as we start to walk through the big portfolio of non-retail uses that we've got in the development pipeline right now. Okay. Before I hand it over to everybody else, some stuff to think about. Visible path to growth. The development pipeline that the guys are going to talk about in a few minutes, we own the land for that. We own the entitlements for that. We don't have to go out and basically do anything other than execute what's right in front of us. I don't think any other company in our space or any other publicly traded retail company can say that. It's a big development pipeline, and we control it all.
We also have, because of that, significantly less risk in our development pipeline than you would typically think of. This is not greenfield ground-up development. This is development in places that we know, in the case of Santana Row, for example, have been operating for 17 years. We know what the residents will pay in rent. We know what it costs to run a residential building. We know that at all three of the Big Three. We know where those properties fit in their sub-market to lease office space, and we know we can be successful leasing office space of these properties. The pipeline that we'll talk about is much less risky than any other ground-up development pipeline. Bob did a great job of setting this up for me on the panel. We were careful about the words we chose here.
These environments are required, not desired, not preferred, required by today's consumers and tenants. Whether it be Puma Hero at Assembly Row or a tech company out in Silicon Valley or a Merrill Lynch down at Pike & Rose, companies need to be in these kinds of locations to recruit employees, to retain those employees, and to present themselves in the right way to their customers. It's an absolute requirement. Gone are the days of being out in the suburbs in an office park surrounded by a surface parking lot with a cafeteria on the ground floor. Same thing in residential. People don't want to live someplace where they have to get in their car every time they want to do something.
They want to go live at a place like Pike & Rose, where all their friends come from wherever they live and meet in the park and then choose where they want to go eat and go out to eat. This is an absolute necessity, and as Liz said, this is a foot in the present and a foot in the future. This is what's being demanded today and what will be demanded in the future, and that's the need we're trying to meet and trying to deliver to. The next point Mario really said best. We've created suburban downtowns. If you need that amenity base, if you need those services to recruit and retain employees, you have a choice. You can go to the CBD, or you can come to a suburban downtown that has those same things, like the Big Three do.
The difference is the CBD is not always safe, clean, and convenient. Usually, it's fun. The other big difference is there's a massive price advantage to being in the suburban downtown. Office rents, for example, at the Big Three are 20%-40% below what they are in the nearest CBD to each of those suburban downtowns. Over time, that's a gap we expect to narrow, and we think there's a lot of added value in our mixed-use portfolio as we go forward, and that gap is narrowed, and we take advantage of that at lease rollover. At last, before I turn it over, the DNA of Federal. After being in this business for 20 years, after developing that in-house team, after putting $3.5 billion to work and building 7 million sq ft of mixed-use space, it's changed the DNA of this company.
It affects everything we do, whether that be leasing, whether that be development or redevelopment, or acquisitions or investment. We look at it through the lens of the mixed-use experience that we've obtained. Dawn and Wendy will get up here when we're finished and show you some great examples of that in our core portfolio. I'm going to turn it over to the four experts. In Major League Baseball, they have a walk-up song. Today, we have a walk-up video for Jan. It's a marketing video for One Santana West. If you guys in the back could queue that up, we'll have Jan come up and tell you about Santana.
I really didn't have that far to walk, but I appreciate the walk-up music. Hi, I'm Jan Sweetnam. Nice to be here with everybody. I'm our West Coast COO. I've been with Federal for over 20 years. I moved up to Silicon Valley from L.A. in 2001 to open up Santana Row. I've been there almost from the beginning. I'll start with setting the stage about creating the place and then using that as a platform to build off of and create value and growth over a long period of time going forward. Santana Row is in the middle of Silicon Valley at the intersection of the 280 and 880 freeways, Highway 17, giving it unparalleled access to all of Silicon Valley and all the neighborhoods and communities there.
We are truly a regional location, as Jeff said, it's really about what the community wants, and that's what we're there to serve and to deliver for them. When we came into town in the 1990s, all of Silicon Valley was crying out for really three things. First, a great place to gather and promenade. You may think of engineers as being introverted and just wanting to do work and put their head down. No, they want to go out and see and be seen. That promenade did not exist anywhere in Silicon Valley. A lot of restaurants in Silicon Valley, but there was no great collection of restaurants in an environment that was convenient, clean, and safe. That also did not exist.
Silicon Valley, as Dawn described earlier about office parks, it was the king of bland office parks, vanilla apartment buildings, faceless suburbs after the next, and there was no place at all that existed out there. We wanted to deliver all three of those. Those were our three goals that we wanted to deliver because the community demanded those. We started with our first phase, we delivered two great gathering places. First, on top, we've got Park Valencia, which is kind of more of our intimate, comfortable park and plaza. It has become our food court. If you're going to meet your colleagues for lunch, that's where you're going to go.
If you're taking your family out Friday after you come home from work and you want to go and grab a couple sandwiches and picnic and have your kids run around on the grass, that's the place. We program it with great entertainment about 200 days a year. It's just a great, fun, comfortable place to go. If we want to get a little bit bigger, we go to Santana Park, which is our second main gathering place when we opened. There we can accommodate large groups. There's essentially four major parts of Santana Park. We see three of them up here, and it's on the bottom. On the left-hand side is where we have a great gathering park.
If you've got thousands of people that want to get together for whether it's the tree lighting or, in this case, Chinese New Year or this last weekend, Cinco de Mayo, that's where you go, it's just a great place. It's wonderful, it can host so many people. On the other side, we've got something totally different. If you want to sit underneath the dappled sunlight and just enjoy a little coffee and discussion with one of your buddies, that's the place to go. If you're like me, the third place, if you want to go out and have a cocktail with your friends or family and you want to sit down and you want to watch the show go by on either side, it's always fascinating. That's where I want to be. All right. The second is the restaurant.
We have 35 restaurants going all the way from $3 and $4 snack food all the way up to white tablecloth and Wagyu beef. We've got the full life cycle between breakfast, lunch, dinner, and then some of the restaurants later at night. The tables and chairs will clear out, and we'll dance all the way to 2:00 A.M. We get to do that in a place that's easy to get to, easy to park, it's clean, and it's an incredible level of perception of safety. They are an incredible anchor for us. Our restaurants do $150 million in sales. They drive 5 million people to the property each year and growing. They're just a phenomenal anchor to the entire property. Last is the sense of place.
Now, the bar wasn't very high that we had to get over, we think we did a fantastic job in bringing great architecture, varied architecture, materials, art, found objects that looked like they had been there for decades, mature landscaping. In fact, trees that were 50, 70, 100 years old into the property. We like to bring the restaurants and the dining right onto the sidewalk, we've got the people that are promenading right together with the people that are dining. A great sense of entry when you come into the property. You can just go underneath the arches and the light pulls you out. If you're going into the theater, you're not just going into some storefront into suburbia, you're really having a great entry experience. Those are the two gathering places that we had in phase one.
The other part that I mentioned was that the people wanted a promenade, we're anchored to the right with the super regional mall, Valley Fair, very productive, we created a 1,400-foot-long promenade street with the two gathering places there. That was a key part of what we delivered, along with the 445,000 sq ft of retail, 255 residential units on top, and then the hotel. Please note that there's one building that's red. I keep on taking that out. Dawn keeps on putting that in. That's the building that burned 30 days before our scheduled opening. It's always a gentle reminder for us. That's phase one. We created the place, right? We created the promenade. We had the gathering spots. We got some mix of uses together.
From there, we've been able to build successfully and consistently over time, getting us right to phase two. We've got the CinéArts theater on the left, Best Buy, and The Container Store and additional parking to the right. We hit a great white-hot condo sales market, we sold 219 of our units, primarily urban lofts that we were having difficulty leasing. I guess San Jose wasn't ready for units without walls in the bedrooms, we were having a tough time with them, we got an incredible price for them. We sold them for $153 million, a cap rate in the 2s, a very accretive transaction for us. We went on to rebuild the units that had burned, the 256 units on top of that building. It's now blue.
Thank you. Then phase 5, we had done such a good job of converting hard-to-lease level 2 and level 3 retail space to office, and it was such well-received, we put our toe into the speculative office development market, which is historically not what Federal had done at that point in time, and built our 300 Santana Row project that successfully opened up in 2011 with 65,000 square feet of office on top of 15,000 square feet of retail. Phase 6, our LeVare apartment building with 108 units right next door. Phase 7, our Misora apartment building with 212 units. Phase 8, our 500 Santana Row, 234,000-square-foot spec office building, followed immediately by our recently completed 700 Santana Row, 300,000 square feet of spec office over 18,000 square feet of retail. Also importantly, now our third major plaza and gathering place at Santana Row that just opened up last week.
The recently announced phase 10 that we'll break ground on in mid-June, 1 Santana West across the street, a 360,000-square-foot spec office building. We'll look at all these additional development sites. After all that, we still have entitlements for 941,000 square feet, almost 400 residential units on the balance of the property still to come. I'll put it up here just to kind of go through, and we can see it all together. We go through the original opening, then we go through the different uses, the retail, the office, the residential, the hotel that was added over time, and the investments. To get to some of the totals. We got one line in there called property maturation, where we did a couple things.
We converted some of the retail space to office, so we wanted to reflect that, and we purchased three little apartment buildings and came up with some additional changes to the mix, if you will. We now have 516,000 square feet of retail, almost 700,000 square feet of office, working 662 residential units in the hotel with an investment of just over $1 billion, with 1 Santana West in the wings coming up here shortly. What have we created? I'm a public school guy, so I've been always interested in Don and Jeff's new math of one plus one plus one equals four. I'm always interested to see how that works. This is kind of where the rubber meets the road here a little bit. What have we created? In San Jose parlance, we've created a walkable urban village on these 45 acres.
We've got great retail that's working on the pedestrian level. We've got the daytime worker with the office, the residents, both rental and the homeowners that are there, and the constant activity at the hotel, and they all work together, bringing 12 million visitors to Santana Row every year. We know they're working really well because the retail has some difficulties in the leasing market, and it's a little bit harder for us in this case because Westfield is expanding Westfield Valley Fair across the street, is in the market trying to lease 80 shop spaces right now. Despite that, our retail is 99% leased. Our office is 100% leased. Our apartments have a retention rate of 65% in a market that is 50%. The hotel delivers RevPAR of 140% of its peer group.
Each and every one of those are clear examples that all of these work better together because none of these would have this performance if they were sitting by themselves. It's clear. This is going to a little bit about what Jeff was talking about in terms of you set the platform and then what growth do we put on top of it? You create the street. 2004, our revenue was dominated by retail because that's what we built. Over time, we used that as a base to add additional residential, add office, and both of those incomes grew organically as well as we built additional projects along the way. What's interesting is just in the last five years, just for same center, if you will, on the residential revenue growth for the existing residential, 4.3% cumulative compounded growth the last five years.
The office, an eye-popping 6.2% because we get annual increases, and we've gotten phenomenal bumps on the renewals of the office that's existing right now. We measure the hotel here in just in terms of the rent that they pay us. However, their RevPAR is up 5.7% per year over the same period. I mean, just tremendous growth. Again, another example of why one plus one plus one equals four, maybe some of the new math. This goes back to one of Jeff's favorite slides, and we added one component to it, which is the yield. We show where we started in the original opening, retail-heavy. We delivered. No one was planning on the 3.9% return, but that's in fact what we delivered. Mathematically, you can imagine how difficult of a lift it is to go from 3.9% to 7.6% in 2017.
The only way that you can do that is by doing a lot of great accretive investment after the first phase. That's exactly what has happened at Santana Row on all of those phases that we just went through. So tremendous value creation through 2017, $619 million and really $1 billion here in the foreseeable future right around the corner. Let's just look at last couple of value creations. 500 Santana Row, $113 million office project, 9% return on cost, $113 million of value creation, followed by 700 Santana Row that just opened up, $215 million investment, 7.5% return on cost. Strong, $143 million value creation. On the horizon, 1 Santana West, $260 million projected investment with a 6.5% return, $116 million of value creation. A lot of value creation in the pipeline.
When you think about it, when we opened up in 2002, here we are 17 years later, nine phases in, 10 on the drawing board, a lot of development to go. Literally after the first phase, a lifetime's worth of work to be done. What do we have in the future beyond One Santana West? We've got these development sites, as I said, 941,000 square feet of entitlements for commercial, almost 400 residential units, $800 million of future projected investment on the sites in blue. We've got a couple of them keyed up already. The first is on the top in the background is One Santana West that we'll start construction on in June.
In the foreground is its sister building, Two Santana West, fully entitled, that we would break ground on once Santana West leases up and the market permitting, all ready to go on the shelf. Lot 12, a yet-unnamed 258-unit apartment building that we expect to fully entitle, that we expect to break ground on in Q1 of 2020. The pipeline is moving, and it's filling beyond that. Let me turn this over to Stu. There's no walk-up music.
Walk-up clap.
Thanks, Jan, and it's great to be with everyone today to discuss Pike & Rose. I'm Stu Biel. I joined Federal's leasing team in 2005, but I've been coming to this property since I was three years old, often on weekend errand runs with my parents, always begging them to enter the Toys R Us that used to be located there with typically very little success. It wasn't until I joined Federal 14 years ago that I truly appreciated, however, just how amazing this piece of real estate was and what an opportunity we had to create a neighborhood here. Pike & Rose sits on 24 acres in the heart of Montgomery County, Maryland, at one of the most prominent intersections in the D.C. region. It's surrounded by 150,000 cars daily, and with easy access to both the Beltway and Interstate 270, it's truly in a regional position.
The Rockville Pike corridor is one of D.C.'s most prominent retail nodes, and Federal is its most prominent landlord. With over 2 million feet in just a 2-mile stretch and ownership spanning back to 1965 in the case of Congressional Plaza, in 1983 on this site specifically, we were really in a unique position when we set out to design Pike & Rose to understand what was working, what wasn't working, and most importantly, what was missing. With that background and experience, we identified three critical pieces that needed to be part of the Pike & Rose development. The community has demanded an environmentally conscious and walkable neighborhood, an entertainment and event space with a focus on the arts, and finally, a sense of place. Montgomery County is a highly educated, progressive demographic, and one that places a lot of importance on environmental sustainability.
With that knowledge, Federal knew that we had to make sustainability a big part of the backbone of the project. Pike & Rose is the first and only LEED Gold neighborhood development certified project owned and managed by a REIT, one of only 10 nationally and 18 worldwide. This goes well beyond green roofs, though we have plenty of those. This includes a working farm on top of one of our residential buildings that produces 17,000 pounds of produce annually. That produce is distributed through CSA programs to our on-site residents, the local community, used on-site in our restaurants, and whatever is left over goes to a great local food bank. This includes our Block 2 Phase 2 parking deck, which has solar capacity that produces 92% of the energy that is used in that same parking deck. It includes 50 car charging stations on-site.
By creating a truly sustainable neighborhood, we've established a very loyal customer base that feels great about spending both time and money on property. Pike & Rose has become the central gathering space for events and entertainment in the county. Already adjacent to the 20,000 sq ft, 1,600 seat Montgomery County Convention Center, we opened in Phase 1, iPic and AMP. AMP, in partnership with Strathmore, one of the region's premier performing arts spaces, is a concert and event venue that now hosts over 100 live shows annually. With the success of both iPic and AMP, going into Phase 2, we opened Pinstripes with their numerous event spaces, as well as the Canopy Hotel with their ballroom space. Between these venues and our existing multitude of private dining options, Pike & Rose is now the hub for weddings, bar mitzvahs, birthdays, showers.
