NORTHCREEK OFFERING MEMORANDUM
CONTENTS
LEAD AGENTS
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
Austin Sum
Senior Associate
Cincinnati Office
D. 513.878.7747
austin.sum@marcusmillichap.com
“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.”
NON-ENDORSEMENT & DISCLAIMER NOTICE
CONFIDENTIALITY DISCLAIMER
THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE 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.
NON-ENDORSEMENT NOTICE
Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
01 - THE INVESTMENT 02 - local competitors 03 - FINANCIALS 04 - LOCAL MARKET SECTIONS
CALABASAS, CALIFORNIA | HQ 2,500 | EMPLOYEES 80+ | OFFICES
UNRIVALED SUCCESS IN THE MIDWEST
YOUR TEAM
JORDAN DICKMAN
FIRST VICE PRESIDENTS DIRECTOR, NMHG
NICK ANDREWS
FIRST VICE PRESIDENTS DIRECTOR, NMHG
AUSTIN SUM
SENIOR INVESTMENT ASSOCIATE
JD SCHMERGE INVESTMENT ASSOCIATE
BRIAN JOHNSTON INVESTMENT ASSOCIATE
TIM VANWINGERDEN INVESTMENT ASSOCIATE
AUSTIN Hall INVESTMENT ASSOCIATE
ALDEN SIMMIS INVESTMENT ASSOCIATE
BROKER SUPPORT
SAM PETROSNIO
VALUATION & RESEARCH
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
SKLYER WILSON
CLIENT RELATIONS MANAGER
BRITTANY CAMPBELL-KOCH
DIRECTOR OF OPERATIONS
ALEX PAPA
MARKETING COORDINATOR
THE INVESTMENT
01
NORTHCREEK CINCINNATI, OH
Unit Mix Unit Type Number of Units Average Size Occupied In-Place Rents One Bed 71 603 97.2% $731.86 Two Bed 69 704 94.2% $858.96 Three Bed 1 800 100.0% $999.00 All Units 141 702 97.1% $863.27 HISTORICAL OPERATING PERFORMANCE T12 T3 T1 Base Rental Revenue $1,150,927.77 $1,221,527.76 $1,239,000.00 Other Income $49,971.29 $57,940.24 $57,784.56 Effective Gross Revenue $1,200,899.06 $1,279,468.00 $1,296,784.56 Real Estate Taxes $129,704.10 $129,704.10 $129,704.10 All Other Expenses $505,249.45 $505,249.45 $505,249.45 Operating Expenses $634,953.55 $634,953.55 $634,953.55 Net Operating Income $565,945.51 $644,514.45 $661,831.01 Operating Expense Ratio 52.9% 49.6% 49.0%
PROPERTY DETAILS NORTHCREEK
Property Address: 1560 W Galbraith Rd
City, State, Zip: Cincinnati, OH
Submarket: College Hill County: Hamilton
Year Built/Reno: 1973
Property Type: Market
Current Ownership: Zingenuity
Number Of Units: 141
Avg Unit Size: 650 SF
Rentable Sqft: 91,700 SF
# of Buildings: 6
# of Stories: 3
Roof Type/Age: Flat
Exterior of Building: Brick
Parking Spaces: 199
Spaces/Units: 1.41
Electric: Resident
Heat: Central - Gas
Water: Owner
Sewer: Owner
Trash: Owner
Cable/Internet: Resident
EXTREMELY ATTRACTIVE ASSUMABLE fannie MAE DEBT
CO-TERMINUS SUPPLEMENTAL DEBT AVAILABLE
LOAN AMOUNT
$6.2mm INTEREST RATE
2.99% AMORTIZATION
30 YEARS
TERM
10 YEARS
EXPIRES
AUG 2030
SERVICER
fannie MAe
INVESTMENT HIGHLIGHTS
Marcus & Millichap is pleased to present North Creek, 141 units of apartment living located in Northwestern Cincinnati, 15 minutes from downtown. Located in the submarket of North College Hill, this property provides the investor a hard-to-find opportunity with phenomenal potential due to its solid submarket fundamentals top-notch employment and high demand.
BY THE NUMBERS:North Creek vacancy across the trailing 12 months has traced under 3%. The trailing 3 months vacancy report comes in at .98%. Such strong occupancy over trailing operations is two-fold: First being under market rents compared to local competition, second being a submarket which characteristically rings in North of 97% occupancy year over year. This submarket along with Cincinnati regularly show occupancies tighter than 96%, yet again showing its strength and resiliency.
EXTREMELY ATTRACTIVE ASSUMABLE DEBT
Current in place assumable debt provides an interest rate over 250 basis points under current market debt. This allows an incoming investor to realize the benefits of in place debt at 2.99% with 8 years left while the ten-year treasury hovers around 4%.
