the granada · 2020. 1. 28. · the granada offering memorandum kidder mathews 5 property the...

32-Unit Apartment Building Located in an Opportunity ZoneOFFERING MEMORANDUM | 1224 S YAKIMA AVE | TACOMA, WA

THE GRANADA

http://www.kidder.com/


The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.

This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.

KIDDER.COM

BRIAN RICHARDSON

Vice [email protected]

EXCLUSIVELY OFFERED BY

01OFFERING SUMMARY

Executive HighlightsInvestment Overview

02LOCATION OVERVIEW

Regional OverviewTacoma OverviewOpportunity Zone

03PROPERTY AERIALS

Amenities MapRegional Employers Map Property Map

04COMMUNITY DESCRIPTION

Community SummaryProperty Photos

05FINANCIALS

Unit MixCurrent Rents & ExpensesProforma Rents & Expenses

06COMPARABLES

Sale ComparablesRent Comparables

TABLE OF CONTENTS

http://www.kidder.com


3THE GRANADA OFFERING MEMORANDUM KIDDER MATHEWS

01OFFERING SUMMARY

EXECUTIVE HIGHLIGHTS

INVESTMENT OVERVIEW

APARTMENT BUILDING OFFERING MEMORANDUM KIDDER MATHEWS 4

32 apartment homes in a desirable community

ADDITIONAL INCOME potential with completion of 33rd unit

POTENTIAL to create additional storage lockers or bike storage

ALL units newly renovated with old world charm

LOCATED in Downtown Tacoma

WALKSCORE of 91

EXECUTIVE HIGHLIGHTS

DIRECTLY across street from Bates Technical college $44M expansion

WALKING DISTANCE to many of downtown Tacoma’s restaurants, boutiques, and nightlife

WALKING DISTANCE to Bates Technical College and University of Washington Tacoma Campus

LOCATED within Opportunity Zone

THREE BLOCKS from future Link Light Rail extension to open in 2022

32NUMBER OF UNITS

1926YEAR BUILT

91WALK SCORE

THE GRANADA OFFERING MEMORANDUM KIDDER MATHEWS 4


Property The Granada Apartments

Address 1224 S Yakima Ave, Tacoma, WA

Parcel Number 2012160080

Price $4,700,000

Number of Units 32 Apartments

Year Constructed 1926

Number of Floors 4

Number of Buildings 1

Land Area 6,500 SF

Building Size 20,544 SF

Zoning R5

INVESTMENT OVERVIEW INVESTMENT SUMMARY

$4,700,000PRICE

1926YEAR BUILT

1NO. OF BUILDINGS

4NO. OF FLOORS

6,500 SFLAND

459 SFAVG. UNIT SIZE

SECURE entry building

ONSITE office area

ONSITE laundry

SECURITY cameras

NEW roof installed

UPDATED double-payne vinyl windows

NEW EXTERIOR and common area paint

LOCATED on two major bus line routes

COMMON area seating lounge

MIX of studios and one bedroom apartment homes

NEW vinyl flooring in kitchens and bathrooms

NEW carpeting in living areas and bedrooms

NEW white and oak cabinets in units

NEW counter tops

NEW stainless steel appliances

NEW doors, hardware, trim, and 4” base

UPGRADED lighting and fixtures

SELECT units with walk-in closets

SELECT units with original hardwood flooring in kitchen area

COMMUNITY AMENITIES

APARTMENT HOME AMENITIES

RENT SUMMARY

Unit Type No. of Units SF Monthly Rents Rents/SF

1 Bedroom / 1 Bath 7 624 $1,134 $1.82

Urban 1 Bedroom / 1 Bath 7 484 $1,018 $2.10

Medium Studio 8 428 $959 $2.24

Small Studio 10 352 $926 $2.63

TOTAL / AVERAGE 12 459 $2.18

Office / Vacant Micro Unit 1 300 $0.00 $0.00



THE GRANADA OFFERS investors a turn-key asset in one of the top rent growth markets in the country.

An investor can capitalize on increasing value through renovating a 33rd unit, and creating additional amenities such as storage lockers, bike storage, a small pet area and capturing the continued aggressive rent growth in the market.

THE GRANADA IS A FOUR-STORY APARTMENT BUILDING centrally located in downtown Tacoma that is also a designated Opportunity Zone.

Its brick exterior and old world charm accentuates the early 20th century architecture displayed in similar buildings throughout the Tacoma area. The building offers a mix of one-bedroom and studio units. The entire building underwent a significant renovation from 2017 through the end of 2018.

New boiler

New windows

New exterior and common area paint

New secure entry doors, new common area flooring and new roof

UNIT RENOVATIONS INCLUDE:

New counter tops

New cabinetry

Stainless steel appliances

New lighting and fixtures

New paint

New flooring

New doors

New 4” base trim

New door and cabinet hardware

RENOVATIONS FOR EXTERIOR COMMON AREA INCLUDE:


02LOCATION

OVERVIEWREGIONAL OVERVIEW

TACOMA OVERVIEW

OPPORTUNITY ZONE


LOCATION OVERVIEWREGIONAL OVERVIEW

In addition to being the home of the third largest city in Washington, Tacoma is located approximately equidistant between Portland and Seattle. This proximity to the two largest metro areas in the Northwest has in part, lead to recent development. First Industrial Trust completed construction in nearby DuPont, building a 1 million square foot fulfillment facility for Amazon.

