PREPARED FOR: ANDREWS | DICKMAN GROUP GEO PORTFOLIO FEBRUARY 2023 319 UNITS
YOUR PROPERTY OUR EXPERTISE
We are excited for the possibility to work with you on the marketing and sale of this asset. As you read this package, you will find that our team has had great success in executing multifamily transactions in the Midwest markets. We have an excellent track record of selling the “story” behind each asset we market. We will ensure maximum market value by identifying a diverse buyer pool, and leveraging Marcus & Millichap’s national platform to create the most competitive environment for sale.
Nicholas Andrews
Austin Sum
TABLE OF CONTENTS
MARKET UPDATE | PAGE 4
CINCINNATI OVERVIEW | PAGE 6
Q4 MARKET | PAGE 8
PROPERTY SNAPSHOT | PAGE 10
FINANCIALS | PAGE 12
PRICING | PAGE 18
RED IQ | PAGE 20
Q&A | PAGE 28
More than $202.6 million in investments are planned in Ohio, through funding from the states Ohio Tax Credit Authority (TCA). The TCA approved 14 new projects which are slated to create $99.7 million in new payroll and 1,663 new jobs and also retain another 3,457 jobs across the state. In the Cincinnati area, the impact will be seen in Springdale, within the North Cincinnati submarket.
Here, liquid sugar company Pennsylvania-based Sugaright LLC plans to create 39 new jobs and generate $2 million in new annual payroll, according to local news. The companys new refinery in Hamilton County will produce sucrose products for baked goods and will receive a 1.066% tax credit for seven years.
MARKET UPDATE AS OF RECENT,
As seen in many markets around the country, the Cincinnati apartment market gave back much of the absorption gains achieved in 2021 following the COVID-19 pandemic lockdowns. In the first two quarters of 2022, Cincinnati recorded basically no demand, followed by net move outs in 3rd quarter and 4th quarter. Net move-outs totaled 1,253 units in 2022, driven down by 764 net move-outs recorded in the October to December time period. Although down from doubledigit growth in the previous three quarters, annual rent growth has been at record
highs for the past six quarters. Class B led the market with an 11.0% year-overyear increase in effective asking rents, followed by a 9.2% bump in Class A rents and a 9.1% increase (a record high) in Class C units. Every submarket continued to post hefty rent hikes, ranging from 7.0% in West Cincinnati to 11.9% in North Cincinnati. Completions in Cincinnati totaled 2,249 units in 2022, and with 176 units removed from stock, inventory grew 1.3%, on net.
4TH QUARTER SNAPSHOT
More than $202.6 million in investments are planned in Ohio, through funding from the states Ohio Tax Credit Authority (TCA). The TCA approved 14 new projects which are slated to create $99.7 million in new payroll and 1,663 new jobs and also retain another 3,457 jobs across the state. In the Cincinnati area, the impact will be seen in Springdale, within the North Cincinnati submarket.
One of Cincinnati’s largest public companies, biotech research organization Medpace, announced plans in December to expand, creating 1,500 new jobs and a payroll of $90 million over the next six years. The Cincinnati Business Courier reports the average salary of these new jobs would be $60,000 and would increase the company’s local employee base to 3,700, a 70% boost. Medpace plans to invest $150 million in a new 250,000-square-foot office building at its local headquarters in North Central Cincinnati and add a 1,000-space parking garage. Construction is scheduled to begin in 2023.
CINCINNATI
Quarterly Rent Growth- 0.4% Rent- $1,304
Rent/SF- $1.399
Occupancy- 96.2%
Units Completed in last 4 quarters- 2,249 Annual Supply Growth- 1.3%
under construction- 6,462 Projected Supply growth- 2.82% YTD 2022 Job Change- 12,800
DAYTON
Quarterly Rent Growth – 0.3% Rent- $1,077 Rent/SF- $1.182 Occupancy- 96.2%
Units Completed in last 4 quarters- 412 Annual Supply Growth- 0.7% Units under construction- 886 Projected Supply growth- 1.17% YTD 2022 Job Change- 2,900
LOUISVILLE
Quarterly Rent Growth: -0.3% Rent- $1,154 Rent/SF- $1.219 Occupancy- 95.0%
Units Completed in last 4 quarters- 2,157 Annual Supply Growth- 2.3% Units under construction- 1,159 Projected Supply growth- 1.12% YTD 2022 Job Change- 28,200
LEXINGTON
Quarterly Rent Growth-: -1.1% Rent- $1,140
Rent/SF- $1.239
Occupancy- 95.2%
Units Completed in last 4 quarters- 369
Annual Supply Growth- 0.8% Units under construction- 920
Projected Supply growth- 0.8% YTD 2022 Job Change- 6,200
Units
CINCINNATI OVERVIEW
ECONOMY
1| Prior to the pandemic, Cincinnati’s real gross metropolitan product grew at an average annual rate of 1.9% from 2015 to 2019. During that same fiveyear 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 9.4% year-over-year in 2nd quarter. 2| In 2022, the metros inflation-adjusted economic output contracted 0.4%. At the same time, the metro recorded a net gain of 12,800 jobs, expanding the employment base 1.2%.
CAPITAL MARKETS
1| Transaction dollar volumes in Cincinnati totaled roughly $520.8 million in 2022, down about 22% year-over-year. 2| Meanwhile, the number of transactions decreased about 40% over the past year, with 31 apartment properties trading hands. 3| Transactions in 2022 yielded an average cap rate of 5.39%, down 34 basis points year-over year. By comparison, cap rates averaged 5.05% in the Midwest region and 4.54% nationally. 4| Meanwhile, the average price per unit in Cincinnati came in at roughly $170,200, up 66.0% annually.
