Rosehill Townhomes OM

ROSEHILL TOWNHOMES

SUBMITTED BY: LEAD AGENTS

Tim VanWingerden Associate Louisville D. 513.878.7750 tim.vanwingerden@marcusmillichap.com

Jordan Dickman First Vice President Investments Cincinnati Office D. 513.878.7735 jordan.dickman@marcusmillichap.com

Nicholas Andrews First Vice President Investments Cincinnati Office D. 513.878.7741 nicholas.andrews@marcusmillichap.com

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.

CONTENTS

B R O K E R C A PA B I L I T I E S

06 | THE INVESTMENT

01

&

20 | LOCAL COMP E TITORS

02

32 | THE FIN ANC I ALS

03

40 | LOCAL M ARKE T

04

O P I N I O N O F V A L U E

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

JD Schmerge

Brian Johnston

Tim VanWingerden

Senior Investment Associate

Investment Associate

Investment Associate

Investment Associate

DEBT & STRUCTURED FINANCE

Chris Litzler

Senior Director of Organization MMCC

VALUATION & RESEARCH

Sam Petrosino

Financial & Research Analyst

CLIENT RELATIONS

MARKETING

Alex Papa

Marketing Coordinator

Kristin Smith Marketing

Skyler Wilson

Client Relations Manager

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

S E C T I O N

01

THE INV

VESTMENT

INVESTMENT HIGHLIGHTS

ROSEHILL TOWNHOMES PROVEN RENT GROWTH Rents in the surrounding markets for a 3-bedroom townhome average $1,509. This provides an excellent opportunity for an investor to incorporate a light renovation on units and draft rents staying on average $109 lower than the competition.

LEXINGTON’S OVERFLOW MARKET Population growth continues to outpace new inventory in the Lexington marketplace. This competitive renting environment attracts tenants to the surrounding markets such as Versailles. Over the past 5 years, there has been a steady increase in Lexington commuters with over half of Lexington workforce commuting from outside the city.

TOWNHOMES

K Y

MINIMAL DEFERRED MAINTENANCE Rosehill townhomes is well-maintained with a number of big-ticket items addressed including HVAC and roof. With the current ownership investing in the future performance of the property, the capital infusion delivers an asset with minimal capex allowing new ownership to focus on an aggressive leasing initiative to further align market rent with market competitors.

ROSEHILL

V E R S A I L L E S ,

VALUE ADD OPPORTUNITY The new owner can take advantage of the value add opportunity of this property’s prime location. Remodeling these apartments with granite countertops, new light fixtures, and updated paint will provide an incoming investor a $276 premium on rents capturing a 44% ROI on unit upgrades.

RECENT CAPEX 42 Units: Full Roof Replacement 12 Units: Upgraded Appliances 34 Units: LVP Flooring (Carpet in Bedrooms) 42 Units: Newly paved back patio and privacy fence.

21 Units: Full HVAC Replacement

ROSEHILL TOWNHOMES PROPERTY SUMMARY

60,900

RE N TABLE S Q UARE FE E T

46

TOTAL UNI T S

1,324

AV G S QUAR E FEE T

3x2

12

3x2 - with garge

34

% Leased

98%

ROSEHILL TOWNHOMES

LOCATION

ROSEHILL TOWNHOMES

PROPERTY SNAPSHOT

ROSEHILL TOWNHOMES

SUBMARKE T: WOODFORD COUNTY | COUNTY: WOODFORD

SUMMARY

210 BRECKENRIDGE ROAD, VERSAILLES, KY Property Name: Property Address: City, State, Zip: Submarket: County: Year Built/Reno: Property Type (Market Rate, Affordable, etc.): Current Ownership: Current Management: Number Of Units: Avg Unit Size: Rentable Sqft: Number of Parcels: Lot Size (Acres): # of Buildings: # of Stories: Current Occupancy: Parking Type: Parking Surface:

Roshill Townhomes 210 Breckenridge Road Versailles, KY Woodford County Woodford 1995 Rosehill Versailles LLC Rosehill Versailles LLC Show Place Realty 46 1350 62,100 46 4.6 12 2 97.8 Driveway Concrete

Mechanical HVAC Water Heater Wiring Construction: Framing Roof Type/Age Exterior of Building Windows Utility Responsibility Electric: Water Sewer Trash:

Central Air Individual Copper Wood Replaced 2021 Brick / Vinyl Original Tenant Paid Tenant Paid Tenant Paid City Provided

RECENT CAPEX 42 Units: Full Roof Replacement 12 Units: Upgraded Appliances 34 Units: LVP Flooring (Carpet in Bedrooms) 42 Units: Newly paved back patio and privacy fence.

