KEES COVE
SUBMITTED BY:
Cincinnati
SHOULD NOT BE
Tim VanWingerden tim.vanwingerden@marcusmillichap.comD.LouisvilleAssociate513.878.7750
Jordan
First
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LEAD AGENTS NON-ENDORSEMENT & DISCLAIMER CONFIDENTIALITYNOTICEDISCLAIMER
THIS IS BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND CONSIDERED AN APPRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies.
Nick Andrews Vice President Investments Office D. nicholas.andrews@marcusmillichap.com513.878.7741 Dickman Vice President Investments Office D. jordan.dickman@marcusmillichap.com513.878.7735 Sum austin.sum@marcusmillichap.comD.CincinnatiAssociateOffice513.878.7747
First
A
Cincinnati
Austin
NOTICE
NON-ENDORSEMENT
Senior
26 | THE FINANCIALS 0403020132 | LOCAL MARKET 18 | LOCAL06COMPETITORS|KEESCOVECONTENTSVALUEOFOPINION&CAPABILITIESBROKER
CALABASAS, CALIFORNIA | HQ 2,500 | EMPLOYEES80+ | OFFICES
UNRIVALED SUCCESS IN THE MIDWEST OPERATIONS Brittany Campbell-Koch Director of Operations Liz Popp Midwest Operations Manager 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 Josh Caruana Vice IndianapolisRegionalPresidentManager|Cincinnati|LouisvilleStLouis|KansasCity Nick Andrews First Vice President Investments Director, NMHG Jordan Dickman First Vice President Investments Director, NMHG Austin Sum SeniorAssociateInvestment JD Schmerge InvestmentAssociate Brian Johnston InvestmentAssociate INVESTMENT ADVISORS Tim VanWingerden InvestmentAssociate DEBT & STRUCTURED FINANCE Chris Litzler Senior Director of MMCCOrganization Sam Petrosino Financial & AnalystResearch VALUATION & RESEARCH Skyler Wilson Client Relations Manager CLIENT RELATIONS Alex Papa Marketing Coordinator Kristin Smith Marketing MARKETING
01SECTION KEES
KEES COVE
PROPOSED VALUE-ADD
New ownership can take advantage of the recent capital im provements and implement a light renovation on unit interiKeesors. Cove rents are on average $300 below the submarket av erage rents. An incoming investor can renovate and still stay below the competition in the market while providing housing that is comparable.
KEES COVE INVESTMENT HIGHLIGHTS
• Nearby employers include: LexMark, USPS Distribution, Jiff Peanut Butter Factory, & Bluegrass Community Tech nical College.
SUBMARKET HIGHLIGHTS
• Rental Growth: The Northeast Submarket has seen an 8.8% YOY rental growth in Lexington’s connected submarket.
Marcus & Millichap is pleased to present Kees Cove, a 24-Unit apartment complex located in Lexington, KY. Kees Cove has undergone extensive renovation with significant capital improvements and is well-positioned for an aggressive marketing initiative to increase rents and improve NOI.
• Chic-fil-a was recently developed in this submarket and located off New Circle Rd it is less than a mile away from Kees Cove.
• The Lexington Northeast Submarket is highlighted for ex cellent connectivity with direct access to New Circle, N Broadway Rd, and i75.