1| Over the past five years, annual change in effective asking rents in Cincinnati ranged from 1.7% to 11.9%. 2| In 4th quarter 2022, effective asking rents for new leases were up 9.9% year-over- year. That annual rent performance was above the market’s five-year average of 5.0%. 3| Looking at product classes in Cincinnati, in 4th quarter 2022 annual effective rent change registered at 9.2% in Class A units, 11.0% in Class B units and 9.1% in Class C units. 4| Among submarkets, the strongest annual rent change performances over the past year were in North Cincinnati and Butler County. In the coming year, samestore effective asking rent change in Cincinnati is expected to slow from the current level.
RENT
0 500 1,000 1,500 2,000 2,500 UNITS COMPLETIONS BY QUARTER Historic & Projected 21’ Q4 22’ Q1 22’ Q2 22’ Q3 22’ Q4 23’ Q1 23’ Q2 23’ Q3 23’ Q4 COMPLETED UNDER CONSTRUCTION
RENT GROWTH
Q1 2022 MARKET SNAPSHOT
CINCINNATI VS NATIONAL RENT GROWTH Year-over-Year
CINCINNATI RENT GROWTH BY ASSET CLASS Year-over-Year
Sector Quarterly Yearly North Cincinnati 3.1% 11.9% Butler County -0.4% 11.8% Southeast Cincinnati 0.6% 11.1% Northeast / Warren County 0.3% 10.1% Boone County / Erlanger 1.6% 10.0% Campbell / Kenton Counties 0.1% 9.1% Central Cincinnati -0.5% 8.2% North Central Cincinnati -2.2% 7.4% West Cincinnati 1.9% 7.0%
EMPLOYMENT Unemployment Rate 3.0% Jobs Added YTD 12,800 Pre-1970s 1970s 1980s 1990s 2000+ Occupancy 95.5% 96.5% 96.3% 95.6% 96.4% Y-O-Y Rent Growth 12.7% 12.5% 11.0% 8.5% 7.8% Average Rent Per Unit $1,041 $1,093 $1,231 $1,306 $1,656 20% 15% 10% 5% 0% MAR 22’ APR 22’ MAY 22’ JUN 22’ JUL 22’ AUG 22’ SEP 22’ OCT 22’ NOV 22’
CINCINNATI NATIONAL Availability Market Nationally Vacancy Rate 2.2% 5.2% Vacant Units 5.9K 952K Market Effective Rent/Unit $1,215 $1,640 Concession Rate 0.4% 0.6% Studio Asking Rent $892 $1,491 1 Bedroom Asking Rent $967 $1,482 2 Bedroom Asking Rent $1,199 $1,715 3 Bedroom Asking Rent $1,502 $2,092 12% 8% 4% 0%
LIFESTYLE RENTERS BY NECESSITY MAR 22’ APR 22’ MAY 22’ JUN 22’ JUL 22’ AUG 22’ SEP 22’ OCT 22’ NOV 22’
Q4 MARKET
DEMAND
1| Over the past five years, annual absorption in Cincinnati has ranged from net move-outs from 1,253 units to demand for 4,544 units, averaging 2,182 units annually during that time. 2| In 2022, the market recorded net move-outs from 1,253 units, trailing concurrent supply volumes.
SUPPLY
1| New apartment completions in Cincinnati were modest recently, as 2,249 units delivered in 2022. That annual completion volume was a six-year high. With 176 units removed from existing stock over the past year, the local inventory base grew 1.3%. 2| In the past year, supply was greatest in Central Cincinnati and Campbell/Kenton Counties. 3| New supply was concentrated in Central Cincinnati, Campbell/Kenton Counties and Northeast Cincinnati/Warren County, which received 66% of the markets total completions. 4| At the end of 2022, there were 6,462 units under construction with 4,669 of those units scheduled to complete in the next four quarters. Scheduled deliveries in the coming year are expected to be concentrated in North Central Cincinnati and Butler County.