21 Units: Full HVAC Replacement

ROSEHILL TOWNHOMES

INTERIOR PHOTOS

GARAGE

BEDROOM

LIVINGROOM

BATHROOM

KITCHEN

ROSEHILL TOWNHOMES

EXTERIOR PHOTOS

EXTERIOR

BACKYARD

EXTERIOR

BACKYARD

DRIVEWAYS

ROSEHILL GARDENS

PROPOSED RENOVATIONS The new owner can take advantage of the value add opportunity and remodel these apartments with granite countertops, stainless appliances, new cabinets, modern light fixtures, and a bathroom vanity providing an estimated $276 monthly premium on rents, capturing a 44% ROI on unit upgrades.

ITEM

2 BEDROOM

Granite Countertop

$1,500

Stainless Appliance Package

$1,850

New Kitchen Cabinets

$2,000

Modern Light Fixtures

$1,150

Bathroom Vanity

$1,000

Total

$7,500

$7.5K/UNIT AVG RENO COST

$276/MONTH AVG RENT INCREASE

44% ROI

PROPOSED RENOVATIONS 1 BATHROOM VANITY 2 GRANITE COUNTERTOPS 3 MODERN LIGHT FIXTURES 4 NEW KITCHEN CABINETS 5 STAINLESS STEEL APPLIANCES 3 4 3

4 5

5

2

5

5 2

3

3 3

1 1

S E C T I O N

02

LOCAL C

COMPETITORS

3

ROSEHILL TOWNHOMES 4

1

REN T C OMPAR ABLE S 1

541 BEECH STREET

2

WOOLDRIDGE APARTMENTS

3

HAVERFORD PATH

4

3121 DALY PLACE

2

*

Three Bedroom Townhome Rents Sorted by Net Rent

Year Built

Unit Type

Market Rent

Utility Adjustment/Month

Net Rent

Net Rent/SF

Haverford Place

2001

3x2

$1,690.00

$0

$1,690

$1.23

Wooldridge Apartments*

2013

3x3

$1,542.00

$0

$1,542

$1.17

Bridgewater Townhomes* Rabbit Run Apartments 541 Beech St 3121 Daly Pl Rosehill Townhomes Pro Forma The Pines Waveland Townhomes