To think that we took a 300,000 sq ft, frankly, fairly unattractive shopping center, have converted it to a place that is now top of mind for people to celebrate their life's most important events, I think is a real testament to that need being unmet and us delivering on it. Lastly, a sense of place. A sense of place is a very hard thing to define because it's made up of so many different ingredients, but when those ingredients are combined in the right way, they create an authenticity and uniqueness that I think we can all feel. That sense of place is certainly created through the physical nature of the property, which you've heard Jeff and Jan talk about. Wider sidewalks, tree-lined streets, pocket parks, great outdoor seating areas.
I think most importantly, the most critical ingredient is the retail lineup that dots the ground floor and creates the environment that everyone interacts with. This, at times, is very difficult. It takes a lot of diligence, patience in not making the early easy deals. When you combine the right regional flagship locations, unique and local food concepts, and relevant national retailers, that uniqueness really comes to life. Both Pinstripes and iPic chose Pike & Rose for their first and only D.C. locations. Uniqlo and L.L.Bean, this is their only location in Maryland.
Lettuce Entertain You, widely regarded as one of the best restaurant concepts in the country out of Chicago and very selective in their real estate, chose Pike & Rose for only their second Summer House out of Lincoln Park. Michael Babin, a perennial Best of D.C. award winner who we've been chasing for years, chose Pike & Rose for his first location in Maryland with Owen's Ordinary. Hometown heroes Cava chose and designed their building in our park for Julii, specifically for Pike & Rose. I think we've really struck this ingredient most strongly at Pike & Rose, and that's created our sense of place. With that, I'm going to turn it over to James.
Thanks, Stu. Hello, everyone. It's nice to be up here with you. I do know many of you. This is my third Federal Realty Investor Day. When I was on the buy side, I attended the event here in 2013 at Assembly Row, and then the event at Pike & Rose in 2015. I certainly have some idea of how you feel coming out of earnings, sitting through another management presentation, trying to get some value out of what we're here to talk about. What I'd like to do is give you some perspective on Pike & Rose that I don't think you can find in an SEC filing, and hopefully that emphasizes this theme that we're talking about in terms of the whole being greater than the sum of the parts. When I joined Federal in 2016, we were stabilizing phase one.
The 160,000 sq ft of retail was leased and nearly fully occupied, and we'd fully leased the 80,000 sq ft office building on Grand Park Avenue. This is the building where Merrill Lynch relocated their regional headquarters from a classic suburban office building into the heart of Pike & Rose on the other side of Rockville Pike. They're paying double the rent that they were paying before, and they're doing that because they knew they needed a highly amenitized environment for customer acquisition, hiring, and employee retention. Pike & Rose was the only neighborhood in the area that could meet those needs. For similar reasons, we were able to lease up our two apartment buildings, the 174-unit mid-rise PerSei community and the 319-unit luxury high-rise Palais community, both at a very brisk pace and at rents 15% above the surrounding sub-market.
Perhaps most impressively for those residential lease ups, we were able to do this despite the ongoing construction of phase two, which started in 2014. The construction delivery of phase two, with 215,000 sq ft of retail GLA, allowed us to really establish the critical mass necessary to make Pike & Rose the regional shopping destination that Stu described. The number of visitors to the site has increased over 15% year-to-date in 2019, and that's after a 26% increase that we saw in 2018. That traffic is directly reflected in our tenant sales statistics, with like-for-like sales up 10% year-over-year in 2018 and up another 5.5% in 2019. A few other impressive stats from phase two.
The Henry, which is our 272-unit residential building, achieved stabilization after only a one-year lease up and more than 15% premium to the surrounding sub-market. We are 90% sold on our condo units at 930 Rose at nearly $600 a foot, that's above pro forma. The 177-room Canopy hotel, which is a modern and cool new lifestyle brand from Hilton, is gaining market share. ADR is over 30% higher than the comp set, RevPAR is 10% higher, that's just one year after opening. Let me just pause here for a minute. I want to reiterate a point that Jeff made earlier. Again, our residential rents are 15% higher than the sub-market. Our office rents are more than 30% higher than the surrounding class A office buildings. The Canopy's RevPAR index is at 110.
While the unique suburban, urban location and neighborhood is the primary reason that people choose Pike & Rose, the other reason is that we are still priced at a significant discount to the CBD. Compared to downtown Bethesda, not D.C., but just Bethesda, apartment rents at Pike & Rose are 20% cheaper, and our office rents are nearly 30% below the rents being achieved in the new office buildings in lease up in downtown Bethesda. Despite our premium pricing to the sub-market, we still do offer a significant value to competing product that is less than five miles away. We think that bodes well for phase three, which is a 215,000 sq ft class A office building and a 700-space parking deck that we're going to invest $132 million in at a 6.5% yield.
Underwritten rents for this building are in line with the existing building on Grand Park Avenue, which is still 100% leased, by the way. We expect 909 Rose to bring another 1,000 people to the property every weekday. That includes the 200 federal employees who work out of Maryland, who will be relocating to the site when the building delivers. I will say, for the same reasons that we talked about with the other office tenants, all of the employees in Maryland are very excited for this new location for us. You can see here what we've created on this slide. Once phase three is completed, in terms of the retail, the office, the residential communities in both apartments and condos, as well as the hotel.
This is D.C.'s version where we were able to translate that comment that Jan made about a walkable urban village into our neighborhood here at Pike & Rose. Although we were a little bit more residential heavy at Pike & Rose when we started, compared to Santana and Assembly, at over 50% of our POI, we'll end up with a similar mix when we get to 2023 at about a third retail, a third office, and a third residential. While we do acknowledge that we've had some challenges at Pike & Rose over the years, we do feel really good about where the property is positioned today as it matures. Once phase three delivers, we'll have invested over $600 million at a yield of 6.5%, generating a value of over $224 million. We do have plenty of work left to do.
We've got 740,000 sq ft of remaining entitlements and 741 residential units remaining to build. That'll fill out the parcels highlighted in blue, as well as the parcel up at the top of the slide behind The Henry. Just like we did at Santana with Santana West, and like many of you may have heard about today on your tour of Assembly Row, if you look at this density on the lower left quadrant of this slide here, all of that is actually just in planning and design right now. None of that is built. That's not what exists today. It is logical to think that as those projects move forward, Federal Realty would have a seat at the table.
But even if none of that happens, between three office towers, three more residential buildings, we still have about $750 million of potential investment and nearly $275 million of value creation to deliver at Pike & Rose. There's plenty more for us to do just to get to the full build-out of the rendering of our project here. With that, I thank you for your attention, and I will now turn it over to Patrick McMahon to talk about Assembly Row.
Come on in.
Thanks.
Joe.
Thanks. Thanks a lot, James. My name is Patrick McMahon. I'm here in the Somerville office on the development side. I've been here at Federal Realty for the past six years and in the Boston real estate development market for the past 20 years. Many of you got here yesterday, and most of you were on the tour today. You've all probably got a good sense of our 65-acre footprint here in our Assembly Row district. What I wanted to do for just a moment is put us in context of the greater Boston region. The Assembly Row district itself is bordered on the east by the T line, on the west by I-93, the highway, and to the north by the Mystic River, the waterfront.
What this graphic shows you quite well is just how close geographically we are to some of Boston's most prominent neighborhoods, as well as some of Cambridge's most prominent neighborhoods. Within 4 miles, you can be in the Seaport in Boston, the Financial District, Back Bay, Beacon Hill, or Cambridge's Kendall Square. Just under 5 miles away is Boston Logan Airport. What this graphic doesn't show you, though, is just how connected we are by the T to the rest of this region. Three stops south of us, or 7 minutes on the T, you're at Downtown North or North Station. Five stops or 10 minutes away, you're in the Financial District. Eight stops or 18 minutes away, you're in Boston's Back Bay. What we've created here is in response to what we saw, what the market was demanding, and what the local community was demanding.
Value orientation, a value-oriented neighborhood. Said another way, could we create an urban experience at a value to the other urban neighborhoods and the CBD in Boston and in Cambridge? Could we activate the waterfront and give people a place to congregate? As wild as this sounds, 15 years ago, there was no urban neighborhood in greater Boston connected to the waterfront with any meaningful amount of open space. We were a city and a region simply near water, not connected to it. Finally, a sense of place. Could we create a truly authentic urban neighborhood here? Talk about the value orientation. In 2010, 2011, when we began the initial planning for phase 1 here at Assembly, we had just come out of the Great Recession, I think as Don Wood noted earlier. Consumer spending habits had changed dramatically, so too had the retail landscape.
As a consequence, we pivoted towards a more value-oriented retail experience and decided to implement an outlet soft goods strategy. We brought some of the top national and international brands here. You can see that in the middle column. We bought them here via their outlet model. To that, to help round out the neighborhood, we added experiential retail. As you were going through the neighborhood today, I'm sure you saw a lot of school buses lining up outside of Lego. Lego puts families and kids here on our streets early in the morning. AMC keeps people coming back here late into the evening. To help infuse our merchandising strategy with some local color and some authenticity, we've leaned on the restaurant platform.
Many of our 22 bars, restaurants, and cafes are local concepts, and certainly 5 of the 6 concepts on the screen in front of you are all by local operators, local chefs. Our value orientation doesn't just stop, though, at the ground floor. It extends vertically. Take, for example, the 447-unit, 21-story Montage building that delivered last year. It's a high-rise, just like all the other new residential buildings delivering in Kendall Square, in the Seaport, and in Boston's Back Bay. It's got the same quality finishes. It's got the same rich amenity package. It's got the same connectivity to the T. Out its front door, it's got the same rich streetscape environment activated by retail as all of those neighborhoods do. In the Seaport, for the Montage building, you're going to pay rents that are now cresting $6 a square foot.
Over in Cambridge, you'll pay rents that are now cresting the mid-$5 a foot range. At Montage, we stabilize in less than 12 months at rents in the high $3 a foot range. The same value proposition extends to office as well. Seaport, Back Bay, they're looking for mid-$70, $75 gross a square foot rents. Over in Cambridge, in Kendall Square, the office market is demanding $90 gross a square foot. Here, we're looking for $65. As I mentioned earlier, as silly as it sounds, we were a region near water but not connected to it.
If you were going to what is today the Seaport 15 years ago, you were driving to what was known as the South Boston waterfront, you were going there to park your car in really cheap parking so you didn't have to pay the downtown rate. As many of you know the history here, IKEA originally owned the land that is today where our phase 1 was erected. A group of citizens here in Somerville filed suit to stop IKEA. Their primary driver, they thought that a mixed-use, dense urban neighborhood activated with a meaningful amount of open space at the water's edge was what was most appropriate for this site, not a big blue box, they were right. We've connected our neighborhood with a six-acre riverfront park that we designed and built, more importantly, we actively manage.
As many of you walked through that park today, I think you saw a couple people doing yoga. We actually have yoga classes on Wednesday nights in the summer. We hold concert series there. We've got a playground to bring families down there. It is a meaningful amount of open space that connects our neighborhood to the water and celebrates our proximity to the water, which is a truly authentic and distinguishing factor for our neighborhood in this greater Boston context. Speaking of authenticity, talk about sense of place. When you create something from nothing, there's a newness to it. That's not bad, it's not wrong, but if you're not careful, it can bend towards sterility, or worse, it can bend towards Mickey Mouse Disneyland effect.
Here at Assembly, we have sought to bend away from that through our placemaking efforts and through the use of art and some of the same ingredients that you just heard Jan detail at Santana Row, you heard Stu talk about at Pike & Rose. It's the big moves like the big art, like the trusses that you saw. It's the small moves, like how we've laid out the street grids and the widths of the sidewalks. Here at Assembly, we've got seven buildings designed by six different architects so that there's not a sameness to the design as you walk down the street. It's programming. I just highlighted what we do with our park. What we do with the private streets further into the district, we've got two of them that bifurcate Caffè Nero.
We've held salsa dancing lessons on those streets in the summer months, we'll do it again this summer. It's also in the design of our storefronts. As I said, we've implemented an outlet model. It was very important to us, and we had willing participants in our outlet partners that the storefronts though themselves look like they belong in an urban neighborhood, urban context, not in what you typically think of as an outlet neighborhood. We, in conjunction with our outlet partners, invested significant capital in stylizing those storefronts so you felt like you were in a downtown environment. Finally, it's art. As I said earlier, we have the big trusses, and we've got a lot of the placemaking art that's typical in some of our neighborhoods. We've actually pulled that into the identity of what we're doing in our buildings. Take, for example, Montage.
At Montage, we've got an artist maker space in addition to all the other amenities in the building, and we invite local artists in Somerville to come down and teach our residents classes, painting, ceramics. Why do we do that? We do that because Somerville has the second highest per capita artist population in the country behind New York City. It connects us and ties us directly to a defining, authentic characteristic of Somerville and helps infuse authenticity here at Assembly, what we've created. You've all walked past this today, I will move quickly through these slides, but please interrupt me if you'd like some additional detail. Phase 1, four buildings. Our partner in AvalonBay had two of those buildings, 445 units. The V-shaped building at the top of the screen is our 100,000 sq ft of office.
We created an additional 300,000 sq ft of retail, as part of our phase 1. All in the investment, $196 million, and we stabilize at 5.5%. That's not a terribly compelling stabilized return on cost, we looked to what had been done at Santana Row and knew that if we created the place, we could begin to add residential, add office, and add retail at a much more compelling return as we evolve this neighborhood, and indeed we have. In phase 2, in 2016, the Partners Building delivered 830,000 sq ft. 730,000 sq ft was Partners. They got 4,200 employees here today. 100,000 sq ft of first floor and second floor retail. Across the street, as I mentioned, the Montage Building, 447 units. The Montage story is a great one, I think, because it's what's compelled us to move into residential in the next phase.
While we were delivering the Montage Building, the 447 units, we leased up at 40 units a month. We delivered that building and leased it up, as Jeff said earlier, at a very brisk pace in less than a year. While we were doing that, our partner at AvalonBay, they held their rents. They didn't offer concessions, and they sustained occupancy in the face of our lease-up. Across the street in the building that we're currently sitting, 21,000 sq ft of ground floor retail, 158-key Autograph Collection hotel, The Row, and above us, 122 condos. As Jeff also mentioned, we pre-sold all of those sight unseen prior to construction completion at $900 a foot. All of that has put wind in our sails and compelled us to move forward with phase 2. Out your left side, my right side, is the construction of our office building, 277,000 sq ft.
Puma is going to be the lead anchor tenant. Very excited about that. On the top of the image above is the 500-unit residential building that we also just broke ground on. 30,000 sq ft of ground floor retail space in a 24-story building. Both of those broke ground in Q1, January of this year, and will begin to deliver in 2021. All in, our total investment on phase 3, we're projecting at $475 million with a projected stabilized return on cost of 6%. What we've created on our 65 acres. What we've either created or is under construction today on our 65 acres, nearly 900,000 sq ft of office, over 1 million sq ft of under 900,000 sq ft of retail, almost over 1 million sq ft of office. Just under 1,400 rental units, 122 for-sale condos, and a 158-key hotel. Back to Jeff's favorite side.
