2024 OFFERING MEMORANDUM COVINGTON, KY OM
COVINGTON PORTFOLIO
LEAD AGENTS
Austin Hall Associate Cincinnati Office
D. 513.878.7712
austin.hall@marcusmillichap.com
Alden Simms
Associate
Cincinnati Office
D. 513.878.7759
alden.simms@marcusmillichap.com
Austin Sum Senior Associate Cincinnati Office
D. 513.878.7747
austin.sum@marcusmillichap.com
Jordan Dickman
First Vice President Investments
Cincinnati Office
D. 513.878.7735
jordan.dickman@marcusmillichap.com
Nick Andrews
First Vice President Investments
Cincinnati Office
D. 513.878.7741
nicholas.andrews@marcusmillichap.com
CONTENTS
The Investment Local Competitors Financials 06 10 16 SECTIONS
“OUR COMMITMENT IS TO HELP OUR CLIENTS CREATE AND PRESERVE WEALTH BY PROVIDING THEM WITH THE BEST REAL ESTATE INVESTMENT SALES, FINANCING, RESEARCH AND ADVISORY SERVICES AVAILABLE.”
300 WEST 4TH STREET, CINCINNATI, OH
GLOBAL REACH, LOCAL EXPERTISE
$86.3B
VALUE OF RECENTLY CLOSED TRANSACTIONS
12,272
CLOSED SALES IN MOST RECENT YEAR
$12.8B
TOTAL VALUE OF RECENT LISTINGS
2,143
CLOSED FINANCINGS IN MOST RECENT YEARS
CALABASAS, CALIFORNIA | HQ 2,500 | EMPLOYEES 80+ | OFFICES
CINCINNATI
DAYTON
LEXINGTON LOUISVILLE
YOUR TEAM
JORDAN DICKMAN
FIRST VICE PRESIDENTS DIRECTOR, NMHG
NICK ANDREWS
FIRST VICE PRESIDENTS DIRECTOR, NMHG
AUSTIN SUM
SENIOR INVESTMENT ASSOCIATE
AUSTIN Hall
INVESTMENT ASSOCIATE
ALDEN SIMMS
INVESTMENT ASSOCIATE
CORPORATE SUPPORT
LIZ POPP
MIDWEST OPERATIONS MANAGER
JOSH CARUANA
VICE PRESIDENT
REGIONAL MANAGER
INDIANAPOLIS | CINCINNATI | LOUISVILLE | ST LOUIS | KANSAS CITY
JOHN SEBREE
SENIOR VICE PRESIDENT
NATIONAL DIRECTOR
NATIONAL MULTI HOUSING GROUP
MICHAEL GLASS
SENIOR VICE PRESIDENT
MIDWEST DIVISION MANAGER
NATIONAL DIRECTOR, MANUFACTURED HOME COMMUNITIES GROUP
BROKER SUPPORT
SAM PETROSino
VALUATION & RESEARCH
BRETT MARTIN
INTERNAL ACCOUNTANT
BRITTANY CAMPBELL-KOCH DIRECTOR OF OPERATIONS
ALEX PAPA
MARKETING
COORDINATOR
DATA SHEET
Property Name: 621 Greenup
Property Address: 621 Greenup St.