Pierce County has been one of the fastest growing counties in the state of Washington since the 1960’s, and has consistently exceeded the state’s overall rate of growth. Pierce County supports manufacturers such as Boeing, Milgard Manufacturing, James Hardie Building Products, Toray Composites (America), Inc., and Medallion Foods. Recreational Equipment, Inc. (REI), Whirlpool, and Costco also have major distribution centers here.

The majority of population increase has been due to the migration of people into the County. This continued migration is the result of Pierce County’s relatively stable economy and exceptional quality

of life. The low-cost living, award-winning education, and lifestyle opportunities, combined with the area’s competitive cost of doing business, create an outstanding environment for businesses and residents to work, play, and live.

Economy

Two words best describe the business climate found in Pierce County’s economy: emerging opportunity. In part, this is because of the county’s strategic location at the mid-point between the major metropolitan areas of the central Puget Sound to the north, and Portland, Oregon to the south.

The presence of the military exerts a stabilizing influence on the Pierce County economy and employs nearly 45,000 residents of Pierce County. In the last several years, the county has noticed quite a dramatic shift in the regional diversification of its workforce. Professional services rank as one of the leading components of industry. These include a solid anchor of Intel, multiple web design firms, and legal and consulting companies.

State jobs and public education employ roughly 20,000 residents. Medical services that provide emergency and maintenance health care for the surrounding five-county region. Traditional manufacturing by many local producers that captures a significant piece of their specific global market. An emerging life sciences community has grown in the region within the last five years.

Fort Lewis and Lewis-McChord Air Force Base

Joint Base Lewis-McChord (JBLM) is the largest military installation in the western United States, and the second largest employer in the entire state of Washington. Its presence is recognized throughout Pierce and Thurston Counties and Washington State as a significant economic benefit to the South Puget Sound. In turn, communities surrounding JBLM enhance the quality of life for military personnel and families by providing high quality neighborhoods, schools, recreation opportunities, and retail services. JBLM has experienced significant population growth to support its mission. Since 2003, nearly 40,000 people have arrived at JBLM and more continue to arrive. The total military-connected population is estimated at 210,000.

PORT OF TACOMA

The Port of Tacoma is an independent seaport located on more than 2,400 acres of land that are used for shipping terminal activity, warehousing, distribution and manufacturing. The Port plays the largest international trade role in the Pacific Northwest, handling between nine and thirteen million tons of cargo and more than $52 billion in commerce. Major imports include automobiles, electronics, and toys, while major exports include grain, forest products, and agricultural products. Based

on tonnage, the Port’s largest export is grain (corn and soybeans) that come into the port by rail from the Midwest.

China/Hong Kong was also the top partner ranked by volume imported and value imported. Japan was the top partner ranked by volume exported and value exported. The top commodities exported, by value, were cereals and grains. The top commodities imported, by value, were vehicles and parts, followed by industrial machinery and electronics. The port is among the top ten largest container ports in North America. Containers hold everything from computers and lawn furniture, to apples and frozen meat. Based on container volumes, China is the port’s largest trading partner. More than 70 percent of the containers imported through the port move by rail to markets in the Midwest and East Coast. The port is served by the BNSF Railway and Union Pacific railroads. Shoreline rail service is provided by Tacoma Rail, which is owned by the City of Tacoma. U.S. Oil and Refining operates an oil refinery in the Port of Tacoma. Oil tankers bring crude oil, which is refined into a variety of products, including JP-8 jet fuel for Lewis-McChord Field Air Force base. Port activities are related to more than 50,000 jobs in Pierce County, and 125,000 jobs in Washington.

Health Care Hub

Pierce County is home to six top-notch full-service hospitals, Good Samaritan Hospital and Rehab Center, Madigan Army Medical

Center, St. Joseph Medical Center, Saint Clare Hospital, St. Anthony Hospital and Tacoma General Allenmore Hospital. The area’s health care hub has hundreds of clinical trials underway and a medical community committed to research and collaboration with local universities and other research institutions. Numerous specialized medical clinics are located throughout the region.

Recreation Opportunities

Puget Sound bays and outlets offer an abundance of year-round outdoor recreational activities such as sailing, fishing, canoeing, diving, and kayaking. Numerous trails for biking and hiking are conveniently located 120 miles away at Mt. St. Helens, at Mt. Rainier which is 81 miles away, and 74 miles away at Ocean Shores. PGA level golf courses and many other fine public and private courses are also around the area. Entertainment includes several of the Northwest’s largest gaming casinos.

Art and Culture

Pierce County is home to some of the most active communities in Washington. Puyallup is home to numerous fairs, festivals, museums, galleries, and antique districts. Artists and performers showcase their talents through live theater at Broadway Center for the Performing Arts, Northwest Sinfonietta, Tacoma Art Museum, Tacoma Opera, and The Tacoma Symphony Orchestra.

Education

The quality of education in Pierce County is a major draw to the South Puget Sound area. Pierce County students consistently show educational attainment levels exceeding both state and national averages. 35% of Pierce County residents typically hold bachelor or graduate degrees, and more than ninety percent attain a high school or GED diploma. Pierce County students also consistently achieve SAT scores above state and national averages.

Pacific Lutheran University

Pacific Lutheran University is a private institution that was founded in 1890. It has a total undergraduate enrollment of 3,100 students. Pacific Lutheran University’s ranking in the edition of Best Colleges in Regional Universities (West), was #14.

University of Puget Sound

University of Puget Sound is a private institution that was founded in 1888. It has a total undergraduate enrollment of 2,600. University of Puget Sound’s ranking in the edition of Best Colleges in National Liberal Arts Colleges, was seventy-two.

