TIMBERS TOWNHOMES APARTMENTS 104 Unit Multifamily Property Offered For Sale
Contact: Jonathan Skinner O: 757-825-9100 F: 757-838-2574 C: 757-771-5905 [email protected] Confidentiality Agreement
Harrison and Lear, Inc., (“listing agent”) has been engaged to exclusively 3) The zoning or legal status of the Property; represent 4) The compliance with applicable codes, laws, regulations, the Seller in the sale of Timbers Townhome Apartments (“Property”). The owner statutes, ordinances, covenants, conditions and restrictions has indicated that all inquiries and communications with respect to the of any governmental, quasigovernmental entity or any other contemplated person or entity; sale of such Property be directed to listing agent. 5) The size of the Property,improvements, apartment or Listing agent has available for study certain information concerning the condominium units (including any reference to square Property which may include various papers, documents, data and other footage);and materials, portions of which may be included in a package or brochure 6) Except as expressly provided otherwise in the executed Purchase (hereinafter referred to as the “Evaluation Material”). Listing agent is and Sale Agreement (as hereinafter defined), the condition of title prepared to furnish the evaluation Material in connection with discussions and nature, status and extent of any right-of-way, right of and negotiations concerning a possible transaction involving the redemption, possession, lien, encumbrance, lease, reservation, Propertyon the condition that Purchaser agrees to treat it in a confidential covenants, conditions, restrictions, and any other matter affecting manner and make the representations and agreements herein provided. the title. therefore, Purchaser hereby represents and agrees as follows: Neither the Purchaser nor the owner shall be bound until execution of a The Property is being offered to qualified investors/purchasers only on an “As Is/ formal Purchase and Sale agreement, which shall then supersede prior Where Is” basis, with all faults and without representations or warranties discussions and constitute the sole agreement of the parties. of any kind or nature (express or implied). the owner expressly disclaims any warranty, not limited to any warranty of habitability, suitability, fitness The Evaluation Material furnished to Purchaser will not be used by Purchaser for a particular purpose, merchantability or quality of workmanship, for any purpose other than for evaluating a possible transaction involving construction or repair. Purchaser should be aware that prior to and after the Propertywith the Purchaser . The Purchaser understands and acknowledges contracting to purchase, reasonable opportunity to inspect and investigate that listing agent and the owner do not make any representations or the Propertyand all improvements thereon shall be given. all requests warranty as to the accuracy or completeness of the evaluation. The Purchaser for additional information and property tours, however, are to be made agrees that neither listing agent nor the owner shall have any liability through the listing agent. Jonathan Skinner(direct: (757)771-5905, e-mail: for any reason to the Purchaser or related parties resulting from the use [email protected]). Purchaser shall be responsible for all costs and of, or reliance upon, the Evaluation Material. further, Purchaser agrees expenses associated with its investigation. The owner and listing agent respectfully that all financial projections provided by Owner or Listing Agent are for request that Purchaser refrain from contacting any on-site personnel or residents. informational purposes only. This presentation, prepared by Harrison and Lear, Inc. was sent to the recipient under the assumption that he or she is a buying Purchaser shall not rely upon information provided by owner or its agents Purchaser. Please be aware that this information has been derived from as to: 1) The quality, nature, adequacy and physical condition of the sources deemed reliableand no warranty is made as to its accuracy. Further, Property, including but not limited to: structural elements, no warranties or representations shall be made by listing agent or their foundation, roof, appurtenances, access, landscaping, parking agents, representatives, or affiliates regarding oral statements which have facilities, electrical, HVAC, plumbing, sewage and utility system, been made in the discussion of the Property. Parties seeking to act in a third- facilities, appliances; party brokerage capacity must register their client(s) with listing agent prior 2) The quality, nature, adequacy and physical condition of soils to receiving or dispersing any marketing information. Listing agent will not and geology and the existence of ground water or any other recognize any third-party brokerage relationship without first receiving and environmental matter; approving such written client registration. Offer Solicitation Process
Offer Submission Contact Information
Offers should be presented in the form of a non-binding Letter of Jonathan Skinner Intent, spelling out the significant terms and conditions of 2310 Tower Place, Suite 105 Purchasers’ offers including, but not limited to (1) asset pricing, (2) Hampton, VA 23666 due diligence and closing time frame, (3) earnest money deposit, (4) a o 757-825-9100 description of the debt/equity structure, and (5) qualifications to f 757-838-2574 close. The purchase terms shall require all cash to be paid at c 757-771-5905 closing. Offers should be delivered to the attention of Jonathan [email protected] Skinner at the address and/or email listed herein.
Property Visitation
Prospective purchasers will have the opportunity to visit the Property via pre-scheduled property tours. these tours will include access to a representative sampling of units and access to maintenance and other similar facilities. In order to accommodate the Property’s ongoing operations, Property visits will require advance notice and scheduling.