2017 1998 2007 2010 1995 1996 2009

3x2.5 3x3 3X2.5 3x2.5 3x2 3x2 3x2.5

$1,529.00 $1,475.00 $1,414.00 $1,406.00 $1,373.00 $1,347.00 $1,301.00

$0 $0 $0 $0 $0 $0 $15

$1,529 $1,475 $1,414 $1,406 $1,400 $1,347 $1,286

$1.13 $0.74 $0.95 $1.00 $1.04 $0.67 $0.87

Sandersville Townhomes Baybrook Townhouses

2012 2006

3x2.5 3x2.5

$1,252.00 $1,025.00

$15 $0

$1,237 $1,025

$0.84 $0.85

Rosehill Townhomes Average Effective

1995

3x2

$939.00

$0

$1,006

$0.75

$1,366

$15

$1,363

$0.94

Property

Averages

LOCAL COMPE TITORS

541 BEECH STREET

541 BEECH STREET VERSAILLES, KY PROPERTY SUMMARY Year Built

2007

Units

33

Occupancy UNIT MIX & RENT SCHEDULE UNIT TYPE RENT 3x2 $1,414

Common Amenities: n/a

100% SF 1,496

RENT PER SF $0.95

Unit Features: Air Conditioning Kitchen Carpet Oven Heating Refrigerator

LOCAL COMPE TITORS

WOOLDRIDGE APARTMENTS

224 CHENEY ROAD, VERSAILLES, KY PROPERTY SUMMARY Year Built

2013

Units

156

Occupancy UNIT MIX & RENT SCHEDULE UNIT TYPE RENT 3x3 $1,542

Common Amenities: 24 Hour Access Walking/Biking Trails Property Manager on Site

98% SF 1,317

RENT PER SF $1.17

Unit Features: Air Conditioning Refrigerator Hardwood Floors Washer/Dryer

LOCAL COMPE TITORS

HAVERFORD PLACE

101 HAVERFORD PATH, GEORGETOWN, KY PROPERTY SUMMARY Year Built

2001/2018

Units

160

Occupancy UNIT MIX & RENT SCHEDULE UNIT TYPE RENT 3x2 $1,414

Common Amenities: Business Center Maintenance on site Clubhouse Package Service Fitness Center Playground Furnished Units Available Laundry Facilities

100% SF 1,496

RENT PER SF $0.95

Unit Features: Walk-In Closets Dishwasher Cable Ready Microwave Vinyl Floorin Washer/Dryer Hookup Ceiling Fans Disposal

LOCAL COMPE TITORS

3121 DALY PLACE

3121 DALY PLACE, LEXINGTON, KY PROPERTY SUMMARY Year Built

2010

Units

5

Occupancy UNIT MIX & RENT SCHEDULE UNIT TYPE RENT 3x2.5 $1,406

Common Amenities:

100% SF 1,406

RENT PER SF $1.00

Unit Features: In Unit Washer & Dryer Air Conditioning Dishwasher Refrigerator Gargage

CONDO CONVERSION Opportunity for new ownership to convert townhome units into parceled condos and sell-off individually. Condo sales in Versailles average $185,000 over the past 24 months.

*

ROSEHILL TOWNHOMES

1

197 BERRY AVE

2

381 CHRUCH STREET

3

2 11 BERRY AVE

4

185 SPRING RUN ST

5

22 7A BL ACKHAWK CIR

ROSEHILL TOWNHOMES 4

* 5

2

3 1

CONDO SALES COMPARABLES Address 197 Berry Ave Versailles, KY 381 Church St Versailles, KY 211 Berry Ave Versailles, KY 185 Spring Run St Versailles, KY 227 Black Hawk Cir Versailles, KY