13,920 24 580 RENTABLE SQUARE FEET TOTAL UNITS AVG SF #1 Bedrooms 24 % Leased 88% PROPERTY SUMMARY KEES COVE
KEES COVE PROPERTY DETAILS Property Name: Kees Cove Property Address: 1124-1132 Kees Rd City, State, Zip: Lexington, KY 40505 County: Fayette Year Built/Reno: 1964 Number Of Units: 24 Avg Unit Size: 580 Rentable Sqft: 13,920 Number of Parcels: 2 Lot Size (Acres): 0.3176 # of Buildings: 2 # of Stories: 2 Parking Type: Off-Street Parking Surface: Lot HVAC Individual Water Heater Individual Plumbing Cast Iron, PVC from Plumbing to Street Wiring Copper Foundation: Slab Framing: Wood Roofs Dimensional Shingle Exterior of Building: Brick Windows: Sliding Door with railing UTILITIES PROVIDER NOTES Electric: Tenant Paid LGE Separately Gas: Tenant Paid Columbia Gas Separately Water Tenant Paid American Water Separately Sewer Tenant Paid Trash: Owner Paid Republic Services 8yd
SeparatelySeparatelySeparatelyNOTESMeteredMeteredMetered RECENT CAPITAL IMPROVEMENTS INCLUDE - New Carpeting - Renovated Common Area: LVP Flooring, paint, light fixtures. - New exterior lighting - New 24/7 video security system - New Vinyl Eaves - New Roof, gutters, fascia - New Sidewalk - New Entrance Decks and Back Decks - New Exterior Doors, Windows, and Sliding Doors - New Side Exterior Side Paneling and Paint - New Plumbing from building to street - New Kitchens and Vanities* - HVAC and Furnaces Replaced As Needed - Coinless Laundry Software MECHANICAL IMPROVEMENTS PAST 5 YEARS - 21/24 Water Heaters Replaced - 13/24 Furnaces Replaced - 20/24 Refrigeraters Replaced - 15/24 Stoves Replaced RECENT CAPITAL IMPROVEMENTS INCLUDE
CAPEX BREAKDOWN PROPERTY DETAILS 1 222 2 3 4 5 6
1. NEW ROOF 2. NEW WINDOWS 3. NEW DECKS 4. NEW SIDEWALK 5. NEW GUTTERS 6. NEW SIDING & PAINT 1 22 22 2 3 3 4 4 5 5 2 2
INTERIOR PHOTOS KEES COVE KITCHENLIVINGROOMLIVINGROOMBATHROOM
LIVINGROOM
EXTERIOR PHOTOS KEES COVE
02SECTION LOCAL COMPETITORS
COMPETITORS
1 500 HOLLOW CREEK RD 2 817 E HIGH STREET 3 315 BALLPARK DRIVE 4 1145 KEES RD 5 CLAY VILLA 6 426 E HIGH STREET 7 1116 KEES RD 8 1132 KEES RD 9 568 N BROADWAY RENT COMPARABLES * 2 4 31 KEES COVE LOCATION COMPS 5 7 6 8 9
RENT SORT COMPS Property Year Built Total Units # 1 BR Units SF Market Rent Occupancy Arcs on Main formerly Barclay 1965 30 30 800 $1,095 98% Clay Villa 1971 40 30 600 $900 100% Saxony Apartments 1976 12 12 475 $825 94% 426 E High St 1985 15 15 696 $799 100% Caballo Crossing 1972 288 163 506 $778 90% 817-819 W High St 1965 18 18 400 $775 94% Kees Cove Pro Forma 1964 24 24 650 $758 95% 315 Ballpark Dr 1963 18 17 696 $758 100% 1145 Kees Rd 1963 9 9 756 $750 100% 1116 Kees Rd 1963 4 4 750 $748 100% 568 N Broadway 1965 30 30 612 $700 97% Bourbon court 1966 217 40 750 $670 60% Keys Cove Average Effective 1964 642 $773 88% Averages 639 $760 94%
