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Offering Memorandum 955 - 957 E 4Th Street, Long Beach, Ca

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OFFERING MEMORANDUM 955 - 957 E 4TH STREET, LONG BEACH, CA 1 NON-ENDORSEMENT NOTICE TABLE OF CONTENTS Marcus & Millichap Real Estate Investment Services, Inc. (“M&M”) 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 M&M, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of M&M, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified SECTION 01 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 Investment Overview // Pg. 6 the purpose of providing tenant lessee information about this listing to prospective customers. SPECIAL COVID-19 NOTICE All potential buyers are strongly advised to take advantage of their opportunities and obligations to conduct SECTION 02 thorough due diligence and seek expert opinions as they may deem necessary, especially given the unpredictable changes resulting from the continuing COVID-19 pandemic. Marcus & Millichap has not been retained to Market Comparables // Pg. 26 perform, and cannot conduct, due diligence on behalf of any prospective purchaser. Marcus & Millichap’s principal expertise is in marketing investment properties and acting as intermediaries between buyers and sellers. Marcus & Millichap and its investment professionals cannot and will not act as lawyers, accountants, contractors, or engineers. All potential buyers are admonished and advised to engage other professionals on legal issues, tax, regulatory, financial, and accounting matters, and for questions involving the property’s physical condition or financial outlook. Projections and pro forma financial statements are not guarantees and, given the potential volatility created by COVID-19, all potential buyers should be comfortable with and rely SECTION 03 solely on their own projections, analyses, and decision-making. Market Overview // Pg. 36 ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. 3 SECTION ONE INVESTMENT OVERVIEW 4 5 INVESTMENT OVERVIEW Marcus and Millichap REIS is pleased to present 955-957 East 4th Street in Long Beach, California. The subject property is a mixed-use property comprising of four separate buildings, containing approximately 4,748 square feet of leasable area and a building pad area of approximately 870 square feet currently used as a common area patio. Three buildings are residential and one building is commercial. The property was originally built in stages from the early 1920’s - 1930’s. The commercial building is historically known as the Coffee Pot. The Coffee Pot building has a hexagonal front facade structure crowned with an over sized coffee pot on its roof. The building exemplifies the “programmatic” or “themed” fantasy architecture of the past. The current owner renovated and upgraded the residential buildings and common area courtyard as well as the Coffee Pot’s exterior under the watchful supervision of the City of Long Beach and it’s Cultural Heritage Commission. The owner also recently leased the Coffee Pot to a high-end specialty salon called Salon Benders. The property is currently zoned PD-30 by the City of Long Beach which allows for a rich mixture of uses, including residential, professional, retail, entertainment and other uses. Current Zoning allows for an approximately 28,880 square feet of maximum building area with an eighty (80) foot height limit. Potential Buyer must verify with the City of Long Beach. An additional upside can be accomplished by re-positioning the property as Air BNB/Short Term Rentals, convert the current residential bungalow buildings to retail/commercial or food-oriented uses or completely redevelop the entire property (except for the Coffee Pot building) into a major mixed-use project. Please note that the financial Pro Forma assumes developing the building pad area into a new 2 bedroom and 2 bath residence. PROPERTY HIGHLIGHTS Historic 1930’s Programmatic Architecture Located in the Extended Part of the Popular “Retro Row” District Completely Renovated Exteriors & Upgraded Interiors Eclectic Piazza-Style Common Courtyard Area Additional Upside with Further Re-Positioning and/or Redevelopment of the Property 6 7 955 East 4th Street | Blue Bungalow Building 8 9 955 1/2 East 4th Street | Yellow Bungalow Building 10 11 955 East 4th Street, Units #1 & 2 12 13 957 East 4th Street | Salon Benders 14 15 955 - 957 East 4th Street | Common Area Courtyard 16 17 RENT ROLL DETAIL OPERATING STATEMENT Income Current Year 2 Per Unit Per SF Multifamily Gross Potential Rent 127,680 131,510 26,302 