capitol lanai - loopnet€¦ · achieved rents as high as $1,345 with a $50 utility/rubs charge and...

Capitol Lanai 1300 G Street

Sacramento, CA 95814

Offering Memorandum

Eric Price

Broker, Principal KJAX Real Estate Investment Services

(916)234-6901 [email protected]

Broker CA01860288

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Capitol Lanai 1300 G Street

[email protected] (916)234-6901

Confidentiality Agreement and Disclaimer

The information contained herein is strictly confidential and is provided for the sole purpose of generating interest from perspective purchases to conduct their own due diligence in regards to potentially purchasing this property. This information has been procured from sources believed to be reliable but no representations are made in regards to its accuracy or completeness. Anyone reviewing this information should undertake their own investigations and reach their own conclusions without reliance upon the material contained herein. KJAX Real Estate Investment Services has not made and will not make any representations, expressed or implied, as to the accuracy or completeness of this analysis or its contents, and no legal commitment or obligation shall arise by reason of the analysis or its contents. Please contact Eric Price to arrange any and all site visits as well as for access to available due diligence information.

Contact Information Eric Price

[email protected]

916.234.6901

BRE Lic: CA01860288

8285 Kingsley Court

Granite Bay, CA 95746

3 [email protected] (916)234-6901

Executive Summary

KJAX Property is excited to present the exclusive listing of the Capitol Lanai apartments in prestigious Downtown Sacramento. This offering is a rare opportunity to acquire 32 apartment units in one of Sacramento’s most desirable rental markets. Capitol Lanai is located at the corner of 13th and G Streets in Downtown Sacramento just a half mile from the California State Capitol and less than one mile from the new Golden One Center, home to the Sacramento Kings. Both streets are lined with beautifully mature trees and set-back sidewalks allowing tenants to comfortably walk to work, restaurants, shopping, and entertainment - although they also appreciate the availability of off-street parking, not to be taken for granted Downtown. The property has just recently finished an extensive exterior renovation encompassing new Hardie Board and Stucco exterior siding, dual-pane windows, and ductless mini-split HVAC systems. Opportunity abounds for a new owner to capitalize on the renovations by continuing to push rents upstream and recapturing loss-to-lease from to long-term tenants and occupancy during construction.

Executive Summary:

Pride of ownership property in thriving Downtown Sacramento

Excellent value-add opportunity by upgrading unit interiors and recapturing loss to lease

Recently completed exterior renovation and replacement of all HVAC systems

Investment Highlights:


Proposed Interior Renovation Overview

Rents & Interior Renovation Potential: Downtown Sacramento is the hottest place to live in the region today, attracting working professionals with disposable income to spend on desirable housing. Capitol Lanai boasts most of the desired amenities in the apartment market: off-street parking, patios/balconies, dishwashers, and effective heating and air conditioning. Units leased while the property was under unsightly construction achieved rents as high as $1,345 with a $50 utility/RUBS charge and $65 parking charge, bringing in monthly revenue of $1,460. Now that the renovation has finished, a new owner can get more aggressive with asking rents as well as get a larger payoff from completing interior renovations. The following Financial Underwriting and Projections include a column projecting the payoff of an $8,000 per unit renovation that generates a $150 per month rent increase to $1,495. This ±$248,000 renovation would not only significantly increase annual revenues, it would likely decrease maintenance costs moving forward further driving cash-flow and value. Adding washers and dryers to each apartment is also achievable and has been completed in one apartment. Continuing to install stackable units could allow an owner to further push rents towards the top end of the rental market.

Renovation Overview:

$8,000 per unit budget for flooring, cabinets, countertops, and appliances.