Pierce College

Pierce College is designated an institutional member of Servicemembers Opportunity Colleges (SOC), a group of more than 1,800 colleges and universities providing voluntary post-secondary education to members of the military throughout the world. Pierce College provides education



Professional sports teams include major league football and baseball as well as soccer and hockey. The region’s professional football team, the Seahawks, won the Super Bowl in 2013. In addition, there is thoroughbred racing, minor league baseball, and the University of Washington Huskies to cheer on.

DEMOGRAPHICS

T h e r e g i o n c o n s i s t s o f approximately 4,285,020 (U.S. Census Bureau Estimate) residents in King, Snohomish, Pierce, and Kitsap counties. The current figure represents a 1.6% increase over as the region added new people. This marks the fourth consecutive year of increased annual growth. Positive population growth in the region is expected to continue through the end of the forecast period.

The Seattle-Tacoma-Bellevue metropolitan area (MSA) is clearly the economic engine of Washington State. The MSA ranks 13th among 362 markets nationwide in terms of effective buying income (EBI or after-tax, discretionary spending power). The median household EBI in the Greater Seattle Area is 20% higher than the national median.

Approximately 56% of the population is in the prime workforce age of 25-64. Residents are among the most highly educated in the nation, with more than 35% having at least a bachelor’s degree and one-third of those holding a graduate or professional degree.

TOP EMPLOYEES

Rank Companies Emplyees

1 Joint Base Lewis-McChord 53,000

2 Multicare Health System 7,705

3 State of Washington 7,621

4 CHI Franciscan Health 6,786

5 City of Tacoma & TPU 3,591

6 Tacoma Public School 3,333

7 Pierce County Government 3,089

8 Puyallup School District 2,190

9 Emerald Queen Casino 2,165

10 Bethel School District 2,028

11 Safeway & Albertsons 1,680

12 State Farm Insurance 1,637

13 Boeing 1,550

14 Clover Park School District 1,446

15 Fred Meyer 1,364

16 US Postal Service 1,336

17 Good Will 1,243

18 Amazon Distribution Center 1,200

19 Walmart 1,192

20 Davita 1,184

programs at Joint Base Lewis-McChord. These programs are specifically designed to serve the needs of active-duty military personnel, their family members, VA benefit recipients, and civilians in the community. Located on two campuses in Pierce County, current student enrollment is approximately 24,052.

EMPLOYMENT

The number of jobs in Pierce County totaled approximately 302,800. The Auburn Boeing Plant, opened in 1966, is the largest airplane parts plant in the world with 2,100,000 square feet and 1,265,000 parts manufactured each year. With 5,179 employees, the Boeing plant is the largest employer in the area. Many businesses are small shops or small to medium service businesses, including The World Vision Headquarters, St. Francis Hospital, and United States The number of jobs in Pierce County totaled approximately 302,800. The Auburn Boeing Plant, opened in 1966, is the largest airplane parts plant in the world with 2,100,000 square feet and 1,265,000 parts manufactured each year. With 5,179 employees, the Boeing plant is the largest employer in the area. Many businesses are small shops or small to medium service businesses, including The World Vision Headquarters, St. Francis Hospital, and United States Postal Service. Numerous companies with over 1,000 employees, including City of Tacoma, Xerox Commercial Services, Muckleshoot Tribal

Enterprises, and Costco, are located in Pierce County.

GREATER SEATTLE AREA

Seattle is the largest city in the four-county metropolitan area known as the Puget Sound region. The area’s other major metropolitan cities include Bellevue, Tacoma, Everett, and Bremerton. Surrounding these are growing cities that include Kirkland, Redmond, Kent, Renton, Bothell, and Issaquah. CLIMATE

The temperate climate lets residentsand visitors enjoy the outdoors year-round. High temperatures in July average just 75 degrees, while low temperatures drop below freezing an average of only 15 days per year.

The rainfall keeps the region’s vegetation a lush green, however, it rarely rains heavily and the total average rainfall is 35 inches, less than New York City or Miami.

Outdoor Activities, Culture, Sports

The Seattle area’s natural beauty and mild climate encourage year-round activities such as hiking in the Olympic or Cascade Mountains, kayaking on Lake Union, or cycling on any of the many rails-to-trails paths.

Art and culture are also driving forces in the region. There are 34 museums, 30 performing arts centers, and—at last count—at least 29 professional theatre companies.

Truck transportation in Washington State is made possible by over 3,700 interstate trucking companies, including common carrier and contract companies. The State ranks among the top 10 states in general freight tonnage carried by trucks intrastate. The competition results in favorable negotiated freight rates.

All regional communities are accessible from Seattle over an efficient, well-planned freeway system. The average commute between Seattle and outlying cities and suburbs is 23 minutes

(non-peak) and 45 minutes (peak). The region’s highway network is anchored by three main highways:

U.S. Interstate 5 which runs north-to-south from Vancouver, British Columbia to San Diego, California

Interstate 90 which runs west-to-east connecting Seattle with New York

Interstate 405 (Washington) is a 30-mile stretch of freeway that bypasses Seattle east of Lake Washington. I-405 runs from Lynnwood in the north to Tukwila in the south Over 23 million passengers annually ride the Washington State Department of Transportation’s Ferry System, the largest in the country and the third largest in the world. This system transports over 10 million vehicles a year, more than any ferry system in the world.

Long-term forecasts call for the Greater Seattle area to resume its historic strong growth patterns. The Puget Sound Regional Council expects the area to add approximately 855,000 new jobs by 2040.