We too here at Assembly, not dissimilar from Pike & Rose, and certainly not dissimilar from Santana, went retail-heavy in order to create the place in the first phase 1. You can see over time the stratification of income across those asset classes. You can also see over time the yield increasing from our phase 1, stabilized in 2017 through to 2023, as we've begun to add those additional asset classes. In that bottom right-hand corner at the end of 2023, which captures phase 3, we're projecting value creation of nearly half a billion dollars. What does the future hold? We've got two remaining development sites here. The large one in the image is just over three acres. The smaller one in the image is just over one acre, block 7 and 9.
On that, we can build up to 1.5 million sq ft of office, 329 residential units in our buy right entitled envelope. That would represent a total investment of nearly $1.2 billion. That's Assembly. With that, I know we've got a couple of moments. I think we got a couple of minutes for Q&As, maybe two or three.
Sure. See, do we have a mic? Craig, did you raise your hand first again this session, too?
Quick.
I'll go.
Prior to Santana Row, I often think of Gertrude Stein's quote, "There is no there." How important is it when you're trying to create the sense of place in these big three projects, is the fact that you're not so much stealing someone's sense of place, but creating it from scratch?
Jan, you want to answer that or you want me to take a shot at it?
Yeah, no, I'll start. I think it's critical, right? You have to figure out what it is that your community's particularly interested in wants. It needs to be clear that you're in fact not stealing it from someplace. We got into a lot of arguments that when we did Santana Row, that we're going to be stealing from downtown San Jose, which had nothing. We were stealing something that they thought they might get in the future. It's critical. It's critical to have that communication. It's also critical to make sure that when you're building it, that it is something unique and very appropriate to the site that you're building. If our particular site was a mile away, maybe even a quarter mile away, we would not have built what we did at Santana Row.
The fact is, we were next door to Westfield Valley Fair, one of the top two productive malls in the Bay Area. That gave us a great retail footprint to build off of and be able to build that 1,400-foot long street all at one time. It's critical.
Yeah. I think like I said, Craig, it's just figuring out what's missing, right? Then meeting that need and Jan's example, clearly, we didn't steal from Valley Fair. We wanted to create an experience different from Valley Fair, and we continue to do that today. Michael.
You've talked a lot about these projects starting with retail, then adding the other uses, and you've put up these slides which have all of the future investment, which is predominantly in residential and hotels and office, getting up to 2023 and sort of where those yields will go. Can you talk a little bit about how the retail rents are being trended in those? I assume when you started these retail projects as retail, you probably had to induce those tenants to come to a new place. But at the same time, there's always been more retail tumult that's been happening given store closures and bankruptcies and retail rents not moving up. You have some crosscurrents going on. Maybe talk about the upside or not within the retail portion of each of these mixed use.
I'm not sure if that's embedded in these future forecasts or not.
Yeah. Look, we're only forecasting out for 4 or 5 years and what we showed you, those come directly from our internal models. Of course, we're thinking about what rents are going to be in the future versus what they are today. I think globally within the big three, retail rents are rising. Jan mentioned we're 99% leased at Santana Row, and we're 99% leased in the face of Valley Fair adding 600,000 square feet, couple hundred thousand square feet of which is shops that theoretically are directly competitive with what we have at Santana. We still have great retail demand at Santana. We're able to get the right kind of tenants. It's really important that you know that. In any of our projects, even in our shopping centers, we're not just looking to capture a buck of rent.
We're looking to put somebody in that's going to be additive to everybody that's already there and doing business and be synergistic and create sales growth. That's definitely a focus at the big three. At each of them, but Santana in particular, because I'm closest to that, we're able to find those people that want to have a store that differentiates and exploits their brand. In the face of a difficult retail environment, in the face of a country that's significantly overbuilt with retail, we continue to find people that are willing to pay and pay up to be in those right and consolidating locations where they can do that for their brand.
Embedded in those-
Yeah. Embedded in the numbers
the investment you're making at targeted above average yields and upside in the existing rental streams, in terms of rollover.
Sure. On average, yes.
Because you didn't talk about other projects like Santana Row out in San Jose or Darien or a number of the other projects that you're working on, Sunset, et cetera. I was a little intrigued that you guys I know Don said over and over, you guys are a retail company, but still only going from 80% down to 72% still sounds like a lot, given that all the future phases seem to be residential, office, hotel, other uses, and the fact that office is fundamentally changing. Certainly, where your suburban-oriented portfolio really benefits from the fact that a lot of the schlocky office that's there, you guys can easily capitalize on. At the same time, as the panel before you guys said, retailers need less stores.
I'm surprised that that number, the percent retail doesn't come down further given everything that you have and the way the environment is changing.
Yeah, that's a good question, Alex. Keep in mind, though, where I started, right? Two-thirds of the company is not mixed use, and the bulk of the two-thirds of that company, the POI is purely from retail. We talked about a slice of the mixed-use portfolio in these three properties. On that slide, it does change 8%, from 80% to 72%, assuming we don't acquire any more retail between now and 2023, which was the capture point on the slide. Yeah, could it go down 8%? Sure. Is it likely to go down something less than 8%? Yes.
I mean-
Is that getting-
Can I answer that?
Yeah, am I not getting Alex his answer here?
I don't think that's the point.
Yeah.
Let me tell you why. The reason we spent the time on these three here this morning was to get you to understand how a multi-decade or decade-long giant piece of land turns into a community. There's no question that over that time, as has been laid out pretty clearly, the second, third, fourth, fifth, whatever phases are other uses that get you to a one-third, one-third, one-third. The notion of that happening, though, happening within a $13 billion company, which is primarily retail, is simply creating that place over each of those projects. The math is what the math is.
To me, the critical thing about that is not that it's office or that it's residential or even frankly that it's retail, but that the creation of that community requires all of those uses, and that together on an integrated basis, that those are de-risked. One of the downsides we talk about all the time of showing the slide that shows retail and then an office piece of the pie and a residential piece of the pie is that in reality, they're all one.
The idea of Santana Row and that office build-out, I can tell you, at some point, to the extent we monetize Santana Row, it is more likely that we will sell 20% of all of Santana Row rather than the office building at the end of the street, which is integral to it, or the residential building that is behind something else. We believe these things are so integrated and trade in terms of the one plus one plus one equals four, that what I really wish you were asking me is on an overall basis, what is the cap rate of all of these uses at Santana Row or at Pike & Rose or at Assembly Row? It has surprised everybody up here, certainly me, and others in our organization at how important that integration really is.
When I sat there just a few minutes ago and heard Bob Philion say, "We're not here just to be in our little headquarters spot on the building, but to be an integrated part of the community," I swear that wasn't staged or anything. To the best I can influence, I'd love you to be thinking about these projects holistically as truly mixed-use communities with an office component, a residential component, a hotel component, a retail component. How does that all work together?
Jan, how does Bethesda and Pentagon Row fit into the other Rows, if you will?
Sure. Just by the way, Alex, we are going to go through some of those other projects a little bit later on, Darien and Sunset and that kind of stuff. We'll get there. Bethesda Row was the initial. Bethesda Row is kind of where we took a place already that really was downtown Bethesda, not a very good one, and made it a whole lot better, critical part of our learning to the next phases. When I think about lessons learned at Bethesda, you see a lot of them in Santana and in Pike & Rose and Assembly. We'll continue. If you look at Stu, who's in charge of the merchandising of Bethesda Row, I think you'll see some really strong growth.
I think you'll be very happy with what has happened to the new tenancy coming there from Chevy Chase, for example, and other places that have solidified Bethesda Row as a critical place. Pentagon Row is a great example of a mistake we made. Really interesting mistake, and a mistake that we repeated here at Assembly, in both cases for good reasons. We cut the buildings horizontally. We said, "We'll keep the retail. Somebody else do the residential upstairs." At Pentagon, it's Post and now MAA. Here it was AvalonBay. In both cases, both times. We really didn't fully appreciate that integration and how much that community on the bottom would help upstairs. At Pentagon, when you look at the demand upstairs, that is right next to where Amazon's headquarters is going. Very walkable. Do I wish we owned the residential on top of Pentagon Row?
More than I can tell you. Even tried to do that. Guess what? They weren't interested in selling. Here at Assembly, in hindsight, do I wish that we did that first phase of residential? Absolutely. Did it for de-risking measures, et cetera. You won't see us cutting uses like that again, most likely. That's a real interesting lesson learned, if you will, in terms of the integration of these uses, in terms of the silly one plus one plus one equals four. It's real.
To Nick.
Forgot who I was talking to, sorry.
Question.
Yeah, thanks. On the cap rates you gave for the three different projects, can you just talk a little bit more about the thought process there? It is easier to find comps for office apartments, not for the whole enchilada or even for the retail. I know you're also sort of suggesting that by adding these components together, that sort of naturally creates a lower cap rate type asset.
Yeah, certainly I do, Nick. Especially when you look at the critical mass that each of these projects will have. Santana has it. Assembly's getting it. Pike & Rose will get there. The uniqueness of that within each of the major cities they're in. Where can you go in Silicon Valley and own something like Santana Row? Where can you go in the United States and own something like Santana Row? Not probably until you get to Somerville, right? We definitely think there's a scarcity premium for that type of property. Because of what they are, which really when you think about it in a lot of respects, the leases that we've done in the non-retail components of these projects, they're the first-time leases that have been done.
As we continue to build them out, as we continue to add density, as they continue to be more and more of a place, where do those rents go down the road? What is somebody willing to pay for that? That's what we think about when we think about the cap rates, because you're right, you can't slice them up by their uses and get a cap rate that's close to what we think they're worth. We absolutely believe they're worth that.
Yeah, Nick, the only thing I would add to that, I was thinking about it as the slides were coming up. Jan started out, he shows these pictures of Santana Row. The first picture that Stu shows up there is Pike & Rose with the farm eye and everything else. The far more industrial notion of Assembly. How different are they? Very. They are for the separate communities. The scarcity piece of this, for that right, whoever your ultimate investor may be. Hopefully, it's Federal Forever, if not, who that ultimate investor is, you can't get it somewhere else. That's the notion. It's why everybody was pushing us to go to Pike 7 and say, "Well, why aren't you doing mixed use at Pike 7 the way you've done it everywhere else? It's the middle of Tysons, Virginia.
Isn't that a great spot? Everybody's doing this stuff, one way or there is some version of this stuff. Why are we scarce if we do exactly that same thing? We didn't need it there. There, the scarcity was a parking lot in front of a very productive shopping center. I can't really emphasize enough how important the scarcity value is for these big three. Now what we're doing is trying to take that and take components of it through the rest of the company, which is what you'll hear further in the afternoon. I'm getting the cut.
Are we out of time?
We're way out of time, I think, unless you want to add something.
Oh, is that how that works?
We'll have questions again.
We're going to take a break?
We're going to take a break, yeah. We're going to take a 15-minute break, so 2:47 P.M. You can 2:45 P.M. be back in here. There's snack outside. There's coffee right there, coffee outside. Restrooms.
It is 2:45 P.M. in life right now.
Add 15.
Add 15 minutes to that.
2:57.
2:57, sorry.
Fantastic.
Bathrooms are to your left, and be back in here, and we'll be ready to go.
I can't do math.
They can take their seats. We're going to kick off the second part of our presentation with Dawn Becker on the influencer effect of the core portfolio.
Thank you.
I have to say, after the first two panels when all these chairs were filled, it's a little lonely up here. If anybody wants to sit up here, feel free. Come keep me company. As Leah said, first of all, for those of you who don't know me, my name is Dawn Becker. I've been here at the company for 22 years and have had really the extraordinarily unique experience in my time here of working extensively on all of our mixed-use properties, including the big three, as well as on our core portfolio. Have some pretty good perspective of the intersection of the two, which is really what I'm going to talk about.
What has continued to amaze me as I think about our core portfolio and I think about our mixed-use properties, is how much intersection there is and how much of those things that we have done on our mixed-use assets that do bleed their way into the core. I do think with having the mixed-use asset, it has made us smarter about how we think about our real estate, it has made us more creative about how we think about our real estate, and it has inevitably added more value to our real estate than if we didn't have the mixed-use to learn from.
What's really interesting from my perspective, again, I said I've been here for 22 years, I kind of take for granted that everybody approaches real estate and thinks about it the way we did because that's what I've seen. It's been interesting perspective over the last few years when we've added some really talented people to our team, people who have a real depth of real estate, retail, residential, different types of expertise, and I see that they don't think as holistically as we tended to do. They've come in with a little bit more of a narrow perspective, and it's reinforced for me that there is a benefit of having seen the mixed-use in action and being able to use it productively.
I know there's a lot of words, what I really do want to do is try to explain to you a little bit more with some examples of what that means and how you see the mixed-use impact flow through to the core and add value to it. I think that slide says it all, right? Mixed-use influences what we do in the core every day in, day out. The places that you really see the broad impact are in these five areas, and you've heard a lot about it with the last panel that was up here. Clearly, sense of place. I can't repeat enough times what that means. It doesn't mean just pretty landscaping. I know a lot of people think that's what it means, pretty landscaping. We have that.
It is what you heard from the group today of talking about that connection to the community, that place where you feel like you need to be as a community. We're answering what the community wants. That's really sense of place when we talk about it. It's merchandising. I think you heard Stu talking about, and you heard Jeff talk about too, getting the right tenants. It's the right tenants in the right spot at the right time. It also means, though, having good, broad, deep relationships with retailers. When you think about, because we have a lot of different real estate, because we have these mixed-use assets, our portfolio consists of every tenant from Dollar Tree to Gucci and everybody in between.
It gives us a really wide range of tenants to talk to when we are thinking about tenanting any space, whether it's in the core or in the mixed-use portfolio. It's maximizing real estate value. It's probably an overused term. Everybody knows what that is. You create real estate value. It's really the holistic way of thinking about the real estate as much as you can vertically as well as horizontally, taking advantage of every piece of the real estate you can to create value. Critical in mixed-use because you've heard us say this a lot of times, it's expensive to do mixed-use. If you're not fully utilizing your real estate, it will never make sense, and that's what we adapt into the core and the way we think about it. It's incorporating those non-retail uses.
Fact is, we've got office, we've got residential, we've got other uses in our mixed-use that get us feeling very comfortable that we know how to look for a market to support office use, for residential use, how to build those types of uses, how to operate them, how to integrate them with retail, and we take advantage of that in the core. It also is impacted by the way we operate in market. You heard Jeff, I think, talk a little bit about the integrated way of operating the properties. Critical on mixed-use, which you can probably tell here, at Assembly. Very critical on mixed-use and those influences find their way into our core portfolio. What I do want to now is take those things, keep those in mind.
You're going to hear that, you're going to see that, keep in mind what they are, and let me walk you through a bunch of examples of how they really have made their way to the core portfolio and how it's made the core more valuable than if we didn't have those types of influences. Jeff showed you this slide. I'm showing you this slide because you can't do any of what I'm talking about if you don't have good real estate, and if you don't have different types of real estate. If you own one type of real estate, you might learn something from mixed-use, but you're not going to be able to apply it. You just can't use every tool in every circumstance.
As Jeff also talked about, the core, which is really what I'm going to talk about as well as Wendy and her panel, are the other two-thirds, all the rest of those assets. Let's start with The Point. I should have put a before slide in here of a property that we bought in 2011, an eight-acre site that was all dirt. That was all it was, just unbuilt land, raw land next to Plaza El Segundo. This is The Point today. I think you can tell just from some of those pictures how clearly this was connected to the community. You can see that sense of place coming out.
