a p a r t m ent h o m e s - loopnet · address 3709-3711 morse ave, sacramento year built 1962...
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FAIRWAYA P A R T M E N T HO M E S
FAIRWAYA P A R T M E N T HO M E S
3 6 A P A R T M E N T H O M E S SACRAMENTO, CALIFORNIA
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CONFIDENTIALITY AGREEMENTThe information contained herein is strictly confidential, furnished solely for the purpose of considering the acquisition of the property described herein, and is not to be used for any other purpose or made available to any other person without the expressed written consent of ARA Newmark.
It has been obtained from the Seller and may include other sources believed to be reliable, but no representation is being made with regard to its accuracy or completeness.
Prospective investors should undertake their own investigations and reach their own conclusions without reliance upon the material contained herein. Neither the Seller nor the Agent nor any of their respective officers, agents or principals has made or will make any representations or warranties, expressed or implied, as to the accuracy or completeness of the Offering Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of the Offering Memorandum or its contents.
Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser.
The Seller and Agent expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the property and/or terminate discussions with any entity at any time with or without notice.
The Seller shall have no legal commitment or obligations to any entity reviewing the Offering Memorandum or making an offer to purchase the property unless and until such offer for the property is approved by the Seller, and any conditions to the Buyer’s obligations thereunder have been satisfied or waived.
36 APARTMENT HOMES SACRAMENTO, CALIFORNIA
E X C L U S I V E L Y P R E S E N T E D B Y N E W M A R K K N I G H T F R A N K
MARC [email protected]
T 916.835.8844License CA: 01956176
NATE [email protected]
T 916.599.6523License CA: 01467941
T 415.430.1037License CA: 02049950
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EXECUTIVE SUMMARY ...........................................................................................................................4
PROPERTY OVERVIEW ........................................................................................................................... 9
COMPARABLE ANALYSIS ...................................................................................................................... 18
FINANCIAL ANALYSIS ...........................................................................................................................25
LOCATION OVERVIEW ......................................................................................................................... 33
TABLE OF CONTENTS
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARYTHE OFFERING
ARA Newmark, as the exclusive advisor, is pleased to present the
opportunity to acquire Fairway, a 36-unit apartment community located
in Sacramento, CA.
KEY INVESTMENT HIGHLIGHTS
• Substantial Value-Add Potential: Current ownership has completed full renovations to 16 units. Additional units are partially renovated with new flooring.
• Loss-to-Lease Capture: There is ~$45k in loss to lease based on the average market rent of $1,011.
• Attractive assumable debt: Balance of $1.847M (as of 05/2019); 4.42% interest rate; fixed until October 31, 2027. A new investor also has the option to add a supplemental loan to further increase leverage.
• Exceptional Submarket Fundamentals: The Sacramento MSA is projected to be the #3 multifamily market for rent growth in the US in 2019.
• Strong Operational Trends: Fairway has achieved consistently positive revenue growth year over year.
• Excellent Property Condition: Over $250,000 in capital improvements have been invested by current ownership.
• Property Characteristics: Fairway features stucco exteriors, pitched
composition shingle roofs, new french doors, and a swimming pool.
• Proximity to Employers: Fairway is just miles from several major
employers, the Arden Mall, and Downtown Sacramento.