EDUCATION

Washington State is home to six public four-year colleges and universities, 34 public community and technical colleges, and more than 300 private colleges, universities, career, and vocational schools.

The University of Washington continues to gain increased national recognition. According to America’s Best Colleges, U.S. News & World

Report, the UW was ranked 52 among all national universities, tied with University of Texas-Austin and Pepperdine University. The U.S. News graduate school rankings show many of the UW’s graduate programs among the best in the nation. The medical school ranked first among all schools in the country for primary care and the School of Nursing also retained its top ranking for the 27th year. Overall the UW School of Medicine ranked tenth among research medical schools and first among public medical schools. The graduate program in computer science ranked sixth and the college of education graduate program was seventh.

Seattle University is a Jesuit university situated on 48 acres in Seattle’s First Hill and Capitol Hill neighborhoods. The school was founded in 1891 and is the largest independent university in the Pacific Northwest. The university has a total enrollment of 54,000 students. Seattle University employs 1,400 faculty and staff. The U.S. News rankings place Seattle University 6th among the top universities in the West that offer a full range of masters and undergraduate programs.

TRANSPORTATION

King County has a well-developed transportation system which provides links to all parts of the country and world. Seattle’s port is closer to the main trading partners in Asia than any other major U.S. port and the region’s distribution networks move goods efficiently inland.

The Puget Sound region’s multi-modal transportation system includes two transcontinental railroads, nationwide trucking capacity, three interstate highways, a ferry system, a world-class port and an international airport.

The Burlington Northern Santa Fe (BNSF) and Union Pacific Southern Pacific (UPSP) railroad serve the greater Seattle area. Both railroads have spur lines that span the area, making it possible to deliver almost any type of load. Outside of Puget Sound and across the state, there are over 4,000 miles of operable track.


The fleet has 20 auto-passenger ferries and two passenger-only ferries. The DOT operates 20 terminals and operates on nine routes.

The Port of Seattle has world-class facilities and relative proximity to Asia; the port is the fastest route for cargo to and from America’s heartland. The transit time from port cities in Asia to Seattle is eight days, which is 30 hours less than through Southern California ports. The Seattle-Tacoma-Everett port region is the third largest container complex in the country, smaller only than New York/New Jersey and Los Angeles/Long Beach. It is the 8th largest US port in terms of TEU’s and cargo activity supports more than 21,000 jobs. The region’s ports serve not only the Pacific Northwest but also the Midwest, East Coast, and Canada. The Northwest Seaport Alliance saw container volumes surpass the 3 million mark in October, a 5 percent increase year to date. Containerized exports fueled the growth, posting a 9 percent gain. Import volumes declined slightly, signaling the end of the peak shipping season when retailers increase inventories ahead of the holiday shopping season. Through the first 10 months of the year, imports rose 4 percent to 1,208,091 TEUs, and exports grew 9 percent to 1,102,194 TEUs. Domestic volumes to Alaska and Hawaii remained flat, up 1 percent to 748,769 TEUs. Auto imports also continued to post gains in October—up more than 6 percent year to date to 154,291 units—as the 2016 models began arriving. Meanwhile,

year-to-date break-bulk cargo volumes and grain, log, petroleum and molasses exports continue to be impacted by a weaker export market. The Northwest Seaport Alliance is a marine cargo operating partnership of the ports of Seattle and Tacoma.

Over 37.4 million passengers and 327,240 metric tons of air cargo passed though Sea-Tac airport. Passenger levels increased 7.7% from 2013 and the volume ranked the airport as the 22nd busiest in the U.S. Because of the state’s strategic geographic location, Sea-Tac is one to two hours of flying time closer to Pacific Asia than Southern California airports. In addition, trans-polar routing enables Sea-Tac to rival East Coast cities like New York in flight times to European capitals.

ECONOMY

While the greater Seattle economy includes a broad range of companies, local business and civic leaders have identified key innovative, knowledge-based industries that drive our economy and are critical to the region’s current and future prosperity. Aerospace

Clean Technology

Information Technology

Interactive Media

Life Sciences

Aerospace

The Puget Sound region has a proud history and a strong future as a leader in the aerospace industry. Aerospace supported more than 102,000 jobs (over 7,000 engineers) in the region and includes over 650 companies, making the area the largest commercial aviation center in the country. The largest employer is Boeing Commercial Airplanes which is headquartered in Renton about 15 minutes south of downtown Seattle. The region is home to final assembly operations for the 737, 747, 767, 777, and 787 aircraft. Boeing has 79,334 employees in the Puget Sound region.

Clean Technology

Analysts predict a boom in clean technologies amid an oncoming energy crunch. The alternative-energy industry’s revenues are projected to quadruple to $226 billion, according to a report by Clean Edge, a Portland-based market-research firm. There are more than 400 clean technology companies located in the region employing more than 21,000 people. There is a 64% greater concentration of clean technology, or “green,” jobs in the Seattle area than the U.S. average.

Statewide, the clean technology industry accounted for more than 62,000 jobs in the sectors of energy efficiency, renewable energy, reducing pollution and pollution cleanup. The sectors of wind, solar, biomass, wave/ tidal and



geothermal energy currently employ more than 17,000. Washington State has long supported clean technology and has the largest coordinated hydro-electric system in the world, providing 73% of the state’s electrical power.

