Medford Street Apartments OM

MEDFORD STREET APARTMENTS

2024 OFFERING MEMORANDUM 275 Medford Street, Dayton, Ohio

CONTENTS LEAD AGENTS 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

SECTIONS

The Investment

06

Local Competitors

08

Financials

12

“OUR COMMITMENT IS TO HELP O U R C L I E N T S C R E AT E A N D P R E S E R V E W E A LT H B Y PROVIDING THEM WITH THE BEST R E A L E S TAT E INVESTMENT SALES, FINANCING, RESEARCH AND ADVISORY S E R V I C E S AVA I L A B L E .”

3 0 0 W ES T 4T H S T RE E T, CIN CIN N AT I, O H

GLOBAL REACH, LOCAL EXPERTISE

$86.3B VA L U E O F R E C E N T LY C L O S E D T R A N S A C T I O N S

12,272 CLOSED SALES IN MOST RECENT YEAR

DAY TO N

$12.8B

C I N C I N N AT I

T O TA L VA L U E O F R E C E N T L I S T I N G S

2,143

LOUISVILLE

LEXINGTON

CLOSED FINANCINGS IN MOST RECENT YEARS

CALABASAS, CALIFORNIA | HQ

80+ | OFFICES

2,500 | EMPLOYEES

YOUR TEAM

C O R P O R AT E S U P P O R T

J O RDAN DICK M A N F I R S T VIC E PR ES I D E N T S D I RE CT O R, N M HG

L I Z P OP P MI DW E S T OP E R A TI ON S MA NAGER

NIC K ANDREWS F I R S T VIC E PR ES I D E N T S D I RE CT O R, N M HG

J OS H C A R U A N A V I C E P R E S I DE N T R E G I ON A L MA N A G E R I N DI A N A P OL I S | C I N C I N N A TI | L O UISVIL L E | S T L O UIS | K ANS AS CITY

AUS T IN SUM S ENIO R INVESTME N T A SSO CI A T E AUS T IN Hall INVESTM ENT ASSO CI A T E AL D E N SIMM S INVESTM ENT ASSO CI A T E

J OH N SE B R E E S E N I OR V I C E P R E S I DE N T N A T I ON A L DI R E C T OR N A T I ON A L MULTI H OUS I N G GR O UP MI C H A E L G L A S S S E N I OR V I C E P R E S I DE N T MI DW E S T DI V I S I ON MA N A GER N A T I ON A L DI R E C T OR , MA N UFACTUR ED HO M E CO M M UNITIES GR O UP

BROKER SUPPORT S AM PET ROSino VA L UATIO N & R E S E A RCH

B R I TTA N Y C A MP B E L L- KOC H DI R E C TOR OF OP E R A T I ON S

B RETT MART IN INT ER NAL AC CO UN TA N T

A L E X PA PA MA R K E TI N G C OOR DI N A TOR

PROPERTY

SUMMARY Property Address:

275 Medford St

City, State, Zip:

Dayton, OH 45410

Submarket:

Walnut Hills

County:

Montgomery

Year Built/Reno:

1964

Number Of Units:

20

Avg Unit Size:

660

Rentable Sqft:

13,420

INVESTMENT HIGHLIGHTS Marcus & Millichap is pleased to present the Medford Apartments, a 19-unit apartment complex located in the Walnut Hills submarket of Dayton. The asset consists of 19 two-bedroom, one-bathroom apartments, and one single family home located two lots over. The asset has undergone minor renovations such as new LVP flooring, New Roof, and New Furnaces in 2020. It is currently 97% occupied and has 13,420 rentable square feet.

Proximity to University of Dayton: The Medford apartments sit less than 1-mile away from the University of Dayton’s main campus. This makes Medford a convenient choice for students looking for affordable housing options near campus.

Number of Parcels:

2

Favorable Unit Composition and Layout: With all 20 of the units being 2 bedroom-one-bathroom

Lot Size (Acres):

0.28

layouts, the rental upside compared to renovation dollars is very attractive. The incoming investor

# of Buildings:

2

# of Stories:

2

Parking Type:

Parking lot

charge $1,200+ for housing. Medford’s rents are $400 below these competitors, so there is opportu-

Parking Surface:

Blacktop

nity for an incoming investor to push rents to increase collections. Medford will still be well below

Roof Type/Age:

Pitched Shingle

can implement a strategic renovation plan and increase the overall NOI of the property.