INVESTMENT SUMMARY
Price $4,100,000
Terms of Sale Free and Clear or Assumable
Address 3709-3711 Morse Ave, Sacramento
Year Built 1962
Total # of Units 36
Average Unit SF 583
Net Rentable SF 21,022
# Of Acres 1.01
Parking Spaces 40
Average In Place Rent $908 / $1.56
Average Market Rent $1,011 / $1.73
Occupancy (June 2019) 100%
PRICE: $4,100,000
PRICE PER UNIT: $113,889
CAP RATE (CURRENT / MARKET): 5.8% / 6.8%
GRM (CURRENT / MARKET): 10.1 / 9.1
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80
80
80
FAIRWAYA P A R T M E N T S
TOWN & COUNTRY VILLAGE
GolfComplex
Seely Park
WDOWNTOWN
SACRAMENTO
Watt Ave Whitney Ave
Morse Ave
Auburn AveEdiso
n AveArcade Fundamental
Middle School
Children’s ReceivingHome of Sacramento
PowerhouseScience Center
CannonIndustrial Park
Township 965 Acres Mixed
Use Development
The Railyards240 Acres MixedUse Development
Elverta Rd
Pfe Rd
Baseline Rd
Cirby Way
Oak Ave
Broadway14th Ave
Fruitridge Rd
47th Ave
Florin Rd
Elder Creek Rd
Gerber Rd
County Road 22
County Road 27
County Road 29
Tremont Rd
W Elverta Rd
King Rd
San Juan Rd
Riego Rd
Howsley Rd
Grant Line Rd
Bradshaw Rd
Excelsior Rd
Mace Blvd
F St
West St
Main AvedR
notr
aBLaird Rd
evA lairtsudnI
dR tnemyddiF
Watt Ave
Fulton AveHowe Ave
24th St
Power Line Rd
Folsom Blvd
Roseville
Rd
Antelope Rd
Taylor Rd
Old River Rd
Scott Rd
White Rock Rd
80
80
80
5
65
16
99113
113
70
50
80
Latrobe Rd
Jackson Rd
16
50
49
Green Valley Rd
S Shin
gle Rd
Dillard Rd
Grant Li
ne Rd
Elk Grove Blvd
Jeffer
son B
lvd
84
5
West SacramentoWest Sacramento
WOODLANDWOODLAND
DAVISDAVIS
NatomasNatomas
Florin/FruitridgeFlorin/Fruitridge
Elk GroveElk Grove
Rancho CordovaRancho Cordova
ArdenArden
Fair OaksFair Oaks
FolsomFolsom
RosevilleRoseville
DowntownDowntown
Greenhaven/Pocket
Greenhaven/Pocket
El Dorado Hills/Cameron Park
El Dorado Hills/Cameron Park
RocklinRocklin
Del PasoHeightsDel PasoHeights
CitrusHeightsCitrus
Heights
SacramentoSacramento
CarmichaelCarmichaelFAIRWAY
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TOP RANKED NATIONAL MARKETAs a late-cycle recovery market, Sacramento is only beginning to experience the rapid rent growth that has been characteristic of urban centers across the US over the last several years. Per Cantor Fitzgerald’s proprietary forecasting model, the Sacramento region is projected to be the third ranked multifamily market in the nation for above-average growth prospects in 2019.
• Robust Rent Growth: Sacramento continues to see strong rent growth and declining vacancy rates — annual rent growth exceeded 4% throughout the region, and vacancy rates are at 3.4% based on our market surveys.
• Strong Employment Gains: Sacramento employment figures continue to improve, with steady employment growth and declining unemployment rates. The MSA has surpassed its 2007 pre-recession peak and now stands at a new high of 1,044,182 total jobs as of November 2017.
• Limited New Supply: New construction of multifamily properties continues to remain limited throughout Sacramento. This lack of new supply combined with steady employment gains has continued to fuel rent growth.