LOSS TO LEASE BURN-OFF
North Creek offers an incoming investor with 197k in loss to lease to be recaptured over the coming 12 months. Most of the loss to lease has been a product of under market rents that the seller has finally started to take advantage of and is successfully doing so keeping occupancy at historic highs.
STRATEGIC RENOVATION PLAN ALREADY UNDERWAY
Current ownership has already implemented a strategic renovation plan across unit interiors. Just north of 25 units have already been completed at a cost of $8,000/unit commanding an additional $150/ month in market rent.
A SUBMARKET ON THE MOVE:
College Hill has been a target of significant public and private infrastructure across many different factions. Just south of the property is a thirty-one-million-dollar mixed use apartment complex delivered in 2022, with an onslaught of custom homes to be delivered in the immediate vicinity as well. Cincinnati Children’s is also underway on a ninety-million-dollar expansion facility in College Hill. Developers across multifamily and other product types continue to eye the area for expansion.
CONSISTENT RENTAL COLLECTIONS:
Although the apartment industry faced one of its most trying years relating to collections across all asset types, North Creek boasted collections over 99% throughout all of 2020, 2021 and 2022. Collections are expected to continue to stay strong, unsurprisingly as Cincinnati was ranked third best for limited job loss through the COVID-19 pandemic and recovery thereafter.
NORTHCREEK
141 650 #1 Bedrooms 71 #2 Bedrooms 69 #3 Bedrooms 1
RENTABLE SQUARE FEET TOTAL UNITS AVG SF * NORTHCREEK
91,700
PROPERTY SUMMARY DEAL SUMMARY
- LVP Flooring
- New Paint
- Black Appliances
- New Carpet
- New Bathroom Vanity
- New Fixtures
- New Cabinets
- New Countertops
- New Tub Surround
- New Door Handles
- New Doorway Numbers
- Freshly Painted Hallways
- New Lighting in Hallways
- New Painted Trim
Ownership has already implemented a strategic renovation program across the property. Unit upgrades range from $6,000 to $9,000 a unit depending on the condition when turned. Strategic upgrades being implemented are listed to the left.
IN-PLACE RENT BY RENOVATION STATUS
RENOVATION STATUS UNIT BREAKDOWN
renovation premium renovation status
RENT COMPETITORS
02
LOCAL COMPETITORS
Bedroom
ONE
One Bedroom Property Year Built # Units Avg SF Avg Rent Avg Rent/SF Lake of the Woods Apartments 1966 264 631 $982 $1.56 Burgundy Court 1967 234 646 $949 $1.47 Woodgrove Point 1971 100 660 $944 $1.43 Subject Pro Forma 1973 141 700 $940 $1.56 Compton Lake 1972 163 740 $922 $1.25 Woodside Apartments 1972 60 692 $915 $1.32 Providence Pointe 1960 55 592 $896 $1.51 Cedar Tower 1964 68 565 $850 $1.50 Subject Average Effective 1973 141 700 $731 $1.21
LOCAL COMPETITORS
TWO BEDROOM
Two Bedroom Property Year Built # Units Avg SF Avg Rent Avg Rent/SF Galbraith Pointe 1971 188 1070 $1,699 $1.59 Lake of the Woods Apartments 1966 264 891 $1,178 $1.32 Woodgrove Point 1971 100 891 $1,155 $1.30 Subject Pro Forma 1973 141 800 $1,130 $1.42 Providence Pointe 1960 55 775 $1,070 $1.38 Compton Lake 1972 163 880 $1,043 $1.19 Woodside Apartments 1972 60 875 $1,005 $1.15 Burgundy Court 1967 234 842 $999 $1.19 Cedar Tower 1964 68 985 $975 $0.99 Subject Average Effective 1973 141 800 $858 $1.08
LOCAL COMPETITORS
BEDROOM
three
Bedroom Property Year Built # Units Avg SF Avg Rent Avg Rent/SF Galbraith Pointe 1971 188 1358 $1,899 $1.40 Village Square Townhomes 1968 98 1205 $1,500 $1.24 Lake of the Woods Apartments 1966 264 1294 $1,336 $1.03 Burgundy Court 1967 234 1177 $1,299 $1.10 Subject Pro Forma 1973 141 1000 $1,210 $1.21 Subject Average Effective 1973 141 1000 $999 $1.00