One of the things that was interesting when we bought The Point that helps demonstrate, I think, this whole connection to mixed use is this was an 8-acre, unbuilt site that had entitlements for 70,000 square feet of retail. 70,000 square feet on 8 acres of land seemed to be underutilized to us. Our team, and not surprisingly, it was the team that runs Santana Row, so this is the way they think every day in and day out, tried to understand what the best answer was in this community and saw a real need with the wealthy beach communities of Hermosa Beach, Redondo Beach, Manhattan Beach, right where we are. You'd think I would know that one, right? Really tried to understand those communities and realized that they had nowhere to go.
They could go to the beach, but there wasn't a place where they could gather together, spend time with their kids, with their neighbors, et cetera. Our team decided to take some time, redesign the property, and come up with a square footage plan of 90,000 square feet, so we were able to expand the footprint some. A lot of companies would have stopped there, built that, created $10 million, $15 million of value, which is all really nice. Our team took it one step further, and this is really because of mixed use. As understanding that market went through their process, they also understood that there was no office that was between really the L.A. office markets and the beach communities, which meant if you live in the beach communities, you're probably commuting some terrible commute to get into downtown L.A. Not fun. Is there a better answer?
We added 25,000 square feet of second-floor office space. Not a lot of retail companies would do that. If we didn't do that, we would have left $8 million of value on the table. Never would've been able to get it back. But because we know how to look at office and think about office from our mixed use, we were willing to do it here. Where we sit with The Point is we were able to, all told, put out $88 million and create $35 million of real estate value. As I said, eight of which was coming just from the office, which most shopping center companies are not going to have added into it. Another example, we're going to come over to South Florida to Coconut Grove and go to CocoWalk.
CocoWalk, this is what it looked like for those of you who haven't been there. This is what we bought in 2015. Not the most inviting place. Has a great benefit of it's literally at Main, and Main. It is with three-way intersection that comes to the front of the property. You can see there's this building in the middle that is just blocking everybody's view of what's going on at the property. You've got second and third floor, what was retail space. Bought it. Lot of vacancy up there. Not surprising. Second and third floor retail space, not the most successful, at this point in time. And we could have taken a couple of approaches to this property. We could have simply said, "Okay, let's add some Class B office space in that second and third level or some service uses." It would've been fine.
Would've been great for earnings. We'd have been able to get some rent started pretty quickly. Would've been leaving so much money on the table that we didn't think that was the right thing to do. Instead, we designed this. That bell almost went off with my change. That was good. We designed this where we said, "Now we've got to get rid of these obsolete structures." Instead of just filling some vacant space with okay tenants, we're redesigning it to create that real sense of community and also to add a total of 4 floors of office space there, about 70,000 sq ft. If we didn't have the comfort from doing the mixed-use properties, we wouldn't have been adding that office square footage. That's a lot of office square footage to add.
Believed it was going to be successful, and it's proving out at this point when we have two-thirds of that space is already leased. When you think about taking advantage of there, again, that was probably about $15 million of value by adding that extra office space, that if we didn't do mixed use, didn't get comfortable with office, we wouldn't have done. Would've left that permanently on the table, not ever to get to it. By the time we're done with CocoWalk, we have a couple of other buildings, some of you may remember, in the Coconut Grove area, we'll be able to benefit from what we create at CocoWalk in some of those other buildings. We'll have a total of $200 million invested in Coconut Grove and have created $75 million of value. Pretty significant change there.
You probably think, yeah, okay, The Point , CocoWalk. Yeah, not surprised that you have a lot of mixed-use influence. I think about them differently. It also applies in our shopping centers, just our basic shopping centers. I'm going to take you to one just up north from here in Davie, Florida. That's Tower Shops. Tower Shops we bought in 2011. Tower Shops when we bought it was a fine superregional shopping center. Wasn't enough for us, knew there was a lot we could do, I want to turn it over to a video of the team telling you what it is that we did at Tower Shops.
Tower Shops is a large multi-format superregional hybrid shopping center located on 67 acres of land in Davie, Florida, at the southeastern intersection of I-595 and University Drive, which is essentially the bullseye for regional traffic in Central Broward County. University Drive is one of the busiest non-highway arteries in the entire county, with over 70,000 cars per day. I-595 provides easy access to Florida's Turnpike, I-95, and I-75. The property boasts solid demographics and also has a strong student and daytime population.
Federal Realty bought Tower Shops in early 2011 for $66 million at roughly a 6% cap rate. Given its size, highly productive shadow anchors, and location at the best corner in the submarket, Tower Shops had the potential to be the dominant center in the regional trade area. While the asset was clearly undermanaged, the anchors had strong sales performance. We liked and felt confident in the NOI growth potential of the asset with an existing 33,000 square feet of vacant space to lease.
In 2012, phase 1 of a property improvement plan was initiated with a $4.7 million canopy renovation and various site improvements. Initial steps taken were to establish a design team that focused on architecture, landscape architecture, environmental graphics, and ideas to build a toolbox for leasing to have to reposition the asset in the marketplace. With the property nearly 100% leased, value add focus shifted to expansion potential. We knew that subsequent to phase 1 property improvements, tenant and consumer demand was measurably present, providing market support for the expansion. The property had approximately five acres of underutilized land located in the center of its primary parking field. Human-scale architecture and earth tone prairie style design provided a new and endearing quality to the immediate Davie, Florida community and surrounding market. Embedded in the strategy to reposition the asset is the quality of place.
Place, which is frankly an overused expression in today's industry, has never been more important than it is today. The ideas of how to make a sidewalk more than just a sidewalk, how to make the approach from a vehicle onto the property to its parking spot for the consumer to walk into the store. That whole experience is something we think about, we try to enhance. Landscaping, lighting, signage, all those considerations come into the thought process. The ability for a consumer, a visitor, to come to our assets and experience the types of opportunities that we provide just makes for a really great position for the property to be recognized as such.
It's a little different than you saw on the slide right before that from what we bought in 2011. At this point, we've got $98 million invested at Tower Shops, and we've created $113 million of value over and above the capital we have in, including our $66 million purchase price. What I'd love to do for a little bit is just take you through the mixed-use influence here, which comes up in a lot of really little ways that when added together clearly made a really big impact, and you see it in all the mixed-use tools that we were able to use at this asset. Let me start with the first one we jumped on. There's an extra piece of land that came with it and a private road.
The road gets you into our shopping center to get you to the back of the property and to get you to the tenants that are over on that side of the property. Who thinks about doing something with a private road? Well, we did. We talked to our neighbor. Our neighbor is a highly successful Costco who was looking for the opportunity to be able to put a gas station out on their property, but they needed parking. Neighbor volunteered to reconfigure our road so it still serves our shopping center, gets our tenants in, reconfigured the road, they use it for parking. Now they pay us $250,000 a year for the privilege of that and created $5 million of value with very little effort on our part other than creative thinking. Let's jump to the pad that John T. talked about in the video.
As you saw, probably for a lot of those pictures in the video were from the pad, and hopefully you saw that it really is a gathering place for the community, has created its own little environment, notwithstanding the fact that it's sitting in the middle of a parking lot. It was, for us, the ability to take $21 million to deploy it and create just in that $15 million of value.
An interesting little story that some of you may have heard that really is very emblematic of the way our thinking about our real estate and getting to value holistically goes through our entire organization, that is one of our anchor tenants at this property has a lease that said, "Landlord, you can't do anything in the parking lot if it materially adversely affects the visibility of our store or parking." As a lawyer by training, clearly coming in my mind of thinking about that, all that says to me is, well, that's a factual determination and leverage. Leverage for the tenant is never a good thing from my perspective.
What we did is got really creative about this and spent 10 months in advance of our plan to do the pad development and created a strategy of frankly documenting that you couldn't see their store anyway with no building, so hard to materially adversely affect that. We cordoned off the parking lot out there where the pad was so no one could park there. Inevitably, we start the development and we get the attorney letter from the tenant that says, "You're going to stop. We're going to take legal action. You need our consent." We present them our evidence. They look at the fact that, yeah, you never could see their building to begin with. By the way, their sales went up when we took all that parking away. They lost their leverage.
They cooperated with us as we went forward, we unlocked that value pretty quickly. It truly goes through the entirety of how we think about our real estate, and we have to do things like that all the time on mixed use because as we've talked about, it's very difficult. You've got a lot of constituencies you're trying to get to, you have to get a little bit more creative in your thinking, and it doesn't stop just because we happen to be working on a core asset. You noticed when we bought the property, that pad site was not one that was showing up. We bought that property, and it was great. We paid full value for it, and we'll be able to make money when we release that tenant. What was really important about that was the impact on that pad site.
The reason it was important is when the pad sites were independently owned, we owned one, a neighbor owned another, you had to respect the parking on each of your pad sites. We own them both, you don't have to respect the parking so much. When what that did on this pad site, it enabled us to do a ground lease to a tenant where they took the building from 6,000 to 8,000 square feet. For us, that allowed us to take the rent from 100,000 to 380. Big change, and independently, that created $7 million of value for us. Couldn't have done that if we wouldn't have taken that strategy to make sure that we owned that pad. One of the things you don't see on that mention, I do say maximize real estate value. I do not say merchandising on that slide.
Part of merchandising is knowing when it doesn't matter. This was one where we knew it didn't matter and really did that lease to get the most money. That was the biggest impact for that particular space. Took our mixed use understanding and applied it to this end cap. We bought the property and that end cap had long-term vacancy, had a couple of service-oriented users like an Allstate, a group called Signarama, but just really an unproductive part of the property. Took the understanding we had as part of the PIP you heard about in the video and created a real outdoor seating and dining area that then became a hub for multiple high-quality, fast casual restaurants who are thriving and are doing a lot of sales, including some of us enough sales to pay percentage rent.
Just doing that difference and taking a different approach to that end cap has created another $7 million of value for the company that we probably would not have done if we don't think about that kind of a destination place that we create in our mixed use assets. All of that has spillover effect. When you make those kinds of changes through the property, when you think about it that way, when you do the improvements that were talked about in the video, we were able to take advantage and upgrade some merchandising, bringing in tenants like Tillys and Ulta, and also to really drive rents from a lot of the tenants that were there.
That really is because of all those little things that we did throughout the property to make it more appealing to the consumer and therefore to the tenant. Just step back and look, a summary of Tower Shops. You'll see our $66 million acquisitions with $4 million of POI. In eight years, we've more than doubled the POI and more than tripled the value, with that shopping center being valued today at about $210 million total. We really did it by focusing on the creating the real estate value and not just getting the space leased.
It is that long-term, kind of to put it in the terms you heard earlier, continuing to look at the future and how to make sure you're doing the best thing for the future. By the way, we're still not done. We have a couple of more opportunities in the next 5-7 years where we'll also be able to add some value through whether it's re-leasing, some redevelopment, we don't know yet, but they are more opportunities to take advantage and exploit what had already been created at Tower Shops. Let's now take another example. We're going to go across the West Coast, back out to San Jose. You're looking right now at Westgate Center, which is a property that we bought in 2004, which is in San Jose.
When we bought it's a large, well-located power center that had a really unproductive interior mall, and that we did some redevelopment work, which the team will tell you about.
Westgate Center is a multi-anchor community center on 44 acres of land in San Jose, California. Located on three of the busiest streets in West San Jose, Saratoga, Campbell, and Hamilton Avenues, with 35,000 cars per day on Saratoga Avenue alone. The trade area is densely populated and affluent. Over 200,000 people live within three miles of Westgate Center, with average household incomes of nearly $150,000. We acquired the property because we saw the opportunity to increase value through re-leasing retail space, which was only producing average annual base rent of $11.50 per sq ft.
In summer of 2012, Federal Realty began a $15 million makeover and rebranding of Westgate Mall by changing its name to Westgate Center and embarking on an extensive renovation of the 52-year-old property. As a flagship retail destination in San Jose, the makeover and rebranding allowed Westgate Center to go beyond a transactional environment and become a true community experience. Federal Realty engaged LPA as the architect and April Philips Design Works for the landscape architecture design. Exterior renovations at the property included all new monument signs at site entrances, lighting and landscaping, and an enhanced central plaza with cafe tables, fountains, and landscaping. Outdoor dining lines the entire space, activating and engaging all visitors, be it passing through or relaxing in the shade.
In support of Westgate Center as a community destination, we enhanced its interior spaces to reflect a warm, contemporary aesthetic that is open, relaxed, and family and neighborhood oriented. Spaces along the interior include a Kiddie Corral play area, and a highlight of the transformation included a food court, which contains cuisines from around the globe. The food court is the heart of the center and is viewed as a community gathering place.
Our customer's looking for quality, variety, and diversity, a product mix that the outlet shops combined with full-price offerings can deliver. Our customer's been extremely responsive to the outlet center hybrid concept. In 2013, Skechers Outlet, J.Crew Factory, and Gap factory stores opened. In 2014, anchor shop Nike Factory Store was added to the dynamic mix. And today, with the additions of TJ Maxx and San Francisco 49ers Fit Gym, Westgate Center is bustling at 99% leased.
There's Westgate Center today. I don't know if you caught it, Jan's comment in the video, which so echoed what the mayor said earlier. Jan made the comment that we took Westgate from a transactional center to a community gathering place. You heard it from the mayor in a totally different context, but the theme is clearly there of just having places where you go to do business isn't what people are looking for today, and they are looking for that sense of place, that community aspect that we do with the mixed-use properties, and then bring home into the core portfolio. I thought it was interesting, the choice of words being just right on target from what our team looks at every day as well.
Westgate, as you heard about the renovation that we did, we sit today with $156 million invested in Westgate and $82 million of value that we've created over that time. The vast majority of which has come since we did the redevelopment in 2012. Just to give you a couple of little interesting facts. You may have heard at the beginning of the video, Jeff told you that the rents per square foot when we bought the property were about $11.50. We had a lot of tenants in place and wasn't a lot we could do until we got to 2011, 2012. When we got to that point, the average rent per square foot was $12.58 a foot. Didn't really go very far. The end of 2018, that stood at $19.34.
Almost 50% more coming during that period that we did the redevelopment, it really did come from transitioning the property from just transactional into more of that community gathering place. One of the things that's really interesting to me with Westgate, as you think about, again, the sense of place, is really that merchandising. It so incredibly ties to the mixed-use properties when you think about what we did here. That was our lineup before we started the redevelopment, which is a fine lineup, some really good productive tenants with Ross, Target, Old Navy, et cetera. We finally started to be able to get to some of those leases that were expiring. Some of those tenants go away, and we replaced them with a couple of the outlet retailers, Skechers, J.Crew Mercantile, Gap, Nike, TJX.
What's really interesting about that when you think about it, especially since you're sitting here at Assembly Row with our outlet center here, is that was a concept that nobody had really thought of until we pioneered here at Assembly, putting outlets in a non-traditional outlet setting. Right? If we had not done that groundwork here at Assembly to have talked to these kinds of retailers, to have understand how these outlet retailers view their business, how they think about expanding their business, what they need, if we hadn't have established the relationships with those tenants, if we hadn't have gained credibility because we told them, "Hey, come to a non-traditional outlet venue, you can do business here," and it's worked.