Vacancy rates sit at a mere 3.4% as of the first quarter
of 2019
23,000 new jobs were added to the region over
the past year — 2.5% Y-O-Y growth
Year over year rent growth exceeded 4% in the
Sacramento MSA between Q1-2019 and Q1-2018
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PROPERTY OVERVIEW- 9 -
CONSOLIDATED UNIT MIX
TYPE# OF
UNITSAVG SF
IN-PLACE RENT
MARKET RENT
1x1 32 550 $882 $975
2x1 4 850 $1,113 $1,300
TTL/AVG 36 583 $908 $1,011
PROPERTY OVERVIEW
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PROPERTY SUMMARY
Address 3709-3711 Morse Ave, Sacramento, CA 95821
County Sacramento
Year Built 1962
# Of Units 36
Net Rentable SF 21,022
Parcels 254-0060-045
Acres 1.01
Density/Acre 36 du/ac
Total Parking 40
Parking Ratio 1.1:1
Buildings 2
Stories 2
Elevators None
Framing Wood-frame
Exterior Stucco / T1-11
Roof Pitched composition shingle
Paving Asphalt
Plumbing Copper
Electrical Copper
Water Heaters 1 Water heater/building (100 G)
Washer/Dryers 4/4
UTILITIES
PAID BY METHOD SUPPLIED
Electric Tenant Direct SMUD
Gas Tenant Direct PG&E
Water/Sewer Tenant RUBS Sacramento Suburban
Trash Tenant RUBS City of Sacramento
Cable Tenant Direct Comcast
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MORSE AVE
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80
80
FAIRWAYA P A R T M E N T S
TOWN & COUNTRY VILLAGE
GolfComplex
Bohemian Park
Seely Park
ECOUNTRY CLUB PLAZA
Fulton Ave
Edison AveAuburn Blvd
Morse Ave
Marconi Ave
El Camino Ave
Capital City Fwy
ArdenMiddle School
Mira LomaMiddle School
Excelsior Jr & SrHigh School
El Camino FundamentalHigh School CCT
College
Arcade FundamentalMiddle School
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INTERIOR HIGHLIGHTS
• Granite countertops*
• Vinyl flooring in living room and bedrooms*
• Open and spacious layouts
• Updated light fixtures*
• Tile flooring in kitchen and common areas*
• Ceiling fans*
*Select units
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EXTERIOR HIGHLIGHTS
• All new french front doors
• New security gate
• Resurfaced pool
• New perimeter fencing
• Resealed and restriped parking lot
• New landscaping
• New gutters
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Ramada Village
Year BuiltUnits
Avg Mkt RentsAvg SF
AVG Rent/PSF
197228
$1,109611
$1.82
1
Skyview Villa
Year BuiltUnits
Avg Mkt RentsAvg SF
AVG Rent/PSF
1973156
$1,116570
$1.96
2
Somerset
Year BuiltUnits
Avg Mkt RentsAvg SF
AVG Rent/PSF
197356
$1,159725
$1.60
3
Fairway Commons
Year BuiltUnits
Avg Mkt RentsAvg SF
AVG Rent/PSF
196684
$1,136855
$1.33
4
Fairway
Year BuiltUnits
Avg Mkt RentsAvg SF
AVG Rent/PSF
196236
$1,011583
$1.73
S
COMPARABLE ANALYSIS
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SOMERSET
RAMADA VILLAGE
1SKYVIEW VILLA
FAIRVIEW COMMONS
2
3 4
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RENT COMPARABLE MATRIX
Subject Comp 1 Comp 2 Comp 3 Comp 4
Property Name Fairway Ramada Village Skyview Villa Somerset Fairway Commons Average
Address 3709-3711 Morse Ave 2112 Edison Ave 2509 Edison Ave 2526 Edison Ave 3220 Watt Ave
City Sacramento Sacramento Sacramento Sacramento Sacramento
Year Built 1962 1972 1973 1973 1966 1971
Units 36 28 156 56 84 324
Avg Market Rent $1,011 $1,109 $1,116 $1,159 $1,136 $1,130
Avg SF 583 611 570 725 855 690
Avg Rent PSF $1.73 $1.82 $1.96 $1.60 $1.33 $1.64