UNITS 163 YEAR BUILT 1972 RENO: 2020 OCCUPANCY 90% UNIT MIX # Units Unit SF Rent Rent/SF 1 Bed 163 506 $778 $1.43 AMENITIES On-Site Maintenance On-SiteHighLaundryBBQ/PicnicManagementCourtyardAreaFacilitiesPoolPlaygroundSpeedInternetDogPark UNIT FEATURES Stainless Steel HardwoodAppliancesFloorsCarpetingAirConditioningDishwasherMicrowaveRefrigeratorBalcony CROSSINGCABALLO
AMENITIES Pet Washing Station Off Street Parking UNIT FEATURES Air Washer/DryerRefrigeratorMicrowaveDishwasherConditioningin Unit, HIGH817-819STREET UNITS 18 YEAR BUILT 1964 OCCUPANCY 94% UNIT MIX # OF UNITS SQFT RENT RENT/SF 1 Bed 18 400 $775 $1.80
UNITS 17 YEAR BUILT 1963 RENO: 2020 OCCUPANCY 100% UNIT MIX # OF UNITS SQFT RENT RENT/SF 1 Bed 17 696 $758 $1.09 AMENITIES Security System UNIT FEATURES Cable Ready Tile Floors HardwoodTub/ShowerFloorsRange BALLPARK315
UNIT FEATURES Wood Laminate Flooring Wall Unit Air Conditioning BlindsNewlyTub/ShowerRefrigeratorRangeHeatingPainted KEES1145 UNITS 9 YEAR BUILT 1963 OCCUPANCY 100.0% UNIT MIX # OF UNITS SQFT RENT RENT/SF 1 Bed 9 756 $750 $0.99
03SECTION THE FINANCIALS
FINANCIALS
AVERAGE EFFECTIVE MARKET PROJECTED UNIT TYPE NO. OF UNITS RENTABLE SF TOTAL SF RENT/UNIT RENT/SF TOTAL POTENTIALRENT RENT/UNIT RENT/SF TOTAL POTENTIALRENT RENT/UNIT RENT/SF TOTAL POTENTIALRENT OneSUMMARYBedroom 24 Units 580 SF 13,920 SF $487.42 $0.84 $11,698 $575.00 $0.99 SF $13,800 $758.33 $1.31 SF $18,200 Totals / Wtd. Averages 24 Units 580 SF 13,920 SF $487.42 $0.84 SF $11,698 $575.00 $0.99 SF $13,800 $758.33 $1.31 SF $18,200 UNIX MIX SUMMARY KEES COVE - FINANCIALS UNIT DISTRIBUTION 100% One Bedroom UNIT RENTS Pro Forma ProjectionAvg. Effective 1 Bed
AVERAGE EFFECTIVE MARKET PROJECTED UNIT TYPE NO. OF UNITS RENTABLE SF TOTAL SF RENT/UNIT RENT/SF TOTAL POTENTIALRENT RENT/UNIT RENT/SF TOTAL POTENTIALRENT RENT/UNIT RENT/SF TOTAL POTENTIALRENT ONE 1BR/1BABEDROOM 16 Units 580 SF 9,280 SF $487.63 $0.84 SF $7,802 $575.00 $0.99 SF $9,200 $775.00 $1.34 SF $12,400 1BR/1BA - Lower Level 8 Units 580 SF 4,640 SF $487.00 $0.84 SF $3,896 $575.00 $0.99 SF $4,600 $725.00 $1.25 SF $5,800 Totals / Wtd. Averages 24 Units 580 SF 13,920 SF $487.42 $0.84 SF $11,698 $575.00 $0.99 SF $13,800 $758.33 $1.31 SF $18,200 UNIX MIX BREAKDOWN KEES COVE - FINANCIALS
EXPENSES&INCOME FINANCIALS-COVEKEES CURRENT (RENT ROLL/T3 INCOME; ADJUSTED TRAILING EXPENSES) YEAR 1 (Recapture LTL, Stabilized Occupancy and Other Income, Normalized Expenses, Start Reno) GROSS POTENTIAL RENT % of GPR Per Unit % of GPR Per Unit All Units at Market Rent $165,600 RR 6,900 $218,400 9,100 Gain (Loss) to Lease ($21,960) 13.26% (915) ($17,472) 8.00% (728) GROSS SCHEDULED RENT $143,640 RR 5,985 $200,928 8,372 Other ForfeitedIncomeSecurity Deposits $7,160 T3 4.98% 298 $0 0.00% 0 Laundry Income $758 T3 0.53% 32 $781 0.39% 33 Other Income $160 T3 0.11% 7 $165 0.08% 7 Total Other Income $8,078 5.62% 337 $946 0.47% 39 GROSS POTENTIAL INCOME $151,718 6,322 $201,874 8,411 Physical Vacancy ($37,708) T3 Economic 