Location

COE

Units

Year Built

Price

Price/Unit

Price/SF

Total SF

Average Rent

Total SF

Versailles, KY Versailles, KY Versailles, KY Versailles, KY Versailles, KY

7/8/2022 4/20/2022 7/2/2021 6/1/2022 7/2/2021

1 1 1 1 1

2005 1993 1986 1985 1971

$185,000 $250,000 $150,000 $192,000 $145,500

$185,000 $250,000 $150,000 $192,000 $145,500

$128 $138 $104 $126 $135

1440 1816 1440 1520 1080

$1,072 $1,103 $1,270 $1,157 $1,124

150,008 73,030 61,248 22,578 24,192

184,500

126

1459

Average Price/Unit

Average Price/SF

Average SQFT

CONDO CONVERSION 1

2

3

19 7 B E R R Y AV E Address

381 CHURCH ST

197 Berry Ave Versailles, KY

Address

2 11 B E R R Y AV E

381 Church St Versailles, KY

Address

211 Berry Ave Versailles, KY

Sale Date

Jul-22

Sale Date

Apr-22

Sale Date

Jul-21

Year Built

2005

Year Built

1993

Year Built

1986

Unit SF

1,440

Unit SF

1,816

Unit SF

1,440

Sale Price $/SF

$185,000 $128

Sale Price $/SF

$250,000 $138

Sale Price $/SF

$150,000 $104

CONDO SALES COMPARABLES 4

5

S

18 5 S P R I N G R U N S T Address

2 2 7 B L A C K H AW K C I R

185 Spring Run St Versailles, KY

Address

Sale Date

Jun-22

Sale Date

Year Built

1985 1,520

Unit SF Sale Price $/SF

$192,000 $126

ROSEHILL TOWNHOMES

227 Black Hawk Cir Versailles, KY

Address

210 Breckenridge Rd Versailles, KY

Jul-21

Year Built

1995

Year Built

1971

# of Units

46

Unit SF

1,080

Avg Sqft

Sale Price $/SF

$145,500 $135

1350

Rentable Sqft

62,100

# of Buildings

12

# of Stories Occupancy

2 97.8%

S E C T I O N

03

THE FIN

NANCIALS

ROSEHILL TOWNHOMES - FINANCIALS

UNIX MIX SUMMARY AV E R A G E E F F E C T I V E UNIT TYPE

NO. OF U N I TS

T E N TA B L E S F

T OTA L S F

RENT/UNIT

46 Units 46 Units

1,324 SF 1,324 SF

60,900 SF 60,900 SF

$939.33 $939.33

MARKET

RENT/SF

T O TA L R E N T POTENTIAL

RENT/UNIT

$0.71 $0.71 SF

$43,209 $43,209

$1,097.83 $1,097.83

P RO J E CT E D

RENT/SF

T O TA L R E N T POTENTIAL

RENT/UNIT

RENT/SF

TOTA L R E N T P OT E N T I A L

RENT I N C R E AS E

% RENT I N C R E AS E

$0.83 SF $0.83 SF

$50,500 $50,500

$1,373.91 $1,373.91

$1.04 SF $1.04 SF

$63,200 $63,200

$113 $119

16.10% 20.39%

SUMMARY

Three Bedroom Totals / Wtd. Averages

UNIT DISTRIBUTION

UNIT RENTS

100%

Three Bedroom

Studio

One Bedroom

Two Bedroom

Three Bedroom

Avg. Effective

Pro Forma Projection

ROSEHILL TOWNHOMES - FINANCIALS

UNIX MIX BREAKDOWN AV E R A G E E F F E C T I V E NO. OF UNITS

T E N TA B L E S F

TOTA L S F

RENT/UNIT

THREE BEDROOM 3BR/2BA 3BR/2BA - With Garage

12 Units 34 Units

1,250 SF 1,350 SF

15,000 SF 45,900 SF

Totals / Wtd. Averages

46 Units

1,324 SF

60,900 SF

UNIT TYPE

MARKET

RENT/SF

T O TA L R E N T POTENTIAL

RENT/UNIT

$883.33 $959.09

$0.71 SF $0.71 SF

$10,600 $32,609

$939.33

$0.71 SF

$43,209

P RO J E CT E D

RENT/SF

T O TA L R E N T POTENTIAL

RENT/UNIT

RENT/SF

TOTA L R E N T P OT E N T I A L

RENT I N C R E AS E

% RENT I N C R E AS E

$950.00 $1,150.00

$0.76 SF $0.85 SF

$11,400 $39,100

$1,300.00 $1,400.00

$1.04 SF $1.04 SF

$15,600 $47,600

$113 $113

16.10% 16.10%

$1,097.83

$0.83 SF

$50,500

$1,373.91

$1.04 SF

$63,200

$113

16.10%

INCOME EXPENSE

ROSEHILL TOWNHOMES - FINANCIALS

INCOME & EXPENSES

GROSS POTENTIAL RENT All Units at Market Rent Gain (Loss) to Lease GROSS SCHEDULED RENT Other Income Pet Fee-Non Refundable Late Fee Utility Reimbursement Fee Application Fee Income Total Other Income GROSS POTENTIAL INCOME Physical Vacancy Bad Debt EFFECTIVE GROSS INCOME NON-CONTROLLABLE Real Estate Taxes 2020 Taxes Paid Adjustment for Sale Total Real Estate Taxes Insurance Utilities Electric Water & Sewage Total Utilities Total Non-Controllable CONTROLLABLE Contract Services Snow Removal Landscaping/Grounds Pest Control Total Contract Services Repairs & Maintenance Marketing & Promotion On-Site Payroll Payroll Taxes & Benefits General & Administrative Management Fee Replacement & Reserves Total Controllable TOTAL EXPENSES NET OPERATING INCOME