The Washington Clean Technology Alliance (WCTA) was established in 2007 to take full advantage of the opportunities presented by this emerging sector and to ensure Washington’s continued leadership. Information Technology

Many of the most well-known names in the software and information technology industry are located in the Greater Seattle area. The established companies include Intel, Microsoft, Amazon, Nintendo, T-Mobile, RealNetworks, Expedia, and several others.

The strong base of businesses has created the largest employment cluster in the region, supporting nearly 110,000 jobs. The Greater Seattle area has several world-leading strengths in the IT sector. The

State of Washington is the largest employer of software publishing workers in the US. Washington ranks first in the country in the creation of new software companies.

Microsoft is the second largest employer in the State of Washington. In addition to the nearly 42,940 employees in the region, the company historically has had an estimated 3.4 implied employment multiplier. As a result, the company currently also supports nearly 98,000 indirect jobs in the area. Microsoft has also greatly impacted the region through next generation companies. Since Microsoft’s founding, over 250 companies have been spun off through investment and development or from former Microsoft employees.

Amazon continued its strong employment growth through 2016. The online retailer added 11,000 employees worldwide last year. The company doesn’t release detailed employment information for the region; however, recent local leasing activity indicates many of the new and planned hires will be based in the Seattle area.

Amazon leased approximately 460,000 square feet at the 1918 Eighth office tower in downtown Seattle. This lease is in addition to the 1.7 million square foot headquarters in South Lake Union which is apparently already near capacity. They are under construction on 4 city blocks totaling approximately 3 million square feet. Tech companies require approximately 250 square feet per employee. Therefore they

plan to house an additional 10,000 employees upon completion of this Amazon campus.

The rich and deep pool of talent has led other industry leading IT companies such as Google to establish the area as an important location for growth. In the Greater Seattle area, Google has a complex of new buildings in Kirkland and offices in the Fremont neighborhood of Seattle. A local manager has indicated that at least 100 positions will be added to the 700 employees already working in the two locations. The local engineers are working on the high priority projects such as the Chrome browser and operation systems and Google Talk.

TOP PUGET SOUND AREA COMPANIES

Amazon.com

AT&T Wireless

Alaska Airlines

Berlex Laboratories

Boeing

Children’s Hospital

Costco

Expedia, Inc.

Group Health Cooperative

Macy’s

Microsoft

MultiCare Health System

Nintendo

Nordstrom

Paccar, Inc.

Providence Health Care

REI

Safeco

Safeway

Starbucks

Swedish Health Services

Symetra Financial

T-Mobile

The Kroger Company

University of Washington

Virginia Mason Medical Center

Weyerhaeuser - Forest Products


TACOMA OVERVIEWTacoma is located 33 miles south of Seattle with a current population estimate of 207,948, making it the 3rd largest city in Washington State. Tacoma is in the midst of a significant expansion and redevelopment of its CBD, just two miles away. The City has supported a number of public and private projects in the past three decades in an attempt to revitalize all elements of the CBD market, which is now starting to pay off. Among these are the establishment and expansion of a University of Washington satellite campus, the Tacoma Museum of Glass, the Greater Tacoma Convention Center, and just outside of the CBD, the LeMay Auto Museum.

A 1.6-mile light rail line was constructed along Pacific Ave., connecting the north end of the CBD to the Amtrak rail station and Sounder heavy rail commuter trains north to Seattle. Light rail trains run every 12 minutes during the day with ridership of 900,000 in 2018. Work on expanding the Tacoma Link system started in November 2018, which will result in six new stops along 2.4 miles of new track. When completed in mid-2022, the line will extend north from the Theater District to the north end of the CBD, near Division St. and then head southwest to MLK Jr. Way, where it will turn south, with the last of the six new stops at MLK Jr. Way and S. 19th St. Long-term plans call for connecting the Tacoma Link to the larger Link system to the north. However, construction on that is not expected to begin until 2034, with complete light rail lines from Tacoma to Everett in 2038.

The University of Washington – Ta c o m a ( U W-T ) b ra n c h campus anchors the southerly end of the Tacoma CBD. The University owns about 46 acres,

including much of the land extending west to Tacoma Ave. S. UW-T became a four-year degree in 2007 and now has an annual enrollment over 5,100 students. The resulting urban campus has become a focal point in the Downtown CBD and the driving force behind present day revitalization efforts.

Adjacent to UW-T is Tacoma Town Center, a roughly $135 million investment that will include a new 23 story Marriott Hotel, about 600 housing units and retail space when complete. The hotel is underway and expected to be delivered in 2020. East of that is a multi-phased project called Brewery Blocks that will have 200 units of market-rate residential housing, 75,000 sf of Class A office, and 50,000 sf of retail.

The Granada is centrally located in downtown Tacoma putting it within walking distance to many of the cities restaurants, boutiques, museums, and nightlife. It is also within walking distance to the University of Washington Tacoma campus. The centralized location, easy access to major freeways and highways, and Tacoma’s strong public transportation system give resident’s easy access to the area’s main employment hubs such Joint Base Lewis-McChord, Port of Tacoma, Kent Valley, Sea-tac International Airport. The Granada will specifically benefit from the strong public transportation system with the addition of a new Link Lite Rail station opening three blocks away in 2022.

The Tacoma Link Lite rail expansion more than doubles the length of the current lite rail system. Starting with relocation the Theater District station and then adding six new stations. The expansion will connect popular destinations such as the Stadium District, Wright Park, and major medical facilities before reaching the new Hilltop neighborhood terminus.