2,249 units completed in past 12 months
6,462 units currently in progress
Overall Performing Submarket
OVERALL PERFORMING SUBMARKETS
UNITS UNDER CONSTRUCTION
Sector Units Central Cincinnati 1,211 Butler County 1,177 North Central Cincinnati 902 Boone County/Erlanger 776 Southeast Cincinnati 775 TOTAL
Submarket Change Central Cincinnati 8.5% Boone County/Erlanger 7.1% Butler County 5.9% Southeast Cincinnati 4.6% Campbell/Kenton Counties 3.7% Highest
Submarkets Rent Occupancy YOY Dearborn County $1,112 96.0% 22.7% Fairfield $1,272 94.9% 14.0% Summerside $1,191 97.5% 13.2% Florence – east/Erlanger $1,065 96.9% 13.2% Dent/Harrison $997 97.8% 12.7%
Submarkets Rent Occupancy YOY Cincinnati – English Woods/Price Hill $828 93.7% 4.5% Cincinnati – Mt. Auburn/Corryville $1,905 94.4% 4.4% Oxford $1,623 - 3.3% Cincinnati – Avondale $1,431 96.4% 1.5% Taylor Mill/Independence $1,186 97.5% 0.3%
FUTURE INVENTORY GROWTH
LOWEST
DEVELOPMENT PIPLINE MAP - CINCINNATI
UNDER CONSTRUCTION
PLANNED
PROPETY SNAPSHOT
PROPERTY NAME: 1 COLLEGE CREST 2 BROOKWOOD APTS 3 VERNON COURT 4 READING ROAD 5 WESTWOOD APTS Property Address: 1451 Hill Crest Rd 2227 Westwood Northern Blvd 1506 North Bend Rd 7875 Reading Rd 2217 Harrison Ave City, State, Zip: Cincinnati, Ohio Cincinnati, Ohio Cincinnati, OH 45224 Cincinnati, OH 45237 Cincinnati, OH 45211 Submarket: Mt. Airy/College Hill English Woods College Hill Reading Westwood County: Hamilton County Hamilton County Hamilton County Hamilton County Hamilton County Year Built/Reno: 1957 1958 1971 1954/2016 1971 Property Type: Market Market Market Market Market Number Of Units: 103 96 45 23 48 Avg Unit Size: 667 630 533 961 775 Rentable Sqft: 75,900 51,040 24,000 22,106 79,000 Number of Parcels: 7 3 2 1 5 Lot Size (Acres): 6.09 4.31 0.75 acres 0.91 1.40 acres Occupancy: 95% 97% 95% 95% 92% # of Buildings: 6 6 2 2 3 Electric: Resident Paid Resident Paid Property Paid Resident Paid Property paid Gas: Property Paid Property Paid Property Paid Resident Paid Property paid Water/Sewer: Property Paid Property Paid Property Paid Resident Paid Property paid Trash: Property Paid Property Paid Property Paid Resident Paid Property paid Cable/Internet: Resident Paid Resident Paid Property Paid Resident Paid Property paid Foundation: Slab Concrete Slab Concrete Slab concrete Slab concrete Concrete slab Framing: Wood Frame N/A Wood frame Wood frame Wood frame Roof Type/Age: Flat - Rubberized Pitched (Composition Shingle) Flat - Rubberized Pitched Shingles Flat Exterior: Brick Brick Brick Brick Brick
PROPERTY LOCATIONS
2 4 1 3 5
UNIT MIX SUMMARY
AVERAGE EFFECTIVE MARKET PROJECTED UNIT TYPE NO. OF UNITS TENTABLE SF TOTAL SF RENT/UNIT RENT/SF TOTAL RENT POTENTIAL RENT/UNIT RENT/SF TOTAL RENT POTENTIAL RENT/UNIT RENT/SF TOTAL RENT POTENTIAL SUMMARY Studio 67 Units 342 SF 22,890 SF $545.43 $1.60 $36,544 $551.49 $1.61 SF $36,950 $650.00 $1.90 SF $43,550 One Bedroom 129 Units 700 SF 90,300 SF $693.92 $0.99 $89,516 $719.38 $1.03 SF $92,800 $858.41 $1.23 SF $110,735 Two Bedroom 113 Units 850 SF 96,050 SF $829.86 $0.98 $93,775 $873.89 $1.03 SF $98,750 $959.60 $1.13 SF $108,435 Three & Four Bedroom 10 Units 1,060 SF 10,600 SF $1,246.70 $1.18 $12,467 $1,255.80 $1.18 SF $12,558 $1,305.00 $1.23 SF $13,050 Totals / Wtd. Averages 319 Units 689 SF 219,840 SF $728.22 $1.06 SF $232,302 $755.67 $1.10 SF $241,058 $864.48 $1.25 SF $275,770 GEQ - FINANCIALS
DISTRIBUTION 41% ONE BEDROOM STUDIO UNIT RENTS PRO FORMA PROJECTION AVG. EFFECTIVE 1 BED 2 BED 3% 35% 21% TWO BEDROOM THREE & FOUR BEDROOM 3 BED 4 BED STUDIO
UNIT
UNIT MIX BREAKDOWN
