RIVER OAKS APARTMENTS
CONFIDENTIALITY & DISCLAIMER The information contained in the following offering memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and it should not be made available to any other person or entity without the written consent of Marcus & Millichap. By taking possession of and reviewing the information contained herein the recipient agrees to hold and treat all such information in the strictest confidence. The recipient further agrees that recipient will not photocopy or duplicate any part of the offering memorandum. If you have no interest in the subject property, please promptly return this offering memorandum to Marcus & Millichap. This offering memorandum has been prepared to provide summary, unverified financial and physical information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence of absence of contaminating substances, PCBs or asbestos, the compliance with local, state and federal regulations, the physical condition of the improvements thereon, or financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this offering memorandum has been obtained from sources we believe reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Prospective buyers shall be responsible for their costs and expenses of investigating the subject property.
PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT ANDREWS | DICKMAN FOR MORE DETAILS.
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ADG MULTIFAMILY
PRESENTED BY
TIM VANWINGERDEN
Associate 513-878-7750 tim.vanwingerden@marcusmillichap.com
JORDAN DICKMAN
First Vice President of Investments 513-878-7735 jordan.dickman@marcusmillichap.com
NICK ANDREWS
First Vice President of Investments 513-878-7735 nick.andrews@marcusmillichap.com
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the table of
CONTENTS
THE ASSET
01
page
8
C O M P E T I TO R S
02 page
14
FINANCIALS
03 page
20
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ADG MULTIFAMILY
CALABASAS, CALIFORNIA | HQ
80+ | OFFICES
2,500 | EMPLOYEES
UNRIVALED SUCCESS IN THE MIDWEST Nick Andrews
First Vice President Investments Director, NMHG
Jordan Dickman
First Vice President Investments Director, NMHG
INVESTMENT ADVISORS
Austin Sum
Senior Investment Associate
Garry Schloemer Investment Associate
JD Schmerge Investment Associate
Brian Johnston Investment Associate
Tim VanWingerden Investment Associate
DEBT & STRUCTURED FINANCE
Chris Litzler
Jim Leonard
Senior Director MMCC
VALUATION & RESEARCH
Sam Petrosino
Financial & Research Analyst
Senior Managing Director of Capital Markets MMCC
CLIENT RELATIONS
Skyler Wilson
Client Relation Manager
MARKETING
Alex Papa
Marketing Coordinator
Kristin Smith Marketing
OPERATIONS
Sidney Bills
Office Administrator
Josh Caruana
Vice President Regional Manager Indianapolis | Cincinnati | Louisville St Louis | Kansas City
Brittany Campbell-Koch Director of Operations
John Sebree
Senior Vice President National Director National Multi Housing Group
Liz Popp
Midwest Operations Manager
Michael Glass
Senior Vice President Midwest Division Manager National Director, Manufactured Home Communities Group
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RIVER OAKS APARTMENTS THE ASSET
01 section
10 - union county location 12 - property snapshot
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CONNECTIVITY
UNION COUNTY LOCATION
UNION COUNTY
2HR 3
10
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2HR 45MIN DRIVE
1HR 5MIN DRIVE
2HR 25MIN DRIVE
30MIN DRIVE
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RIVER OAKS APARTMENTS
PROPERTY SNAPSHOT 400 N Kelsey Street, Sturgis, KY
1947 56
7 6 3 41,216 3.72 LOT 12
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YEAR BUILT/RENO
NUMBER OF UNITS
AVERAGE UNIT SIZE
RENTABLE SQUARE FEET
LOT SIZE (ACRES)
PARKING
CONCRETE WOOD
BRICK COPPER WINDOW UNITS
FOUNDATION
FRAMING
EXTERIOR
WIRING
HEATING & COOLING
POPULATION BY OCCUPATION ECONOMY Unemployment Rate Recent Job Growth Future Job Growth Sales Taxes Income Tax Income per Cap. Household Income
Union County, Kentucky 4.40% -4.50% 21.80% 6.00% 5.50% $21,758 $42,139
Agriculture, forestry, fishing, hunting Mining, quarrying, oil and gas extraction Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Utilities Information Finance and insurance Real estate, rental, leasing Professional, scientific, technical services Management of companies Administrative, support, waste mgt svcs Educational services Health care and social assistance Arts, entertainment, recreation Accommodation, food services Other services Public administration