Three
COMPETITORS
UNITS 188 YEAR BUILT 1971 OCCUPANCY 93.9% UNIT MIX UNITS SQFT RENT RENT/SF Two Bedroom 128 880 $922 $1.05 Three Bedroom 60 740 $1,043 $1.41 Apartment Interior Amenities High Speed Internet Access Private Balcony/Patio Semi-Private Entry Common Area Amenities Waterscape Community Room Swimming Pool 12 Laundry Facilities 7777 Compton Lake Drive Utilities Responsibility Resident Pays Electricity Property Pays Sewer Property Pays Trash Removal Property Pays Water
RENT
COMPTON LAKE
RENT COMPETITORS
BURGUNDY COURT
Washer/Dryer
Waterscape
Clubhouse
Tennis Court
Playground
Swimming Pool
Units 234 Year Built 1967 Occupancy 99.6% UNIT MIX UNITS SQFT RENT RENT/SF One Bedroom 32 646 $949 $1.47 Two Bedroom 140 842 $999 $1.19 Three Bedroom 62 1177 $1,299 $1.33
Apartment Interior Amenities Private Entry
Units
Hookups In All
High Speed Internet Access
Common Area Amenities
3295 Rocker Dr
Resident
Resident pays
gas Property
sewer Property
Property
Utilities Responsibility
Pays Electricity
partial
pays
pays Trash Removal
pays water
RENT COMPETITORS
GALBRAITH POINTE
UNITS 188 YEAR BUILT 1971 OCCUPANCY 96.3% UNIT MIX UNITS SQFT RENT RENT/SF Two Bedroom 128 1070 $1,699 $1.59 Three Bedroom 60 1358 $1,899 $1.40 Apartment Interior Amenities Private Balcony/Patio Combination Entry Outside Storage Washer/Dryer Hookups In All Units High Speed Internet Access Common Area Amenities Community Room Basketball Court Playground 2 Swimming Pools 8240 W Galbraith Pointe Lane Utilities Responsibility Resident Pays Electricity Property Pays Sewer Property Pays Trash Removal Property Pays Water
RENT COMPETITORS
LAKE OF THE WOODS APARTMENTS
Units 264 Year Built 1966 Occupancy 96.3% UNIT MIX UNITS SQFT RENT RENT/SF One Bedroom 123 631 $982 $1.56 Two Bedroom 112 891 $1,178 $1.32 Three Bedroom 29 1294 $1,336 $1.44 Apartment Interior Amenities Private Balcony/Patio Combination Entry Fireplaces Available In Select Three Bedroom Units High Speed Internet Access Common Area Amenities Waterscape Clubhouse Swimming Pool 20 Laundry Facilities 7235 Hamilton Ave Utilities Responsibility Resident Pays Electricity Property Pays Gas Resident Pays Sewer Property Pays Trash Removal Resident Pays Water
NORTHCREEK FINANCIALS
03
NORTHCREEK - FINANCIALS
UNIt MIX SUMMARY
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 SUMMARY One Bedroom 71 Units 603 SF 42,800 SF $731.86 $1.21 $51,962 $822.04 $1.36 SF $58,365 $940.00 $1.56 SF $66,740 Two Bedroom 69 Units 796 SF 54,950 SF $858.96 $1.08 $59,269 $955.87 $1.20 SF $65,955 $1,130.00 $1.42 SF $77,970 Three Bedroom 1 Units 1,000 SF 1,000 SF $999.00 $1.00 $999 $999.00 $1.00 SF $999 $1,210.00 $1.21 SF $1,210 Totals / Wtd. Averages 141 Units 700 SF 98,750 SF $795.95 $1.14 SF $112,230 $888.79 $1.27 SF $125,319 $1,034.89 $1.48 SF $145,920
VACANCY
APR 22 - MAR 23 MAR 23 - FEB 24
LEASING TRENDS LEASE EXPIRATIONS
NORTHCREEK - FINANCIALS UNIT MIX BREAKDOWN
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 One Bedroom 1BR/1BA 67 Units 600 SF 40,200 SF $721.30 $1.20 SF $48,327 $815.00 $1.36 SF $54,605 $940.00 $1.57 SF $62,980 1BR/1BA - Renovated 4 Units 650 SF 2,600 SF $908.75 $1.40 SF $3,635 $940.00 $1.45 SF $3,760 $940.00 $1.45 SF $3,760 Totals / Wtd. Averages 71 Units 603 SF 42,800 SF $731.86 $1.21 SF $51,962 $822.04 $1.36 SF $58,365 $940.00 $1.56 SF $66,740 Two Bedroom 2BR/1.5BA 64 Units 800 SF 51,200 SF $844.43 $1.06 SF $54,044 $945.00 $1.18 SF $60,480 $1,130.00 $1.41 SF $72,320 2BR/1.5BA - Renovated 5 Units 750 SF 3,750 SF $1,045.00 $1.39 SF $5,225 $1,095.00 $1.46 SF $5,475 $1,130.00 $1.51 SF $5,650 Totals / Wtd. Averages 69 Units 796 SF 54,950 SF $858.96 $1.08 SF $59,269 $955.87 $1.20 SF $65,955 $1,130.00 $1.42 SF $77,970 Three Bedroom 3BR/1.5BA 1 Units 1,000 SF 1,000 SF $999.00 $1.00 SF $999 $999.00 $1.00 SF $999 $1,210.00 $1.21 SF $1,210 Totals / Wtd. Averages 1 Units 1,000 SF 1,000 SF $999.00 $1.00 SF $999 $999.00 $1.00 SF $999 $1,210.00 $1.21 SF $1,210