CURRENT (Rent Roll / T12 Income; T12 Expenses) % of GPR Per Unit $606,000 RR 13,174 ($85,200) 14.06% (1,852) $520,800 RR 11,322 $3,000 $2,500 $1,740 $1,560 $8,800 $529,600 ($14,427) $0 $515,173

T3 T3 T3 T3

0.58% 0.48% 0.33% 0.30% 1.69%

T3

2.77% 0.00% 83.17%

$28,088 Auditor $0 $28,088 $13,800 Note 5 $3,690 T12 $1,041 T12 $4,730 $46,618

$0 $26,467 $0 $26,467 $49,538 $0 $19,823 $0 $14,563 $27,600 $11,730 $149,721 $196,340 $318,833

T12

T12 T12 T12 T12

Note 4

YEAR 1 (Stabilized LTL, Occupancy, and Other Income; Normalized Expenses) % of GPR Per Unit $758,400 16,487 ($53,088) 7.00% (1,154) $705,312 15,333

65 54 38 34 191 11,513 (314) 0 11,199

$3,090 $2,575 $1,792 $1,607 $9,064 $714,376 ($35,266) ($7,053) $672,057

0.44% 0.37% 0.25% 0.23% 1.29% 5.00% 1.00% 87.00%

67 56 39 35 197 15,530 (767) (153) 14,610

% of EGI Per Unit 5.45% 611 0.00% 0 5.45% 611 2.68% 300

$28,088 $51,703 $79,791 $13,800

% of EGI 4.18% 7.69% 11.87% 2.05%

Per Unit 611 1,124 1,735 300

0.72% 0.20% 0.92% 9.05%

80 23 103 1,013

$3,764 $1,061 $4,825 $98,416

0.56% 0.16% 0.72% 14.64%

82 23 105 2,139

0.00% 5.14% 0.00% 5.14% 9.62% 0.00% 3.85% 0.00% 2.83% 5.36% 2.28% 29.06% 38.11% 61.89%

0 575 0 575 1,077 0 431 0 317 600 255 3,255 4,268 6,931

$1,610 $9,200 $1,610 $12,420 $25,300 $3,450 $39,100 $3,450 $6,900 $33,603 $11,965 $136,187 $234,603 $437,454

0.24% 1.37% 0.24% 1.85% 3.76% 0.51% 5.82% 0.51% 1.03% 5.00% 1.78% 20.26% 34.91% 65.09%

35 200 35 270 550 75 850 75 150 730 260 2,961 5,100 9,510

YEAR 2 $781,152 ($15,623) $765,529

% of GPR 2.00% 0.42% 0.35% 0.24% 0.22% 1.22%

YEAR 3 Per Unit 16,982 (340) 16,642

$804,587 ($16,092) $788,495

% of GPR

$3,278 $2,732 $1,901 $1,705 $9,616 $798,111 ($39,425) ($7,885) $750,801

5.00% 1.00% 92.00%

71 59 41 37 209 17,350 (857) (171) 16,322

2.00%

$3,183 $2,652 $1,846 $1,655 $9,336 $774,865 ($38,276) ($7,655) $728,933

5.00% 1.00% 92.00%

69 58 40 36 203 16,845 (832) (166) 15,846

$28,088 $51,703 $79,791 $14,076

% of EGI 3.85% 7.09% 10.95% 1.93%

Per Unit 611 1,124 1,735 306

$28,088 $51,703 $79,791 $14,358

% of EGI 3.85% 7.09% 10.95% 1.97%

Per Unit 611 1,124 1,735 312

$3,839 $1,083 $4,922 $98,788

0.53% 0.15% 0.68% 13.55%

83 24 107 2,148

$3,916 $1,104 $5,020 $99,168

0.54% 0.15% 0.69% 13.60%

85 24 109 2,156

$1,642 $9,384 $1,642 $12,668 $25,806 $3,519 $39,882 $3,519 $7,038 $36,447 $12,204 $141,083 $239,871 $489,062