5.60% 13.80% 2.60% 12.80% 2.10% 13.10% 3.80% 1.80% 0.40% 1.90% 1.20% 2.50% 0.00% 2.20% 7.80% 15.10% 1.00% 5.10% 4.40% 2.90%
SEVEN OAKS APARTMENTS BARRETT APARTMENTS
RIVER OAKS APARTMENTS
WILLOW RUN APARTMENTS
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JAMESTOWN APARTMENTS
RIVER OAKS APARTMENTS THE COMPETITIVE SET
02 section
16 - rent sort 18 - rent comps
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COMPETITIVE SET
RENT SORT
One Bedroom Apartment Rents Sorted by Net Rent
Year Built
# of Units
SF
Market Rent
Utility Adjustment/Month
Net Rent
Net Rent/SF
Willow Run Apartments Madisonville, KY
1984
73
576
$567.00
$55
$512
$0.89
River Oaks Pro Forma
1974
56
650
$550.00
$55
$495
$0.76
Barret Apartments
1978
86
730
$517.00
$55
$462
$0.63
Elmwood Apartments
1973
30
600
$491.00
$55
$436
$0.73
32
700
$451.00
$55
$396
$0.57
Property
Ashmoor Apartments Sturgis, KY
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Green Valley Apartments Mt Vernon, IN
1980
68
500
$435.00
$55
$380
$0.76
Jamestown Apartments Madisonville, KY
1978
79
695
$407.00
$55
$352
$0.51
River Oaks Average Effective
1974
56
650
$376.00
$55
$321
$0.49
Dawson Village Dawson Springs, KY
1973
48
550
$285.00
$55
$230
$0.42
Averages
1977
628
$453
$55
$398
$0.64
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Two Bedroom Apartment Rents Sorted by Net Rent
Year Built
# of Units
SF
Market Rent
Utility Adjustment/Month
Net Rent
Net Rent/SF
Barret Apartments
1978
86
1000
$842.00
$65
$777
$0.78
Willow Run Apartments Madisonville, KY
1984
73
864
$662.00
$65
$597
$0.69
Green Valley Apartments Mt Vernon, IN River Oaks Pro Forma
1980 1974
68 56
708 800
$658.00 $650.00
$65 $65
$593 $585
$0.84 $0.73
Elmwood Apartments
1973
30
800
$566.00
$65
$501
$0.63
Seven Oaks Apartments
1985
96
801
$695.00
$65
$630
$0.79
Dawson Village Dawson Springs, KY
1973
48
750
$537.00
$65
$472
$0.63
River Oaks Average Effective
1974
56
800
$492.00
$65
$427
$0.53
32
800
$492.00
$65
$427
$0.53
79
966
$489.00
$65
$424
$0.44
829
$608
$65
$543
$0.66
Property
Ashmoor Apartments Sturgis, KY Jamestown Apartments Madisonville, KY
1978
Averages
1978
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COMPETITIVE SET
LOCAL COMPETITORS 1
2
W I L L O W R U N A PA R T M E N T S Address
901 Princeton Rd. Madison, KY
Occupancy
97%
Units
73
Year Built
S E V E N O A K S A PA R T M E N T S Address
1x1
$567
576
$0.89
2x2
2x2
$662
864
$0.69
Common Amenities
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96
Year Built
R/SF
Courtyard Package Service Laundry Facilities
n/a
Units
SF
Clubhouse Fitness Center Laundry Facilities Pool
G R E E N VA L L E Y A P A R T M E N T S
771 Lakeview Drive Hederson, KY
Occupancy
RENT
Common Amenities
18
1984
3
1985
RENT
SF
R/SF
$695
801
$0.87
Address
149 Green Valley rd. Carlisle, KY
Occupancy
DND
Units
68
Year Built
1980 RENT
SF
R/SF
1x1
$435
500
$0.76
2x1
$658
708
$0.84
Common Amenities n/a
4
S
5
J A M E S T O W N A PA R T M E N T S Address
579 Jamestown Drive Madisonville, KY
Occupancy
n/a
Units
79
Year Built
1978 RENT
SF
R/SF
1x1
$407
695
$0.51
2x1
$489
966
$0.69
SUBJECT: RIVER OAKS
B A R R E T T A PA R T M E N T S Address
1968 Barrett Ct. Henderson, KY
Occupancy
n/a
Units
86
Year Built
1973 RENT
SF
R/SF
1x1
$517
730
$0.71
2x1
$842
$0.84
Address
400 N Kelsey Street Sturgis, KY
Occupancy
89
Units
56
Year Built
1974 RENT
SF
R/SF
1x1 (24 units)
$375
650
$0.58
2x1 (32 units)
$455
800
$0.57
Common Amenities
Common Amenities
Common Amenities
n/a
Laundry Facilities
Laundry Facilities
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RIVER OAKS APARTMENTS THE FINANCIALS
03 section
22 - investment highlights 24 - workhouse force demand 26 - financials
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INVESTMENT HIGHLIGHTS
RIVER OAKS APARTMENTS
STURGIS, KY
Marcus & Millichap is pleased to present River Oaks Apartments, a 56 unit community located in Union County which is a part of the Illinois-Indiana-Kentucky tri-state area. This 30-county region consists of over 900,000 people with Evansville, Indiana being the principle hub. Economic activity in Union County is characterized by fossil fuel production (13.8%), Health care and social assistance (15.1%), and manufacturing (12.8%).