UNIT DISTRIBUTION UNIT RENTS PRO FORMA COMPETITORS NORTHCREEK VS COMPETITORS $1,035 $1,244 MARKET RENT 751 944 AVG SQFT $1.38 $1.32 RENT/SQFT NORTHCREEK
NORTHCREEKFINANCIALS EXPENSE INCOME
CURRENT RENT ROLL: AS OF MARCH 13, 2023 INCOME & EXPENSES: MARCH 2022 - FEBRUARY 2023 YEAR 1 GROSS POTENTIAL RENT All Units at Market Rent $1,550,808 RR 10,999 $1,628,462 11,549 Gain (Loss) to Lease ($153,540) 9.90% (1,089) ($113,992) 7.00% (808) GROSS SCHEDULED RENT $1,397,268 RR 9,910 $1,514,469 10,741 OTHER INCOME Late & NSF Fees Income $23,590 T12 1.69% 167 $33,592 2.22% 238 Discounts and Miscellaneous $10,125 T12 0.72% 72 $10,429 0.69% 74 Laundry Income $8,029 T12 0.57% 57 $8,270 0.55% 59 Collection Recovery Income $4,355 T12 0.31% 31 $4,486 0.30% 32 Pet Fee Income $3,212 T12 0.23% 23 $3,308 0.22% 23 Total Other Income $55,671 3.98% 395 $66,635 4.40% 473 GROSS POTENTIAL INCOME $1,452,939 10,305 $1,581,105 11,214 Physical Vacancy ($32,768) T12 2.35% (232) ($75,723) 5.00% (537) Non-Revenue Unit ($12,867) T12 Note 2 0.92% (91) ($11,359) 0.75% (81) Bad Debt ($25,943) T12 1.86% (184) ($7,572) 0.50% (54) Concessions Allowance ($2,364) T12 0.17% (17) $0 0.00% 0 EFFECTIVE GROSS INCOME $1,378,997 84.81% 9,780 $1,486,451 86.75% 10,542 NON-CONTROLLABLE Real Estate Taxes % of EGI Per Unit % of EGI Per Unit 2022 Taxes Paid $121,220 Auditor 8.79% 860 $121,220 8.16% 860 Total Real Estate Taxes $121,220 8.79% 860 $121,220 8.16% 860 Insurance $49,094 T12 3.56% 348 $56,400 3.79% 400 Utilities Electric $10,498 T12 0.76% 74 $10,708 0.72% 76 Electric Vacant $1,097 T12 0.08% 8 $1,118 0.08% 8 Gas $60,182 T12 4.36% 427 $61,386 4.13% 435 Water & Sewage $106,117 T12 7.70% 753 $108,240 7.28% 768 Trash Removal $17,124 T12 1.24% 121 $17,467 1.18% 124 Total Utilities $195,018 14.14% 1,383 $198,919 13.38% 1,411 Total Non-Controllable $365,332 26.49% 2,591 $376,539 25.33% 2,670 CONTROLLABLE Contract Services Security Expense $12,158 T12 0.88% 86 $11,985 0.81% 85 Snow Removal $1,660 T12 0.12% 12 $3,525 0.24% 25 Landscaping/Grounds $13,915 T12 1.01% 99 $14,100 0.95% 100 Pest Control $12,454 T12 0.90% 88 $10,575 0.71% 75 Total Contract Services $40,187 2.91% 285 $40,185 2.70% 285 Repairs & Maintenance $35,582 T12 2.58% 252 $84,600 5.69% 600 Marketing & Promotion $1,027 T12 0.07% 7 $7,050 0.47% 50 On-Site Payroll $151,315 T12 10.97% 1,073 $133,950 9.01% 950 Payroll Taxes & Benefits $15,140 T12 1.10% 107 $21,150 1.42% 150 General & Administrative $28,661 T12 2.08% 203 $21,150 1.42% 150 Management Fee $0 0.00% 0 $59,458 4.00% 422 Telephone & Cable $1,195 T12 0.09% 8 $1,128 0.08% 8 Replacement & Reserves $35,955 Note 1 2.61% 255 $36,674 2.47% 260 Total Controllable $309,062 22.41% 2,192 $405,345 27.27% 2,875 TOTAL EXPENSES $674,395 48.90% 4,783 $781,884 52.60% 5,545 NET OPERATING INCOME $704,602 51.10% 4,997 $704,566 47.40% 4,997
INCOME & EXPENSES
INCOME EXPENSE
UNDERWRITING NOTES
# NOTE
1 Replacement & Reserves: added based on market norm of $255 per unit per year
2 Non Revenue Unit: Includes unit used as an office. Allocation for office only starting 'Year 1'
GROSS POTENTIAL RENT
OPERATING EXPENSES