City, State, Zip: Covington, KY 41011
Year Built/Renovated: 1900 Number Of Units: 7 Avg Unit Size: 586 Rentable Sqft: 4100 Number of Parcels: 1 Lot Size (Acres): .13 Acres Density: 54 # of Buildings: 2 # of Stories: 3 Current Occupancy: 100% Parking Type: 3 Garages and 1 off street spot Parking Surface: Asphalt # Garage/Carport: 3 Foundation: Stone Framing: Wood
Submarket: Covington County: Kenton
Framing Roof Type/Age: White rubber (2009)
Exterior of Building: Brick
RENT MATRIX | studio
$700
Barkley Ridge
$1,287
$680
Square $1,405 621 Greenup $882
River Haus $1,432 JRG Lofts
Arthur Apts
Duveneck
02 SECTIONLOCAL COMPETITORS Studio Property Year Built # Units Avg SF Avg Rent Avg Rent/SF River Haus 2019 192 539 $1,432 $2.66 Duveneck Square 2018 110 688 $1,405 $2.04 John R Green Lofts 2021 8 451 $1,287 $2.85 Subject Pro Forma 1900 7 550 $945 $1.72 Subject Average Effective 1900 7 550 $882 $1.60 Barkley Ridge 1969 327 360 $700 $1.94 The Arthur 1903 58 308 $680 $2.21 Market Average 1961 101 492 $1,047 $2.15
RENT MATRIX | ONE BED
Barkley Ridge $927 709 Garrard Street $1,045 621 Greenup $1,211 Academy on Fourth $1,587 River Haus $1,569 JRG Lofts $1,614 City View Apartments $1,195 Arthur Apts $1,104 509 Garrard Street $1,525 229 W 4th Street $1,350 Duveneck Square $1,548 13 W 8th Street $1,195
02 SECTIONLOCAL COMPETITORS One Bedroom Property Year Built # Units Avg SF Avg Rent Avg Rent/SF John R Green Lofts 2021 112 608 $1,614 $2.65 Academy on 4th 2020 202 825 $1,587 $1.92 River Haus 2019 192 820 $1,569 $1.91 Duveneck Square 2018 110 797 $1,548 $1.94 509 Garrad St. 1909 5 740 $1,525 $2.06 229-235 W 4th St 1900 8 700 $1,350 $1.93 Subject Pro Forma 1900 7 600 $1,260 $2.10 13 W 8th Street 1921 4 550 $1,195 $2.17 City View 1986 77 800 $1,195 $1.49 Subject Average Effective 1900 7 600 $1,211 $2.02 The Arthur 1903 58 600 $1,104 $1.84 709 Garrard St 1900 12 600 $1,045 $1.74 Barkley Ridge 1969 327 587 $927 $1.58 Market Average 1951 86 679 $1,318 $1.95
single family house comps
1245 Parkway Ave, Covington, KY 2 Bed 2 Bath 1,132 Sqft $1,450/month 1310 Hazen Street, Covington, 3 Bed 1.5 Bath 1,888 Sqft $1,650/month 632 Watkins Street, Covington, KY 2 Bed 1 Bath 973 Sqft $1,276/month 02 SECTION - LOCAL COMPETITORS
Covington, KY 713 Adela Ave, Ludlow, KY 3 Bed 2 Bath 816 Sqft $1,800/month 713 Adela Ave $1,800 1310 Hazen $1,650 632 Watkins $1,276 1245 Parkway $1,450 SUBJECT 1 447 HAZEN STREET $1,670 2 1111 JOHN STREET $1,340 3 1113 JOHN STREET $1,340 4 1214 W PIKE $945 5 1216 W PIKE $1,340 AVERAGE $1,327 1 2 3 4 5
UNIT MIX BREAKDOWN
