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COLDWELL BANKER COMMERCIAL / BROOKS REAL ESTATE, INC. 2013 IN REVIEW & 2014 FORECAST

© 2008 Coldwell Banker Real Estate Corporation.

All Rights Reserved.

Brooks Real Estate Inc


THE MARKET: A LETTER FROM JOHN WILSON REGARDING THE COMMERCIAL REAL ESTATE MARKET

© 2008 Coldwell Banker Real Estate Corporation.

All Rights Reserved.

Brooks Real Estate Inc


COLDWELL BANKER COMMERCIAL BBROOKS REAL ESTATE, INC. 312-B Lightfoot Road Williamsburg, VA 23188

January 9, 2014

BUS (757) 585-2959 FAX (757) 345-5104 Website: www.cbcbrooks.com

To:

New Kent Retail Center

From:

John Wilson: Coldwell Banker Commercial / Brooks Real Estate

Attached you will find our Proposed 2014 Budget for the commercial property(s) that we have in our Commercial Lease/Management Program at Coldwell Banker Commercial/Brooks Real Estate. With the Proposed Budget your Leasing and Property Managers have provided an Overview for 2013, highlighting our accomplishments in regards to your individual property, as well as their proposed Budget for 2014. I also wanted to provide you with an overview our Program for 2013 and the upcoming year. The past several years have been difficult years for those of us that have invested in commercial real estate. As we have seen unprecedented difficulties in the business sector that have lead to sharp vacancies, a decline in rental rates, very little expansion in business presence, and in-turn a drop in the values of real estate. Along with a tightening in the banking community, it has been exceedingly difficult for those entrepreneurs in the commercial real estate world. In leasing and managing these portfolios the last seven years we have concentrated on assisting our owners in:  Focusing on the Retention of current tenants and advising on where to make adjustments when necessary.  Maintaining their properties in good standing to assure that the tenants will remain inplace while using prudence and good judgment in executing those activities that were necessary to continue a consistent and well balanced program.  Assisting our Landlords in working with the banking world to assure their loans are appropriate for the times.


 Lastly, continue with a strong leasing effort to screen and place worthy tenants into your property that are capable of paying the rent and maintain a good standing in your business centers. This last year has followed the others in assuring the strongest program profile for our owners with indexes that demonstrate our commitment to assuring the best possible results and return for our owners. The key indexes for our overall program in 2013, are: Program Occupancy Factor:

91%

Program Vacancy Factor:

8%

(With 75% of our properties currently experiencing 100% occupancy)

Program Delinquencies:

4%

Our presence and effectiveness with working and accessing local businesses to attract them to our properties in our program has been a tremendous strength in our program over the years, and in 2012 we affiliated with Coldwell Banker Commercial to assure our landlords of our abilities and effectiveness to work with and access national businesses and franchises, as well. This strategy has worked well for our landlords as we have been able to place four franchise leases into our landlords’ portfolios in 2013. And, the strength of this program continues to gain momentum. All our industry indicators are looking at 2014 as another year that the commercial real estate scenario will continue to improve. Industry journals, national forecasters, and local economic indicators point to better times. So, what we believe you can expect in 2014:  Better Occupancy Rates  Less Vacancies Rates  Steady and lessening in Delinquency Rates, and  Some expansion of local business in locations and existing square footage With that said, we will continue to focus on:  Strong retention efforts of current tenants


 Continued marketing and networking strategies in the business community and commercial real estate community to attract new and upcoming businesses to our centers.  Efficient and appropriate management strategies to assure prudent expenses that maintain properties and assure tenant satisfaction in our management program.  Explore and recruit national business and chains to the area, and to our properties.  Continue to improve our internal program to best service our owners.  Look beyond retention in some sectors to begin to accelerate rents where possible. Again, we look for 2014 to continue to improve, and will continue to examine all possibilities to lease and manage your properties to assure their optimal performance. With that said, as you all know Anna is pregnant and will be going on maternity leave sometime in the 1st quarter; therefore, beginning in January 2014 you will notice a lot more of my presence in the commercial program in regards to not only oversight, but in the everyday leasing efforts. We have some exiting new faces that will be arriving in the leadership of our Residential Brokerage, Coldwell Banker Traditions, which will allow me to devote more of my efforts and time in the commercial program. So, as we go into 2014 we are hopeful and positive of the possibilities for the New Year, and continue to be devoted to the health and performance of your portfolios. As I become more involved with the commercial program I am hoping I will see and talk to you more often. We appreciate your continued patronage in our program, and again look forward to working closely together in 2014. Sincerely,

John Wilson


YOUR PROPERTY OVERIEW: 2013 PROPERTY OVERVIEW AND 2014 PROJECTED INCOME AND PROPOSED BUDGET & EXPENSES

© 2008 Coldwell Banker Real Estate Corporation.

All Rights Reserved.