YEAR 2 YEAR 3 $1,751,040 12,419 $1,803,571 12,791 ($35,021) 2.00% (248) ($36,071) 2.00% (256) $1,716,019 12,170 $1,767,500 12,535 $34,600 2.02% 245 $35,638 2.02% 253 $10,742 0.63% 76 $11,064 0.63% 78 $8,518 0.50% 60 $8,774 0.50% 62 $4,620 0.27% 33 $4,759 0.27% 34 $3,407 0.20% 24 $3,509 0.20% 25 $68,635 4.00% 487 $70,694 4.00% 501 $1,784,654 12,657 $1,838,193 13,037 ($85,801) 5.00% (609) ($88,375) 5.00% (627) ($12,870) 0.75% (91) ($13,256) 0.75% (94) ($8,580) 0.50% (61) ($8,837) 0.50% (63) $0 0.00% 0 $0 0.00% 0 $1,677,403 91.75% 11,896 $1,727,725 91.75% 12,253 % of EGI Per Unit % of EGI Per Unit $121,220 7.23% 860 $121,220 7.23% 860 $121,220 7.23% 860 $121,220 7.23% 860 $57,528 3.43% 408 $58,679 3.50% 416 $10,922 0.65% 77 $11,141 0.66% 79 $1,141 0.07% 8 $1,164 0.07% 8 $62,613 3.73% 444 $63,866 3.81% 453 $110,404 6.58% 783 $112,612 6.71% 799 $17,816 1.06% 126 $18,173 1.08% 129 $202,897 12.10% 1,439 $206,955 12.34% 1,468 $381,646 22.75% 2,707 $386,854 23.06% 2,744 $12,225 0.73% 87 $12,469 0.74% 88 $3,596 0.21% 26 $3,667 0.22% 26 $14,382 0.86% 102 $14,670 0.87% 104 $10,787 0.64% 77 $11,002 0.66% 78 $40,989 2.44% 291 $41,808 2.49% 297 $86,292 5.14% 612 $88,018 5.25% 624 $7,191 0.43% 51 $7,335 0.44% 52 $136,629 8.15% 969 $139,362 8.31% 988 $21,573 1.29% 153 $22,004 1.31% 156 $21,573 1.29% 153 $22,004 1.31% 156 $67,096 4.00% 476 $69,109 4.00% 476 $1,151 0.07% 8 $1,174 0.07% 8 $37,408 2.23% 265 $38,156 2.27% 271 $419,901 25.03% 2,978 $428,970 25.45% 3,028 $801,546 47.78% 5,685 $815,824 48.64% 5,786 $875,856 52.22% 6,212 $911,901 54.36% 6,467
INCOME EXPENSE NORTHCREEK -
FINANCIALS
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 $1,550,808 $1,628,462 $1,751,040 $1,803,571 $1,857,678 $1,913,409 $1,970,811 $2,029,935 $2,090,833 $2,153,558 $2,218,165 Gain (Loss) to Lease ($153,540) ($113,992) ($35,021) ($36,071) ($37,154) ($38,268) ($39,416) ($40,599) ($41,817) ($43,071) ($44,363) GROSS SCHEDULED RENT $1,397,268 $1,514,469 $1,716,019 $1,767,500 $1,820,525 $1,875,141 $1,931,395 $1,989,337 $2,049,017 $2,110,487 $2,173,802 Total Other Income $55,671 $66,635 $68,635 $70,694 $72,107 $73,550 $75,021 $76,521 $78,051 $79,612 $81,205 GROSS POTENTIAL INCOME $1,452,939 $1,581,105 $1,784,654 $1,838,193 $1,892,632 $1,948,690 $2,006,415 $2,065,858 $2,127,068 $2,190,100 $2,255,006 Physical Vacancy ($32,768) ($75,723) ($85,801) ($88,375) ($91,026) ($93,757) ($96,570) ($99,467) ($102,451) ($105,524) ($108,690) Bad Debt ($25,943) ($7,572) ($8,580) ($8,837) ($9,103) ($9,376) ($9,657) ($9,947) ($10,245) ($10,552) ($10,869) Concessions Allowance ($2,364) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 EFFECTIVE GROSS INCOME $1,378,997 $1,486,451 $1,677,403 $1,727,725 $1,778,849 $1,831,494 $1,885,703 $1,941,524 $1,999,005 $2,058,194 $2,119,144 Real Estate Taxes $121,220 $121,220 $121,220 $121,220 $123,645 $126,118 $128,640 $131,213 $133,837 $136,514 $139,244 Insurance $49,094 $56,400 $57,528 $58,679 $59,852 $61,049 $62,270 $63,516 $64,786 $66,082 $67,403 Utilities $195,018 $198,919 $202,897 $206,955 $211,094 $215,316 $219,622 $224,015 $228,495 $233,065 $237,726 Contract Services $40,187 $40,185 $40,989 $41,808 $42,645 $43,498 $44,367 $45,255 $46,160 $47,083 $48,025 Repairs & Maintenance $35,582 $84,600 $86,292 $88,018 $89,778 $91,574 $93,405 $95,273 $97,179 $99,122 $101,105 Marketing & Promotion $1,027 $7,050 $7,191 $7,335 $7,482 $7,631 $7,784 $7,939 $8,098 $8,260 $8,425 On-Site Payroll $151,315 $133,950 $136,629 $139,362 $142,149 $144,992 $147,892 $150,849 $153,866 $156,944 $160,083 Payroll Taxes & Benefits $15,140 $21,150 $21,573 $22,004 $22,445 $22,893 $23,351 $23,818 $24,295 $24,781 $25,276 General & Administrative $28,661 $21,150 $21,573 $22,004 $22,445 $22,893 $23,351 $23,818 $24,295 $24,781 $25,276 Management Fee $0 $59,458 $67,096 $69,109 $71,154 $73,260 $75,428 $77,661 $79,960 $82,328 $84,766 Telephone & Cable $1,195 $1,128 $1,151 $1,174 $1,197 $1,221 $1,245 $1,270 $1,296 $1,322 $1,348 Replacement & Reserves $35,955 $36,674 $37,408 $38,156 $38,919 $39,697 $40,491 $41,301 $42,127 $42,970 $43,829 TOTAL EXPENSES $674,395 $781,884 $801,546 $815,824 $832,803 $850,142 $867,848 $885,929 $904,394 $923,250 $942,507 NET OPERATING INCOME $704,602 $704,566 $875,856 $911,901 $946,046 $981,352 $1,017,855 $1,055,595 $1,094,611 $1,134,944 $1,176,637 INCOME EXPENSE