If we didn't have that credibility, I don't think we would've been able to get them to go out to Westgate and what you heard Kaushik specifically talk about as an outlet hybrid. Really an interesting connection of how the R&D that we did here at Assembly, particularly on that merchandising, has translated into our portfolio. One of the things I think is not unimportant here in particular, we just talked about Assembly having a translation effect out to San Jose. Don't lose sight of the fact that these mixed-use communities are in each of our large geographic areas. We have Assembly up here in the northeast, we've got Pike & Rose in the D.C. area, and then we do have Santana on the West Coast.
Pretty much all of our employees are working on something related to these assets, no matter which office you're in and no matter what you spend most of your time working on. Everybody hears about them and knows about them. Frankly, it's pretty easy when you only have 300 employees, they all talk to one another. The learning that goes from these properties, it's not Don or Jeff or me or Jan calling and saying, "Hey, this is happening at Pike & Rose. This is happening at Assembly. Try that here." It's the teams on the ground talking to one another. It's so organic of the leasing people calling and understanding who are you talking to at your mixed-use properties? Who are you talking to at the core? It's the property managers, it's the development teams.
The knowledge gets shared really efficiently throughout the organization, which is why you can take a lot of the learning from mixed-use and translate it onto the core portfolio in different ways. In case you're wondering, we're not done at Westgate either. Target sits on the end cap there at Westgate, and Target accounts for about 25% of the square footage of the property. Today, Target accounts for about 3% of the property operating income from the property. I know the lease is coming up in 2027, which, if you ever talk to Jan Sweetnam, he will tell you that's just around the corner, the way he looks at it. I don't know, nobody knows if that's going to be a $13 rent in 2027. Is it $15?
Pretty much no matter what you put on that, given what they're paying today, it's probably $35 million-$40 million of additional value coming out of Westgate from just that one particular box. It's not bad. Just to take a breath for a second here, these are four big properties. You may be saying, "Great, you created $300 million of value at these four properties. They're big properties. I can see why mixed-use would influence them." It really doesn't stop there, and it is all through our core, even in small little ways. I did want to just jump and show you a couple of the other ways in smaller investments that you can see how mixed-use has made its way into the core.
It's taking things like that beautiful The Bon-Ton entrance, which is dark and foreboding on that side, and converting it on our property in Brick, New Jersey, into a boardwalk. This is a Jersey Shore community, you want to talk about fitting the community. It's giving them the gathering place that feels organic to their particular community. It's taking Plaza del Mercado, which was one of our Clarion assets, for some of you who may recall that we bought out a few years ago. It's taking obsolete space. It's taking space that's obviously quite unattractive that you see on the right side. It's changing that. It's creating a sense of place. It's taking the merchandising and putting in a grocery anchor and a fitness user in more relevant retail space than existed in that shopping center. It's Willow Lawn.
Willow Lawn has been in the Federal Realty portfolio since 1984. If you look on the left side, that's a fine shopping center, and it really is a fine shopping center. It wasn't really good enough because we knew that the people in Richmond were looking for that same kind of community experience that we've talked about at the mixed-use properties. We took the time to create that, and that's something I don't think a lot of shopping center owners would do. If you think about redevelopments and some like this, that we have done it since 2016. We've done 9 similar things that have been more extensive redevelopments, put out $105 million, and created $48 million of value. Pretty good influence where you see those mixed use come through, even in smaller types of redevelopments that add up to a lot of value creation over time.
Not surprisingly, you also see it in the fact that we do residential. Very comfortable with residential from our experience here at Santana, at Assembly, at Pike & Rose, and we've done a few small residential projects over the last couple of years. In fact, we've done 3 of them and generated about $18 million of value. Remember, this was value that was created on properties that if we weren't comfortable doing residential, we wouldn't be creating that value. There was nothing else to do. These were parking lots. These were unused pieces of land. One of them has a really good example, I think, of again, how we think about always looking to the future of the real estate. That's a property in Towson, Maryland. 2007, we bought White Marsh portfolio up, and we got this piece of land.
It was about 1.2 acres that the seller said, "Here you go. We've got a bank pad pretty much ready to go. The lease is almost done. All yours." 1.2 acres of land for a bank pad just inherently didn't make sense to our team as a good use of real estate, decided, "Eh, let's slow it down a little bit. Let's talk to the bank." Talked to the bank, got them to agree to move their pad up into the corner of the property. This is still 2008, 2009. Had no idea what we were going to do, but knew there should be something we could do at some point in time. 10 years later, market conditions were such, we added a 105-unit apartment building there and created $8 million of value we would not have created if we didn't understand and feel very comfortable with retail.
We just wouldn't have thought about it. I think this is a really great example of how that mantra of maximizing all parts of your real estate horizontally and vertically, that we learn and do in mixed use day in and day out, how it really comes through, even in a simple project, a 1.2-acre property like this one. I think we've been doing the residential pretty well, by the way. This is our flats at 703 at Towson. You do also see it in the pad buildings that we do. These are pad buildings, and they feel pretty good when you go there. You feel like you're not in the middle of a parking lot, even though you are.
Even the pad buildings, taking that influence, whether it's the merchandising influence, whether it's the placemaking influence. We've been able to do nine of those projects and create $39 million of value, and arguably do them better and smarter than if we had not had the mixed-use time, whether it's because we created that sense of place or because we changed the way we orient the pad or the way we document the lease with the tenants to make sure that we're not precluding ourselves from those future opportunities that would come up. It also comes up in things you're not going to see on the 8-K. Don mentioned it earlier when he led off of it's taking the concept of FitRow.
It's having our team in Maryland say, "Geez, we've got some second-floor space at Congressional Plaza that we want to lease, and we want to figure out the best way to do it." The single-tenant user is not the best alternative, we feel like, at this point in time. We're exporting the FitRow concept down to Congressional Plaza. We've got a version of FitRow, by the way, that they've exported down to Charlottesville, Virginia, on a side part of the shopping center at Barracks Road. It's our different teams understanding what's going on here and thinking about how to use the concepts that are pioneered at the mixed-use properties and bring them into their portfolio in small ways, small, discreet ways that work in that particular circumstance, and FitRow is a great example of it.
Last part of the influence really is the operations of the center, which you heard Jeff, I think, talk a little bit about integrating the operations. I think the one thing, if you've been to any of the properties, Assembly is a great example of it. We don't view our job as stopping when we sign the lease. Right? Our job keeps going on, and at the mixed-use properties you see and feel that hospitality and customer service part of being there for the community, the customer, the tenant. We take that and let's be really clear, our marketing budgets at Assembly, Pike & Rose in Santana Row, much bigger than they are in the core.
There are a lot of things we can't be pioneers on the core and can't do a lot of development on, but we can sure take advantage of the learning of how to have a hospitality-focused, customer service-focused experience for the consumer. All the things we learned from mixed-use and take those when they refined it and spent the money on it and bring those into the core. What that really does, I can't give you an ROI on that because I don't know, but what it really does is it creates a brand loyalty with the consumer because they do think those properties are part of their communities. We've been responding to what they want. We've doing what they want. They want to come here.
That certainly leads to better sales for the tenants and ultimately for better rents to us, so more value in our assets. Really an important part of it that really is only possible because of the investments we can make in the mixed-use communities and the learnings that we can do here. That was a lot of stuff. There's a lot of properties, a lot of examples. Just a quick summary of it. We've done a bunch of big projects, small projects. These are just projects that are either in process or stabilized since 2016. Through all those projects, created more than $400 million of value. I don't know, if we didn't do the mixed use, what that number would've been. 300, 325? I really don't know. What I do know is it would've been less.
If you think about no office at the Point, no additional office at CocoWalk, no outlets as the leasing alternative at Westgate, no residential at Towson. Those kinds of things, they add up. They add up over time to significant amounts of value that because we think about mixed use and we have mixed use, we are thinking about all of our real estate differently. What I know without a doubt at this point is when you've got well-located real estate and you've got diverse types of real estate, which we do, if you can combine that with the R&D that you get from mixed-use properties and all of the learnings, you can definitely create a lot more real estate value.
If you don't have either one of those things, you don't have the right real estate, you don't have the R&D that you can do at the mixed-use properties, your real estate is not going to be able to create the same amount of value over the long term. With that, I'm going to turn it over to Wendy and a team to walk you through more of the core.
Good afternoon, everybody. I'm Wendy Seher. I'm president of the Eastern Division. Many of you I haven't met. I've met some of you, but I haven't met a lot of you. I just wanted to give you a little bit of background. I grew up in this business entering the industry on the leasing side of things, so between leasing and transactions and revenue, both on the landlord side and the brokerage side, and I joined Federal Realty in 2002. We've seen, as Dawn says, we've covered a lot of territory this afternoon, movies and videos and site plans and before and after. Starting with the mixed use and these amazing neighborhoods that really are our incubators of ideas that resonate through our portfolio, our core portfolio.
Dawn just did a great job walking us through at least a dozen or more examples of how those mixed use and those lessons learned, if you will, really influence how we execute in the core. One of the biggest takeaways I'm hoping for you guys this afternoon is understanding our core portfolio. Even when you say the word core, it just sounds kind of boring, right? It's just core. This is anything but boring. This is not your everyday USA generic retail that you see across this country. This is a premium set of quality shopping centers that really provides us with a tool and an advantage to grow for the future. It really is our competitive advantage. As we talk about real estate this afternoon, I do want to touch on the environment a little bit out there. Retail is rapidly changing.
I want to acknowledge the fact that it's tough out there right now, this disruption throughout the industry is putting pressure on our growth. Where is it really stemming from? It's really starting with the consumer, right? The consumers, their wants, their needs are changing, they're evolving what they value, how they want to spend their time, what they want to spend their time on. It's changing, it's being fueled by the rapid changes and advancement in technology. Who's the benefactor of all this? We are, right? The consumers. You and I are benefiting from better information, better choices, the speed under which we get our information, the speed under which you can order products and have it literally delivered to your front door within hours of when you've placed that order.
These are very exciting times, in my 30 years in this business, I've been in many cycles because we know this is a cyclical business that we're in. This is not a cycle. This is a fundamental change, a shift in how consumers want to spend their time and their money. In addition to these behavioral changes, technology changes and advancements, we have an oversupply of retail. There's just too much retail in this country right now, it's being compounded by bankruptcies, downsizing, liquidations, which, by the way, have always been throughout the retail landscaping. Retailers have always failed, which created opportunities. This is nothing new. With the abundance of retail product out there, it's compounding the issue, it's putting pressures on rents.
It's forcing retailers to really evaluate what are the number of stores that they need, the size of the stores that they need, the centers in which they want to be located in. Given these dynamics, why do we remain bullish on our ability to grow, how do we really differentiate ourselves from everybody else? The simple answer is that not all real estate is created equal. With change and disruption, there comes opportunities. It's not just any real estate that has the opportunities, it's the right real estate. That's really what I'm talking about today, and we're coining, if you will, the Federal advantage. If we talk about the Federal advantage, you've heard a lot about this today already. It's the quality of our real estate, which really is the combination of the location, the merchandising, the consumer experience altogether.
It's the local boots on the ground and those experienced teams who are executing day in and day out, and it's that pipeline of growth. When we look at this a little bit further, and we break it down a little bit, the location, the merchandising, you know these markets. You've seen this slide before. We're on the East Coast, the West Coast, strong demographics, strong barriers to entry. Just like the consumer today expects more, retailers expect more today from the locations that they're in, and they expect more from the landlords that they choose to do business with. In spite of all these challenges that we're having in the market right now, we continue to see a flight to quality. Retailers are willing to pay more rent to be in better quality assets, shopping centers. The basic fundamentals haven't changed.
If you can drive the sales, you can drive the rent. I just was with the folks from TJX last month here in Boston, and I was sitting down with them, and we were doing a portfolio review and working on a bunch of things, and this is their senior leadership. Their biggest message to me was, "We want to be in more shopping centers with Federal Realty. We value quality real estate. We understand, and more often than not, that means higher volume stores for us. We want to be in quality real estate." That doesn't mean that they won't use the dynamics in each individual market that they can to drive the best deals possible, but they value quality real estate because it produces more for them in sales.
About two weeks ago, I had someone ask me a question, and the question was, would I trade some of our higher quality assets that have higher in-place rents for lower quality assets with lower in-place rents so that I could grow rents quicker from a lower base? I'm kind of scratching my head with the concept because, I mean, I work in long-term value creation, and I know sometimes that runs in the face of reporting quarterly, quarter to quarter, which Dan is responsible for. If I reached out to our leasing folks here, if I reached out to Liz Ryan, who's right over here, and Jeff Fischer and Stu Biel, who's somewhere, and said, "If you're responsible for growing a stream of revenue," which by the way, you are, "would you rather do it over a lower quality asset or a higher quality asset?
Higher quality. Higher quality asset.
Okay. All right. Good answer. The higher quality assets. They just simply provide more choices, right? It might be retail choices, it might be alternate revenue choices. When you have choices, you can drive demand. When you have demand, you can drive growth. The lower quality assets, which by the way, we have some. It's not like we don't have everything is perfect at Federal Realty. We have some low-quality assets. You have less choices, less demand, and sometimes it's harder to justify putting the capital into these properties because you don't have the rent to get any type of an incremental return on your investment. The teams, the second Federal advantage. These local decentralized teams that we've put into place are making a difference. They live in these markets. They breathe these markets. They know these markets. Remember, we're in a contract business.
What gets put in those contracts can influence dramatically, and we're going to hear an example of it. The value of your real estate, not only at that time, but for years to come. The third one is really the robust pipeline, and it really stems from one and two, right? You got great real estate, great experienced teams executing on it. It's an engine. It's a pipeline that keeps creating more and more opportunities. What we thought might be interesting is to take you to Bala Cynwyd, Pennsylvania and provide you with three industry experts, Federal Realty employees from three different disciplines, and walk you through kind of a live example of something that we're working on in the core and let you hear their perspective of how they approached it.
Closest to me, Mike Ennes, is our Vice President of Residential for the company. In the middle, center stage, Jeffrey Fischer, who is our Vice President of Leasing for our Philadelphia and New Jersey markets, and John Tschiderer, who is, we know him as John T. You've already seen him up on the screen today. He is our Senior Vice President of Development for the Eastern Region. I think, Jeff, you're a born and bred.
Born and bred native Philadelphian.
Take us to Bala Cynwyd. Tell us why are we talking about this property today? What makes it special?
Well, we know it to be a quality asset, but what we're investigating or what we're looking at is how much untapped potential there is. As I said, I'm a native Philadelphian, I remember going to the Bala Cynwyd Shopping Center when I was a kid, specifically to the Woolworth's that was there. Even at that time, it was a busy, productive center. Fast-forward 25 years, I'm now leasing the center. That Woolworth's is now Michaels Arts and Crafts. It's still a busy, productive center. That begs the question as to why, how has it stayed relevant for all these years? In my opinion, it's because of its strong fundamentals. What you're seeing on this slide here is that we are approximately six and a half miles from Center City, Philadelphia. We are essentially 10 minutes, traffic notwithstanding, to Center City.
That allows us to have reach into a much larger audience. At the same time, the captive audience within three miles has a population of upwards of 300,000 people. There's good demographics there, but it's a diverse demographic. That diverse demographic consists of an affluent, lower-marrying customer. It consists of the density that comes from the West Philadelphia customer. It consists of 12,000 students, faculty, and staff that attend Saint Joseph's University and PCOM, as well as, and as you can see on the slide, we're surrounded by about three and a half million square feet of Class A and Class B office space.