Occupancy 97.2% 96.4% 98.1% 98.4% 94.0% 96.7%
Property Name Fairway Ramada Village Skyview Villa Somerset Fairway Commons Average
1 Bedroom 1 Bath 32 Units 24 Units 99 Units 12 Units 38 Units
Avg Market Rent $975 $1,095 $1,080 $1,080 $1,100 $1,086
Avg SF 550 580 525 650 630 564
Avg Rent PSF $1.77 $1.89 $2.06 $1.66 $1.75 $1.93
2 Bedroom 1 Bath 4 Units 4 Units 56 Units 44 Units 21 Units
Avg Market Rent $1,300 $1,195 $1,180 $1,180 $1,200 $1,184
Avg SF 850 795 650 745 900 730
Avg Rent PSF $1.53 $1.50 $1.82 $1.58 $1.33 $1.62
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$1,011
$1,109 $1,116 $1,130 $1,136$1,159
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
Fairway Ramada Village Skyview Villa Average Fairway Commons Somerset
Average Rent
$1.33
$1.60$1.64
$1.73
$1.82
$1.96
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
Fairway Commons Somerset Average Fairway Ramada Village Skyview Villa
Average Rent PSF
AVERAGE MARKET RENT
$975
$1,080 $1,080 $1,086 $1,095 $1,100
$700
$800
$900
$1,000
$1,100
$1,200
Fairway Skyview Villa Somerset Average Ramada Village Fairway Commons
1 Bedroom 1 Bath
$1,184
$1,200
$1,175
$1,180
$1,185
$1,190
$1,195
$1,200
$1,205
Average Fairway Commons
2 Bedroom 1 Bath
$1,050
$0
$200
$400
$600
$800
$1,000
$1,200
Average
2 Bedroom 2 Bath
$1
$1
$1
$1
$1
$1
3 Bedroom
AVERAGE RENT FOR 1-BEDROOM UNITS
INVESTMENT SUMMARY
Price $4,100,000
Terms of Sale Free and Clear or Assumable
Address 3709-3711 Morse Ave, Sacramento, CA 95821
Year Built 1962
Units 36
Avg Unit Size 583 SF
Net Rentable SF 21,022
Total Parking 40
Total Parking/Ratio 1.1:1
Acres/Density 36 du/ac
Avg In-Place Rent $908
Avg In-Place Rent PSF $1.56
Avg Market Rent $1,011
Avg Market Rent PSF $1.73
Occupancy 100%
FINANCIAL ANALYSIS
CONSOLIDATED UNIT MIX
TYPE# OF
UNITSAVG SF
IN-PLACE RENT
MARKET RENT
1x1 32 550 $882 $975
2x1 4 850 $1,113 $1,300
TTL/AVG 36 583 $908 $1,011
The following section provides detailed information on the
operations of the subject property, including an analysis of revenue
trends, historic operations, and our pro forma underwriting and
assumptions.
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F INANCIAL ANALYSIS
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80
FAIRWAYA P A R T M E N T S
TOWN & COUNTRY VILLAGE
Cottage Park
Seely Park
SECOUNTRY CLUB PLAZA
Capital City Freeway
Morse
Ave
Edison Ave
Whitney Ave
Pope AveWatt Ave
El Camino FundamentalHigh School CCT
College
Del Paso ManorElementary School
FINANCIAL ANALYSIS
ASSUMABLE DEBT
Lender Fannie Mae
Initial Principal $1,862,000
Current Balance $1,847,398 (as of May, 2019)
Loan Type Fixed
Interest Rate 4.42%
Start Date 9/14/2017
Maturity Date 9/14/2027
Monthly Payment $9,346
Pre-Payment Fannie Mae Defeasance
SUPPLEMENTAL LOAN QUOTE
Lender Fannie Mae
Estimated Loan Amount $720,000
Loan Type Fixed
Estimated Interest Rate 5.75%
Maturity Date 9/1/2028
Estimated Monthly Payment $4,243
BLENDED
Loan Balance $2,582,000
Blended Interest Rate 4.79%
Monthly Payment $13,589
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FINANCIAL ANALYSISFairway3709-3711 Morse Ave, Sacramento, CA36 Units
ACTUAL PER UNIT PER MONTH ACTUAL PER UNIT PER MONTH ACTUAL PER UNIT PER MONTH