AVERAGE EFFECTIVE MARKET PROJECTED UNIT TYPE NO. OF UNITS TENTABLE 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 0BR/1BA - Brookwood 66 Units 340 SF 22,440 SF $543.85 $1.60 SF $35,894 $550.00 $1.62 SF $36,300 $650.00 $1.91 SF $42,900 0BR/1BA - College Crest 1 Units 450 SF 450 SF $650.00 $1.44 SF $650 $650.00 $1.44 SF $650 $650.00 $1.44 SF $650 Totals / Wtd. Averages 67 Units 342 SF 22,890 SF $545.43 $1.60 SF $36,544 $551.49 $1.61 SF $36,950 $650.00 $1.90 SF $43,550 ONE BEDROOM 1BR/1BA - Brookwood 2 Units 700 SF 1,400 SF $712.50 $1.02 SF $1,425 $800.00 $1.14 SF $1,600 $835.00 $1.19 SF $1,670 1BR/1BA - College Crest 75 Units 700 SF 52,500 SF $709.51 $1.01 SF $53,213 $725.00 $1.04 SF $54,375 $865.00 $1.24 SF $64,875 1BR/1BA - Reading 1 Units 700 SF 700 SF $825.00 $1.18 SF $825 $825.00 $1.18 SF $825 $825.00 $1.18 SF $825 1BR/1BA - Vernon 39 Units 700 SF 27,300 SF $666.22 $0.95 SF $25,983 $700.00 $1.00 SF $27,300 $855.00 $1.22 SF $33,345 1BR/1BA - Westwood 12 Units 700 SF 8,400 SF $672.50 $0.96 SF $8,070 $725.00 $1.04 SF $8,700 $835.00 $1.19 SF $10,020 Totals / Wtd. Averages 129 Units 700 SF 90,300 SF $693.92 $0.99 SF $89,516 $719.38 $1.03 SF $92,800 $858.41 $1.23 SF $110,735 TWO BEDROOM 2BR/1BA - Brookwood 32 Units 850 SF 27,200 SF $822.65 $0.97 SF $26,325 $850.00 $1.00 SF $27,200 $945.00 $1.11 SF $30,240 2BR/1BA - College Crest 27 Units 850 SF 22,950 SF $839.00 $0.99 SF $22,653 $950.00 $1.12 SF $25,650 $995.00 $1.17 SF $26,865 2BR/1BA - Reading 12 Units 850 SF 10,200 SF $802.27 $0.94 SF $9,627 $825.00 $0.97 SF $9,900 $945.00 $1.11 SF $11,340 2BR/1BA - Vernon 6 Units 850 SF 5,100 SF $883.33 $1.04 SF $5,300 $900.00 $1.06 SF $5,400 $995.00 $1.17 SF $5,970 2BR/1BA - Westwood 36 Units 850 SF 30,600 SF $829.71 $0.98 SF $29,870 $850.00 $1.00 SF $30,600 $945.00 $1.11 SF $34,020 Totals / Wtd. Averages 113 Units 850 SF 96,050 SF $829.86 $0.98 SF $93,775 $873.89 $1.03 SF $98,750 $959.60 $1.13 SF $108,435 THREE & FOUR BEDROOM 3BR/1BA - Reading 9 Units 1,050 SF 9,450 SF $1,239.89 $1.18 SF $11,159 $1,250.00 $1.19 SF $11,250 $1,300.00 $1.24 SF $11,700 4BR/1BA - Reading 1 Units 1,150 SF 1,150 SF $1,308.00 $1.14 SF $1,308 $1,308.00 $1.14 SF $1,308 $1,350.00 $1.17 SF $1,350 Totals / Wtd. Averages 10 Units 1,060 SF 10,600 SF $1,246.70 $1.18 SF $12,467 $1,255.80 $1.18 SF $12,558 $1,305.00 $1.23 SF $13,050 GEQ - FINANCIALS
CURRENT YEAR 1 GROSS POTENTIAL RENT % of GPR Per Unit % of GPR Per Unit All Units at Market Rent $2,892,696 RR 9,068 $3,309,240 10,374 Gain (Loss) to Lease ($99,048) 3.42% (310) ($66,185) 2.00% (207) GROSS SCHEDULED RENT $2,793,648 RR 8,758 $3,243,055 10,166 OTHER INCOME Bonus Income $37,351 T12 1.34% 117 $38,472 1.19% 121 Late/NSF Income $23,182 T12 0.83% 73 $23,877 0.74% 75 Laundry Income $2,900 T12 0.10% 9 $2,987 0.09% 9 Total Other Income $63,433 2.27% 199 $65,336 2.01% 205 GROSS POTENTIAL INCOME $2,857,081 8,956 $3,308,391 10,371 Physical Vacancy ($248,663) T12 Economic 8.90% (780) ($162,153) 5.00% (508) Bad Debt $0 0.00% 0 ($16,215) 0.50% (51) EFFECTIVE GROSS INCOME $2,608,418 87.67% 8,177 $3,130,023 92.50% 9,812 NON-CONTROLLABLE Real Estate Taxes % of EGI Per Unit % of EGI Per Unit 2020 Taxes Paid $270,123 Auditor 10.36% 847 $270,123 8.63% 847 Total Real Estate Taxes $270,123 10.36% 847 $270,123 8.63% 847 Insurance $81,063 3.11% 254 $95,700 3.06% 300 Utilities Gas & Electric $145,008 5.56% 455 $147,909 4.73% 464 Water & Sewage $190,086 7.29% 596 $193,887 6.19% 608 Trash Removal $33,263 1.28% 104 $33,928 1.08% 106 Total Utilities $368,357 14.12% 1,155 $375,724 12.00% 1,178 Total Non-Controllable $719,542 27.59% 2,256 $741,546 23.69% 2,325 CONTROLLABLE Contract Services Snow Removal $0 0.00% 0 $11,165 0.36% 35 Landscaping/Grounds $89,980 3.45% 282 $79,750 2.55% 250 Pest Control $47,318 1.81% 148 $11,165 0.36% 35 Total Contract Services $137,298 5.26% 430 $102,080 3.26% 320 Repairs & Maintenance $208,908 8.01% 655 $199,375 6.37% 625 Marketing & Promotion $120 0.00% 0 $15,950 0.51% 50 On-Site Payroll $452,618 17.35% 1,419 $382,800 12.23% 1,200 Payroll Taxes & Benefits $0 0.00% 0 $31,900 1.02% 100 General & Administrative $30,236 1.16% 95 $31,900 1.02% 100 Management Fee $240,025 9.20% 752 $187,801 6.00% 589 Replacement & Reserves $81,345 Note 1 3.12% 255 $82,972 2.65% 260 Total Controllable $1,150,550 44.11% 3,607 $1,034,778 33.06% 3,244 TOTAL EXPENSES $1,870,093 71.69% 5,862 $1,776,325 56.75% 5,568 NET OPERATING INCOME $738,325 28.31% 2,314 $1,353,698 43.25% 4,244 INCOME EXPENSE GEQFINANCIALS INCOME