$150 projected rent increase to $1,495

Decreased ongoing maintenance expenses after renovations

Interior Renovation Projection Summary:


Offering Summary

Unit MixNumber Approxof Units Square Feet

32 591

Loan Details - Proposed New Acquisition FinancingAmount: $3,750,000 Initial Interest Rate: 3.85%Loan Type: Fixed RateLoan Term: 5 YearsAmortization: 30 Years

Unit Type

One Bedroom One Bath

Capitol Lanai1300 G StreetSacramento, CA 95814

Investment DetailsOffering Price $7,500,000Price Per Unit $234,375Price Per Square Foot $396.57New First Deed of Trust $3,750,000 Down Payment $3,750,000

Property DetailsNumber of Units 32 UnitsRentable Square Feet 18,912 SF Average Unit Size 591 SF Average Unit Rent $1,142Year Built 1977Number of Buildings 5Number of Stories 2Current Physical Occupancy 88%

Financial IndicatorsYear End

2018Current

RentsAsking Rents

Interior Renovation*

Underwritten Cap Rate 3.43% 3.39% 4.68% 5.38%Projected Cash Flow 1.23% 1.15% 3.73% 5.15%Projected Total Return 3.04% 2.95% 5.53% 6.85%GIM 19.45 16.77 13.66 12.85GRM 19.93 17.64 14.52 13.54

*the above figures reflect adding $248,000 to the Offering Price and Down Payment


Physical Site Overview: Features & Amenities:Apartment Features:

Property Name Capitol Lanai Wood Burning FireplaceAddress 1300 G Street New Dual Pane WindowsAlternate Address (Per Assessor) 711 13th Street Vertical & Mini Blinds

Sacramento, CA 95814 New Ductless Mini-Split Heating and Air ConditioningAssessor's Parcel Number (APN) 002-0164-001-0000 Downstairs Patios and Upstairs BalconiesZoning C-2 GENERAL COMMERCIAL

Number of Units 32 Units Kitchen Equipment:Number of Residential Buildings 4 Electric RangeNumber of Stories 2 Over-the-Range Microwaves or Vented HoodsRentable Square Feet (Per Rent Roll) 18,912 SF RefrigeratorsAssessed Gross Building Area 18,909 SF DishwashersLot Acreage 0.59 Acres DisposalsDensity 54.2 Units Per AcreParking ±32 Open SpacesParking Ratio 1.0 Spaces Per Unit Site Amenities:

New Hardie Board and Stucco ExteriorFoundation Concrete Slab Available Off-Street Parking

Frame Material Wood FrameWindow Type Dual PaneExterior Material Stucco & Hardi LapParking Surface AsphaltRoofing Type Comp Shingle with Flat SectionsHVAC Type Ductless Mini-Split UnitsLaundry On-SiteWater Heater Two Central Water Heaters

Physical Site Summary


Financial Underwriting and Projections

Total Asking Market Gross Average Average GrossUnit Court Square Square Rent / Unit / Rent / Potential Rent / Unit / Rent / Scheduled

Unit Type Count Feet Feet Month Month / SF Rents Month Month / SF RentsOne Bedroom One Bath 32 591 18,912 $1,345 $2.28 $43,040 $1,142 $1.93 $36,537

Totals / Wtd. Average: 32 Units 591 SF 18,912 SF $1,345 $2.28 $43,040 $1,142 $1.93 $36,537

Unit Status

Physically Occupied Units 28 87.5%

Available Units 4 12.5%

Total / Percentage 32 100%

Tenant Occupied Units 27 84.4%

Available Units 4 12.5%

Model Units 0 0.0%

Employee Units 1 3.1%

Total / Percentage 32 100%

Rent Roll Dated June 6th, 2019


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Year End 2018 $8,000/Unit RenovationActual Income Current Rents Asking Rents Projected RentsActual Expenses Projected Expenses Projected Expenses Projected Expenses

Income

Unit Rental Income Notes Per Unit Per SFGross Potential Rent 516,480 516,480 572,280 [1] 17,884 30.26 Gain (Loss) to Lease (78,040) -15.1% - 0.0% - 0.0% [2] - -

Gross Scheduled Rent 438,440 516,480 572,280 17,884 30.26

Total Vacancy and Collection Loss (13,153) 3.0% (15,494) 3.0% (17,168) 3.0% [3] (537) (0.91)

Net Effective Rental Income 376,399 425,287 500,986 555,112 17,347 29.35

Other IncomeRUBS (Utility Fee Income) - 5,400 18,600 18,600 [4] 581 0.98 Laundry & Vending Income 1,754 2,449 2,449 2,449 [5] 77 0.13 Parking Income 4,983 10,440 23,400 23,400 [6] 731 1.24 NSF & Late Fee Income - 300 300 300 [7] 9 0.02 Application & Misc Income - 800 800 800 [8] 25 0.04 Security Deposit Witholding Income 2,455 2,455 2,455 2,455 [9] 77 0.13