CENTRALIZED LOCATION & STRONG DRIVERS

GRANADAAPARTMENTS


Bus/Transfer Stations

Intercity Transit Routes

AREA BREAKDOWN

Tacoma Dome Station

Tacoma Amtrak Station

Commerce Street Transfer Area

GRANADAAPARTMENTS

TACOMA

WALK SCORE91 - VERY WALKABLE

TRANSIT SCORE79 - GREAT TRANSIT

BIKE SCORE60 - BIKEABLE

To I-705 1 Mile

To Highway 509 1.7 Miles

To Highway 16 2 Miles

To I-5 2.4 Miles

UNIVERSITY OF WASHINGTON TACOMA

COMMENCEMENT BAY

Existing Light Rail


01

15

16

14

1702

06

08

12

03

07

11

05

09

13

GRANADA APARTMENTS

Existing Light Rail

10

0418

DEVELOPMENTS

01 Bates Technical College expansion

02 Future Home of Pacific Brewing

03 Future Home of Hong Kong Furniture

04 Aero Precision

05 Micro Brewery

06 7 Seas Brewery Phase 1

07 Holiday In Express

08Horizon Commerce Mixed-Use (350 units)

09 New YMCA

10 Convention Center Hotel Marriot

11 Greater Convention and Trade Center

12 Marcato Condominums

13 Napolean Apartments

14 Koz Micro Apartments

15 Grand on Broadway

16 Old City Hall Building

17 The Hailey Apartments

18 TRAX Micro Apartments

19 Tacoma Town Center


STUDENT HOUSING DEMAND

THE QUALITY OF EDUCATION IN TACOMA continues to a major draw for the city. Tacoma is home to three major universities, two community colleges, and a technical college. The continued expansion of University of Washington Tacoma has put tremendous strain on the available housing options for students in supply constrained market. With expansion of Bates Technical College in downtown Tacoma it will add to an already tight housing market.

2016 UWT HOUSING DEMAND STUDY Finds 49% of Students are traveling 10 miles or more to attend classes. Study finds 1,500 more units needed just for UWT.

BATES TECHNICAL COLLEGE kicks off 80th anniversary year with $44 M expansion.

IN 2020, BATES TECHNICAL COLLEGE is anticipating the opening of The Center for Allied Health Education. The project broke ground in 2019 and will provide the in-demand allied health programs with access to much needed high-tech facilities

WA RESIDENT STUDENT LOCATION WHILE ATTENDING UWT

9% of students live within a 5 minute drive of campus 14% of students live within a 5 -10 minute drive of campus

students live in a county outside of Pierce county

1,191

students live in Tacoma

1,520

students live in Pierce County, outside of Tacoma

1,936

51% live within 10 miles of campus

44% live within 10 - 30 miles of campus

5% live greater than 30 miles from campus

*drive time does not factor in traffic

DOMESTIC, WA-STATE STUDENT RESIDENTS PROXIMITY TO UWT #* UWT Campus

! Local WA Resident Student Locations

5 minutes from campus

10 minutes from campus

—387 students

—976 students (387 + 589)

WA State Resident Students


AS RESIDENTS CONTINUE TO BE PRICED OUT

of core markets like Seattle and Bellevue, they are choosing to live in outlying communities. Combined with net in-migration from other states and the lack of development, this is creating organic rent growth in these surrounding markets. According to Yardi Matrix, the greater Tacoma market saw a Year-over-Year rent growth of 5.72%, almost double the national average. The downtown Tacoma submarket saw 6.5% Year-over-Year rent growth.

APARTMENT BUILDING OFFERING MEMORANDUM KIDDER MATHEWS 20

TACOMA VS NATIONAL RENT GROWTH

$500

Year-over-Year

8.0%

6.0%

4.0%

2.0%

0.0%Mar

2019

Tacoma National

Apr 2019

May 2019

Jun 2019

Jul 2019

Aug 2019

Sep 2019

Oct 2019

Nov 2019

Dec 2019

TACOMA RENT GROWTH BY ASSET CLASS

Year-over-Year

8.0%

6.0%

4.0%

2.0%

0.0%Mar

2019

Lifestyle Renters-By-Necessity

Apr 2019

May 2019

Jun 2019

Jul 2019

Aug 2019

Sep 2019

Oct 2019

Nov 2019

Dec 2019



X MINTO THE INTERNATIONAL AIRPORT

X MINTO THE INTERNATIONAL AIRPORT

OPPORTUNITY ZONES

*Assumes long term capital gains tax rate of 23.8%, no state income tax, and annual appreciation of 7% for both the OZ and standard investment

Temporary Defferal

Defer taxes on gains until 12.31.26

Does NOT have to be like kind

$100,000 Invested in 2018

After tax value of investment in 2028

Step-Up Basis

Hold for more than 7 years and get a

15% increas in the tax basis of the

original gain

Permanent Exclusion

Hold for more than 10 years and all

additional gains beyond that which

were previously defered are excluded

through 12.31.47

$200,000

$132,000

$176,000

Excess return offered by OZ Investment $44,000

Standard Investment OZ Investment

$100,000

$50,000

$150,000

$0

WHY? THE MAGIC OF OZ AFTER TAX VALUE OF INVESTMENT

The Granada Apartments are located in a Department of Commerce designated Opportunity Zone. A census tract nominated by the Washington State governor and certified by the U.S. Department of the Treasury. Through private investment, these zones are designed to provide tax incentives to investors who help revitalize or who fund

businesses in select communities. Investors are allowed to defer taxes on capital gains from real estate or other asset classes that are invested in Opportunity Zones. Investors are further rewarded with additional tax incentives when investing long-term. See the following page for information on the tax saving benefits provided by Opportunity Zones.