Lack of Affordable Student Housing: Current competitors in the student housing marketplace

the market average and an affordable choice for students looking for off-campus housing.

R e l at i v e l o c at i o n

SCAN FOR Q U A R T E R LY D ATA

D AY T O N M A R K E T •

Prior to the pandemic, Dayton’s real gross metropolitan product grew at an average annual rate of 1.4% from 2015 to 2019. During that same five-year period, job growth averaged 1.0% annually, with roughly 3,700 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 10.0% year-over-year in 2nd quarter.

•

In the year-ending 2nd quarter 2023, the metro’s inflation- adjusted economic output expanded 2.8%.

•

Downtown D ay t o n

At the same time, the metro recorded a net gain of 8,900 jobs, expanding the employment base 2.3%.

•

8 min drive (2.5 mi)

MEDFORD STREET A PA RT M E N T S

As such, Dayton’s unemployment rate in May 2023 declined 0.1 point year-over-year to 3.4%, matching the national average of 3.4%.

•

During the past year, job gains in Dayton were most pronounced in the Education/Health Services sector followed by Leisure/Hospitality Services.

NOTEWORTHY MENTIONS -140 UNDERGRAD PROGRAMS

WRIGHT STATE

-20,000 JOBS -13,000 STUDENTS -80 UNDERGRAD PROGRAMS

UNIVERSITY OF DAYTON

-9,000 STUDENTS -$70M ECONOMIC IMPACT - 28,000 JOBS

WRIGHT PAT AIR FORCE BASE

- $4.3B ECONOMIC IMPACT - LARGEST SINGLE SIT EMPLOYER IN OH

rent sort TWO bedroom Flats at South Park $1,550

101 Fairground Ave $1,295

The Flight at Dayton $1,499

2414 King Ave $900 Medford Street Apartments $785 108 Bellaire Ave $850

The Echelon $1,325 Parliament House $775

Year Built 2018 2023 1962 n/a 1966 1964 n/a 1964 1967 1981

# Units 94 143 101 3 14 20 4 20 22 47

Avg SF 890 834 770 600 800 1000 895 1000 950 860

Avg Rent $1,550 $1,499 $1,325 $1,295 $900 $900 $850 $785 $775 $1,098

Avg Rent/SF $1.74 $1.80 $1.72 $2.16 $1.13 $0.90 $0.95 $0.79 $0.82 $1.33

SECTION 2 - LOCAL COMPETITORS

Two Bedroom Property The Flats at South Park The Flight at Dayton The Echelon 101 Fairground Ave 2414 King Ave Subject Pro Forma 108 Bellaire Ave Subject Average Effective Parliament House Market Average