Brooks Real Estate Inc


Coldwell Banker Commercial / Brooks Real Estate 2013/2014 Overview The following is an overview of 2013 and our Proposed Forecast for 2014 for both Income and Expenses projections for your property located at 6215 Chesapeake Circle, New Kent, Virginia. 2013 Highlights • •

100% Occupancy Factor Expenses came in just slightly over budget by less than $2K with unforeseen HVAC repairs.

2014 Income Projections, prepared by Anna Lind (see enclosure) • •

100% Occupancy Factor Tenants continue to renew and escalate as scheduled.

2014 Proposed Expense Budget, prepared by Robyn Williams (see enclosure) •

Expenses are expected to remain in line this year and no Contribution should be deemed necessary as with the property being completely leased, will be able to hold its own. • $1500 was placed in Loan Modification Fee as the mortgage is coming up for review. • $2500 was placed in Improvements. We look forward to providing you with Leasing and Management Services this coming year. Should you have any questions regarding the material provided in this package, please do not hesitate to contact us at 757-229-1507.

Very truly yours, Coldwell Banker Commercial / Brooks Real Estate

John Wilson, Managing Broker Anna Lind, Commercial Leasing Agent Robyn Williams, Commercial Property Manager Frankie Byrnes, Senior Bookkeeper Nicole Cook, Executive Assistant


2014 Income Projections Budget Income Chart New Kent Retail Center - 2014 Tenant Size ANTONIOS (A) 2,100 URBAN (B) 1,000 HERITAGE (C&D) 4,360 SUBWAY (E ) 1,800 CBT (F) 1,020 TOPS (G&H) 2,200 SNAG (I) 1,280 Total

13,760

Jan 3,096 1,417 3,829 1,617 3,111 1,600

Feb 3,096 1,417 3,829 2,250 1,617 3,111 1,600

Mar 3,096 1,417 3,829 2,250 1,665 3,111 1,600

Apr 3,096 1,417 3,829 2,250 1,665 3,111 1,600

May 3,096 1,417 3,829 2,250 1,665 3,111 1,600

14,670

16,920

16,968

16,968

16,968

Assumptions: Urban Escape is flat rate until June 2014. All Tenants renew and escalate as scheduled.

Jun 3,096 1,417 3,829 2,250 1,665 3,111 1,600

Jul 3,096 1,417 3,829 2,250 1,665 3,111 1,600

Aug 3,096 1,417 3,829 2,250 1,665 3,111 1,600

Sep 3,096 1,417 3,829 2,250 1,665 3,111 1,600

3,096 1,417 3,829 2,250 1,665 3,111 1,600

3,096 1,417 3,829 2,250 1,665 3,111 1,600

3,096 1,417 3,829 2,250 1,665 3,111 1,600

Total 37,152 17,000 45,948 24,750 19,886 37,332 19,200

16,968

16,968

16,968

16,968

16,968

16,968

16,968

201,267

Snap Shot Current Occupancy Factor: Current Vacancy Factor: Square Foot 2013 Actual: Square Foot 2014 Proposed: Aggregate Income: 2013 Actual: 2014 Proposed:

Š 2008 Coldwell Banker Real Estate Corporation.

$ $

Oct

Nov

Dec

100% 0% 14.46 14.80

$ 198,652.00 $ 201,267.42

All Rights Reserved.

Brooks Real Estate Inc


2014 Proposed Expense Budget New Kent Retail Center, LLC 2014 Proposed Budget 2012 Actuals

2013 Proposed Budget

2013 Forecasted Actual

2014 Proposed Budget

Income and Expenses Operating Revenue 4000 Rent/Lease Income 4170 Electricity Utility Income 4180 Water Utility Income Total Operating Income

$175,945 $5,040 $3,904 $184,889

$199,852 $2,160 $4,291 $190,185

$165,371 $0 $0 $165,371

$201,267 $0 $0 $201,267

Operating Expenses 5010 Management Fees 5150 Accounting Services 5200 Maintenance & Repair 5220 Landscaping 5221 Snow Removal 5231 Exterminating 5300 Electricity 5310 Water & Sanitation 5320 Trash Collection 5410 Bank Charges 5420 Mortgage Interest 5421 Mortgage Principle 5430 Loan Modification Fee 5440 Legal 5500 Real Estate Taxes 5510 Fees & Permits 5520 Property Insurance 5540 Improvements Total Operating Expenditure

$12,623 $1,000 $7,238 $3,510 $0 $0 $4,650 $8,945 $2,638 $180 $111,255 $37,062 $250 $282 $12,715 $3,573 $2,479 $233 $208,632

$3,600 $1,050 $4,500 $3,600 $100 $250 $2,880 $7,516 $2,550 $120 $83,240 $42,000 $3,500 $1,500 $15,472 $75 $2,620 $1,200

$175,773

$3,600 $1,050 $7,217 $3,510 $0 $0 $1,457 $3,746 $2,607 $0 $84,332 $42,000 $0 $1,726 $12,974 $90 $3,458 $9,338 $177,105

$3,600 $1,050 $4,500 $4,710 $100 $500 $1,700 $3,700 $2,607 $0 $84,332 $42,000 $1,500 $0 $12,974 $75 $3,458 $2,500 $169,306

Increase (Decrease) Net Income

-$23,743

$14,412

-$11,734

$31,961

Increase (Decrease) from Operations Owner Contribution/Draw 3000 Retained Earnings 3020 Owner Contribution-Current Year

-$23,743

$14,412

-$11,734

$31,961

$38,578

Š 2008 Coldwell Banker Real Estate Corporation.