Available Tour Dates
To schedule your tour of the Property, please contact Jonathan Skinner at 757-771-5905 or [email protected].
Timbers 3 Table of Contents
Executive Summary 5 Investment Highlights
Location Analysis 8 City of Norfolk HamptonRoads Retail
Property Location 10 Directions
Property Description 11 Features and Amenities Property Summary Unit Mix Floor Plans
Financial Analysis 16 Stabilized Proforma Post-Renovation Proforma Financial Assumptions
Market Overview 19 Hampton Roads Apartment Market Rent Comparables
Timbers 4 Executive Summary
Harrison and Lear is proud to present the opportunity to acquire the Timbers Townhomes (“Timbers”), a 104 unit multifamily asset strategically located in the geographic center of the Hampton Roads region in Norfolk, Virginia. Situated near the intersection of East Little Creek Road, Chesapeake Boulevard and Interstate 64 (I-64), this spacious family-oriented Property is approximately one mile from the Norfolk Naval Air Station. Timbers has undergone recent renovations but remains an excellent value-add opportunity with the largest floor plans in the market. Interior walls and ceilings have been replaced in approximately 20 apartment units. The spacious and efficient unit layouts are perfectly positioned for families. This Class C, multifamily housing investment opportunity is being offered subject to an assumable self-amortizing HUD loan at 4.2%, with 20 years remaining on the loan.
Price Market Total number of units 104 Total net rentable sf 114,300 Year built 1973 Acres 7.06 Average unit size 1,099 sf Average rent/month $1,022 Average rent/psf $1.01 Current occupancy (November 2017) 82% Loan balance (November 2017) $5,561,723 Assumable Loan – interest rate 4.2%
Timbers 5 Investment Highlights
Great Central Location Excellent Asset and
The Property is strategically positioned with excellent access to the Market Performance East Little Creek Road retail corridor, with its array of popular dining and shopping destinations. It is also near Interstate 64 putting all of the As of January 2017, rents in the Hampton Roads multifamily market employment centers and amenities of Norfolk, and all of Hampton reached an all-time high with an average effective rent of $1,033, while Roads, within easy reach. occupancy improved to 93.9%. Rental rates increased an impressive 3.0% in the past 12 months. In the Norfolk submarket, monthly market rents are averaging $1,031 ($1.13 psf) with an increase in average effective rent of The Timbers is situated in the path of progress. Several major economic developments are just minutes from the Property including Norfolk 3.8% over the past 12 months. Premium Outlets and the first SE Virginia IKEA. It has immediate access Over the past year, 2,081 units were delivered in Hampton Roads while to I-64, which provides residents ready accessibility to all of Hampton 1,789 units have been absorbed. Absorption is forecasted to keep Roads. This includes Downtown Norfolk, Virginia Beach, historical pace and exceed construction in both Norfolk and the overall Hampton locations, retail and recreational facilities like JANAF Shopping Center, Roads market. Gallery at Military Circle and Northside Park, and the vast number of universities and colleges located throughout the region. Timbers also enjoys immediate access to Norfolk International Airport. Class C Multifamily Housing with Value-Add Story Current ownership has done a tremendous job with the community completing substantial renovations to the unit interiors over the last nine months. Interior walls and ceilings have been replaced in approximately 20 apartment units. Additionally, extensive exterior improvements have been completed at the Property including new siding, new landscaping and extensive concrete repairs. Further potential unit upgrades include enhancing and improving the kitchens and bathrooms with an estimated monthly rent premium of $110 per month for 2 bedroom units, $125 per month for 3 bedroom units and $140 per month for 4 bedroom units.
Strong Area Demographics The average household income within a 5-mile radius of the Property is $63,707.
The unemployment rate in Hampton Roads has fallen to 4.1% in 2017, its lowest level in nine years, according to the Virginia Employment Commission.
Timbers 6 Timbers 7 Location Analysis
Location
Timbers is located in Norfolk, Virginia which is part of the larger Hampton Roads Metropolitan Area. Hampton Roads is the second largest population center in Virginia, home to more than 1,700,000 residents. With 245,000 residents, Norfolk is the urban core of Hampton Roads, situated on the Elizabeth River near the mouth of the Chesapeake Bay, the gateway to the Atlantic Ocean. The area features miles of beaches and waterfront property, and is largely defined by the rivers, lakes and bays throughout the area. The Chesapeake Bay and Elizabeth River offer natural deep water channels, which have made Norfolk a major international shipping hub, home to the world’s largest navy base (Norfolk Naval Air Station), and the country’s fasting growing shipping port.