COVINGTON PORTFOLIO - financials AVERAGE EFFECTIVE MARKET PROJECTED UNIT TYPE NO. OF UNITS RENTABLE SF TOTAL SF RENT/UNIT RENT/SF TOTAL RENT POTENTIAL RENT/UNIT RENT/SF TOTAL RENT POTENTIAL RENT/UNIT RENT/SF TOTAL RENT POTENTIAL Studio COVINGTON PORTFOLIO - 1 Units 550 SF 550 SF $910.00 $1.65 SF $910 $910.00 $1.65 SF $910 $945.00 $1.72 SF $945 COVINGTON PORTFOLIO - 1 Units 550 SF 550 SF $790.00 $1.44 SF $790 $790.00 $1.44 SF $790 $835.00 $1.52 SF $835 Totals / Wtd. Averages 2 Units 550 SF 1,100 SF $850.00 $1.55 SF $1,700 $850.00 $1.55 SF $1,700 $890.00 $1.62 SF $1,780 One Bedroom COVINGTON PORTFOLIO - 1 Units 600 SF 600 SF $1,440.00 $2.40 SF $1,440 $1,440.00 $2.40 SF $1,440 $1,495.00 $2.49 SF $1,495 COVINGTON PORTFOLIO - 1 Units 600 SF 600 SF $940.00 $1.57 SF $940 $940.00 $1.57 SF $940 $985.00 $1.64 SF $985 COVINGTON PORTFOLIO - 3 Units 600 SF 1,800 SF $1,123.00 $1.87 SF $3,369 $1,140.00 $1.90 SF $3,420 $1,185.00 $1.98 SF $3,555 Totals / Wtd. Averages 5 Units 600 SF 3,000 SF $1,149.80 $1.92 SF $5,749 $1,160.00 $1.93 SF $5,800 $1,207.00 $2.01 SF $6,035 Single Family House 3BR/1BA - 447 Hazen St 1 Units 1,426 SF 1,426 SF $1,670.00 $1.17 SF $1,670 $1,670.00 $1.17 SF $1,670 $1,700.00 $1.19 SF $1,700 2BR/1BA - 1111 John St 1 Units 816 SF 816 SF $1,340.00 $1.64 SF $1,340 $1,340.00 $1.64 SF $1,340 $1,375.00 $1.69 SF $1,375 1BR/1BA - 1113 John St 1 Units 618 SF 618 SF $1,340.00 $2.17 SF $1,340 $1,340.00 $2.17 SF $1,340 $1,375.00 $2.22 SF $1,375 0BR/1BA - 1214 W Pike 1 Units 500 SF 500 SF $945.00 $1.89 SF $945 $945.00 $1.89 SF $945 $1,000.00 $2.00 SF $1,000 3BR/1BA - 1216 W Pike 1 Units 1,602 SF 1,602 SF $1,340.00 $0.84 SF $1,340 $1,340.00 $0.84 SF $1,340 $1,725.00 $1.08 SF $1,725 Totals / Wtd. Averages 5 Units 992 SF 4,962 SF $1,327.00 $1.34 SF $6,635 $1,327.00 $1.34 SF $6,635 $1,435.00 $1.45 SF $7,175 Summary Studio 2 Units 550 SF 1,100 SF $850.00 $1.55 $1,700 $850.00 $1.55 SF $1,700 $890.00 $1.62 SF $1,780 One Bedroom 5 Units 600 SF 3,000 SF $1,149.80 $1.92 $5,749 $1,160.00 $1.93 SF $5,800 $1,207.00 $2.01 SF $6,035 Totals / Wtd. Averages 12 Units 755 SF 9,062 SF $1,173.67 $1.55 SF $14,084 $1,177.92 $1.56 SF $14,135 $1,249.17 $1.65 SF $14,990 03 SECTION - THE FINANCIALS
UNIT RENTS
UNIT DISTRIBUTION
COVINGTON PORTFOLIOfinancials
CURRENT RENT ROLL: AS OF MAY 2024 INCOME AND EXPENSES: OCTOBER 2022- SEPTEMEBER 2023 GROSS POTENTIAL RENT % of GPR Per Unit All Units at Market Rent $169,620 RR 14,135 Gain (Loss) to Lease ($600) 0.35% (50) GROSS SCHEDULED $169,020 RR 14,085 TOTAL OTHER INCOME $6,720 3.98% 560 GROSS POTENTIAL INCOME $175,740 14,645 Physical Vacancy ($4,972) T12 2.94% (414) Bad Debt $0 0.00% 0 EFFECTIVE GROSS INCOME $170,768 96.70% 14,231 NON-CONTROLLABLE Real Estate Taxes % of EGI Per Unit 2023 Taxes $9,220 Auditor 5.40% 768 Total Real Estate Taxes $9,220 5.40% 768 Insurance $6,084 T12 3.56% 507 Utilities Gas - Electric $4,884 T12 2.86% 407 Water & Sewage $3,216 T12 1.88% 268 Trash Removal $600 T12 0.35% 50 Total Utilities $8,700 5.09% 725 Total Non-Controllable $24,004 14.06% 2,000 CONTROLLABLE Contract Services Landscaping/Grounds/Snow Removal $1,511 T12 0.72% 60 Pest Control $270 T12 0.13% 11 Total Contract Services $1,781 0.84% 71 