CASH FLOW
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 5.01% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% (Loss) / Gain to Lease* 7.00% 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** 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 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 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 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 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% *Calculated as a percentage of Gross Potential Rent | **Calculated as a percentage of Effective Gross Income Tax Breakdown Property Address Parcel ID Year Built Acres Market Value Assessed Value Tax Rate Taxes Payable Land Use Code 1570 W Galbraith Rd 595-0004-0027-00 1973 6.49 $4,134,000 $1,446,900 78.489155 $119,566.00 403 - Apartments 40+ Rental Units W Galbraith Rd 244-0006-0039-00 0.28 $53,030 $18,561 89.090432 $1,654.40 499 - Other Comm Structure Total 6.77 $4,187,030 $1,465,461 $121,220.40 LOAN AMOUNT $6.2mm INTEREST RATE 2.99% AMORTIZATION 30 YEARS TERM 10 YEARS EXPIRES AUG 2030 SERVICER fannie MAe loan info
LOCAL MARKET
04
CINCINNATI, Ohio
The steady and stable nature of the Cincinnati apartment market was undoubtfully a benefit through 2020. The MSA saw a 2.7% annual increase in effective asking rents on new leases which matched the market’s norm for the 2010s decade. This growth put Cincinnati at #14 amongst the 50 largest markets for rent growth in 2020. Although occupancy was down 0.3 points from the prior year’s rate, the 4th quarter 2020 occupancy rate (96.4%) ranked #11 among the top 50 markets and #3 regionally. Only Q1 2020 saw net move-outs, although that’s typically the case in the local
market due to seasonal demand patterns, the three subsequent quarters saw huge demand and absorption totaled 1,563 units. That is 38% above the 20-year norm for annual absorption. During the peak of the pandemic challenges the job market declined 4.6%, this ranked Cincinnati 3rd best among the Midwest and was significantly better than the national average of 5.8%.
ECONOMIC OVERVIEW
Prior to the pandemic, Cincinnati’s real gross metropolitan prod uct grew at an average annual rate of 1.8% 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 9.7% year-over-year in 2nd quarter. In the year-ending 3rd quarter 2022, the metro’s inflation-adjusted economic output expand ed 0.3%. At the same time, the metro recorded a net gain of 1,400 jobs, expanding the employment base 0.1%. Cincinnati’s unemployment rate in August 2022 declined 0.5 points yearover-year to 3.8%, on par with the national average of 3.8%. During the past year, job gains in Cincinnati were most pro nounced in the Manufacturing sector followed by Trade/Trans portation/Utilities. Due to job losses stemming from the pan demic, Cincinnati’s current employment base now sits at about 1% below the pre-pandemic level in February 2020. Cincinnati, like many other Rust Belt markets, has long had a concentration in higher-paying manufacturing jobs and has been working to reinvent its economy as a high-skill, high-value manufacturing center. Further, Cincinnati is home to corporate headquarters for seven Fortune 500 companies.
