River Oaks OM

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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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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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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

16

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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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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