Repairs & Maintenance $7,200 T12 4.22% 600 Marketing & Promotion $240 T12 0.14% 20 Labor $0 0.00% 0 General & Administrative $3,420 T12 2.00% 285 Management Fee $0 0.00% 0 Replacement & Reserves $3,060 Note 1 1.79% 255 Total Controllable $13,920 8.15% 1,160 TOTAL EXPENSES $37,924 22.21% 3,160 NET OPERATING INCOME $132,845 77.79% 11,070 EXPENSE INCOME UNDERWRITING NOTES # NOTE 1 Replacement & Reserves: added based on market norm of $255 per unit per year
YEAR 1 YEAR 2 YEAR 3 % of GPR Per Unit % of GPR Per Unit % of GPR Per Unit $179,880 14,990 $185,276 15,440 $190,835 15,903 ($3,598) 2.00% (300) ($3,706) 2.00% (309) ($3,817) 2.00% (318) $176,282 14,690 $181,571 15,131 $187,018 15,585 $6,922 3.93% 577 $7,129 3.93% 594 $7,343 3.93% 612 $183,204 15,267 $188,700 15,725 $194,361 16,197 ($8,814) 5.00% (735) ($9,079) 5.00% (757) ($9,351) 5.00% (779) ($1,763) 1.00% (147) ($1,816) 1.00% (151) ($1,870) 1.00% (156) $172,627 92.00% 14,386 $177,806 92.00% 14,817 $183,140 92.00% 15,262 % of EGI % of EGI Per Unit % of EGI $9,220 5.34% 768 $9,220 5.19% 768 $9,220 5.19% 768 $9,220 5.34% 768 $9,220 5.19% 768 $9,220 5.19% 768 $6,000 3.48% 500 $6,120 3.44% 510 $6,242 3.51% 520 $4,982 2.89% 415 $5,081 2.86% 423 $5,183 2.91% 432 $3,280 1.90% 273 $3,346 1.88% 279 $3,413 1.92% 284 $612 0.35% 51 $624 0.35% 52 $637 0.36% 53 $8,874 5.14% 740 $9,051 5.09% 754 $9,233 5.19% 769 $24,094 13.96% 2,008 $24,391 13.72% 2,033 $24,695 13.89% 2,058 $2,500 0.97% 100 $2,550 0.96% 102 $2,601 0.98% 104 $875 0.34% 35 $893 0.33% 36 $910 0.34% 36 $3,375 1.30% 135 $3,443 1.29% 138 $3,511 1.32% 140 $6,000 3.48% 500 $6,120 3.44% 510 $6,242 3.51% 520 $900 0.52% 75 $918 0.52% 77 $936 0.53% 78 $9,000 5.21% 750 $9,180 5.16% 765 $9,364 5.27% 780 $3,000 1.74% 250 $3,060 1.72% 255 $3,121 1.76% 260 $12,084 7.00% 1,007 $12,446 7.00% 1,037 $12,820 7.00% 1,037 $3,121 1.81% 260 $3,184 1.79% 265 $3,247 1.83% 271 $34,105 19.76% 2,842 $34,908 19.63% 2,909 $35,731 19.89% 2,946 $58,199 33.71% 4,850 $59,299 33.35% 4,942 $60,425 33.98% 5,035 $114,428 66.29% 9,536 $118,507 66.65% 9,876 $122,715 69.02% 10,226
CASH FLOW
YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 7 YE MAY-2025 YE MAY-2026 YE MAY-2027 YE APR-2028 YE APR-2029 YE APR-2030 YE APR-2031 GROSS POTENTIAL RENT All Units at Market Rent $169,620 $179,880 $185,276 $190,835 $196,560 $202,457 $208,530 $214,786 Gain (Loss) to Lease ($600) ($3,598) ($3,706) ($3,817) ($3,931) ($4,049) ($4,171) ($4,296) GROSS SCHEDULED RENT $169,020 $176,282 $181,571 $187,018 $192,629 $198,407 $204,360 $210,490 TOTAL OTHER INCOME $6,720 $6,922 $7,129 $7,343 $7,490 $7,640 $7,793 $7,948 GROSS POTENTIAL INCOME $175,740 $183,204 $188,700 $194,361 $200,119 $206,047 $212,152 $218,439 Physical Vacancy ($4,972) ($8,814) ($9,079) ($9,351) ($9,631) ($9,920) ($10,218) ($10,525) Bad Debt $0 ($1,763) ($1,816) ($1,870) ($1,926) ($1,984) ($2,044) ($2,105) EFFECTIVE GROSS