27.05 Potential Current Rent/ Current Rent Scheduled Scheduled Potential Loss / Gain to Lease (31,679) 24.8% 0 0.0% 0 0.00 Unit Unit Type Square Feet Rent / SF / Month / SF / Month Rent / Month Rent / Month Rent / Month Month Gross Scheduled Rent 96,001 131,510 26,302 27.05 959 1 Bedrooms/1 Bathroom 658 SF $1,700 $2.58 $1,700 $2.58 $1,700 $2.66 Laundry, Garage and Other Income 3,000 3,000 600 0.62 961 1 Bedrooms/1 Bathroom 658 SF $1,750 $2.66 $1,750 $2.66 $1,800 $2.74 Vacancy (2,880) 3.0% (3,945) 3.0% 955 1/2 2 Bedrooms/1 Bathroom 1,240 SF $2,250 $1.81 $2,250 $1.81 $2,325 $1.88 Effective Gross Income $96,121 $130,565 $26,113 $26.85 955 2 Bedrooms/1 Bathroom 1,436 SF $2,300 $1.60 $2,300 $1.60 $2,370 $1.65 Retail 961 1/2 2 Bedroom/2 Bathrooms 870 SF $0 $0.00 $0 $0.00 $2,395 $2.75 Gross Scheduled Rent 24,000 24,000 31.75 Total/Average 4,862 SF $8,000 $1.65 $8,000 $1.65 $10,640 $2.19 Expense Reimbursements 4,876 5,022 6.64 General Vacancy (720) 3.0% (720) 3.0% Effective Gross Income $28,156 $28,302 $37.44 Description of Square % Bldg Lease Rent per Total Rent Changes Changes Operating Tenant Type Suite Feet Share Term Square Feet Per Month On To Expense Combined EGI $124,277 $158,867 $28.28 Reimbursements 6/1/18 to Salon Benders Retail 957 756 SF 13.46% $31.75 $2,000 June 2021 $2,060 NNN Income Current % of CEGI Year 2 % of CEGI Per SF 5/31/23 Total/Average 756 SF Real Estate Taxes 26,800 21.6% 27,336 17.2% 4.87 Insurance 2,620 2.1% 2,700 1.7% 0.48 Utilities 3,631 2.9% 3,740 2.4% 0.67 Management Fee 0 0.0% 0 0.0% 0.00 Repairs & Maintenance 1,600 1.3% 1,648 1.0% 0.29 General & Administrative 400 0.3% 412 0.3% 0.07 Reserves and Miscellaneous 1,200 1.0% 1,236 0.8% 0.22 Total Expenses $36,251 $37,072 $6.60 Expenses as % of Combined EGI 29.2% 23.3% Net Operating Income $88,026 $121,795 $21.68 18 19 PRICING DETAIL Summary Income Current Year 2 Price $1,675,000 Multifamily Down Payment $775,000 46% Gross Scheduled Rent $96,001 $131,510 # of Apartment Units 5 All Other Income $3,000 $3,000 # of Commercial Suites 1 Vacancy 3.0% ($2,880) 3.0% ($3,945) Price Per SqFt $298.15 Effective Gross Income $96,121 $130,565 Rentable SqFt 5,618 Retail Suites Lot Size (SqFt) 7,113 Gross Scheduled Rent $24,000 $24,000 Approx. Year Built 1932 / 2015 Expense Reimbursements $4,876 $5,022 All Other Income $0 $0 Current Year 2 Vacancy 3.0% ($720) 3.0% ($720) CAP Rate 5.26% 7.27% Effective Gross Income $28,156 $28,302 Cash-on-Cash 3.97% 8.33% Debt Coverage Ratio 1.54 2.13 Combined Effective Gross $124,277 $158,867 Income (CEGI) Financing Terms Less: Expenses ($36,251) ($37,072) Financing 1st Loan Net Operating Income $88,026 $121,795 Loan Amount $900,000 Cash Flow $88,026 $121,795 Loan Type New Debt Service ($57,245) ($57,245) Interest Rate 4.04% Net Cash Flow After Debt Service 3.97% $30,781 8.33% $64,550 Amortization 25 Years Principal Reduction $21,348 $22,227 Year Due 2027 Total Return 6.73% $52,129 11.20% $86,776 Current Pro Forma # Of Suites Type GLA Expenses Current Year 2 Rent Rent 1 Retail 756 $2,000 $2,000 Real Estate Taxes $26,800 $27,336 Insurance $2,620 $2,700 Current Market # Of Units Unit Type SqFt/Unit Rents Rents Utilities - Combined $3,631 $3,740 2 1 Bed/1 Bath 658 $1,725 $1,775 Operating Expenses - Combined $3,200 $3,296 2 2 Bed/ 1 Bath 1338 $2,275 $2,348 Total Expenses $36,251 $37,072 1 2 Bed/2 Bath 870 $0 $2,395 Expenses/SF $6.45 $6.60 20 21 SURROUNDING RETAIL E Anaheim St Pacific Coast Hwy Woodrow Wilson High School Alamitos Ave (3,679 students) Museum of Latin American Art E 7th St E 4th St THE PIKE OUTLETS 955 – 957 E 4TH STREET Long Beach Performing Arts Center 22 23 SECTION TWO MARKET COMPARABLES 24 25 SALES COMPARABLES Total Total Sales Close of Price Year Property Apartment Commercial Cap Rate Price Escrow PSF Built Units Suites 6 955 - 957 E 4th Street $1,800,000 5 1 4.79% TBD $320.40 1932 5 4 1 400 - 404 E 1st Street $2,325,000 3 3 N/A 7/2/2019 $339.12 1902 2 3 1 2 443 - 449 E Broadway $2,900,000 0 11 N/A 8/30/2019 $590.15 1922 3 2204 E Broadway $1,140,000 0 1 N/A 6/6/2019 $453.64 1924 4 1249 E 3rd Street $1,799,000 6 0 4.84% 3/19/2020 $549.15 1923 5 3011 E 4th Street $2,500,000 8 0 4.37% On-Market $390.44 1963 6 463 W 6th Street $1,900,000 8 0 4.75% On-Market $474.88 1923 Average $2,094,000 4 3 4.65% -- $466.23 -- SALES 955 - 957 E 4th Street 4 1249 E 3rd Street COMPARABLES 1 400 - 404 E 1st Street 5 3011 E 4th Street 2 443 - 449 E Broadway 6 463 W 6th Street 3 2204 E Broadway 26 27 SALES COMPARABLES SALES COMPARABLES 1 2 3 4 5 955 - 957 E 4TH Street | Long Beach, CA 90802 400-404 E.
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