0.23% 1.29% 0.23% 1.74% 3.54% 0.48% 5.47% 0.48% 0.97% 5.00% 1.67%

36 204 36 275 561 77 867 77 153 792 265 3,067 5,215 10,632

$1,675 $9,572 $1,675 $12,922 $26,322 $3,589 $40,680 $3,589 $7,179 $37,540 $12,448 $144,269 $243,437 $507,364

0.23% 1.31% 0.23% 1.77% 3.61% 0.49% 5.58% 0.49% 0.98% 5.00% 1.71% 19.64% 33.40% 69.60%

36 208 36 281 572 78 884 78 156 792 271 3,113 5,292 11,030

19.35% 32.91% 67.09%

0.42% 0.35% 0.24% 0.22% 1.22%

Per Unit 17,491 (350) 17,141

UNDERWRITING NOTES

#

NOTE

1

Rent Roll Date: March 2021

2

T12 Date Range: February 2020 - January 2021

3

Taxes: information from Hamilton County Auditor

Replacement & Reserves: added based on market norm of $255 per unit per year Gross Potential Rent: assumes a normal growth of 3% starting in 5 year 2 4

6 Loss to Lease: assumes a normal growth of 2% starting in year 2 7

Physical Vacancy: set at 5% which is the norm for this market

8

Bad Debt: set at 2% which is the norm for this property type and market

INCOME EXPENSE

ROSEHILL TOWNHOMES - FINANCIALS

CASH FLOW

CURRENT

YEAR 1 YE DEC-2022

YEAR 2 YE DEC-2023

YEAR 3 YE NOV-2024

YEAR 4 YE NOV-2025

YEAR 5 YE NOV-2026

YEAR 6 YE NOV-2027

YEAR 7 YE NOV-2028

YEAR 8 YE NOV-2029

YEAR 9 YE NOV-2030

YEAR 10 YE NOV-2031

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

$606,000 ($85,200) $520,800 $8,800

$758,400 ($53,088) $705,312 $9,064

$781,152 ($15,623) $765,529 $9,336

$804,587 ($16,092) $788,495 $9,616

$828,724 ($16,574) $812,150 $9,808

$853,586 ($17,072) $836,514 $10,004

$879,193 ($17,584) $861,610 $10,205

$905,569 ($18,111) $887,458 $10,409

$932,736 ($18,655) $914,082 $10,617

$960,718 ($19,214) $941,504 $10,829

$989,540 ($19,791) $969,749 $11,046

GROSS POTENTIAL INCOME Physical Vacancy Bad Debt EFFECTIVE GROSS INCOME

$529,600 ($14,427) $0 $515,173

$714,376 ($35,266) ($7,053) $672,057

$774,865 ($38,276) ($7,655) $728,933

$798,111 ($39,425) ($7,885) $750,801

$821,958 ($40,607) ($8,121) $773,229

$846,519 ($41,826) ($8,365) $796,328

$871,814 ($43,080) ($8,616) $820,118

$897,867 ($44,373) ($8,875) $844,619

$924,698 ($45,704) ($9,141) $869,854

$952,333 ($47,075) ($9,415) $895,843

$980,795 ($48,487) ($9,697) $922,610

EXPENSES Real Estate Taxes Insurance Utilities Contract Services Repairs & Maintenance Marketing & Promotion On-Site Payroll Payroll Taxes & Benefits General & Administrative Management Fee Replacement & Reserves TOTAL EXPENSES

$28,088 $13,800 $4,730 $26,467 $49,538 $0 $19,823 $0 $14,563 $27,600 $11,730 $196,340

$79,791 $13,800 $4,825 $12,420 $25,300 $3,450 $39,100 $3,450 $6,900 $33,603 $11,965 $234,603

$79,791 $14,076 $4,922 $12,668 $25,806 $3,519 $39,882 $3,519 $7,038 $36,447 $12,204 $239,871

$79,791 $14,358 $5,020 $12,922 $26,322 $3,589 $40,680 $3,589 $7,179 $37,540 $12,448 $243,437

$81,387 $14,645 $5,120 $13,180 $26,849 $3,661 $41,493 $3,661 $7,322 $38,661 $12,697 $248,677