03PROPERTY

AERIALSAMENITIES

REGIONAL EMPLOYERS

PROPERTY


11

03 0302

01

09

08

07 06

05

01

03

03

04

01

02 02

01

01

01

04

1213

03

01

05

1110

GRANADA APARTMENTS

EAT + DRINK

1 Subway

2 Jack in the Box

3 Starbucks

4 Jimmy Johns

5 Tully’s

6 Dominos

7 KFC

8 A&W

9 Baskin Robins

HOTELS

01 EconoLodge

02 Travelodge

03 Roadway Inn

04 RLHC

05 LaQuinta

06 Best Western

07 Holiday Inn Express

08 Courtyard Marriott

09 Murano

SHOPPING

01 Goodyear

02 Napa

03 Purcell

04 Costco

05 Savers

06 Shell Gas

07 Chevron

08 Arco

09 Ace

BANKS

01 US Bank

02 Union Bank

03 Umpqua Bank

04 Columbia Bank

05 Wells Fargo

06 Key Bank

07 Bank of the West

08 Bank of America

09 Chase

PARKS/SCHOOL

01 Wright Park

02 Garfield Park

03 Ursich City Park

04 Snake Lake Park

05 McKinley Park

06 Lincoln Park

07 Swell Park

08 Franklin Park

09 Jefferson Park

10 Bellarmine

11 U of Puget Sound

12 Jefferson Elementary

13 Stadium High School

14 Hilltop Artists

15 Mason Middle School

10 Safeway

11 Thriftway

12 7-11

13 Goodwill

14 Jiffy Lube

15 Walgreens

16 Target

17 Hobby Lobby

18 Petsmart

19 Walmart

20 Fred Meyer

21 Bartel’s

22 Home Depot

23 Met Market

10 McDonalds

11 Papa John’s

12 Jazz Bones

13 E9

09

08

07

05

04

0301

05

06

07

10

04

08

09

12

14

02

0315

13

15

01

0201

0402

0309

01 06

0805

04

04

06

01

06 04

05

01

0212

19

16

18 17

20

22

04

06

06

06

07

03

07

13

10

06

08

09

15122115

2310

12

06

11


REGIONAL EMPLOYERS

DESMOINES CREEK

KENT VALLEY INDUSTRIAL/FLEX SPACE

SOUNDER TRAIN STATIONS

SEATAC AIRPORT

GRANADA APARTMENTS


PROPERTY

S 13TH S

T TACOMA AVE

S YAKIMA AVE

S 1

5TH

ST

S 11TH ST

N

DOWNTOWN TACOMA

GRANADA APARTMENTS


04COMMUNITY

DESCRIPTIONCOMMUNITY SUMMARY

PROPERTY PHOTOS


Assessor’s Parcel No. 2012160080

Site Area 6,500

Building SF 20,544

No. of Units 32

Year Built 1926

Zoning R5

Parking Street

No. of Buildings One (1)

No. of Floors Four (4)

Structure URM

Roof Flat

Heating Boiler

Siding Brick

Electrical Single panel, 600 amp

COMMUNITY SUMMARY


05FINANCIALS

UNIT MIX

CURRENT RENTS & EXPENSES

PROFORMA RENTS & EXPENSES


UNIT MIX | CURRENT RENTS & EXPENSES

1 BED / 1 BATH

No. of Units SF Avg. Current Rent Avg. $/NRSF

7 624 $1,134 $1.82

Total 4,368 $7,959 $1.82

URBAN 1 BED / 1 BATH


7 484 $1,018 $2.10

Total 3,388 $7,126 $2.10


FLOOR PLANS CONT.

MEDIUM STUDIO


8 428 $959 $2.24

Total 3,424 $7,672 $2.24

SMALL STUDIO


10 352 $926 $2.63

Total 3,520 $9,260 $2.63


CURRENT RENTS & EXPENSES

INCOME

Current Pro Forma

Market Rent $415,800 $423,420*

Loss to Lease ($31,896) $0

Total Potential Gross Rent $383,904 $423,420

OTHER POTENTIAL GROSS REVENUE

Current Pro Forma

Utility Bill Back $36,954 $42,000*

Laundry Income $2,676 $2,760*

Aggregate Vacany (5%) ($21,177)* ($23,409)

Total Aggregate Gross Potential Revenue $402,357 $444,771

Other Income $13,815* $11,819

Effective Gross Income $416,172 $456,590

LOAN ASSUMPTIONS

Interest Rate 4.25%

Loan Term 10-years

Amortization 360-months

Down Payment 32% @ 1.25 DCR

OPERATING EXPENSES

Current Pro Forma

Property Management (5%) $20,809 $22,830

Property Taxes $40,152* $40,152

Insurance $6,420 $6,420

Utilities $54,115* $54,115

Repairs & Maintenance $16,000* $16,000

Common Area Cleaning $2,316* $2,316

General Administrative $3,200 $3,200

Turnover $3,837 $4,125

Marketing $1,600* $1,600

Payroll $24,000* $24,000

Reserves $8,000 $8,250

Total Operating Expenses $180,449 $183,008*

Net Operating Income $235,723 $273,582

$4,700,000PRICE

$146,875$146,875

$228.22$/NRSF

5.02% CURRENT FINANCIALS | CAP RATE

5.83%PRO FORMA | CAP RATE

* Refer to Underwriting Notes on page 34 * Pro Forma includes 33rd unit

CURRENT

Concessions Were offered in 2019 for lease-up. Have been removed due to stabilization