- -

Total Other Income 9,192 21,844 48,004 48,004 1,500 2.54

Effective Gross Income 385,591 447,131 548,990 603,116 [10] 18,847 31.89



Year End 2018 $8,000/Unit RenovationActual Income Current Rents Asking Rents Projected RentsActual Expenses Projected Expenses Projected Expenses Projected Expenses

Expenses

Management & Administrative Per Unit Per SFManagement Fee 19,161 5.0% 22,357 5.0% 27,449 5.0% 30,156 5.0% [11] 942 1.59 On-Site Management Rent Discount - 4,800 4,800 4,800 [12] 150 0.25 General & Administrative 1,584 1,600 1,600 1,600 [13] 50 0.08

Repairs, Maintenance, and TurnoverMaintenance Payroll and Costs 10,967 6,400 6,400 3,200 [14] 100 0.17 Maintenance Supplies 1,645 3,200 3,200 3,200 [15] 100 0.17 Vendor Contracted Work 18,095 18,095 18,095 6,400 [16] 200 0.34

Regularly Scheduled Vendor ContractsPest Control 2,125 840 840 840 [17] 26 0.04 Landscape Service 5,154 2,400 2,400 2,400 [18] 75 0.13

Fixed and Non-ControllableReal Estate Taxes 22,316 85,238 85,238 85,238 [19] 2,664 4.51 Insurance 6,589 6,589 6,589 6,589 [20] 206 0.35 Utilities - Electricity 2,378 3,464 3,464 3,464 [21] 108 0.18 Utilities - Gas 4,497 5,783 5,783 5,783 181 0.31 Utilities - Water & Sewer 23,231 23,473 23,473 23,473 734 1.24 Utilities - Garbage 4,334 2,525 2,525 2,525 [22] 79 0.13

Capital Reserve Budget 6,400 6,400 6,400 6,400 [23] 200 0.34

Total Expenses 128,476 193,164 198,257 186,068 5,815 9.84

Net Operating Income 257,115 253,967 350,733 417,048 [24] 13,033 22.05

Notes and assumptions to the above analysus are on the following page.


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Note # Notes and Assumptions

Income Notes[1] Gross Potential reflects all units at Asking Rents or Renovation Rents[2] Current Loss-to-Lease reflects difference between ACTUAL rent roll and ASKING Rents.[3] Vacancy Projected 3%.[4] RUBS Shown as per Actual Rent Roll and Projected at asking $50 Per Unit.[5] Laundry & Vending Income Projected from 2019 Year-to-Date Annualized[6] Parking Income Projected at $65 per Space for 30 of 32 Spaces.[7] NSF & Late Fee Income Projected at $25 per Month.[8] Application & Misc Income Projected from 2019 Year-to-Date Annulized[9] Security Deposit Witholding Income Projected at 2018 Actual Figure.

[10] Gross Income before Expenses.

Expense Notes - Projected as per the provided P&L unless otherwise noted

[11] Projected Management Fee of 5%.[12] On-Site Management Rent Discount Projected at $400 Per Month[13] General & Administrative Projected at $50 Per Unit Per Year.[14] Maintenance Payroll Projected at $200 Per Unit Per Year, $100 After Renovation.[15] Maintenance Supplies Projected at $100 Per Unit Per Year.[16] Vendor Contracted Work Projected at 2018 Actual Figure[17] Pest Control Projected at Actual $70 Per Month.[18] Landscape Projected at Actual $200 Per Month[19] Real Estate Taxes Projected Per Sac County Assessor area 03-005 (1.1365%)[20] Insurance Projected at 2018 Historical Cost[21] Utilities Projected at 2019 Year-to-Date Annualized Cost.[22] Garbage Collection Projected at Actual Contract Rate[23] $200 Per Unit Capital Reserve Budget

[24] Net Operating Income Before Debt Service


Capitol Lanai

1300 G Street Sacramento, CA 95814

Offering Summary

Eric Price

Broker, Principal Phone: (916)234-6901

KJAX Real Estate Investment Services Email: [email protected]

Broker CA01860288

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capitol lanai - loopnet€¦ · achieved rents as high as $1,345 with a $50 utility/rubs charge and...

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