INCOME $170,768 $172,627 $177,806 $183,140 $188,561 $194,143 $199,891 $205,809 Real Estate Taxes $9,220 $9,220 $9,220 $9,220 $9,404 $9,592 $9,784 $9,980 Insurance $6,084 $6,000 $6,120 $6,242 $6,367 $6,495 $6,624 $6,757 Utilities $8,700 $8,874 $9,051 $9,233 $9,417 $9,606 $9,798 $9,994 Repairs & Maintenance $7,200 $6,000 $6,120 $6,242 $6,367 $6,495 $6,624 $6,757 Marketing & Promotion $240 $900 $918 $936 $955 $974 $994 $1,014 Labor $0 $9,000 $9,180 $9,364 $9,551 $9,742 $9,937 $10,135 General & Administrative $3,420 $3,000 $3,060 $3,121 $3,184 $3,247 $3,312 $3,378 Management Fee $0 $12,084 $12,446 $12,820 $13,199 $13,590 $13,992 $14,407 Replacement & Reserves $3,060 $3,121 $3,184 $3,247 $3,312 $3,378 $3,446 $3,515 TOTAL EXPENSES $37,924 $58,199 $59,299 $60,425 $61,757 $63,119 $64,512 $65,936 NET OPERATING INCOME $132,845 $114,428 $118,507 $122,715 $126,804 $131,024 $135,379 $139,873 INCOME EXPENSE COVINGTON PORTFOLIOfinancials
Tax Breakdown Property Address Parcel ID Market Value Assessed Value Tax Rate Taxes Payable 621 Greenup 054-23-19-010.00 $160,000 $160,000 0.019418 $3,106.87 447 Hazen 040-14-01-001.00 $150,000 $150,000 $2,912.69 1111 John 040-30-00-140.00 $41,800 $41,800 $811.67 1113 John 040-30-00-141.00 $60,000 $60,000 $1,165.08 1214-16 W Pike 041-33-06-017.00 $63,000 $63,000 $1,223.33 Total $474,800 $474,800 $9,219.64
CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS YR 1 YR 2 YR 3 YR 4 YR 5
Gross Potential Rent 6.05% 3.00% 3.00% 3.00% 3.00% (Loss) / Gain to Lease* 2.00% 2.00% 2.00% 2.00% 2.00% Other Income 3.00% 3.00% 3.00% 3.00% 3.00% EXPENSES Expenses 2.00% 2.00% 2.00% 2.00% Management Fee** 7.00% 7.00% 7.00% 7.00% 7.00% CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS YR 1 YR 2 YR 3 YR 4 YR 5 Physical Vacancy 5.00% 5.00% 5.00% 5.00% 5.00% Non-Revenue Units 0.00% 0.00% 0.00% 0.00% 0.00% Bad Debt 1.00% 1.00% 1.00% 1.00% 1.00% Concessions Allowance 0.00% 0.00% 0.00% 0.00% 0.00% Total Economic Loss 6.00% 6.00% 6.00% 6.00% 6.00%
INCOME
CINCINNATI
THE ECONOMY
1| Prior to the pandemic, Cincinnati’s real gross metropolitan product grew at an average annual rate of 2.1% from 2015 to 2019. During that same five-year period, job growth averaged 1.4% annually, with roughly 15,500 jobs added on average each year. In 2020, COVID-19 mitigation measures and limited business activity caused the local economy to contract as much as 8.4% year-over-year in 2nd quarter. 2| In 2023, the metro’s inflation-adjusted economic output expanded 2.3%. 3| The metro recorded a net gain of 21,100 jobs, expanding the employment base 1.8%. 4| Cincinnati’s unemployment rate in November 2023 was unchanged year-over-year at 3.0%, below the national average of 3.5%. 5| Despite job losses stemming from the pandemic, Cincinnati’s current employment base now sits roughly 63,700 jobs or about 6% above the pre-pandemic level in February 2020.