Those are the good fundamentals, but there is one thing beyond all that that also makes it special, and that's that it's 23 acres on City Avenue with almost a quarter of a mile of frontage with 50,000 cars going by on a daily basis. That's unparalleled branding for any retailer, what retailer or tenant for that matter. We get that, and that is a part of the ingredient that makes for a good redevelopment. Another factor that needs to be considered, I think, is the market conditions. The market conditions here are such, this is a mature market. There are high barriers to entry. You've not seen any undeveloped parcels for some time. That's worked to our advantage. That's allowed us to maintain great occupancy. It's allowed us to have options when it comes to merchandising.
We often have two or three tenants vying for the same space. We can be selective, and with that comes higher sales and higher rents, and that's the name of the game. Given all that, I think we're looking at a redevelopment and say, what more can we do? There's pent-up demand, how can we harness it, and how can we build a product that's going to be embraced by the community?
John, we're looking at 11 acres. Tell us why. We're shading 11 acres. What's happening here?
What's happening here- Okay. There you go. Building off the attributes that Jeff talked about, and how do you get after, if you will, the value-add proposition that we're talking about here? In this case study, everything that you've heard so far today, the influencing, the use, and all those qualities that go into the real estate, they all add up into the equation of how you look at this 11-acre opportunity in Bala Cynwyd, Philadelphia. A variety of drivers, a couple of drivers, main drivers frankly, but two in particular that are going to bear our focus into this opportunity is to control the real estate, and I'll get to that in a second.
The other one is the actual zoning that's in place today, and is it antiquated or is it productive in today's market in terms of uses and how you get after those uses. First, how we get after in terms of the control of the real estate. In the retail sector historically, anchor stores in particular, have incredible control that is limiting in the leases, whether it's no build, parking restrictions, exclusive of uses. 10 years ago, the Lord & Taylor lease came up, this renewal, both parties sat down and negotiated a new lease. At Federal Realty, we got together, leasing, legal, asset management, development, and we said, "How are we going to craft this new lease so we give ourselves the best chance on the horizon to create more value at this great real estate?" We worked out a great opportunity with the lease.
In that opportunity, this is a decade ago. Over the last six, seven years, we have been able to get after phase 1. What you are seeing on the screen is phase 1. That is control. Let me go to the zoning for a second before I get to the slide. On the zoning side of it, when you realize that the, I will call it antiquated zoning, with the zoning classifications, the land use regulations, they are just not productive in today's market and how you get the highest and best uses on the property. We started working with the community, the township staff, Lower Merion Township. We worked with the local community, the business community, to work on zoning amendment text that got adopted. It allows us now to put higher density onto the property, threefold higher density. Phase 1 of where we are going.
Phase 1 is what you see on the screen. The first opportunity was the 14,000 sq ft, as Jeff mentioned, along the busy City Avenue, 14,000 sq ft retail opportunity. We executed on that. The other one, which is actually under construction, was the 87-unit residential building, which Mike is going to elaborate more on, is on the other, quote-unquote, front of the shopping center. These images show the Honeygrow and then the Corner Bakery Cafe of the retail component. The bottom left is the residential building that is currently under construction, and that delivers in March of next year. Financially, here is how it rolled up. It was a $29.3 million investment and had a value creation of $48 million. Pretty heady for the opportunity that we had there and the thinking that went into it.
John, you talked about the other front of the shopping center. This is a view of where the residential is actually under construction right now. This is really the back of our shopping center. I am looking at Mike, who creates our residential environments. I really have two questions for you. Why would anyone want to live there? Number 1. Number 2 is, if it is the back of a shopping center or unutilized parking, why can not every real estate owner just do the same thing and replicate this?
A lovely photo, yes. I will answer your second question first in that it is simply math. I do not believe that everyone is going to be able to put residential on the back of a shopping center, because you need to have the rent levels to achieve that. That is kind of the first threshold. If you can get past that, there is then two areas that we focus on, which is the quality of the real estate, which we have heard a lot about today. Third is the product. You need to have the experience to deliver the right product to meet the demand in the market. That is kind of the beauty of our portfolio too.
When those three things come together, what that allows us to do is to be in a position of strength, not in a position of defense in a commodity environment, but when we have the right location and the right product, we're in a position of strength so that we can deliver a premium to those that are around us. It's not just Bala Cynwyd either. There are a lot of other opportunities that we're looking at. I think right now I'm in initial underwriting with various development partners on probably 10 projects. Not all of them are going to work out by any means. Trust me, it sure is fun to try and figure out opportunities like this where they do come to fruition. This photo specifically, yes, we passed the rent threshold in this location. Check the box there.
We feel that's a prudent deployment of capital. Two, what are the qualities of the local environment from a residential standpoint? They mirror a lot of what Jeff just said. Particularly this photo, it's not about the construction in the foreground, but it's about the neighborhood that sits just across the road. This location is the eastern border of the Main Line, one of the most mature and desirable neighborhoods in all of Philadelphia. The homes for Philadelphia in this area range from $600,000 to $1.5 million. That's a key. The second is the access to transit. We have a regional road network, City Avenue. We have the Purple Line that's just a few minute walk away to get you to downtown Center City Philadelphia. Two. Number three is how is the resi demand in the area?
We have 2.5 or 3 million square feet of office space in Bala Cynwyd. We have a regional hospital to the west, and we have Saint Joseph's University, all relevant demand drivers for residential multifamily demand. Fourth is what's the quality of the shopping experience or the shopping center? What a resident wants in a shopping center that's adjacent to them may not be the same as what a consumer or a shopper might want going to a power center or a regional mall. They want grocery. They want fitness. They want compelling food concepts. They also want services like banking, like dry cleaning, and in this case, we also have a gas station adjacent. Those are all key elements that come together from a retail perspective that further allow us to drive a premium. The final is just a wide bandwidth of potential renter profiles.
I went through the different demand drivers of residential demand here. What that means is we have potential grad students from Saint Joseph's. We have early career professionals who are working in Bala Cynwyd, who are also commuting downtown to Center City or commuting up to King of Prussia in this location. We have individuals who are working at the regional hospital. We have empty nesters who have lived in these neighborhoods for decades that are looking to downsize and simplify their life. We can ensure ourselves the widest bandwidth of potential renters to ensure that demand exceeds supply in this location. That's kind of the second part of our key criteria. Then the third is the product, and this is the most fun, frankly, is what do we deliver for the resident experience?
Before joining Federal Realty, I worked at Hilton Worldwide for eight years in luxury brand development for Waldorf Astoria, Conrad, and helped develop the Canopy brand. What I do is take that knowledge of visiting over 500 luxury and lifestyle hotels around the world, and then try and infuse that in a way that's contextual and relevant to each location that we're building. In this instance, we're not pulling other images of other multi-family locations and using those as precedent imagery for our design teams. If we're pulling images from some of the best boutique hotels and also leveraging some of the local context, like the fact that Bala Cynwyd has a cricket club. What can we do with that? What can we do to make sure that it's memorable and that we stand out from the competition?
Those are all things that we consider in addition to the service and leveraging technology in a way that helps benefit or enhance the resident's experience in their home. Finally, in looking at those three criteria, does the rent work? Can we have the right qualities of real estate in the surrounding location and the right product for the demand? Finally, what that nets us here is for a relatively modest $23 million investment, it helps validate and confirm our phase one opportunity. We know that if we have a pathway to call it 10% rent growth, that may then turn into additional residential in phase two.
$48 million value creation, phase one. The critical component is when the tenant came up for renewal, not only getting flexibility on what we could do with the controls of the property right now, but looking out 10 years and what we could get the opportunity to redevelop, because we knew with this quality of real estate, it was going to demand densification at some point. Now we get to John, what are we looking at for the future?
Control, proper zoning that allows higher densities, market confidence, both past, present, and future. I like that. Provides all kinds of opportunities at this location. Right now, we're going through a highest and best use analysis, if you will, to see what we can do on the eight acres. Right now, under the current zoning, we have the ability to put 360,000 square foot of additional titled GLA on the property with an investment of approximately $150 million plus. All to be determined here, hopefully in the next few months.
I wanted to stop on Bala Cynwyd, kind of where we started with a unbelievable piece of real estate on City Avenue with the metrics of that Federal advantage. It's the quality of the real estate. It's another example and many more examples to come of how you have quality real estate. It produces choices, it produces demand, and you can drive growth for the long term. Thank you guys for walking us through that. I know that we have just a couple minutes. I got a couple minutes, and I'm holding you up from Dan, who's going to roll up all the numbers. There's three more slides I want to show that really demonstrate important kind of on-the-deck redevelopments that we're thinking of again in the course. Somebody mentioned over here Darien.
We've got Darien, Connecticut, great piece of real estate, nine acres just north of Stamford. This is Patrick. Are we fully entitled? Where is he?
We are fully entitled.
Fully entitled, ready to go. This will transform this property with an additional 40,000 feet on top of the commercial retail real estate that we have there now, plus 122 units for $100 million investment. You may remember, a couple of years ago, we bought River Point in Lincoln Park, just north of Chicago, we continue to work on this property. We continue to kind of peel away at that Jewel-Osco lease, we are looking at what are the opportunities on the Chicago River. I think you're going to be very excited as we probably the next time have more to tell you about our River Point shopping center. Then lastly, I love this property, Fresh Meadows. We're in Queens, New York. We have had this property for over 20 years.
It's 400,000 feet of retail, we have done nothing but drive rents there year after year after year. Now we have come finally to a point where the community is ready for change, our contracts are ready for change, and it gives us the opportunity to look at an asset that from a density standpoint, there's almost 600,000 people here in three miles. That to this is what the future could be for Fresh Meadows with additional entitlements and possibly over a $600,000 investment. It sort of reminds you of the Big Three. Stay tuned. Thank you. Dan.
Well, thanks. Hello, everyone. I'm Dan G. Or Dan Guglielmone, for those of you who wonder how to pronounce my last name. Because you rarely hear it. I joined Federal about three years ago as the CFO. Believe it or not, I've been in the real estate and real estate finance business for the last 30 years. It's hard to believe. We're almost finished. It's just me. As using Don's sports metaphors, we're in the ninth inning, the 10th frame, the final lap, the 18th hole. I could go on for days. Let's just get going and jump into things. You've seen a lot today. I think hopefully you have a better insight into how we think. From the panel, which Dawn kind of put together and moderated, I think it really provided some insight into how we're different and how we think about things.
From Jeff covering our unique philosophy on mixed-use. From the rest of the mixed-use team, who took you through the opportunities that we've created, really what we've created at the big mixed-use projects and what we still have in terms of future opportunities. Dawn took you through a lot of examples and some recent history in the core, and walked you through the breadth of strategies that we use to maximize both cash flow and value creation over the long term. To Wendy, giving you a little bit of flavor for how we think about redevelopment and how we look at properties, and also give you insight into a couple of the redevelopment opportunities we have going forward. They're significant, both large and small in scale, and they are at more than 30 of our properties.
My objectives over the next 15 minutes are to bring this all together from a financial perspective. As we move forward in a more challenging retail environment in general, what do these opportunities mean in terms of Federal's ability to grow FFO per share over the long term, as well as drive NAV per share along the way? I will cover our best-in-class capital structure and how it positions us to execute on this plan with the lowest cost of capital in the sector and significantly de-risks this business model. Finally, I'm going to walk you through our track record of driving growth over the long term. A track record which is unmatched and drives industry-leading performance, as well as the aforementioned industry-leading cost of capital. This is a slide that's pretty busy, but I'll start here. You're familiar with this slide. You've seen it before.
We've had it in our investor deck over the last four years. It gives you a sense of the densification and lays out the densification opportunities that we have at properties we already own and that are in the pipeline today. At the top of the page is the big three opportunities that we have in the mixed use. At the bottom of the page are opportunities in the core that Wendy highlighted. Divided into three color-coded columns. You have in black what's completed and in process. It's over 6 million sq ft and 2,600 apartment units. In gray is what we have entitled by right and can move forward on. It's 4.4 million sq ft and almost 2,000 apartments. In yellow are the future entitlements that we have. Almost 10 million sq ft of additional densification opportunity across our portfolio.
However, these are not by right, we need to go through an entitlement process. Here is a Gantt chart, which kind of lays out the pipeline of projects that we have at the big three. It's a 10-year program phasing through, most of the balance of the opportunity that we have at the big three totals roughly $2.8 billion in today's dollars. All of it is entitled with the in-process in black. The Phase 3s at Assembly in Pike & Rose, 700 Santana, and 1 Santana West. The buy-right entitlements in gray, which are the future phases beyond that. Just keep in mind, this has already been significantly de-risked with the retail environments that we've already created at these locations. Here's another Gantt chart, which just gives you the same thing at the core.
You have Bala and CocoWalk, which are in process, as well as Jordan Downs. Additional opportunities like Darien in gray, in yellow, you've got the opportunities at River Point and places like Fresh Meadows. $1.6 million over the next 10 years we can deploy over the next 10 years for a total of about $4.4 billion of projects in the pipeline. Here's a summary highlighting the 10-year plan. Gives you a sense, it's $400 million-$500 million per year of development and redevelopment, significantly de-risk projects of highly productive real estate that we already own in markets we know. Development yields on cost of 6%-7%, and 7+% in many cases at the big three. Yields of 6%-12% at developments and redevelopments within the core. Attractive risk-adjusted returns, which will drive FFO per share growth. What kind of growth? What will it do?
How will it drive us forward? Using just some reasonable assumptions, maybe a more conservative comparable growth metric for the rest of the portfolio, I'd roughly call it 2.5%-3%, we can achieve NAREIT-defined FFO growth per share over this pipeline of 5%-5+%. Not every year, but on average over that timeline. This assumes no acquisitions. Acquisitions is another piece of it that doesn't come into play in that outlook. Acquisitions, we've always been opportunistic when it comes to acquisitions. We're not a programmatic shop that needs to go out and buy. In 2016, we acquired nothing. 2017, we acquired a half a billion. 2018, almost nothing again. This year, we acquired one small property so far, but we have a pretty solid pipeline, so stay tuned.
Acquisitions continue to be an important part of our growth plan moving forward, as we look to add to our pipeline of value-creating opportunities. As you know, we don't include acquisitions into our guidance. While we look at everything and we consider new markets, we expect to target markets that we already have a presence in and already have boots on the ground. Continued focus in Northern California and Southern California, including Primestor Markets , Metro Boston and Metro New York, Northern Virginia, where we just opened a regional office, a region that extends down to North Carolina, and South Florida, where we've had some recent successes with tower shops, with CocoWalk. It's taken a while. We think that there's more fertile ground there as well. The question comes, how are we going to pay for all this? How will we fund this moving forward?
We've always had multiple arrows in the quiver in terms of funding sources that are very attractive. We have industry-leading cost of capital, and it's through free cash flow, that $75 million to $100 million per annum. Leverage-neutral debt capacity. As we grow EBITDA and POI, we're creating $125 million to $175 million of leverage capacity on a leverage-neutral basis. Tax-neutral asset sales. We've talked about the $400 million to $500 million portfolio where we have a tax-friendly situation with regards to gains, where we can redeploy that capital into new development. Over a three-year period, that's about $800 million to $1.2 billion of capital capacity. Given the leverage capacity we have, we can fund our three-year pipeline without any incremental equity. We can and we will supplement that with other sources. Tactical issuance of common equity through our ATM.