OPPORTUNITY
Current rents are well below market allowing an opportunity for an incoming investor to renovate units and provide quality housing for residents with estimated rental increase of 25%. Neighboring communities in the tri-state area with similar product are seeing rents over $200 higher than pro forma rents.
RENOVATION PLAN Renovations would consist of interior unit upgrades of $7500 which would include flooring, paint, bathrooms, and kitchens allowing for a $150 increase in rents. This equates to a 24% ROI on invested capital for renovations.
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56 TOTAL UNITS
1 BEDROOM
2 BEDROOM
24 Units 650 Avg SF $375 Avg Rent
32 Units 800 Avg SF $455 Avg Rent
1975 YEAR BUILT $62,297 CURRENT NOI
736 SF AVERAGE UNIT SIZE
$421 AVERAGE RENT
89% OCCUPANCY
$182,678 PROFORMA NOI ADG MULTIFAMILY
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ALL TIME HIGHS
WORKFORCE HOUSING DEMAND OVERVIEW
Workforce housing demand is currently at an all time high. Vacancy has significantly declined in class C workforce housing over the last 10 years while other classes have remained relatively stable. This correlates closely with the declined unemployment and has continued to decline even during the peak pandemic unemployment. As the number of jobs available increases and unemployment continues to decline from the peak pandemic levels the housing affordability gap continues to grow and demand for workforce housing is increasing.
EMPLOYMENT
Workforce rental housing is set up to have an extremely strong near-future. There is a record high number of job openings with high unemployment that hasn’t been seen since 2013 showing that the workforce is set to increase since the past 3 years unemployment has consistently been lower than the number of job openings which is currently not the case. During this time of more jobs openings than the number of unemployed there has been strong median net income increases over 4% annually which has not been seen since the late 90’s.
U.S. AFFORDABILITY GAP
Owning a home in the past year and a half has become significantly more expensive than renting an apartment. This large differentiation between the two has not been seen since 2006/2007 which proceeded with a massive decline in the cost of homes. Currently, there are no signs of a pull back in the housing market, in face its is projected to continue to increase as supply remains low. This leaves ample room for apartments to close the affordability gap by roughly $200-$250 to become more in line with what has been seen in a stabilized market form 2013-2019.
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RIVER OAK APARTMENTS- UNIT MIX SUMMARY Summary
PROJECTED
MARKET
AVERAGE EFFECTIVE
Rentable
Total
Units
SF
SF
One Bedroom
24 Units
650 SF
15,600 SF
$375.86
$0.58
$9,021
$400.00
$0.62 SF
$9,600
$550.00
$0.85 SF
$13,200
Two Bedroom
32 Units
800 SF
25,600 SF
$455.56
$0.57
$14,578
$500.00
$0.63 SF
$16,000
$650.00
$0.81 SF
$20,800
Totals / Wtd. Averages
56 Units
736 SF
41,200 SF
$421.40
$0.57 SF
$23,598
$457.14
$0.62 SF
$25,600
$607.14
$0.83 SF
$34,000
Unit Type
Total Rent Rent/Unit Rent/SF
Potential
Total Rent Rent/Unit Rent/SF
Potential
Total Rent Rent/Unit Rent/SF
Potential
Summary
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UNIT MIX BREAKDOWN MARKET
AVERAGE EFFECTIVE
One Bedroom
No. of
Rentable
Total
Unit Type
Units
SF
SF
Rent/Unit
Rent/SF
Potential
Rent/Unit Rent/SF
Potential
Rent/Unit
Rent/SF
Potential
1BR/1BA
24 Units
650 SF
15,600 SF
$375.86
$0.58 SF
$9,021
$400.00 $0.62 SF
$9,600
$550.00
$0.85 SF
$13,200
Totals / Wtd. Avgs