& EXPENSES
YEAR 2 YEAR 3 % of GPR Per Unit % of GPR Per Unit $3,408,517 10,685 $3,510,773 11,006 ($68,170) 2.00% (214) ($70,215) 2.00% (220) $3,340,347 10,471 $3,440,557 10,785 $39,626 1.19% 124 $40,815 1.19% 128 $24,593 0.74% 77 $25,331 0.74% 79 $3,077 0.09% 10 $3,169 0.09% 10 $67,296 2.01% 211 $69,315 2.01% 217 $3,407,643 10,682 $3,509,872 11,003 ($167,017) 5.00% (524) ($172,028) 5.00% (539) ($16,702) 0.50% (52) ($17,203) 0.50% (54) $3,223,924 92.50% 10,106 $3,320,641 92.50% 10,410 % of EGI Per Unit % of EGI Per Unit $270,123 8.38% 847 $270,123 8.38% 847 $270,123 8.38% 847 $270,123 8.38% 847 $97,614 3.03% 306 $99,566 3.09% 312 $150,867 4.68% 473 $153,884 4.77% 482 $197,765 6.13% 620 $201,721 6.26% 632 $34,606 1.07% 108 $35,298 1.09% 111 $383,238 11.89% 1,201 $390,903 12.13% 1,225 $750,975 23.29% 2,354 $760,592 23.59% 2,384 $11,388 0.35% 36 $11,616 0.36% 36 $81,345 2.52% 255 $82,972 2.57% 260 $11,388 0.35% 36 $11,616 0.36% 36 $104,122 3.23% 326 $106,204 3.29% 333 $203,363 6.31% 638 $207,430 6.43% 650 $16,269 0.50% 51 $16,594 0.51% 52 $390,456 12.11% 1,224 $398,265 12.35% 1,248 $32,538 1.01% 102 $33,189 1.03% 104 $32,538 1.01% 102 $33,189 1.03% 104 $193,435 6.00% 606 $199,238 6.00% 606 $84,631 2.63% 265 $86,324 2.68% 271 $1,057,352 32.80% 3,315 $1,080,433 33.33% 3,369 $1,808,327 56.09% 5,669 $1,841,025 57.11% 5,771 $1,415,597 43.91% 4,438 $1,479,616 45.89% 4,638
GEQFINANCIALS CURRENT YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 YE FEB-2024 YE JAN-2025 YE JAN-2026 YE JAN-2027 YE JAN-2028 YE JAN-2029 YE JAN-2030 YE JAN-2031 YE JAN-2032 YE JAN-2033 GROSS POTENTIAL RENT All Units at Market Rent $2,892,696 $3,309,240 $3,408,517 $3,510,773 $3,616,096 $3,724,579 $3,836,316 $3,951,406 $4,069,948 $4,192,046 $4,317,808 Gain (Loss) to Lease ($99,048) ($66,185) ($68,170) ($70,215) ($72,322) ($74,492) ($76,726) ($79,028) ($81,399) ($83,841) ($86,356) GROSS SCHEDULED RENT $2,793,648 $3,243,055 $3,340,347 $3,440,557 $3,543,774 $3,650,087 $3,759,590 $3,872,378 $3,988,549 $4,108,205 $4,231,451 Total Other Income $63,433 $65,336 $67,296 $69,315 $70,701 $72,115 $73,557 $75,029 $76,529 $78,060 $79,621 GROSS POTENTIAL INCOME $2,857,081 $3,308,391 $3,407,643 $3,509,872 $3,614,475 $3,722,202 $3,833,147 $3,947,406 $4,065,078 $4,186,265 $4,311,072 Physical Vacancy ($248,663) ($162,153) ($167,017) ($172,028) ($177,189) ($182,504) ($187,979) ($193,619) ($199,427) ($205,410) ($211,573) Bad Debt $0 ($16,215) ($16,702) ($17,203) ($17,719) ($18,250) ($18,798) ($19,362) ($19,943) ($20,541) ($21,157) EFFECTIVE GROSS INCOME $2,608,418 $3,130,023 $3,223,924 $3,320,641 $3,419,568 $3,521,448 $3,626,370 $3,734,425 $3,845,708 $3,960,314 $4,078,343 Real Estate Taxes $270,123 $270,123 $270,123 $270,123 $275,525 $281,036 $286,656 $292,389 $298,237 $304,202 $310,286 Insurance $81,063 $95,700 $97,614 $99,566 $101,558 $103,589 $105,661 $107,774 $109,929 $112,128 $114,370 Utilities $368,357 $375,724 $383,238 $390,903 $398,721 $406,696 $414,829 $423,126 $431,589 $440,220 $449,025 Contract Services $137,298 $102,080 $104,122 $106,204 $108,328 $110,495 $112,705 $114,959 $117,258 $119,603 $121,995 Repairs & Maintenance $208,908 $199,375 $203,363 $207,430 $211,578 $215,810 $220,126 $224,529 $229,019 $233,600 $238,272 Marketing & Promotion $120 $15,950 $16,269 $16,594 $16,926 $17,265 $17,610 $17,962 $18,322 $18,688 $19,062 On-Site Payroll $452,618 $382,800 $390,456 $398,265 $406,230 $414,355 $422,642 $431,095 $439,717 $448,511 $457,481 Payroll Taxes & Benefits $0 $31,900 $32,538 $33,189 $33,853 $34,530 $35,220 $35,925 $36,643 $37,376 $38,123 General & Administrative $30,236 $31,900 $32,538 $33,189 $33,853 $34,530 $35,220 $35,925 $36,643 $37,376 $38,123 Management Fee $240,025 $187,801 $193,435 $199,238 $205,174 $211,287 $217,582 $224,066 $230,742 $237,619 $244,701 Replacement & Reserves $81,345 $82,972 $84,631 $86,324 $88,050 $89,811 $91,608 $93,440 $95,309 $97,215 $99,159 TOTAL EXPENSES $1,870,093 $1,776,325 $1,808,327 $1,841,025 $1,879,797 $1,919,402 $1,959,859 $2,001,188 $2,043,408 $2,086,537 $2,130,597 NET OPERATING INCOME $738,325 $1,353,698 $1,415,597 $1,479,616 $1,539,771 $1,602,046 $1,666,510 $1,733,237 $1,802,300 $1,873,776 $1,947,745 DEBT SERVICE - Proposed New Principal Payments $150,427 $150,427 $159,705 $169,555 $180,012 $191,115 $202,903 $215,417 $228,704 $242,810 $257,786 Interest Payments $730,884 $730,884 $721,606 $711,756 $701,298 $690,195 $678,408 $665,893 $652,607 $638,501 $623,525 TOTAL DS - Proposed New Loan $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 $881,310 DEBT SERVICE - Loan 2 Principal Payments $5,894 $5,894 $6,258 $6,644 $7,054 $7,489 $7,951 $8,441 $8,962 $9,514 $10,101 Interest Payments $28,640 $28,640 $28,276 $27,890 $27,480 $27,045 $26,583 $26,093 $25,572 $25,020 $24,433 TOTAL DS - Loan 2 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 $34,534 CONSOLIDATED DEBT SERVICE $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 $915,845 NET CASH FLOW AFTER DEBT ($177,519) $437,854 $499,752 $563,772 $623,926 $686,201 $750,666 $817,392 $886,456 $957,932 $1,031,901 DEBT SERVICE COVERAGE RATIO 0.81 1.48 1.55 1.62 1.68 1.75 1.82 1.89 1.97 2.05 2.13 RETURN ANALYSIS TRAILING YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 CAP Rate (Purchase Price) 3.62% 6.63% 6.93% 7.25% 7.54% 7.85% 8.16% 8.49% 8.83% 9.18% 9.54% 'All-In' CAP Rate (Total Cost) 3.48% 6.38% 6.67% 6.97% 7.26% 7.55% 7.85% 8.17% 8.50% 8.83% 9.18% Cash-on-Cash Return -2.09% 5.16% 5.89% 6.64% 7.35% 8.09% 8.85% 9.63% 10.45% 11.29% 12.16% IRR n/a 121.37% 55.20% 39.31% 30.60% 25.72% 22.62% 20.49% 18.96% 17.82% 16.93% INCOME EXPENSE CASH
FLOW
*Calculated as a percentage of Gross Potential Rent | **Calculated as a percentage of Effective Gross Income
CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 Income Gross Potential Rent 14.40% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% (Loss) / Gain to Lease* 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Other Income 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Expenses Expenses 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Management Fee** 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 Physical Vacancy 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Non-Revenue Units 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Bad Debt 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Concessions Allowance 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Total Economic Loss 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%
PRICING
PURCHASE PRICE Target Purchase Price $20,416,000 Per Unit $64,000 Per RSF $92.87 ACQUISITION / ADDITIONAL COSTS Projected Capital Expenditures $800,000 Renovation Cost $0 Closing Costs $0 Transfer Tax $0 Total Loan Fees $0 Total Acquisition Costs $800,000 PURCHASE PRICE Total Cost $21,216,000 Per Unit $66,508 Per RSF $96.51 ANALYSIS ASSUMPTIONS Analysis Period 10.00 Years Analysis Start Date Feb-2023 Terminal Cap Rate 4.12% Cost of Sale 6.00% ACQUISITION FINANCING SUMMARY Loan Amount $12,729,600 Loan to Value (LTV) 62.35% Loan to Cost (LTC) 60.00% Existing or Proposed Loan Proposed Origination Date Feb-2023 Interest Rate 6.00% Years Interest Only 0.00 Equity Required $8,486,400 Equity to Value 41.57% Equity to Cost 40.00% RENT SUMMARY (MONTHLY) Avg. Effective Rent $728 Avg. Current Market Rent $756 Avg. Projected Rent $864 TOTAL EXPENSES SUMMARY (PER UNIT) Trailing $5,862 Year 1 $6,068 Year 2 $6,168 NOI SUMMARY Trailing $738,325 Year 1 $1,194,294 Year 2 $1,256,192 ECONOMIC LOSS SUMMARY Trailing 8.90% Year 1 5.50% 10-Year Projected Avg. 5.50% GEQ - FINANCIALS
PRICING
Marketing the asset without a specific price allows us to customize our sales approach to each investor’s specific rehab costs, cost of debt and minimum return requirements. Thus facilitating a competitive bidding environment and ultimately maximizing the value of the Property.