26.25% (1,571) ($20,093) 10.00% (837) Bad Debt $0 0.00% 0 ($2,009) 1.00% (84) EFFECTIVE GROSS INCOME $114,010 60.49% 4,750 $179,771 81.00% 7,490 RealNON-CONTROLLABLEEstateTaxes % of EGI Per Unit % of EGI 2021 Taxes Paid $10,563 Auditor 9.27% 440 $10,563 5.88% 440 Adjustment for Sale $6,236 5.47% 260 $6,236 3.47% 260 Total Real Estate Taxes $16,800 14.74% 700 $16,800 9.35% 700 Insurance $11,248 T12 9.87% 469 $8,400 4.67% 350 UtilitiesUtilities $15,072 T12 13.22% 628 $15,374 8.55% 641 Total Utilities $15,072 13.22% 628 $15,374 8.55% 641 Total Non-Controllable $43,120 37.82% 1,797 $40,573 22.57% 1,691 ContractCONTROLLABLEServicesSnowRemoval $0 0.00% 0 $840 0.47% 35 Landscaping/Grounds $0 0.00% 0 $2,400 1.34% 100 Pest Control $0 0.00% 0 $840 0.47% 35 Total Contract Services $0 0.00% 0 $4,080 2.27% 170 Repairs & Maintenance $14,400 Note 2 12.63% 600 $14,400 8.01% 600 Marketing & Promotion $0 0.00% 0 $1,800 1.00% 75 Payroll/Labor $13,285 T12 11.65% 554 $21,600 12.02% 900 Payroll Taxes & Benefits $0 0.00% 0 $2,400 1.34% 100 General & Administrative $5,523 T12 4.84% 230 $2,400 1.34% 100 Management Fee $11,052 T12 9.69% 461 $12,584 7.00% 524 Replacement & Reserves $6,120 Note 1 5.37% 255 $6,242 3.47% 260 Total Controllable $50,380 44.19% 2,099 $65,506 36.44% 2,729 TOTAL EXPENSES $93,500 82.01% 3,896 $106,080 59.01% 4,420 NET OPERATING INCOME $20,510 17.99% 855 $73,692 40.99% 3,070 INCOMEEXPENSE
Underwriting
YEAR 2 (...STABILIZED OCCUPANCY, FINISH RENO ON REMAINING UNITS) YEAR 3 (PROJECTED RENT INCREASE AFTER STABILIZATION, RENO) % of GPR Per Unit % of GPR Per Unit $224,952 9,373 $231,701 9,654 ($4,499) 2.00% (187) ($4,634) 2.00% (193) $220,453 9,186 $227,067 9,461 $0 0.00% 0 $0 0.00% 0 $804 0.36% 34 $828 0.36% 35 $170 0.08% 7 $175 0.08% 7 $974 0.44% 41 $1,003 0.44% 42 $221,427 9,226 $228,070 9,503 ($11,023) 5.00% (459) ($11,353) 5.00% (473) ($2,205) 1.00% (92) ($2,271) 1.00% (95) $208,200 92.00% 8,675 $214,446 92.00% 8,935 % of EGI Per Unit % of EGI Per Unit $10,563 5.07% 440 $10,563 5.07% 440 $6,236 3.00% 260 $6,236 3.00% 260 $16,800 8.07% 700 $16,800 8.07% 700 $8,568 4.12% 357 $8,739 4.20% 364 $15,681 7.53% 653 $15,995 7.68% 666 $15,681 7.53% 653 $15,995 7.68% 666 $41,049 19.72% 1,710 $41,534 19.95% 1,731 $857 0.41% 36 $874 0.42% 36 $2,448 1.18% 102 $2,497 1.20% 104 $857 0.41% 36 $874 0.42% 36 $4,162 2.00% 173 $4,245 2.04% 177 $14,688 7.05% 612 $14,982 7.20% 624 $1,836 0.88% 77 $1,873 0.90% 78 $22,032 10.58% 918 $22,473 10.79% 936 $2,448 1.18% 102 $2,497 1.20% 104 $2,448 1.18% 102 $2,497 1.20% 104 $14,574 7.00% 607 $15,011 7.00% 607 $6,367 3.06% 265 $6,495 3.12% 271 $68,555 32.93% 2,856 $70,072 33.45% 2,901 $109,604 52.64% 4,567 $111,605 53.60% 4,650 $98,596 47.36% 4,108 $102,840 49.40% 4,285
Notes # Note 1 Replacement & Reserves: added based on market norm of $255 per unit per year 2 Repairs/Maint from T12 included major CAPEX items. CAPEX itemized in OM.