INCOMEMARKET RENT RENT $410,400 % GPR $11,400 $34,200 $436,800 % GPR $12,133 $36,400 $436,800 % GPR $12,133 $36,400Less: LOSS TO LEASE ($10,203) -2.5% ($283) ($850) ($44,700) -10.2% ($1,242) ($3,725) $0 0.0% $0 $0GROSS POTENTIAL RENT $400,197 $11,117 $33,350 $392,100 $10,892 $32,675 $436,800 $12,133 $36,400Less: VACANCY LOSS ($3,762) -0.9% ($105) ($314) ($11,763) -3.0% ($327) ($980) ($13,104) -3.0% ($364) ($1,092) NET RENTAL INCOME $396,435 $11,012 $33,036 $380,337 $10,565 $31,695 $423,696 $11,769 $35,308Plus: OTHER INCOME $3,974 $110 $331 $4,785 $133 $399 $4,785 $133 $399Plus: RUBS $13,341 $371 $1,112 $21,600 $600 $1,800 $21,600 $600 $1,800 TOTAL INCOME $413,750 $11,493 $34,479 $406,722 $11,298 $33,893 $450,081 $12,502 $37,507
EXPENSESPAYROLL $24,050 $668 $2,004 $24,050 $668 $2,004 $24,050 $668 $2,004
$3,828 $106 $319 $3,828 $106 $319 $3,828 $106 $319MARKETING $1,188 $33 $99 $0 $0 $0 $0 $0 $0TURNOVER $1,844 $51 $154 $7,200 $200 $600 $7,200 $200 $600REPAIRS $8,104 $225 $675 $7,200 $200 $600 $7,200 $200 $600UTILITIES $40,998 $1,139 $3,417 $40,998 $1,139 $3,417 $40,998 $1,139 $3,417LANDSCAPING / GROUNDS $1,900 $53 $158 $1,900 $53 $158 $1,900 $53 $158CONTRACT SERVICES / OTHER $3,960 $110 $330 $3,960 $110 $330 $3,960 $110 $330TOTAL CONTROLLABLE EXPENSES $85,872 $2,385 $7,156 $89,136 $2,476 $7,428 $89,136 $2,476 $7,428MANAGEMENT FEE $13,750 3.3% $382 $1,146 $12,202 3.0% $339 $1,017 $13,502 3.0% $375 $1,125INSURANCE $9,645 $268 $804 $9,000 $250 $750 $9,000 $250 $750REAL ESTATE TAXES $32,319 $898 $2,693 $49,708 $1,381 $4,142 $49,708 $1,381 $4,142SPECIAL ASSESSMENTS $0 $0 $0 $700 $19 $58 $700 $19 $58TOTAL OPERATING EXPENSES $141,586 $3,933 $11,799 $160,746 $4,465 $13,396 $162,047 $4,501 $13,504CAPEX / RESERVES $0 $0 $0 $9,000 $250 $750 $9,000 $250 $750TOTAL EXPENSES $141,586 $3,933 $11,799 $169,746 $4,715 $14,146 $171,047 $4,751 $14,254
NOI AFTER RESERVES $272,164 $7,560 $22,680 $236,976 $6,583 $19,748 $279,034 $7,751 $23,253
LIST PRICEPRICE PER UNITPRICE PER S.F.CAP. RATEGROSS RENT MULTIPLIER
$3,075,000 75% 4.25% ($183,264.61) $3,075,000 75% 4.25% ($183,264.61)$1,025,000 5.24% $53,710.98 $1,025,000 9.34% $95,769.21
1.29 1.52
10.3 10.1 9.1
$113,889 $113,889 $113,889$195 $195 $195
$4,100,000 $4,100,000 $4,100,000
5.8% 6.8%6.6%
UNDERWRITINGVALUATION
PRO FORMA - MARKET RENTS
MAY AND JUNE INCOME WITH T12 EXPENSES
PRO FORMA - CURRENT RENTS PRO FORMA - MARKET RENTS
ADMINISTRATIVE
VALUATION SUMMARY MAY AND JUNE INCOME WITH T12 EXPENSES PRO FORMA - CURRENT RENTS
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LOCATION OVERVIEW
SACRAMENTO REGIONAL OVERVIEWLocated approximately 80 miles northeast of the San Francisco Bay Area at the foothills of the Sierra Nevada Mountains, Sacramento is one
of the premier markets in the state of California. As the Capitol City, Sacramento is the 25th largest metropolitan area in the United States with
a total population in excess of 2.5M. The region has recently emerged as one of the strongest economies in the State of California, offering
businesses lower operating costs than the Bay Area, a positive business climate, world class research and educational institutions, and a highly
qualified technical workforce. In fact, Sacramento has been one of the fastest growing regions in the state, and posted particularly strong
employment numbers in December (gaining nearly 23,000 jobs from a year earlier – a gain of 2.5%). Over the same period, California gained
265,000 jobs, a 1.5% increase.