SECTION 2 - LOCAL COMPETITORS 2414 KING AVE

2414 KING AVENUE UNITS YEAR BUILT OCCUPANCY UNIT MIX Two Bedroom

UNITS 14

SQFT 800

14 1966 95.0% RENT RENT/SF $900 $1.13

7 37 WILMINGTON AVE

PA R L I A M E N T HOUSE UNITS YEAR BUILT OCCUPANCY UNIT MIX Two Bedroom

UNITS 22

SQFT 950

22 1967 95% RENT RENT/SF $775 $1.22

SECTION 2 - LOCAL COMPETITORS 108 BELLAIRE AVE

108 BELLAIRE AV E N U E UNITS YEAR BUILT OCCUPANCY UNIT MIX Two Bedroom

UNITS 4

SQFT 895

4 n/a 80.0% RENT RENT/SF $850 $0.95

101 FAIRGROUND AVE

101 Fair ground Ave UNITS YEAR BUILT OCCUPANCY UNIT MIX Two Bedroom

UNITS 3

SQFT 600

3 n/a n/a RENT RENT/SF $1,295 $2.16

MEDFORD STREET APARTMENTS

UNIT MIX BREAKDOWN AV E R A G E E F F E C T I V E

MARKET

PROJECTED

UNIT TYPE

NO. OF UNITS

R E N TA B L E S F

T O TA L S F

RENT/UNIT

RENT/SF

T O TA L R E N T POTENTIAL

Two Bedroom 2BR/1BA Totals / Wtd. Averages

19 Units 19 Units

660 SF 660 SF

12,540 SF 12,540 SF

$785.00 $785.00

$1.19 SF $1.19 SF

$14,915 $14,915

$785.00 $785.00

$1.19 SF $1.19 SF

$14,915 $14,915

$900.00 $900.00

$1.36 SF $1.36 SF

$17,100 $17,100

Single Family Home 2BR/1BA Totals / Wtd. Averages

1 Units 1 Units

880 SF 880 SF

880 SF 880 SF

$800.00 $800.00

$0.91 SF $0.91 SF

$800 $800

$800.00 $800.00

$0.91 SF $0.91 SF

$800 $800

$1,000.00 $1,000.00

$1.14 SF $1.14 SF

$1,000 $1,000

Summary Two Bedroom Single Family Home Totals / Wtd. Averages

19 Units 1 Units 20 Units

660 SF 880 SF 671 SF

12,540 SF 880 SF 13,420 SF

$785.00 $800.00 $785.75

$1.19 $0.91 $1.17 SF

$14,915 $800 $15,715

$785.00 $800.00 $785.75

$1.19 SF $0.91 SF $1.17 SF

$14,915 $800 $15,715

$900.00 $1,000.00 $905.00

$1.36 SF $1.14 SF $1.35 SF

$17,100 $1,000 $18,100

RENT/UNIT

RENT/SF

T O TA L R E N T POTENTIAL

RENT/UNIT

RENT/SF

T O TA L R E N T POTENTIAL

SECTION 3 - FINANCIALS

UNIT RENTS

UNIT DISTRIBUTION

INCOME

GROSS POTENTIAL RENT

% of GPR

Per Unit

All Units at Market Rent

$188,580

9,429

Gain (Loss) to Lease

($3,772)

GROSS SCHEDULED RENT

$184,808

9,240

GROSS POTENTIAL INCOME

$184,808

9,240

Physical Vacancy

($9,240)

5.00%

(462)

EFFECTIVE GROSS INCOME

$175,568

93.00%

8,778

% of EGI

Per Unit

2.00%

(189)

NON-CONTROLLABLE

EXPENSE

MEDFORD STREET APARTMENTS

INCOME & EXPENSES

CURRENT

Real Estate Taxes 2022 Taxes Paid

$26,159 Auditor

14.90%

1,308

Total Real Estate Taxes

$26,159

14.90%

1,308

Insurance

$8,000 Note 2

4.56%

400

Electric

$1,150

0.66%

58

Water & Sewage

$10,000

5.70%

500

Trash Removal

$1,200

0.68%

60

Total Utilities

$12,350

7.03%

618

Total Non-Controllable

$46,509

26.49%

2,325

Controllable Contract Services Snow Removal

$700 Note 2

0.40%

35

Landscaping/Grounds

$2,000 Note 2

1.14%

100

Pest Control

$700 Note 2

0.40%

35

Total Contract Services

$3,400

1.94%

170

Repairs & Maintenance

$11,000 Note 2

6.27%

550

Marketing & Promotion

$1,500 Note 2

0.85%

75

Labor

$18,000 Note 2

10.25%

900

General & Administrative

$2,000 Note 2

1.14%

100

Management Fee

$10,534 Note 2

6.00%

527

Replacement & Reserves

$5,100 Note 1

2.90%

255

Total Controllable

$51,534

29.35%

2,577

TOTAL EXPENSES

$98,043

55.84%

4,902

NET OPERATING INCOME

$77,525

44.16%

3,876

YEAR 1 % of GPR $217,200

YEAR 2 Per Unit

% of GPR

10,860

$223,716

(217)

($4,474)

$212,856

10,643

$212,856

($4,344)

2.00%

YEAR 3 Per Unit

% of GPR

#

Per Unit

11,186

$230,427

(224)

($4,609)

$219,242

10,962

$225,819

11,291

10,643

$219,242

10,962

$225,819

11,291

2.00%

11,521 2.00%

(230)

($10,643)

5.00%

(532)

($10,962)

5.00%

(548)

($11,291)

5.00%

(565)