3,263 units completed in past 12 months 5,184 units currently in progress
HIGHEST OVERALL PERFORMING SUBMARKET
RENT
1| Over the past five years, annual change in effective asking rents in Cincinnati ranged from 2.0% to 11.9%. 2| In 4th quarter 2023, effective asking rents for new leases were up 3.6% year-over- year. That annual rent performance was below the market’s five-year average of 5.7%. 3| Cincinnati’s recent annual rent change performance ranked #10 in the Midwest region and #27 nationally. 4| Looking at product classes in Cincinnati, Class B led for rent performance over the past five years. In 4th quarter 2023, annual effective rent change registered at 2.5% in Class A units, 3.4% in Class B units and 5.8% in Class C units. 5| Among submarkets, the strongest annual rent change performances over the past year were in West Cincinnati and Southeast Cincinnati. 6| The weakest performances were in Central Cincinnati, Butler County and North Central Cincinnati. Over the past five years, rent growth was strongest in Southeast Cincinnati.
LOCAL MARKET
Q4 2023 MARKET SNAPSHOT Pre-1970s 1970s 1980s 1990s 2000+ Occupancy 93.8% 95.4% 96.2% 94.8% 94.7% Y-O-Y Rent Growth 5.2% 3.5% 3.4% 3.0% 3.5% Average Rent Per Unit $1,094 $1,148 $1,283 $1,367 $1,732
SUBMARKETS RENT OCCUPANCY YOY Dent/Harrison $1,147 97.6% 11.0% Roselawn $1,022 92.5% 8.5% Mt Washington $1,155 94.7% 8.3% Mt Healthy $1,123 96.7% 8.1% Middletown/Franklin $969 94.1% 7.3%
SCAN FOR MORE
1| New apartment completions in Cincinnati were moderate recently, as 3,263 units delivered in 2023. That annual completion volume was a 24-year high. 2| With 150 units removed from existing stock over the past year, the local inventory base grew 1.9%. In the past year, supply was greatest in North Central Cincinnati. 3| Annual new supply averaged 1,754 units, and annual inventory growth averaged 1.0% over the past five years. During that period, new supply was concentrated in Central Cincinnati and Campbell/Kenton Counties, which received 42% of the market’s total completions. 4| At the end of 2023, there were 5,184 units under construction with 3,531 of those units scheduled to complete in the next four quarters. Scheduled deliveries in the coming year are expected to be concentrated in Central Cincinnati.
OCCUPANCY
1| Occupancy in the Cincinnati apartment market has ranged from 94.9% to 98.2% over the past five years, averaging 96.4% during that period. 2| Over the past year, occupancy lost 1.2 points, with the 4th quarter 2023 rate landing at 94.9%. 3| Looking at product classes in Cincinnati, 4th quarter 2023 occupancy registered at 94.1% in Class A units, 94.9% in Class B units and 95.6% in Class C units. 4| Occupancy in Class C product was generally tightest over the past five years. 5| Among submarkets, 4th quarter 2023 occupancy was strongest in Southeast Cincinnati and Campbell/Kenton Counties. 6| The weakest readings were seen in Central Cincinnati and North Central Cincinnati. During the coming year, occupancy in Cincinnati is expected to register around 95%.
HIGHEST OVERALL PERFORMING SUBMARKET
LOWEST OVERALL PERFORMING SUBMARKETS
UNITS UNDER CONSTRUCTION
SECTOR UNITS Central Cincinnati 1,747 Northeast Cincinnati/Warren County 811 Boone County/Erlanger 769 Campbell/Kenton Counties 497 Butler County 482 TOTAL FUTURE INVENTORY GROWTH SUBMARKET CHANGE Central Cincinnati 11.9% Boon County/Erlanger 7.0% Northeast Cincinnati/Warren County 4.8% Campbell/Kenton Counties 2.9% Butler County 2.4%
SUBMARKETS RENT OCCUPANCY YOY Dent/Harrison $1,147 97.6% 11.0% Roselawn $1,022 92.5% 8.5% Mt Washington $1,155 94.7% 8.3% Mt Healthy $1,123 96.7% 8.1% Middletown/Franklin $969 94.1% 7.3%
SUBMARKETS RENT OCCUPANCY YOY Fort Mitchell/Crescent Springs $1,162 96.1% 1.0% Fairfield $1,291 94.2% 1.0% Covington/Newport $1,608 93.9% 0.8% Clifton $1,038 90.6% -0.5% Downtown $1,786 94.6% -0.8
SUPPLY
COVINGTON PORT-