The presence of many state and federal agencies, the nation’s largest pension fund (CalPERS), and the State Capitol have provided economic
stability, while prominent companies like Intel, Apple and HP all have a major presence in the region and are helping revitalize the private sector.
Now that regional economic recovery is underway, optimism surrounding the Sacramento rental market has been strong. In fact, the Sacramento
MSA is projected to be the #3 multifamily market for rent growth in the US in 2019.
Sacramento features an abundance of recreational opportunities and lifestyle amenities. The region is home to the Sacramento Kings, the
Sacramento Rivercats AAA baseball team, Folsom Lake, the American River, and numerous regional parks. Additionally, Sacramento residents
are within a few hours’ drive of world-renowned ski resorts in Lake Tahoe, famous wineries in the Napa Valley, and all the lifestyle attractions the
San Francisco Bay Area has to offer.
NATOMAS
FLORIN
CITRUS HEIGHTS
ROSEVILLE
ROSEMONT
ELK GROVE
WOODLAND FOLSOM
ARDEN-ARCADE
DAVIS
5
5
50
5
SACRAMENTO
RANCHO CORDOVA
SACRAMENTOINTERNATIONAL
AIRPORT
50
50
5
5
99
99
99
FAIRWAY
TRANSPORTATION
Interstate 80 – This is the major east-west route in the area, leading west to Sacramento (and I-5) and then to San Francisco. Heading east, I-80 leads to the Sierra Nevada Mountain Range and the Reno Tahoe area.
Highway 50 – Another major east-west route, Highway 50 runs through Folsom and connects Downtown Sacramento to the El Dorado National Forest and South Lake Tahoe.
Interstate 5 – This is the major north-south route running throughout California and intersecting with Sacramento. I-5 provides easy access to downtown Sacramento.
Light Rail – Fairway is located just 10 minutes to the nearest Sacramento Regional Transit stop, which offers bus and light rail service to and from Sacramento seven days a week.
Sacramento International Airport – This airport serves the Northern California region with access to major cities across the U.S. and the world.
Amtrak (Capitol Corridor) – Amtrak Capitol Corridor provides daily service between the Sacramento region and the Bay Area.
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EXCEPTIONAL SCHOOLSSacramento has an abundance of higher education options throughout the region that meet different needs of the students. American River College and Sacramento City College are two-year institutions that offer associate degrees and serve as feeder institutions to the University of California, Davis. Both the University of California Davis and California State University Sacramento offers bachelors, masters and PhD degrees and programs in a variety of subjects. The distance from Fairway and the number of students at these establishments can be seen below:
• University of California Davis (32,000 students and 24 miles)• California State University, Sacramento
(23,000 students and 4 miles)• Sacramento City College (26,000 students and 8 miles)• American River College (34,502 students and 5 miles)
E X C L U S I V E L Y P R E S E N T E D B Y N E W M A R K K N I G H T F R A N K
MARC [email protected]
T 916.835.8844License CA: 01956176
NATE [email protected]
T 916.599.6523License CA: 01467941
T 415.430.1037License CA: 02049950