$202,213

93.00%

10,111

$208,280

93.00%

10,414

$214,528

93.00%

10,726

% of EGI

Per Unit

% of EGI

% of EGI

$26,159

12.94%

1,308

$26,159

12.56%

1,308

$26,159

12.56%

1,308

$26,159

12.94%

1,308

$26,159

12.56%

1,308

$26,159

12.56%

1,308

$8,000

3.96%

400

$8,160

3.92%

408

$8,323

4.00%

416

$1,173

0.58%

59

$1,196

0.57%

60

$1,220

0.59%

61

$10,200

5.04%

510

$10,404

5.00%

520

$10,612

5.10%

531

$1,224

0.61%

61

$1,248

0.60%

62

$1,273

0.61%

64

$12,597

6.23%

630

$12,849

6.17%

642

$13,106

6.29%

655

$46,756

23.12%

2,338

$47,168

22.65%

2,358

$47,588

22.85%

2,379

$700

0.35%

35

$714

0.34%

36

$728

0.35%

36

$2,000

0.99%

100

$2,040

0.98%

102

$2,081

1.00%

104

$700

0.35%

35

$714

0.34%

36

$728

0.35%

36

$3,400

1.68%

170

$3,468

1.67%

173

$3,537

1.70%

177

$11,000

5.44%

550

$11,220

5.39%

561

$11,444

5.49%

572

$1,500

0.74%

75

$1,530

0.73%

77

$1,561

0.75%

78

$18,000

8.90%

900

$18,360

8.82%

918

$18,727

8.99%

936

$2,000

0.99%

100

$2,040

0.98%

102

$2,081

1.00%

104

$12,133

6.00%

607

$12,497

6.00%

625

$12,872

6.00%

625

$5,202

2.57%

260

$5,306

2.55%

265

$5,412

2.60%

271

$53,235

26.33%

2,662

$54,421

26.13%

2,721

$55,634

26.53%

2,763

$99,991

49.45%

5,000

$101,589

48.78%

5,079

$103,222

49.56%

5,161

$102,223

50.55%

5,111

$106,691

51.22%

5,335

$111,306

53.44%

5,565

1

UNDERWRITING NOTES

NOTE Replacement & Reserves: added based on market norm of $255 per unit per year

INCOME EXPENSE

MEDFORD STREET APARTMENTS

CASH FLOW

CURRENT

YR 1

YR 2

YR 3

YR 4

YR 5

YR 6

YR 7

YE JAN-2025

YE JAN-2026

YE JAN-2027

YE JAN-2028

YE JAN-2029

YE JAN-2030

YE JAN-2031

GROSS POTENTIAL RENT All Units at Market Rent Gain (Loss) to Lease GROSS SCHEDULED RENT

$188,580 ($3,772) $184,808

$217,200 ($4,344) $212,856

$223,716 ($4,474) $219,242

$230,427 ($4,609) $225,819

$237,340 ($4,747) $232,593

$244,461 ($4,889) $239,571

$251,794 ($5,036) $246,758

$259,348 ($5,187) $254,161

GROSS POTENTIAL INCOME Physical Vacancy EFFECTIVE GROSS INCOME

$184,808 ($9,240) $175,568

$212,856 ($10,643) $202,213

$219,242 ($10,962) $208,280

$225,819 ($11,291) $214,528

$232,593 ($11,630) $220,964

$239,571 ($11,979) $227,593

$246,758 ($12,338) $234,421

$254,161 ($12,708) $241,453

Real Estate Taxes Insurance Utilities Contract Services Repairs & Maintenance Marketing & Promotion Labor General & Administrative Management Fee Replacement & Reserves TOTAL EXPENSES

$26,159 $8,000 $12,350 $3,400 $11,000 $1,500 $18,000 $2,000 $10,534 $5,100 $98,043

$26,159 $8,000 $12,597 $3,400 $11,000 $1,500 $18,000 $2,000 $12,133 $5,202 $99,991

$26,159 $8,160 $12,849 $3,468 $11,220 $1,530 $18,360 $2,040 $12,497 $5,306 $101,589

$26,159 $8,323 $13,106 $3,537 $11,444 $1,561 $18,727 $2,081 $12,872 $5,412 $103,222

$26,682 $8,490 $13,368 $3,608 $11,673 $1,592 $19,102 $2,122 $13,258 $5,520 $105,415

$27,216 $8,659 $13,635 $3,680 $11,907 $1,624 $19,484 $2,165 $13,656 $5,631 $107,656

$27,760 $8,833 $13,908 $3,754 $12,145 $1,656 $19,873 $2,208 $14,065 $5,743 $109,946

$28,315 $9,009 $14,186 $3,829 $12,388 $1,689 $20,271 $2,252 $14,487 $5,858 $112,285