ALL-IN CAP RATE CASH-ON-CASH RETURNS PRICE PER UNIT PER RSF TRAILING YEAR 1 YEAR 2 TRAILING YEAR 1 YEAR 2 YEAR 3 (FULLY AMORTIZING) $21,436,800 $67,200 $97.51 3.44% 5.37% 5.65% -2.00% 3.13% 3.83% 4.55% $21,096,533 $66,133 $95.96 3.50% 5.45% 5.74% -2.03% 3.18% 3.89% 4.62% $20,756,267 $65,067 $94.42 3.56% 5.54% 5.83% -2.06% 3.23% 3.95% 4.69% $20,416,000 $64,000 $92.87 3.62% 5.63% 5.92% -2.09% 3.28% 4.01% 4.76% $20,075,733 $62,933 $91.32 3.68% 5.72% 6.02% -2.13% 3.33% 4.08% 4.84% $19,735,467 $61,867 $89.77 3.74% 5.82% 6.12% -2.16% 3.39% 4.14% 4.92% $19,395,200 $60,800 $88.22 3.81% 5.91% 6.22% -2.20% 3.45% 4.21% 5.01% SUGGESTED LIST PRICE: MARKET BID
TRAILING YR 1 YR2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 Cash on Cash Return -2.09% 3.28% 4.01% 4.76% 5.44% 6.13% 6.85% 7.60% 8.37% 9.17% 10.00% Internal Rate of Return (IRR) n/a 76.60% 39.48% 30.07% 23.99% 20.55% 18.35% 16.85% 15.77% 14.96% 14.34% CAP Rate (Purchase Price) 3.62% 5.85% 6.15% 6.47% 6.75% 7.03% 7.33% 7.64% 7.97% 8.30% 8.64% CAP Rate ("All-In") 3.48% 5.63% 5.92% 6.22% 6.49% 6.77% 7.06% 7.36% 7.67% 7.99% 8.32% Gross Revenue Multiplier (GRM) 7.31 6.30 6.11 GEQ - FINANCIALS
RED IQ
AVG MARKET RENT AT TIME OF ANALYSIS
AVG EFF RENT AT TIME OF ANALYSIS
EFFECTIVE INCOME AT TIME OF ANALYSIS
INCOME ANALYSIS
MARCH 22’
OCTOBER 22’
FEBRUARY 23’
GEQ - FINANCIALS
TRAILING NOI PER UNIT TRAILING EXPENSES AT TIME OF ANALSIS
ECONOMIC VACANCY AT TIME OF ANALYSIS
EXPENSE ANALYSIS
MARCH 22’
OCTOBER 22’
FEBRUARY 23’
RED IQ
DSCR AT TIME OF ANALYSIS
INTERST RATES | 10 YEAR
LTV AT TIME OF ANALYSIS
TREASURY AT TIME OF ANALYSIS
LOAN ANALYSIS
MARCH 22’
OCTOBER 22’
FEBRUARY 23’
GEQ - FINANCIALS
ADG IQ
* INFO UNAVAILABLE WITH GIVEN RENT ROLL - ABOVE INFORMATION IS FROM OCTOBER 22’ RENT ROLL
Unit Type Earlier Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Later Studio 0 4 0 1 1 2 2 4 3 3 4 2 2 0 1 Bed 0 2 2 3 2 5 2 6 2 0 4 3 2 0 2 Bed 0 1 2 3 1 4 0 3 4 3 3 1 3 0 3 Bed 0 0 0 0 0 0 0 0 0 2 1 0 0 0 4+ Bed 0 0 1 0 0 0 0 0 0 0 0 0 0 0
* INFO UNAVAILABLE WITH GIVEN RENT ROLL - ABOVE INFORMATION IS FROM OCTOBER 22’ RENT ROLL
Earlier 22-Sep 22-Oct 22-Nov 22-Dec 23-Jan 23-Feb 23-Mar 23-Apr 23-May 23-Jun 23-Jul LossToLease $1,551 $1,446 $1,363 $1,108 $983 $510 $480 $190 $110 $75 $- $GainToLease $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 NetLossToLease $1,526 $1,421 $1,338 $1,083 $958 $485 $455 $165 $85 $50 $(25) $(25)
ADG IQ
Unit Type In-Place Market Studio $545.56 $551.49 1 Bed $687.94 $719.38 2 Bed $830.02 $873.89 3 Bed $1,238.89 $1,250.00 4+ Bed $1,308.00 $1,308.00 Unit Type Occupied Vacant Studio 19% 2% 1 Bed 39% 2% 2 Bed 34% 2% 3 Bed 3% 0% 4+ Bed 0% 0%
Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Base Rental Revenue $208,577 $193,286 $198,860 $206,613 $201,309 $210,136 $201,120 $208,235 $205,031 $212,988 $226,615 $218,543
QUESTION / ANSWERS / RECAP
• Is there a contract falling into the ‘Office Supplies & Software’ gl account? That account has the same charge every month.
o Brookwood, College Crest, Reading, Vernon, and Westwood all have consistent charges through the 12 months. Is this your Property software?
o Yes. Property and Accounting Software.
• What is the ‘Lender Repair Reimbursement’ gl account?
o Brookwood had a 1 time negative expense of almost $14k in Sep21
o This is not an operational line item. Money is withheld by lender and disbursed once repairs and turns are done. The negative means the lender has paid out. Please ignore this line in when assessing operational P&L.
• What is the gl account ‘Unapplied Cash Bi
o It is how accounting software accounts for pre-payment of certain bills. Again, this is not an operational expense. These are typically utilities bills that are pre-paid/ reimbursed. Ignore this line item to avoid double counting as these are going to picked up in the actual utilities lines.
• Roof repair on Vernon was over $12k for the LTM, any CAPEX in there?
o Bulk of expenses were last summer
o Almost all of it CAPEX
Payroll: Reason for labor being high at Brookwood?
They had high labor expenses for the last 7 months.
o Lots of units being turned over so we can change over tenants and leases to higher market rents. This is a good thing. They should be one-time and will be much lower once stabilized.
• Pest control: Higher expenses for LTMs at Brookwood and College Crest. Reason for higher expenses?
o Turnover related. Should be lower and comparable to other properties as it stabilizes.
• What is bonus income?