Assumptions

$100 increase per month Twice a year

$8,000

All Rights Reserved.

Brooks Real Estate Inc


REIS REGIONAL QUARTERLY REPORT: Leader in Commercial Real Estate Market Performance Information and Analysis Publications

Š 2008 Coldwell Banker Real Estate Corporation.

All Rights Reserved.

Brooks Real Estate Inc


Observer Reis Reis Observer

October 10, 2013 NORFOLK

Metro: Norfolk/Hampton Roads

Published October 10, 2013

THE ECONOMY Dodging bullets. From potential military base closures via the Defense Base Realignment and Closure Commission (BRAC) to the federal budget sequester to the potential transfer of ships to other areas to, even more recently, the shutdown of the federal government, the local economy seems under constant threat of potential job losses in the defense-related sector. Indeed, given Hampton Roads’ major naval installations and high large federal employment numbers, employment by Government amounts to 20.3% of total non-farm employment as of August, according to data provided by the U.S. Bureau of Labor Statistics (BLS). Given the lack of substantial economic growth drivers, the spillover effects of federal job losses would be substantial. With these matters remaining unresolved and with much hanging in the balance, the recent performance of the Hampton Roads economy has been strong. According to preliminary BLS data, non-farm employment as of August was up fully 23,000 jobs (3.1%)—this in the wake of a gain of only 4,600 jobs (0.6%) over the preceding 12-month span. Job growth, meanwhile, has been broad-based. The largest numerical gain over the latest August-to-August span was the 5,400 jobs added net to the Education and Health Services sector, a gain of 5.5%. Highest in rate of growth at 13.3% representing expansion by 4,700 jobs was Mining, Logging, and Construction (mainly Construction). Notable gains are indicated as well for the Leisure and Hospitality (5,300 jobs or 5.8%) and Professional and Business Services (2,500 or 2.5%) sectors. Still, it is the Government sector with its large Federal and related employment base to which attention inevitably turns. Employment by Government overall was down 200 jobs (0.1%) August-to-August; the Federal sector lost 1,400 jobs for a decline of 2.7%. While it seems likely that accommodations by Congress will allow military employment to proceed without significant disruption while the shutdown persists and the next round of BRAC-generated base closures and related announcements has been delayed, uncertainty over the future of local bases lingers. According to an August report in Inside Business citing a third quarter forecast report by economists at Old Dominion University (ODU), “Sequestration hasn’t been as bad as it was expected to be.” “We basically dodged a bullet,” ODU economist Vinod Agarwal informed the source.

Copyright 2014 Reis, Inc.

Employment: 

The BLS reports a seasonally unadjusted unemployment rate of 6.3% in June for the Virginia Beach-Norfolk-Newport News MSA, down from 6.9% one year earlier.

Moody’s Economy.com reports a second quarter 2013 average household income of $115,783 for Norfolk. Average household incomes of $126,990 and $116,398 are reported for the top metros in the nation and South Atlantic region, respectively. Employment Growth:

Employment by Sector:

1


Observer Reis Reis Observer

October 10, 2013 NORFOLK

Metro: Norfolk/Hampton Roads

Published October 10, 2013

In addition, the ODU report described the local single-family housing market as “a bright spot.” Cited was a 25.7% increase in building permits in the first half of 2013 year-over-year along with a 34.9% increase in the value of issued permits. National Association of Realtors put the second quarter Metropolitan Statistical Area (MSA) median single-family home resale price at $200,000, up 2.6% year-over-year yet up 11.2% for the quarter alone. On the other hand, Sequestration should lead to weakening in the Tourism sector and the related hotel industry, observes ODU. OUTLOOK The Hampton Roads economy continues to dodge the bullets aimed or fired in the direction of federal employment. In May, BRAC base closure decisions were delayed; more recently the sequester proved less dangerous than feared; and earlier, the recovery from the effects of the loss of the Joint Forces Command headquarters was achieved without undue duress. Still, uncertainty remains an item for the future. That aside, growth should proceed much as it usually does in here periods of national expansion— slowly.

Copyright 2014 Reis, Inc.

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Budget Income 2014 for New Kent Retail Center  
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