Keep in mind, we've sold $600 million of equity over the last three years, over the last 12 quarters, at over $141 a share on a blended basis. We can issue preferred equity when it's attractively priced, like we did about 18 months ago. We did a 5% flat forever. JV capital, something we really haven't tapped in any meaningful way. We're getting a lot of reverse inquiries from institutions across the globe interested in tapping into our mixed-use expertise as well as our mixed-use assets. It's probably something we won't tap. It's another arrow in the quiver that we have at our disposal. Let me just jump into some of those sources just very quickly. Free cash flow, which is just simply our cash flow from operating activities, less leasing and maintenance CapEx and dividends. It's generated. It's been growing consistently.
It's up between $80 million to $85 million over the last two years. We project that this year. This will grow as we move forward. This will grow over the 10-year horizon north of $100 million a year. Dispositions. We have two types. On the left, a tax-neutral pool of assets, as I said, $400 million, $500 million, that we can manage the tax gains that we have and recycle into development and redevelopment. On the right side, to fund acquisitions, which are high tax gains. Most of our assets are very, very big gains. We've created a lot of value. We've owned them for over a long period of time. We've got a non-core pool that gives us an opportunity to look to recycle capital through 1031 exchanges into new acquisitions. Taking a step back, just talking broadly about our industry-leading cost of capital.
I think it's driven, we're one of only half a dozen REITs that have an A-minus or better rating from the rating agencies with consistent and stable leverage metrics. Net debt to EBITDA between 5 and 5.5 times. Fixed charge coverage of roughly north of 4 times, a growing unencumbered pool of EBITDA, and a weighted average maturity that's consistently been above 10 years. Let me just point one thing to you, just in terms of how we think about managing our fixed income relationships. We deliver on what we say we're going to do. If you look at 2017, we took net debt to EBITDA purposefully up a little bit higher, up to 6 times. Because we knew organically we would be able to, as we delivered the phase 2s at Assembly and Pike & Rose, we would very organically bring that back down.
We laid out a very cogent and clear plan for the agencies for our fixed income investors, able to get it down within a year into the comfort zone. To demonstrate our commitment and something that's been asked from our fixed income folks for a while, we're going to start publishing our bond covenants. It's a nod to, I think, our efforts and continued commitment to improving disclosure and transparency as we move along. Let me take a step back towards growth and our business plan, and how we will evolve as a company going forward. As we push forward with this business plan with a meaningful component focused on attractive risk-adjusted development of non-retail income streams, rest assured we remain a retail-based real estate company.
Also understand that this development and redevelopment pipeline in this business plan is occurring at properties where we already have created the place and are simply harvesting on the assets that we know well. I've jumped to this slide, this is a slide you all know well. This is a slide I dubbed the wow slide when I joined three years ago, not really appreciating Federal's performance, and its history of outperformance through the downturn. Imagine not delivering on the FFO per share that you delivered in 2005, 14 years ago. You've heard me highlight the reasons why. The superior quality of our portfolio and how it performed through the downturn. It performed better than all of our peers. The strength of our balance sheet management positioned our capital structure so we didn't have to issue equity in a dilutive way, like a lot of folks.
Management's capital discipline leading up, its historical capital discipline, and from a capital allocation perspective, is exemplary leading up into the years before the downturn. This slide is a big reason why we trade like we do, why we've earned the multiple premium we have, and will maintain and expect to maintain this multiple premium moving forward, given the FFO growth we expect. Why do we have this premium? Just look. It's because we grow FFO more consistently and at a faster rate than any of our peers. When we look at ourselves versus the Bloomberg Shopping Center Index, we've outperformed over 10 years, five years, and three years. We've exceeded the Bloomberg Shopping Center Index by 7.5%, 6%, and 8% respectively, and that's compounded annual growth. Very powerful. It's the same over 15 years, since 2003.
Yes, some quarters may not look as good, or even in some years, won't look as good either. Over the long term, the timeframe through which real estate value is created, Federal has set itself apart from the rest of the sector. Now, let me pause here. What I think is interesting is today there seems to be a growing emphasis away from bottom-line growth, FFO growth, and more of an emphasis on operating metrics on a quarter-to-quarter and a year-over-year basis. I'm not diminishing kind of the importance of same store and sequential occupancy and rollover and so forth. They're important metrics. Not to the extent that they should outweigh kind of what the bottom-line result is that you're delivering to shareholders on an FFO per share growth basis.
Just like recurring cash flow, using FFO as a metric, Federal leads the sector in growth of NAV per share. As you can see here, over the last 16 years since Dawn took over at Federal's NAV per share growth stands at 11% per annum. More than double our next nearest peer. Over the last 10 years, we're at 8%, more than double our next closest peer. While we've actually flattened out over the last three years, we're basically flat since the inflection point of retail back in 2016. Essentially, we've still outperformed a lot of our peers who are down. I think what's interesting is real estate tends to do that.
You've seen if you've ever come to visit Dawn and myself, we show you the 10-year sheets in Rockville when we take you on our tour of our assets on Rockville Pike. You'll see three, four, five years of flat cash flows. I think we're poised for resurgence in our NAV per share, given the business plan and the model that we have in front of us and the opportunity of 10 years, given the development pipeline we have over the next 10 years. Which leads potentially to the next question. What do we think our NAV is? Okay. I think we'd like to just kind of give you a quick snapshot of kind of how we think about it today. Really, it's four components on the left side of the balance sheet.
You've got a comparable pool based upon our 2019 estimated numbers, roughly a five cap. We do a bottoms-up, asset-by-asset assessment on a quarterly basis to assess that. Right now, it's on either side of 5%. We look at our non-comparable pool, which is a group right now of about eight assets. They're eight assets that are in transition in most cases. It's the stuff that hasn't stabilized, the phase 2s at Pike & Rose and Assembly. It's CocoWalk and Sunset, which are in transition, and a few others. We give you a sense of what that is here. Also, you've got our in-process development as well as the land holdings. Now, I'll point to the box in the middle there. We disclose what our entitlements are at the big three.
We don't really give a lot of detail with regards to what's entitled in terms of square footage across the rest of the portfolio, which is obviously at the core. We also have another 10 million sq ft of unentitled opportunity. I wouldn't give us any credit for that now. I think it's going to be a source of NAV growth going forward. You bring it down onto the right-hand side of the balance sheet, and we're at about $130-$145 per share. As I mentioned before, I think we're poised, given all the value-creating projects in our pipeline, the pipeline of four to $500 million per annum over the next 10 years, that we can drive NAV growth on a go-forward basis. Here you have management. I'll go through this quickly. At the top, you know all of us. I think you've met.
If you haven't met Wendy today and Jan, unless you've been out to Santana Row, you definitely met him for the first time today. I want to focus on the bottom tier, okay? We've got a group of senior development folks that are led and supported by Don Wood, Jeff Berkes, Jan Sweetnam. A senior team that averages 30 years of real estate and real estate development experience with Seth Bland on the left, Patrick McMahon, who you met today, Ramsey Meiser, and John T. Seth is out west. Patrick covers New York and Boston. You've got Ramsey covering D.C. Metro and Florida, and John covering the core in D.C. Metro and Philadelphia. This management team's 25 years experience on average, 13 years at Federal. With me there three years, I bring the average down.
You can see also since 2003, since Don took over, you can see the outperformance that we've demonstrated over that time period, not only versus REITs and our REIT peers, but also versus the S&P. Can't have an investor day without updating our dividend slide. 51 years. It's powerful. 7% compounded annual growth over that 51-year period through cycles, through recessions, through downturns, through runaway inflation. Even over the last 5 years, 10 years, 15 years, we've generated 5%-6%, so it's been pretty consistent. We expect in our second quarter call in August that we'll make it 52 years, and we expect that to continue given the prospects that we have moving forward to grow FFO per share.
Just to close things out, just to summarize quickly before we have questions, and I invite Don to come up, is we've got an A-rated balance sheet with multiple sources of low-cost capital. A diversified income stream and a diversified business plan. Superior growth, both from an FFO and NAV perspective. We're looking to appeal to the broadest set of investors out there. A best-in-class real estate locations that I think we beat into your head today, the importance of that. A seasoned executive team and a dividend track record, both of which I just mentioned. Don, do you want to open it up to questions?
Great news. The cocktail hour, which is scheduled for 5:00 P.M., can be available at 4:45 P.M. Says Leah, who by the way, before I go any further, just how about a shout-out to Leah Brady? The whole team that was involved in this today, man. There's a lot of work that goes into this stuff, and I really, again, can't thank you enough for coming and being part of it. If you can hang out, if you got things you want to talk about for the next 15, 20 minutes or so, what I would love to do is to invite everybody from Federal Realty up here. I want to make sure you're all. Come on. Let's go. Come on.
Peter.
Find your way up here. I want to make sure you can ask anybody anything. We'll answer to the best of our ability. You've got our Boston office here out in force for sure. Find your way up and around, wherever you're comfortable. Pretend you like each other, all that stuff. Part of the reason I want to do this, I hope you saw today kind of our depth and kind of the stuff underneath that really creates a group of very passionate people in terms of what it is that we do. We're not an easy place to work. The demands. All right, don't laugh. All right, laugh. I don't care. We're very demanding. We expect a lot out of ourselves. We expect a lot out of our projects. We expect a lot in terms of what we could deliver to shareholders.
We know it's a tough time. Sometimes it's hard to do that. It doesn't stop us. One of the things that I think is really important, and I hope you kind of got today, is if you're looking for easy answers and easy solutions to a world that is over-retailed, in flux, going from where it was to wherever it will be, we're not your investment. It's not easy, and I don't have answers. We don't have answers for every one of those specific questions.
If you're looking for a company with vision that tries to effectively take our best shot in the ground, plant ourselves in terms of what it is that we believe about consumer behavior, what it is we believe about real estate locations, and where it is that we think we're going, and that you believe that that gives you a fair shot, that's when you want us. That's who it is that we are, this whole group and a whole lot more. Let's get to the tough questions, the stuff you really want to know. Certainly, if it's tough, I'm not answering it. I'm going to hand it off to somebody up there. What is it that you want to know, and who do you want to hear from?
I want to know Don's three pet peeves.
Only three?
20 minutes.
I got to tell you, dude, it's like extra innings here for you. Go get them.
Another sports metaphor. A little too topical possibly, but what is the potential impact of a trade war getting seriously escalated? A lot of people are saying what's going to suffer the most is the riskier assets. What does that mean for your assets? What does it mean for the consumer, and what does it mean for the retailers?
Obviously, I have no idea of any of the answers to the questions that you just had, but I do have a point of view. Let me give you a point of view. We fundamentally believe that what it is that we are trying to do is to give you the best chance to have an increasing stream of cash flows over the long term. When you look over the long term, I know that dividend slide, you've seen it 1 billion times. The problem is we've shown it 1 billion times. If you sit back and really think about 51 years, today you want to talk about a trade war and what Trump's going to do today. Who knows? I will tell you, over 51 years, there were really, really scary times.
There were really, really economic disastrous times, from 20% interest rates or 18% interest rates to wars, and everything in between. I don't know how you can find a better hedge. It's not a perfect hedge, but a better hedge in real estate than the markets that we're in, the uniqueness of the assets in those markets that we're in, and a view on effectively where it is in a long-term view so that you're not determined. It's not determined by what happens with any particular tenant at one particular time or any particular issue. That may sound like a cop-out to the question, but it's a philosophy. It is our DNA of a long-term view.
That's all we can do, is to make sure we're in places with a product, in places that are the best, with a product that is the most relevant in a very uncertain time. Generally, an uncertain time. I think it's why you see safe haven money in Miami. Is Miami the safest place in the world? Well, certainly is compared to South America and Central America in terms of what's happening there, right? Do you want to short New York or short California in the long term? Maybe you do, but where's better? While I don't have all the answers to your question, Craig, I think we've hedged it about as best as we can. This whole group up here, and much more behind that, are all looking. I loved listening to Wendy today. Wendy today, Wendy doesn't care about you people.
This is a financial investor point of view that Dan and myself and Leah, Don, we've got to worry about all the time. I don't want Wendy worrying about you people. I want her thinking through long-term real estate value creation day in, day out with the tough stuff. That's what you heard from her today. That's why I sat back there like a proud papa. Because effectively, we've got that going, and the only liaison there is between that pervasive thought process through this company and you guys are basically Dan, me, and Leah. Our job is to make sure that those things can come together and do come together, and largely we do. That's kind of the environment that we're in today. Trade war scares me, too, for a whole lot of reasons in terms of what it can do.
I don't know how long this is going to last. It may be done by now for a fact.
No way
I know I can't worry about it with respect to our overall business strategy. Unlike lots of other businesses, this is real estate. We're talking about a decade and a half here. We're talking about 2 decades at Santana Row. We can't switch. You know what really came out today for me? Persistence. The fact that we stick with stuff to not move our business plan around, given the issue of the day. Fundamental strong real estate, move from there, gives us the best chance.
Don, you asked the rhetorical question, where would you rather be? It is the case, as many great characteristics as your markets have, that they also have high cost of living, high taxes, anti-business environment, et cetera. You do see some brainpower, meaningful brainpower, migrating to places like Denver, Austin, Nashville, even Pittsburgh. Is there a way for you to deploy capital in markets like that is a way to sort of enhance the business?
It's not easy, Scott. It's a really good question. Do I worry about it? Absolutely. Mike Kirby looked at me, whatever it was, five years ago, when the highest individual tax rate in California went to 13.3%. He came over to me and he said, "I'm telling you, your properties are worth a lot less today than they were yesterday." I get it. I mean, logically and empirically, yes, that's the case. Except it wasn't, because it was absorbed by the people of California. Does that mean that's always going to happen? Of course not. I've been told that about California or about New York, at least in my 20 years, at least four times. Feels like every five years or so. Somewhere around that. That doesn't mean Denver's not attractive to us, or Raleigh isn't attractive to us.
To get in, the one thing that's more important today than ever before, is that local team understanding what it is that you're doing. To truly, just simple economics, to buy an asset in Denver makes no sense to us. There was a time where a commodity-based homogenous product, you could blow out across the country, manage it centrally, get up to 5, 6, 700 assets and have your way with it. That's not today. It's not today at all. I like our relative small size. I like our concentration in a few markets where we have the best chance of being right in terms of what the community of Somerville needs and wants, the community of North Bethesda, used to say Rockville, now I'm saying North Bethesda, wants, et cetera, in each place that we're in. That's more important to me.
I think our better chance for risk mitigation and growth combined is taking the risk of the macro things that you're talking about, but it's not like we're sitting in the Ozarks here. We are talking about real job-creating places. More than anything else, that's the driver. Answer the question, will there be more and better jobs? You've got the answer to whether you can get comfortable investing capital or not. Because to me, it's all about more and better jobs. You can certainly understand our Silicon Valley investments, and frankly, our overall California investments, and answer the question, will there be more and better jobs? You can certainly look at Boston, Massachusetts, and the surrounds and answer the question, will there be more and better jobs?
Whether we're talking about medical technology or general technology, or we're talking about healthcare, it's clear where there will be more and better jobs in terms of industries going forward. Why not base that? Especially if you have critical mass and a full-service local team. How about in unison?