NET OPERATING INCOME

$77,525

$102,223

$106,691

$111,306

$115,548

$119,937

$124,475

$129,168

Tax Breakdown Property Address

Parcel ID

Year Built

Acres

Market Value

Assessed Value

Taxes Payable

Land Use Code

275 Medford St 259 Medford St Total

R72-03307-0041 R72-03307-0046

1964 1919

0.14 0.14 0.91

$760,100 $32,600 $848,890

$266,030 $11,410 $297,100

$25,485.74 $673.12 $21,570.31

C - APARTMENTS 20-39 RENTAL UNITS" R - SINGLE FAMILY DWELLING, PLATTED LOT"

CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS YR 1

YR 2

YR 3

YR 4

YR 5

15.18% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

6.00%

2.00% 6.00%

2.00% 6.00%

2.00% 6.00%

2.00% 6.00%

INCOME Gross Potential Rent (Loss) / Gain to Lease* Other Income EXPENSES Expenses Management Fee**

CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS Physical Vacancy Non-Revenue Units Bad Debt Concessions Allowance Total Economic Loss

YR 1

YR 2

YR 3

YR 4

YR 5

5.00% 0.00% 0.00% 0.00% 5.00%

5.00% 0.00% 0.00% 0.00% 5.00%

5.00% 0.00% 0.00% 0.00% 5.00%

5.00% 0.00% 0.00% 0.00% 5.00%

5.00% 0.00% 0.00% 0.00% 5.00%

R E L AT I V E L O C AT I O N

SCAN FOR Q U A R T E R LY D ATA

D AY T O N M A R K E T •

Prior to the pandemic, Dayton’s real gross metropolitan product grew at an average annual rate of 1.4% from 2015 to 2019. During that same five-year period, job growth averaged 1.0% annually, with roughly 3,700 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 10.0% year-over-year in 2nd quarter.

•

In the year-ending 2nd quarter 2023, the metro’s inflation- adjusted economic output expanded 2.8%.

•

downtown d ay t o n

At the same time, the metro recorded a net gain of 8,900 jobs, expanding the employment base 2.3%.

•

As such, Dayton’s unemployment rate in May 2023 declined 0.1 point year-over-year to 3.4%, matching the national average of 3.4%.

8 min drive (2.5 mi)

•

During the past year, job gains in Dayton were most pronounced in the Education/Health Services sector followed by Leisure/Hospitality Services.

MEDFORD STREET A PA RT M E N T S

NOTEWORTHY MENTIONS -140 UNDERGRAD PROGRAMS

WRIGHT STATE

-20,000 JOBS -13,000 STUDENTS -80 UNDERGRAD PROGRAMS

UNIVERSITY OF DAYTON

-9,000 STUDENTS -$70M ECONOMIC IMPACT - 28,000 JOBS

WRIGHT PAT AIR FORCE BASE

- $4.3B ECONOMIC IMPACT - LARGEST SINGLE SIT EMPLOYER IN OH

Q u a r t e r ly R E P O R T OCCUPANCY 1| Occupancy in the Dayton apartment market has ranged from 95.4% to 98.0% over the past five years, averaging 96.6% during that period. 2| Over the past year, occupancy lost 1.1 points, with the 3rd quarter 2023 rate landing at 95.5%. 3| Looking at product classes in Dayton, 3rd quarter 2023 occupancy registered at 94.4% in Class A units, 96.1% in Class B units and 95.8% in Class C units. 4| Occupancy in the more affordable Class C product was generally tightest over the past five years. Among submarkets, 3rd quarter 2023 occupancy was strongest in Greene County (96.6%) and Central Dayton/Kettering (95.9%).

SUPPLY 1| New apartment completions in Dayton were modest recently, as 737 units delivered in the year-ending 3rd quarter 2023. Completions over the past year expanded the local inventory base 1.3%. 2| In the past year, supply was greatest in Central Dayton/Kettering, with only North Dayton/Miami County and South Montgomery County receiving any additional supply. Annual new supply averaged 534 units, and annual inventory growth averaged 1.0% over the past five years. 3| During that period, new supply was concentrated in Central Dayton/Kettering and South Montgomery County, which received 66% of the market’s total completions. At the end of 3rd quarter 2023, there were 1,235 units under construction with 931 of those units scheduled to complete in the next four quarters. 4| Scheduled deliveries in the coming year are expected to be concentrated in Central Dayton/Kettering.

Q UA R T E R 3 J U LY

AUGUST

SEPTEMBER

O C TO B E R

N OV E M B E R

DECEMBER

MEDFORD STREET APARTMENTS