24 Units
650 SF
15,600 SF
$375.86
$0.58 SF
$9,021
$400.00 $0.62 SF
$9,600
$550.00
$0.85 SF
$13,200
Two Bedroom
No. of
Rentable
Total
Unit Type
Units
SF
SF
Rent/Unit
Rent/SF
Potential
Rent/Unit Rent/SF
Potential
Rent/Unit
Rent/SF
Potential
32 Units 32 Units
800 SF 800 SF
25,600 SF 25,600 SF
$455.56 $455.56
$0.57 SF $0.57 SF
$14,578 $14,578
$500.00 $0.63 SF $500.00 $0.63 SF
$16,000 $16,000
$650.00 $650.00
$0.81 SF $0.81 SF
$20,800 $20,800
2BR/1BA Totals / Wtd. Avgs
Total Rent
PROJECTED
Total Rent
Total Rent
Total Rent
Total Rent
Total Rent
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GROSS POTENTIAL RENT All Units at Market Rent Gain (Loss) to Lease GROSS SCHEDULED RENT Other Income
INCOME
Pet Fees Application Fees Late Fees
Total Other Income GROSS POTENTIAL INCOME Physical Vacancy Bad Debt Concessions Allowance
EFFECTIVE GROSS INCOME
EXPENSES
FINANCIAL BREAKDOWN 28
Current (Rent Roll/T# Income; Adjusted Trailing Expenses)
$307,200 ($20,484) $286,716 $0 $0 $0 $0 $1,781,576 ($233,783) $0 $0 $1,547,793
RR RR
T12 Economic
% of GPR
Per Unit
Year 1 (Recapture LTL, Stabilized Occupancy and Other Income, Normalized Expenses, Start Reno) % of GPR
Per Unit
5,486 (366) 5,120
$408,000 ($8,160) $399,840
0.00% 0.00% 0.00% 0.00%
0 0 0 0 14,846
$8,400 $554 $840 $9,794 $2,106,103
2.10% 0.14% 0.21% 2.45%
150 10 15 175 17,551
14.75% 0.00% 0.00% 84.63%
(1,948) 0 0 12,898
($93,257) ($18,651) ($9,326) $1,984,869
5.00% 1.00% 0.50% 91.50%
(777) (155) (78) 16,541
6.67%
2.00%
7,286 (146) 7,140
Utilities Electric Water & Sewage Total Utilities Total Non-Controllable Controllable
$2,800 $33,600 $39,900 $67,557
Note 2 Note 2
1.13% 13.53% 16.07% 27.21%
50 600 713 1,206
$2,856 $34,272 $40,698 $78,357
0.75% 8.98% 10.66% 20.53%
51 612 727 1,399
Repairs & Maintenance Marketing & Promotion Payroll Payroll Taxes & Benefits General & Administrative Management Fee Replacement & Reserves Total Controllable
$28,000 $2,800 $44,800 $5,600 $5,600 $17,382 $14,280 $118,462
Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 1
11.28% 1.13% 18.04% 2.26% 2.26% 7.00% 5.75% 47.71%
500 50 800 100 100 310 255 2,115
$28,000 $2,800 $44,800 $5,600 $5,600 $26,715 $14,566 $128,081
7.34% 0.73% 11.74% 1.47% 1.47% 7.00% 3.82% 33.56%
500 50 800 100 100 477 260 2,287
TOTAL EXPENSES
$186,019
74.91%
3,322
$206,438
54.09%
3,686
NET OPERATING INCOME
$62,297
25.09%
1,112
$175,207
45.91%
3,129
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Year 2 (...Stabilized Occupancy, Finish Reno on Remaining Units)
$420,240 ($8,405) $411,835
% of GPR
2.00%
Per Unit
Year 3 (Projected Rent Increase after Stabilization, Reno)
7,504 (150) 7,354
$432,847 ($8,657) $424,190
% of GPR
2.00%
Per Unit
7,729 (155) 7,575
$8,652 $571 $865 $10,088 $2,169,286
2.10% 0.14% 0.21% 2.45%
155 10 15 180 18,077
$8,912 $588 $891 $10,391 $2,234,365
2.10% 0.14% 0.21% 2.45%
159 11 16 186 18,620
($96,055) ($19,211) ($9,605) $2,044,415
5.00% 1.00% 0.50% 91.50%
(800) (160) (80) 17,037
($98,936) ($19,787) ($9,894) $2,105,748
5.00% 1.00% 0.50% 91.50%
(824) (165) (82) 17,548
$2,913 $34,957 $41,512 $79,507
0.74% 8.89% 10.56% 20.23%
52 624 741 1,420
$2,971 $35,657 $42,342 $80,680
0.76% 9.07% 10.77% 20.52%
53 637 756 1,441
$28,560 $2,856 $45,696 $5,712 $5,712 $27,517 $14,857 $130,910
7.27% 0.73% 11.62% 1.45% 1.45% 7.00% 3.78% 33.30%
510 51 816 102 102 491 265 2,338
$29,131 $2,913 $46,610 $5,826 $5,826 $28,342 $15,154 $133,803
7.41% 0.74% 11.86% 1.48% 1.48% 7.00% 3.86% 33.83%
520 52 832 104 104 491 271 2,375
$210,417
53.53%
3,757
$214,483
54.56%
3,830
$182,678
46.47%
3,262
$190,405
48.44%
3,400
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