$83,014 $14,938 $5,223 $13,444 $27,386 $3,734 $42,323 $3,734 $7,469 $39,816 $12,951 $254,032

$84,675 $15,236 $5,327 $13,713 $27,933 $3,809 $43,170 $3,809 $7,618 $41,006 $13,210 $259,506

$86,368 $15,541 $5,434 $13,987 $28,492 $3,885 $44,033 $3,885 $7,771 $42,231 $13,474 $265,101

$88,095 $15,852 $5,542 $14,267 $29,062 $3,963 $44,914 $3,963 $7,926 $43,493 $13,744 $270,820

$89,857 $16,169 $5,653 $14,552 $29,643 $4,042 $45,812 $4,042 $8,084 $44,792 $14,018 $276,666

$91,655 $16,492 $5,766 $14,843 $30,236 $4,123 $46,728 $4,123 $8,246 $46,130 $14,299 $282,642

NET OPERATING INCOME

$318,833

$437,454

$489,062

$507,364

$524,552

$542,296

$560,612

$579,518

$599,034

$619,177

$639,968

INCOME

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

25.15% 7.00% 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%

3.00% 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%

5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

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

YR 6

YR 7

YR 8

YR 9

YR 10

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

5.00% 0.00% 1.00% 0.00% 6.00%

*Calculated as a percentage of Gross Potential Rent | **Calculated as a percentage of Effective Gross Income

S E C T I O N

04

LOCAL M

MARKET

ROSEHILL TOWNHOMES

LEXINGTON, KY 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, boasting Transylvania College (1780; now Transylvania University), street lights, a public subscription library, a theatre, and a musical society. In 1817 it had presented the first Beethoven symphony heard in the United States.

EMERGING TECH HUB Metronet has invested over $100 million in fiberoptic infrastructure 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 professionals and startups alike.

EMPLOYERS IN THE NEWS

B O U R B O N D I S T I L L E R Y B U F F A L O T R A C E

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 warehouses, added fermenters and an expansion of the dry house operation.

Over the past 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.

•

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)

•

New $37.5 million Lexington Distillery District hotel will open in spring 2023 (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).

•

TMMK to invest $461 million in upgrades at Georgetown Toyota plant. (Oct 2021)

•

Buffalo Trace Distillery makes headway on $1.2 billion expansion (Aug 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)

ECONOMY • Lexington has mix of stable anchors alongside

ette were most pronounced in the Leisure/Hospi-

some larger, private employers. Prior to the

tality Services and Trade/Transportation/Utilities

pandemic, Lexington-Fayette’s real gross

sectors. Despite job losses stemming from the

metropolitan product grew at an average annual

pandemic, Lexington-Fayette’s current

rate of 1.6% from 2015 to 2019. During that same

employment base now sits roughly 16,200 jobs, or

five-year period, job growth averaged 1.2%

about 6% above the 1st quarter 2008 level, prior to

annually, with roughly 3,100 jobs added on aver-

the Great Recession.

age each year.

• 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%.

• 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%.

• During the past year, job gains in Lexington-Fay-

D E M O G R A P H I C S : STAT I ST I C S Population: 323,152

Msa median hhi: $57,405

Msa median home value: $173,500

Average occupany: 96.4%

Median age: 35 (.39%)

1 - Year growth: 1.77%

1 - Year growth: 4.83%

Rent growth: 2.7%

S U P P LY & D E M A N D S U P P LY • 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.

• Completions over the past year expanded the local inventory base 0.6% and were concentrated only in the Downtown Lexington/University submarket.

• 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.

• 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.

MARKET DRIVERS

2

8

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

12 10 4

13 7

5 1 3 9 11

6

O C C U PA N CY • 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%.

• 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.

• 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.

ATTRACTIONS KEENELAND 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 building 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.

K E N T U C K Y H O RS E PA R K 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 presentations, horse drawn tours, horseback and pony rides, and an array of horse shows and special events throughout the year.

HIGHER EDUCATION 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.

U N I V E RS I T Y O F K E N T U C K Y 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

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