• Cincinnati characteristically managed to escape the more extreme swings in apartment market performance seen over the last two years in the wake of the pandemic. Although apartment absorption cooled considerably in 3rd quarter 2022, Cincinnati apartment demand did not plumet to the degree seen in many other markets nationwide.
• As deliveries mount to a record rate over the next year, operators will be unlikely to sustain Cincinnati’s recent record high rent growth. There were 6,411 units under construction at the end of 3rd quarter, with 3,722
DEMOGRAPHICS: STATISTICS
Population: 2.2M
Average occupancy: 96.9%
DEMOGRAPHIC OVERVIEW the rent
of those units slated to come online within the next 12 months. Although those deliveries will be spread more evenly throughout the Cincinnati market, new supply will test the depth of the Class A renter pool in a market that has still yet to recover all its pandemic-era job losses.
• During the year-ending 3rd Quarter 2022, median home prices in Cincinnati increased an average of 10.6%, landing at a median price of roughly $270,000.
• The local homeownership rate averaged 70.6% in the year-ending 2nd
• In 3rd quarter 2022, effective asking rents for new leases were up 11.8% yearover-year. That annual rent performance was above the market’s five-year average of 4.7%. Cincinnati’s recent annual rent change performance ranked #2 in the Midwest region.
Median age: 37.9
Rent growth: 11.8%
MSA median home value: $270,000
MSA median hhi: $66,900
• Product classes in Cincinnati, annual effective rent change registered at 14.8% in Class A units, 11.6% in Class B units and 8.1% in Class C units.
1 - Year growth: 10.6%
1 - Year growth: 2.35%
• Among submarkets, the strongest annual rent change performances over the past year were in Butler County and North Central Cincinnati.
• The weakest performances were in West Cincinnati and North Cincinnati. As of 3rd quarter 2022, effective asking rental rates in Cincinnati averaged S1,286 per month, or $1.372 per square foot.
SUPPLY & DEMAND
• New apartment completions in Cincinnati were modest recently, as 2,130 units delivered in the year-ending 3rd quarter 2022. With 176 units removed from existing stock over the past year, the local inventory base grew 1.2%.
• In the past year, supply was greatest in Central Cincinnati and Campbell/Kenton Counties. New supply was concentrated in Central Cincinnati, Campbell/Kenton Counties and Northeast Cincinnati/Warren County, which received 65% of the market’s total completions.
• At the end of 3rd quarter 2022, there were 6,411 units under construction with 3,722 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 Central Cincinnati.
• Over the past five years, annual absorption in Cincinnati has ranged from 675 units to 4,536 units, averaging 2,286 units annually during that time.
• In the year-ending 3rd quarter 2022, the market recorded demand for 1,013 units, trailing concurrent supply volumes. Among submarkets, the strongest absorption over the past five years was seen in Central Cincinnati, Campbell/Kenton Counties and Northeast Cincinnati/Warren County.
• Those areas accounted for 56% of the market’s total demand over the past five years. In the past year, demand was greatest in Central Cincinnati and Campbell/Kenton Counties.
CAPITAL MARKETS
• Transaction dollar volumes in Cincinnati totaled roughly $332.9 million in the year-ending 3rd quarter 2022, down about 40% year-over-year.
• Transactions in the year-ending 3rd quarter 2022 yielded an average cap rate of 5.50%, down 21 basis points year-over-year. By comparison, cap rates averaged 5.05% in the Midwest region and 4.56% nationally.
• The average price per unit in Cincinnati came in at roughly $151,800, up 57.4% annually. Cincinnati’s average price per unit landed below the norms for both the Midwest region ($173,900) and U.S. overall ($238,700).
ATTRACTIONS
HEART OF DOWNTOWN
Right on the water and brimming with activity- The Banks is where you will find everything from sports events to a lively nightlife scene. Located along the Ohio River, The Banks provides spectacular riverfront views and lines the water with a family friendly park. Along with great biking, walking, and other recreational amenities during the daytime, The Banks comes alive at night. With live music and entertainment, a thriving bar scene nestled between two sports stadiums, The Banks is the place to be.
A major attraction at The Banks, the Andrew J Brady ICON Music Center was built for the audience experience, offering an intimate yet spacious setting. Offering both indoor and outdoor venues, the state-of-the-art facility hosts a wide variety of musical acts, spanning all genres. Visitors can enjoy a live concert while taking in the scenic riverfront view.