04SECTION LOCAL MARKET
MARKET
EMERGING TECH HUB
Lexington, city, coextensive with Fayette county, north-central Kentucky, U.S., the focus of the Bluegrass region and a major centre for horse breeding. Named in 1775 for the Battle of Lexington, Massachusetts, it was chartered by the Virginia legislature in 1782 and was the meeting place (1792) for the first session of the Kentucky legislature following statehood. Lexington in the early 1880s called itself the Athens of the West, boast ing Transylvania College (1780; now Transylvania Univer sity), street lights, a public subscription library, a the atre, and a musical society. In 1817 it had presented the first Beethoven symphony heard in the United States.
Metronet has invested over $100 million in fiberoptic infra structure making Lexington the largest Gigabit city in the nation. The city’s highspeed infrastructure along with its low cost of living provides 1.54 times the purchasing power compared to Silicon Valley attracting talented tech profes sionals and startups alike.
LEXINGTON, KY KEES COVE
DISTILLERYBOURBONTRACEBUFFALO
• New $37.5 million Lexington Distillery District hotel will open in spring 2023 (Dec 2021)
• The University of Kentucky approved a purchase agreement for $6.9 Million to acquire land for construciton of a new outpatient cancer treatment center and advanced ambulatory complex. (Dec 2021)
• The University of Kentucky gives the city of Lexington 250 acres in and near the Coldstream Research Campus where office, laboratory, residential and hospitality developments are planned. A new, $15 million hightech building currently under construction will provide office and laboratory space for early-stage, hightech companies to develop and commercialize their products and services. (Oct 2021).
• Lexington-based Quality Logistics LLC, doing business as Longship, opened its new office in Fayette County, a $4.3 million investment creating 155 well-paying jobs for Kentucky residents (Aug 2021)
NEWS
• Buffalo Trace Distillery makes headway on $1.2 billion expansion (Aug 2021)
Buffalo Trace distillery, based out of Kentucky, has made progress in its $1.2 billion expansion, which includes the construction of an additional still, more barrel warehous es, added fermenters and an expansion of the dry house Overoperation.thepast year, a second still house has been built next to the existing 1930s structure. At 40 ft tall, it has doubled production capacity and holds 60,000 gallons.
• TMMK to invest $461 million in upgrades at Georgetown Toyota plant. (Oct 2021)
EMPLOYERS IN THE
Population: 323,152 Median age: 35 (.39%)
• At the same time, the metro recorded a net gain of 3,600 jobs, expanding the employment base 1.4%. As such, Lexington-Fayette’s unemployment rate in August 2021 declined 1.5 points year-overyear to 3.2%, below the national average of 5.3%.
DEMOGRAPHICS: STATISTICS
Msa median hhi: $57,405 1 - Year growth: 1.77% Msa median home value: $173,500 1 - Year growth: 4.83% Average occupany: 96.4% Rent growth: 2.7%
• Lexington has mix of stable anchors alongside some larger, private employers. Prior to the pandemic, Lexington-Fayette’s real gross metropolitan product grew at an average annual rate of 1.6% from 2015 to 2019. During that same five-year period, job growth averaged 1.2% annually, with roughly 3,100 jobs added on average each year.
• During the past year, job gains in Lexington-Fayette were most pronounced in the Leisure/Hospi tality Services and Trade/Transportation/Utilities sectors. Despite job losses stemming from the pandemic, Lexington-Fayette’s current employment base now sits roughly 16,200 jobs, or about 6% above the 1st quarter 2008 level, prior to the Great Recession.
ECONOMY
• In 2020, COVID-19 mitigation measures and limited business activity caused the local economy to contract as much as 10.3% year-overyear in 2nd quarter. In the year-ending 3rd quarter 2021, the metro’s inflation-adjusted economic output expanded 6.5%.