All properties but College Crest had income through the LTMs
• Additional income from Cincinnati Housing Authority given as incentives to landlords to accept Section 8 tenants.
• Difference between “insurance escrow” and “insurance”? Seems like insurance escrow is the actual insurance expense.
o Brookwood, Reading, Vernon had small dollars in the ‘Insurance’ gl code
o “Insurance escrow” is the actual insurance expense. It is escrowed and then paid out at the end of the year. Use this as the expense. “Insurance” number is small and one-time additional expenses, not related to on-going operations.
NOTABLE MARKET SOLD COMPS YTD OCTOBER 2022
NOTABLE CURRENT MARKET UNDER CONTRACTS YTD OCTOBER 2022
Property Asset Class Property Name City State Units Date Buyer Seller Sale Date Total Sale Price (MM) Sale Price Per Unit Fully Affordable Harbour Cove Cincinnati OH 66 1905 Sundance Property Management PRE/3 01/05/2022 $6.53 $98,989.89 Workforce - Upper Beacon Tower Cincinnati OH 58 1966 Vorhand, Hermann Cincinnati Properties 01/24/2022 $4.90 $84,482.76 Workforce - Upper Williamtown Cincinnati OH 84 1971 REM Capital Z-Ingenuity 02/17/2022 $4.34 $59,514.00 Workforce - Upper Eagle Watch Cincinnati OH 96 1968 REM Capital Z-Ingenuity 02/17/2022 $6.26 $65,237.00 Workforce - Upper Heirloom Of Cincinnati Cincinnati OH 161 1949 REM Capital Z-Ingenuity 02/18/2022 $13.84 $85,983.00 Workforce - Upper Wyoming Cincinnati OH 96 1967 REM Capital Z-Ingenuity 02/19/2022 $6.22 $64,799.00 Workforce - Upper Meadowood Forest Park OH 106 1985 SNS Capital Group Blue Tides Partners 03/28/2022 $5.87 $55,357.55 Workforce - Upper Woodside Cincinnati OH 60 1972 SNS Capital Group Blue Tides Partners 03/28/2022 $4.33 $72,100.00 Low Mid-Range Apple Valley Independence KY 108 1990 PLK Communities Noll, David J. 03/30/2022 $17.45 $161,574.07 Workforce - Upper Riverchase Newport KY 204 1975 Fairway America Ray Brown Properties 06/01/2022 $22.60 $111,078.43 Upper Mid-Range John R. Green Lofts Covington KY 178 2022 Stoneweg US RealtyLink 06/10/2022 $62.00 $348,314.61 Workforce - Lower Willow Glen Erlanger KY 69 1967 Detzel, Jeffrey A. Axiom Residential 06/10/2022 $5.00 $72,463.77 Workforce - Upper Meadow View Apartments & Townhomes Springboro OH 180 1994 Zidan Management Group Eenhoorn Management 07/01/2022 $24.63 $138,518.52 Workforce - Upper Victoria Square Newport KY 232 1964 Sunset Property Solutions Broeman, Dwight W. 07/12/2022 $26.68 $115,000.00 Workforce - Upper Creekside Cincinnati OH 0 1969 Ohayon, Shalom ME Real Estate 07/15/2022 $5.00 Fully Affordable North Pointe Townhomes West Chester OH 100 1995 SNS Capital Group Clear Creek Investment Partners 07/22/2022 $12.40 $124,000.00 Upper Mid-Range Poste Cincinnati OH 124 2020 A-Strategy Management Milhaus Development 07/25/2022 $21.33 $172,043.01 Workforce - Upper Terrace Woods Cincinnati OH 54 1965 Ravipati, Krishnamohan Miller, Thomas L. 08/10/2022 $5.72 $106,000.00 Workforce - Upper Crescent Ridge Crescent Springs KY 143 1976 Cooper Street Capital PLK Communities 08/17/2022 $17.30 $120,979.02 Fully Affordable Batavia Meadows Batavia OH 54 1980 Guntaka, Swarna Latha Clermont Metropolitan Housing Authority 08/24/2022 $3.18 $58,796.30 Workforce - Upper Bahama West Cincinnati OH 66 1965 Kang, Constance Maritato, Karl C. 08/26/2022 $2.67 $40,404.03 Workforce - Upper Northside Flats Cincinnati OH 141 2016 Red Knight Properties Rusk, William D. 09/19/2022 $7.33 $52,009.45 Upper Mid-Range Current at the Banks Cincinnati OH 300 2011 Crawford Hoying Nicol Investment Company 10/13/2022 $62.82 $209,400.00 2680 $348.40 $109,865.66 Property Asset Class Property Name City State Unit Count Completion Date Buyer Seller Sale Date Total Sale Price (MM) Sale Price Per Unit Workforce - Upper Royal Cove Ft Thomas KY 96 1990 Under contract King Communities TBD $9.70 $101,041.00 Workforce - Upper Cincy 222 Westwood OH 222 1970 Under contract ME Real Estate TBD $14.00 $63,063.00 Workforce - Upper Dwell and Renaissance Avondale OH 100 1972 Under contract R-Investment TBD $6.00 $60,000.00 Workforce - Upper College/Price Hill Portfolio College Hill OH 158 1974 Under contract Micah Kamarass TBD $9.40 $59,500.00 Workforce - Upper Cedar Ridge Park Hills KY 168 1960 Under contract Miles Sinclair TBD $14.50 $86,310.00 Workforce - Upper 1922 Hopkins Norwood OH 18 1970 Under contract Danny Gudorf TBD $1.50 $68,181.00
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