Ta-da. Don, this question Christy sent in to me. She apologizes. She has the flu.
No, she's got the flu. She can't ask a question.
I'll be the mouthpiece. Hopefully, I don't mess it up. It's sort of surrounding equity, joint venture capital, NAV. Dan G. talked a little bit about the growth potential in underlying earnings, right? Going to that 5 to 7 type range, right? When you sell current equity today, you're selling that potential upside when you're doing it. You guys put out an NAV today. I can't remember the last time you guys did that, so I don't know if there.
Never.
Right.
Never.
That's why I don't remember it.
It's good. I hedged myself after 20 years. I don't know what the philosophy there is in putting that out today. In terms of capital raise, Dan, you talked about JV capital being an arrow in the quiver, but we probably won't tap it. I guess when you step back and you sort of say, "Well, why issue equity below what you think the stock is worth today?" Number one, why issue equity when you have the confidence in the growth outlook? Why not go into your asset base? Don Wood, you talked at the beginning saying, "Hey, we can sell a 20% interest in Santana Row." I don't know if the marketing deck is already prepared.
Did we not clear that up before?
Well, no one else is listening.
That we are not selling 20% of Santana Row. Do I need to go on record? I'm on record.
Why not sell-
Michael
interest in assets to fund the growth and maybe help us tie all three pieces together?
Well, hey, look, I think that we're very tactical when we do issue equity, and I think we do it very selectively. I think we put out kind of our sense of how we look at NAV, and that moves from quarter to quarter, but I think it gives you a sense of how we've issued it over time and how we've done it in a way that's, I think, accretive to our existing NAV. I think also with regards to, I think it's more a strategic question with regards to capping. We've got multiple sources, so we don't have to use equity, and we won't use it because of the debt capacity and the leverage capacity that we have from the free cash flow and obviously the asset sales. I think that with regards to, it's more of a strategic question with regards to JV.
If we can issue equity, I think it kind of maintaining absolute control over our assets is a preference.
Yeah. This is the ultimate balance question, right? What has worked really well for us for 20 years is effectively making sure that we're doing our best to match the right side of the balance sheet up with the left side of the balance sheet. I think that's really critical. Having lots of tools is a critical part to making that happen. There are lots of other considerations, including simplicity. I don't know what in our multiple impact being a straightforward fee-owned simple company really has to us, but it's something, Mike. I don't particularly want conflicting money in our assets who have different points of view, different objectives, et cetera, than our common stakeholders. I really view the notion that we are primarily an unsecured company from a debt perspective with a very simple capital structure that relates well to long-term growing assets.
These are, we believe, are our best long-term growing assets that way. On balance, using modest equity, and what I love to do is never surprise anybody as best we can about anything. Yeah, we access the ATM on a small basis throughout the year. So what? We're putting that money to work in clearly NAV accretive investments. Asset component, unsecured debt, little bit of equity, asset sales truly, but not 20% of Santana Row at this point. Those assets that we don't see a way out of everything you heard of here today, where we can tax efficiently get that to make sense, feels like the better strategy. What you heard today was a very heavy development-focused day, right? You didn't hear a lot about acquisitions. That could change in six months or three months.
I want you to know that when you guys are giving us money, that we treat it like ours. That notion of incremental value creation, incremental returns over our cost of capital is a fundamental use of that. When we start complicating it.
Right
I'm worried that we lose some of that understandability of this company.
Why put out NAV at this point? What was the philosophy?
Dan made me.
That's not true.
Go ahead.
I think it was just to kind of give a sense of that parameter, and I think it's an important part in terms of showing kind of, I think, on a go-forward basis that we want to have a sense of kind of provide a sense. We know what consensus NAV estimates are. I don't think it's going to be a surprise.
$135 a share.
What's that?
$135 a share.
Yeah. I think we're kind of right around that number, and I think that the slide I showed in terms of our ability to grow NAV since Don took over back in 2003 and then again since 2008.
By the way, I don't keep telling him to say that, for Pete's sake. He said that way too many times yesterday. Nonetheless, come on. I digress.
Basically is the consensus estimates that you guys put out there. Maybe we were trying to simply validate kind of where you guys are, but also give you a sense of how we think about the company, how we think about what it's worth, and provide you with a little bit of an insight because we do have development and it's heavily focused on development. I think our hope is to go forward is maybe to provide over the next year. I'm not promising anything, maybe to have some supplemental disclosure that gives some of those building blocks.
Oh, wow.
Sorry.
Go ahead.
Okay.
Christy liked that. She texted. She says more disclosure and those building blocks would be helpful.
Well, nothing is not predictable. Listen, the answer on that, the NAV, it is. We went back and forth. Should we do it? Should we not do it, et cetera?
My last vote was to take it out.
Wait.
His last vote was to keep it in.
It was.
He kept it in.
Honestly, when you sit and you look at the business plan, if you spent the day here, I think one of the hardest things to value is not putting a cap rate on an income stream, a current income stream. Go put a cap rate. You decide. Do what you want. I don't care in terms of that. Well, I guess I do care, but, you know. The development piece and those entitlements and what's unentitled. I think we spent time on stuff today that as an investor, you may not have
Dug into all that deep in the past, and that is: where is the opportunity? Is it possible, is it realistic that this company truly does have a plan in a very uncertain 2019 to be able to continue to grow for the foreseeable future? I think that's powerful. That part of it, the NAV, I think helps in terms of laying it out there, and that's ultimately where I came out. You'll never see it again. Feel free to change cap rates. Do whatever you want on that stuff. Those entitlements have real value. By the way, and I never make any headway with this argument, but I'm going to try one last time because you brought it up anyway. NAV is liquidation value. What business trades, what company should trade at its liquidation value?
Shouldn't companies trade above what it would take if we sold all the assets? Would somebody say yes? Because you should be trading at a premium. That group of people for 20 years, creating that type of income stream, with that potential to go forward, why should they trade at liquidation value? I'd leave that alone. That was rhetorical. I don't want an answer from you on that. Were you going to give?
I got a question.
Oh, you got a question? Well, it's Jeff's turn, man.
Okay, after Jeff.
Okay.
Okay. Actually.
Happy hour's coming.
Just two questions. One was, Dan, I think in your NAV, you had the un-entitlement.
the 10 million square feet as a zero.
I guess maybe it's a question for you and for Jan, perhaps. What's the option value there? Because it's not zero.
It's not zero, I'd rather look at it as a kind of a hope note on the future and a driver of growth going forward. We've work to do. We need to get the entitlements. In some places, it's going to be a lot easier. Some places, there's going to be some heavy lifting. I think that that was kind of trying to leave it at some Hey, look, it's looking honestly at kind of what those assets are, there is probably some option value, I think it's hard to quantify.
Feel free to try, Jeff
a boost.
Feel free to try. Yeah.
Just the second question was actually maybe for Wendy and for you, Jeff, because you spoke up, when we kind of think back about all the Analyst Days for Federal, the mixed-use assets or densification projects always seem to, for lack of a better word, sort of suck the oxygen out of the room. They get a lot of the focus. It doesn't mean that you can't make money in conventional neighborhood shopping centers. When you think about 2025, and we're doing the same event then. Hopefully, I'm not here, but. Do you think it'll be predominantly mixed use at that point, or more mixed use then than you are today? How do you kind of think about how your respective portfolios shift over the next few years?
Jeff, it's hard to answer, Alex was beating me up on this out in the lobby. Yeah, sure.
No, I wasn't. You just dumped the question.
Look, I don't personally view the shift over the next five years as that significant. Again, what we're trying to emphasize is we have a lot of opportunity that's been created at the big three and some of the other properties, and we can really take the time now when the market's right and all that kind of stuff to leverage that opportunity. It doesn't mean we're going to stop buying retail, right? In those look-forward numbers to 2023 and certainly to 2025, there's no growing of the portfolio. We do want to grow the portfolio. When we grow it, we're not going to go out and buy freestanding apartment buildings or distribution warehouses or office buildings. We're going to buy retail. Sure, over time, could some of that be just like Mid Pike Shopping Center and become a Pike & Rose? Absolutely.
That's the kind of stuff we like to buy, but it's going to start as retail. I wouldn't think-
Maybe apartment homes.
Yeah. I wouldn't think there would be a meaningful shift between now and 2025 and where our POI comes from, plus or minus a few percentage points of what we showed you on the chart.
I hope we have exactly the same investor day in 2025 as we're having today. The reason I really hope that is because you cannot possibly underestimate quality retail real estate's cash flow stability and what it does to the cost of capital of this company. The idea of all of this, I actually think it's the magic elixir of Federal Realty. The ability to have those three, and if you throw Bethesda Row in there, four, if you throw maybe what Fresh Meadows becomes, five, if you throw et cetera. Having those things to be able to be on the leading edge of what is happening with consumer behavior and do that and experiment that way with the lowest cost of capital is unheard of.
The only reason we have the lowest cost of capital is because there are 100 shopping centers producing $600 million of cash flow. There was an investment bank that will remain nameless that goes back quite a bit of time, I almost said it, but I won't who really felt that we should spin off the basic shopping centers and leave this stuff. Because that's your future, is the notion. If that had happened, there would be no Federal Realty today. There would be no Federal Realty today because our cost of capital of doing those projects would be significantly higher, obviously, than it is today, and the base would've effectively been completely overshadowed by just a couple of places. The balance, the magic elixir, Jeff, of having what we do best.
What these people do best is create retail environments, find the tenants to put in there, design them right, create the right product. Having that as a core competency is not something you don't fully exploit. Feel fully exploited up there. With that and that balance, I don't think there's anybody that has a better business plan in retail land than that mix. I expect it to be the same.
Yeah, just to be 100% crystal clear. If we could find what we've done for decades, which are well-located, older, under-leased shopping centers where we think we can roll rents up, we would absolutely buy those all day long if they're in the markets that we want to be in and we believe in them long term. If we can densify them over time, so much the better. Right?
Question for the experts on the stage. Don
We're in the cocktail hour, by the way.
Oh, that's fine. I'll just be quick. Don has a well-known image of being a thrifty CEO, so keeps expenses tight. At the same time, you guys, the past few years, there's pressure on earnings from Pike & Rose, pressure on earnings from the retail environment. There's a lot of pressure on earnings. If you guys are always sort of a very efficient platform, how has that manifested itself as far as, maybe a few of you want to speak about, where you've been able to sort of find more efficiencies. If you've always been drilled tough on efficiencies, where have you been able to find more efficiencies to help deliver the constant earnings that Dan Gee has got to produce every year?
Yeah, where is it coming from?
Do you want to answer that question, Dan G.?
Well, look, I've been here three years. I think it's just a philosophy that's instilled by Don in terms of continuous improvement. We're in the process of upgrading accounting systems. It's been hard and difficult. We're looking to hopefully get some efficiencies out of that. It won't happen right away, that's an area where I think we can kind of drive efficiencies from a cost perspective.
It's not bottom line, man. It's top line. Bottom line, you always have to have a, I think, spend money like it's your own philosophy. Spend money like it's your own. The benefit of this place, one of the biggest benefits of this place is we do far less defensive spending than our competitors. You spend money, whether it's on a human being or on a shopping center or on a big development. You spend money, you deserve a return on that money. The object, I hate the Don's a thrifty guy thing, obviously. What it is I want value. I want to pay for value. We, I believe, have a terrific foundation of our overall cost of our doing business. Right? If this were a fund, our G&A and everything, our total costs are less than 5% of our revenues.
We just showed you a big plan about our revenues going up. You saw that all day long. Costs will go up modestly throughout that, not disproportionately. We have made big investments in our people for tomorrow. Many of them are sitting behind me. Those investments are critical investments in the talent that can deliver tomorrow. I love that. I'm not looking to save money on that stuff. Not looking to make sure we're delivering the top line that makes those investments smart, that's just smart business. Of course, we work on accounting systems. Of course, we run a business, we do the best we can to make sure that business is rationalized. Nobody talking to you today that's telling you we're going to cut our way to prosperity has much of a business plan. Top-line growth with a stable, strong, reasonably rationalized cost basis.
That's where I think we are.
Hi. Thank you. You laid out a 10-year slide, which was given entitlements as well as projected CapEx. I didn't notice anything on Sunset, so I just was wondering if that was part of the mix, and if maybe in 2025, we'll be having the investor day there.
It's interesting. I'm going to start on that, if you don't mind, Jan.
Sure.
There you are. Feel free to add to this. We didn't put Sunset in as a part of this presentation because we don't have much more to say than we've said on the conference call, and that's already kind of out there. The difference in the retail environment since we bought that asset is very clear, right? If a component of that, and a component of that was going to be the Nordstrom Rack of the world and that kind of stuff, the rents that were talked about in 2016 or underwritten 2015, 2016, they're not the rents today. What did I just tell you? The sky's blue. I mean, no kidding, right? In terms of that being the case. The notion of first of all, having the ability to do something far more dense on the property was job one.
In a weird kind of way, I'm glad we didn't get it right away. Right? In a weird kind of way, if we got it right away, and we were in the middle of working through a plan that was a 2015 or 2016 plan, might not have been as good as we thought of it, right? What we have today is something pretty cool, and that is the opportunity to look at it with 2019, 2020, and 2025 vision in terms of where the world is going on the retail side, the hotel side, the residential side, et cetera. With that vision today, we're going to try like crazy to make something make sense, but it won't be the same thing that we were talking about in 2016.
I don't have more to add to that today, so we didn't make it a big part of the conversation. Hopefully, it will be.
It was in that $10 million of to be entitled because we're not through the appeal process.
Any more, Jan?
No, I think that's right. I mean, we had a great first step with the planning commission and had to get to an appeal period and a process of understanding what we can do there, and it looks good, but we're at the beginning.
One more? Sir.
Any lessons learned or Yeah. You know where you got it, right? Any lessons learned or things that you think you got wrong in the past couple years?
How much time you got?
20 seconds.
Yeah, I don't think we did the best job on our due diligence at Sunset. I don't mean that from the standpoint of retail rents or any of that. I think understanding that community, as well as we should have, when we went in there. I think that there was an acquisition or two that we didn't get that I wish we had stepped up a little more, to get. In one case in particular that's in my head. I think that the notion of decentralizing was something that we should have done years before we did. I think I was still running the place more like in a centralized mode with just East and West Coasts for longer than I would've liked to.
I think we should have set up a Northern Virginia office about five years ago or six years ago, rather than trying to run that whole region out of Rockville. Stuff like that. You want more? I got a whole bunch. We can do it. It's a really good question because what I hope it shows is we love what we do. We love what we do. When you get fat and happy and saying you do things better than anybody and everything's great and everything else, boy, that's your first sign. Just run away. We're never satisfied. We're never going to be satisfied. Every single thing that we do, we try to get better at continuously. I have no problem telling you what we did wrong. I have no problem telling you when we did something right, and we're real proud of it.
You are sitting here today and listening to a whole presentation today by probably, if we've got 25 people up here, 25 of the proudest people in our industry. Starting with me and getting through everybody here because we think we've got something that's a whole lot better than other people. Doesn't mean every 90 days on that business model, but as a business plan, we think it's something that's pretty special. I'd love to thank you all for coming. I really, really would. I hope you hang around over there in the cocktail hour. We'll be around for as long as you want to be. We'll see you soon, okay? Thanks, everybody.