SUPPLY & DEMAND
• The level of new apartment completions in Lexington-Fayette were modest recently, as 252 units delivered in the year-ending 3rd quarter 2021. That annual completion volume compares to a low of 24 units and a high of 900 units over the past five years. Annual new supply averaged 357 units, and annual inventory growth averaged 0.6% over the past five years.
SUPPLY
• Over the next year, inventory growth is set to accelerate with the scheduled addition of 680 units. At the end of 3rd quarter 2021, there were 866 units under construction.
• Completions over the past year expanded the local inven tory base 0.6% and were concentrated only in the Downtown Lexington/University submarket.
• New supply over the past five years has been concentrated in South Lexington, which received 58% of the market’s total completions over that time. Scheduled new deliveries in the coming year are expected to deliver in South Lexington and North Lexington.
1 University of Kentucky 2 Toyota 3 Baptist Health 4 Amazon.com 5 Lexmark 6 Hitachi 7 Lockheed Martin 8 Adient 9 Link-Belt 10 Webasto 11 Valvoline 12 Big Ass Fans 13 Tempur- Sealy MARKET DRIVERS 2 4 6 15 3 7 8 9 10 11 12 13
• That occupancy rate ranked #29 among the 65 key South region markets and #85 among the top 150 markets nationally. That tight occupancy was also the highest since RealPage began tracking the market.
OCCUPANCY
• Occupancy in the Lexington-Fayette apartment market has ranged from 93.0% to 97.3% over the past five years, averaging 94.7% during the same five yer period. Over the past year, occupancy gained 1.4 points, with the 3rd quarter 2021 rate landing at 97.3%.
• Looking at product classes in Lexington-Fayette, 3rd quarter 2021 occupancy was 97.9% in Class A units, 97.3% in Class B units and 96.4% in Class C units, occupancy in Class C product was generally tightest over the past five years.
Lexington, the heart of Kentucky “bluegrass,” has been renowned for two centuries for horse raising and horse racing. Shortly after the track’s completion in 1936, Keeneland Racetrack became the most conspicuous manifestation of this culture. Jack Keene, for whom Keeneland is named, was an extraordinary figure in American racing, and helped revive this industry during the 1930s when it was beginning to suffer. Keene was a descendant of a distinguished Lexington family and was known worldwide as a trainer of thoroughbreds. After training abroad in Russia and Japan he returned to Kentucky where he began laying out the Keeneland racecourse in 1916. The main track is one and 1/16th miles in circumference and has retained this length since its original inception by Keene. The grounds also include Keene’s mansion and training center. Constructed of limestone that was quarried on Keene’s farm, this build ing was designed with living quarters, a large clubroom and stalls. The two-story center section of the building is flanked on either side by stone arcades leading to three-story wings of the building.
KEENELAND
ATTRACTIONS
The Kentucky Horse Park is a working horse farm, educational theme park and equine competition facility dedicated to man’s relationship with the horse. Set on more than 1,200 acres in the heart of the Kentucky’s famous Bluegrass region, the park is THE place to get close to horses! Featuring dozens of breeds of horse at work and at play, the park showcases the horse in daily equine presenta tions, horse drawn tours, horseback and pony rides, and an array of horse shows and special events throughout the year.
KENTUCKY HORSE PARK
Founded in 1865, the University of Kentucky is a single campus at the heart of the Blue-grass. More than 100 countries are represented in the student body at UK. UK has over 200 academic programs and last spring, there were 29,182 students enrolled. With more than 12,000 staff and 2,000 faculty, UK is one of the largest employers in the state.
HIGHER EDUCATION
In an extensive study conducted by the Associated Press and then revealed in 2017, the University of Kentucky men’s basketball program was rated as the greatest of its kind ever. Certainly, more current NBA players have emerged from the Wildcats’ ranks than from any other college team, with DeMarcus Cousins, John Wall, and Anthony Davis just some of the University of Kentucky’s former stars. The Wildcats also clinched the NCAA Division I Men’s Basketball Tournament in 2012 and have progressed to the men’s Final Four on four occasions since 2011.
20,500 RUPP AREA FACILITY CAPACITY 20 NCAA CHAMPIONSHIP WINS $19.5M IN TICKETS UNIVERSITY OF KENTUCKY
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