Vacancy 2019 vacancy rate was higher due to lease-up. Imputed stan-dard lender vacancy rate of 5%

Other Income Includes all listed in 2019 profit and loss statement except laundry and utility reimbursement

Property Taxes Adjusted for List Price

Utilities New boiler system will improve efficiency. Presumes a 15% cost savings when boiler is running

Repairs & Maintenance 2019 was lower. Was adjusted to reflect market rate for smaller unit size

Common Area Cleaning On contract now with vendor reducing cost

Marketing Reduced because lease-up is complete

Payroll Actual payroll was higher due to the renovation work and lease-up. Going forward will have lower payroll due to stabilization

PRO FORMA

Market Rent Assumes 2019 total market rent with no loss to lease plus Consumer Price Index increase of 2.3%. Also includes renting 33rd Unit at $875 per month

Utility Bill Back Estimated with additional 33rd unit

Laundry Income Estimated with additional 33rd unit

Operating Expenses Estimated with additional 33rd unit

UNDERWRITING NOTES



05COMPARABLES

SALE COMPARABLES

RENT COMPARABLES

SALE COMPARABLES

9TH STREET FLATS815 S 9th St, Tacoma, WA

Date Sold 12.2019

# of Units 16

Year Built 2008

Sale Price $3,330,000

Price / Unit $208,125

Price / SF $102

Cap Rate 5.43%

01

1311 - 1315 S 9TH STTacoma, WA

Date Sold 12.2019

# of Units 10

Year Built 1909



Price / SF $207

Cap Rate 5.50%

02

THE WINDSOR17 St. Helens Ave, Tacoma, WA

Date Sold 10.2019

# of Units 24

Year Built 1923



Price / SF $356

Cap Rate 4.94%

03

THE STILLWATER245 Tacoma Ave S, Tacoma, WA

Date Sold 09.2019

# of Units 26

Year Built 2005



Price / SF $249

Cap Rate 4.24%

04

THE PAULINE APARTMENTS1305 S 5th St, Tacoma, WA

Date Sold 09.2019

# of Units 8

Year Built 1959



Price / SF $247

Cap Rate 4.30%

05

THE MARGUERITE1002 N J St, Tacoma, WA

Date Sold 05.2019

# of Units 14

Year Built 1967



Price / SF $172

Cap Rate 4.25%

06


SALE COMPARABLES

VISTA TERRACE320 N Tacoma Ave, Tacoma, WA

Date Sold 05.2018

# of Units 14

Year Built 1966



Price / SF $200

Cap Rate 5.50%

07

MILLER APARTMENTS202-210 Tacoma Ave S, Tacoma, WA

Date Sold 08.2017

# of Units 31

Year Built 1907



Price / SF $200

Cap Rate 5.50%

08

SHASTA APARTMENTS1545 Fawcett Ave, Tacoma, WA

Date Sold 04.2017

# of Units 10

Year Built 1919



Price / SF $251

Cap Rate 5.36%

09


SALE COMPARABLES

01

02

03

04

05

0607

08

09

E 11TH ST

SC

HU

ST

ER

PK

WY

S 9TH ST

6TH AVE

DIVIS

ION A

VE

6TH AVE

S S

PR

AG

UE

AV

E

S 11TH ST

S 15TH ST

TA

CO

MA

AV

E S

N S

TE

EL

E S

T

N I ST

COMMENCEMENT BAY

GRANADA APARTMENTS


RENT COMPARABLES Property Units Year Built Rents Avg Rent Avg SF Avg Price/SF

01THE WINDSOR

17 St Helens AveTacoma, WA

24 1923Studio1 BR / 1 BA

$1,015$1,210

335 SF600 SF

$3.03/SF$2.02/SF

02KLEE APARTMENTS

1301 6th AveTacoma, WA

12 1910 1 BR / 1 BA $1,250 600 SF $2.08/SF

03MIDTOWN 15

1801 S 15th StTacoma, WA


$1,099$1,199

434 SF570 SF

$2.53/SF$2.10/SF

041207 ALTHEIMER

Tacoma, WA10 1918

Studio1 BR / 1 BA

$1,050$1,250

450 SF850 SF

$2.33/SF$1.47/SF

05OLYMPIC APARTMENTS

304 Tacoma Ave STacoma, WA


$1,195$1,495

550 SF750 SF

$2.17/SF$1.99/SF

06LANDMARK COURT

818 S 11th StTacoma, WA


$935$1,495

335 SF800 SF

$2.79/SF$1.87/SF

07RED MAPLE

1122 N 6th StTacoma, WA

23 1918Studio1 BR / 1 BA2 BR / 1 BA

$1,025$1,095$1,495

360 SF400 SF700 SF

$2.85/SF$2.74/SF$2.14/SF


RENT COMPARABLES

01

02

03

04

05

06

07

E 11TH ST

SC

HU

ST

ER

PK

WY

S 9TH ST

6TH AVE

DIVIS

ION A

VE

6TH AVE

S S

PR

AG

UE

AV

E

S 11TH ST

S 15TH ST

TA

CO

MA

AV

E S

N S

TE

EL

E S

T

N I ST

COMMENCEMENT BAY

GRANADA APARTMENTS


KIDDER.COM

EXCLUSIVELY REPRESENTED BY

BRIAN RICHARDSON

Vice [email protected]



the granada · 2020. 1. 28. · the granada offering memorandum kidder mathews 5 property the...

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