Ranked by USA Today readers as a Top 5 Riverwalk in the nation, Smale Riverfront Park offers walking trails, water features, swings, and other amenities to enjoy, while taking in the beautiful views of the Ohio River and the historic John A. Roebling Suspension Bridge. If you have kids in tow, make sure to visit Carol Ann’s Carousel, featuring 44 characters and illustrations incorporating Cincinnati landmarks. Enclosed in a glass building, the carousel is open year-round.
TQL STADIUM
The FCC-TQL partnership brings together two Cincinnati-grown, leading businesses that share a “no limits” philosophy as well as a deep connection and commitment to our local community. There are a lot of synergies that make this alliance between TQL and FCC a perfect match and are reflected throughout the stadium from — the fin lighting to the TQL Beer District. The stadium features first-in-the-world lighting technology powered by 2.7 miles of LED lights.
ATTRACTIONS CINCINNATI ZOO
The Cincinnati Zoo & Botanical Garden is the second oldest zoo in the United States, founded in 1873 and officially opening in 1875, after the Roger Williams Park Zoo. It is located in the Avondale neighborhood of Cincinnati, Ohio. It originally began with 64.5 acres in the middle of the city, but has spread into the neighboring blocks and several reserves in Cincinnati’s outer suburbs. It was appointed as a National Historic Landmark in 1987.
From 11am – 1am daily, the 85-acre DORA district at The Banks allows guests to take their beverage purchased from one of the 18 Banks establishments and explore our public plazas and green spaces. It simply needs to be in the Official DORA Cup.
At risk of missing the first pitch? Late for the opening act? Take your beverage purchased in a DORA cup from a Banks establishment and go! Waiting for a table, or wish to picnic outside in The Banks plazas or greenspaces? Grab a DORA beverage from a Banks establishment and explore!
DORA
HARD ROCK CASINO
The game is always on at Hard Rock Casinos, where stars are made every night. Come try your hand at the tables, with classic games including blackjack, baccarat and poker, or tap into thousands of the hottest slots on the planet. With the world’s greatest rock memorabilia collection to enhance the thrill, plus the accompaniment of live, world-class entertainment, the atmosphere is like no other.
CINCINNATI ART MUSEUM
Located in scenic Eden Park, the Cincinnati Art Museum features a diverse, encyclopedic art collection of more than 67,000 works spanning 6,000 years. In addition to displaying its own broad collection, the museum also hosts several national and international traveling exhibitions each year. Visitors can enjoy the exhibitions or participate in the museum’s wide range of art-related programs, activities and special events. General admission is always free
for all. Museum members receive additional benefits. The museum is supported by the generosity of individuals and businesses that give annually to ArtsWave. The Ohio Arts Council helped fund the museum with state tax dollars to encourage economic growth, educational excellence and cultural enrichment for all Ohioans. The museum gratefully acknowledges operating support from the City of Cincinnati, as well as our museum members.
RETAIL & SHOPPING
In addition to the restaurant and nightlight scene, the area has no shortage of retail options. Downtown offers both boutiques and department stores. Over-the-Rhine (OTR) is a historic, walkable district of downtown Cincinnati with many independent shops. Cincinnati’s Over-the-Rhine neighborhood was once a place where residents would not recommend to visitors, but that has changed. The restaurant and nightlife scene is now thriving, and the shopping scene is beginning to catch up. Most of the shops are in the southwest quarter of Over-the-Rhine, on either Vine or Main St. You won’t find chain stores in this walkable shopping district. MiCA 12/v and Urban Eden are a popular gift shops that sell local arts and crafts. Elm & Iron sells vintage and up-cycled items for the home. The Little Mahatma sells exotic jewelry and folk art from around the world. You’ll find several clothing boutiques, including Mannequin, a non-profit upscale and vintage boutique that benefits local charities. Park + Vine is a popular general store for environmentally-conscious shoppers; they sell a variety of merchandise including green cleaning and personal products, vegan foods, garden products and more.
FINDLAY MARKET
Findlay Market is Ohio’s oldest continuously operated public market and is located in the historic Over-the-Rhine neighborhood. The market is a wonderful place for locals to buy their groceries as well as a must-see historic spot for visitors to Cincinnati. Findlay Market is open year-round, Tuesday through Sunday, with a seasonal farmers market. Nearly 40 full-time businesses operate year-round, plus over 100 more vendors operate on weekends or part-time. Many vendors sell raw food while others specialize in prepared foods. Some of the merchants are new startups, while others have been in business for generations. You’ll find everything from fresh meat and produce to imported fine teas to Belgian waffles. There are restaurants as well as a beer garden, so plan to stay for lunch. Findlay Market has a fascinating history. Why not take a tour to learn more? There are several different tour options, including a culinary tour with tasty samples.
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