Travel from the Property east along Chesapeake Boulevard allows easy access to I-64, less than one-fifth of a mile away. The I-64 Beltway acts as the major north-south highway in Norfolk with 80,000 vehicles passing by the property each day. Just beyond the on-ramp to I-64 is Granby Street (21,000 cars per day), followed closely by Tidewater Drive (32,283 cars per day), which are major north-south thoroughfares providing access to Downtown Norfolk in 15 minutes. Timbers also enjoys immediate access to Norfolk International Airport, which is just over two miles away. In addition, the community is situated less than ten minutes from Old Dominion University (24,466 students).
The area around Timbers is a long-established residential community that grew from the necessity to meet housing demands for the expanding Norfolk Naval Air Station. The area is largely developed with single family housing. In close proximity to the Property is Norfolk Botanical Garden, Ocean View Golf Course, and several beach parks along Ocean View Avenue, which is located just over one mile north from the Property.
Timbers 8 Location Analysis
Employment
Civilian Labor Force While home to several military installations, the economic engine in Hampton Roads is driven by a diverse civilian labor force of 837,408 people. There are 790,293 employed workers, representing an unemployment rate of just 5.6%. There are three Fortune 500 Companies located in the area which include Norfolk Southern, Dollar Tree, Inc. and Smithfield Foods. Other notable major companies with headquarters or North American headquarters include CMA CGM (shipping), ZIM Integrated Shipping, Maersk Line (shipping), Landmark Media Enterprises (mixed media & marketing), and Blackhawk (firearms).
Military The military provides a solid economic benefit to the region with 102,222 active duty military personnel and showed a net gain to total personnel after Base Realignment and Closing (BRAC). The military bases employ 40,527 civilians and will account for $21.1B in defense spending in 2015. The Navy alone accounts for nearly $15B in direct economic impact to the local economy (salaries and procurement). At Norfolk Naval Air Station, there are approximately 76,000 positions filled by active duty and civilian workers. In November 2014, the Military Sealift Command consolidated two offices onto Norfolk Naval Air Station, bringing an additional 500 jobs to the base.
Timbers 9 Property Location
64
News
Directions PrPrPropPr opopopertyerty AAAddress Address From Virginia Beach: Follow I-264 W/Norfolk Virginia Beach Expressway. Take I-64 W to VA-194 N/Chesapeake Blvd in Norfolk. Take exit 278 from I-64 W. Continue on VA-194 N/Chesapeake Blvd. Timbers Townhome Apartments Drive to North Gate Drive. Smithfi 7004 Northgate Drive Norfolk, VA , 23513 FFFromFrom RRRichmond Richmondichmond/Newport/Newport NewsNews:::: Follow I-64 E to VA-194N/Chesapeake Blvd in Norfolk. Take exit 278 from I-64 E, continue on VA-194N/Chesapeake Blvd. Drive to Northgate Drive.
Timbers 10 Property Description
Community Amenities
• On site management • On site maintenance • Extensive outdoor recreational areas • High speed internet • Three onsite laundry rooms
Interior Features
• Large and spacious layouts • Fully equipped eat-in kitchen and separate dining room • Abundant storage space with large closets • Double vanity master bathroom • Generous windows providing abundant light • Washer/dryer hookups
Timbers 11 Property Description
Property Summary Utilities Address 7004 Northgate Drive, Norfolk, VA Power Paid By/ Utility Service supplied by source method Number of units 104 Heating Gas Direct Dominion Power Number of buildings 18 A/C Electricity Direct Dominion Power Parking Spaces Expansive parking lots Cooking Electricity Direct Dominion Power Land Size 7.06 acres Hot water Gas Direct VNG Density (units/acre) 14.73 Trash N/A Included Waste Management Avg unit size 1,099 Cable/telephone N/A Direct Cox Communications Rent perunit $1,022 Water N/A Billed Back City of Norfolk Rent persf $1.01 Street/Sidewalk Maintenance Included City of Norfolk Building style 2 Story Townhome Exterior New vinyl siding and brick Personnel Overview Foundation Slab on grade Property Manager 1 full-time Roof Pitched w/ asphalt shingles Assistant Property Manager 1 full time Windows Vinyl storefront Maintenance Supervisor 1 full time Heating and cooling Central HVAC in each unit Maintenance Technician 1 full time Water Heater Gas boiler Plumbing Copper Electrical Aluminum/CO/ALR Fire Safety Smoke/CO² detectors in all units
Timbers 12 Property Description
Current Unit Mix
UnitsUnit sf Market rents Rent psfRentable sf Total rent/month Total rent/annual 2BED/1BATH 22 950 $955 $1.00 20,900 $21,010* $252,120* 3BED/1.5BATH 50 1,100 $1,125 $1.02 55,000 $56,250* $675,000* 4BED/1.5BATH 32 1,200 $1,199 $1.00 38,400 $38,368* $460,416* Totals/Averages 104 1,099 $1,022 $1.01 114,300 $115,628* $1,387,536*
* Does not include other income **Ownerand Broker make no representation as to the actualsquare footage of any units. Prospectivepurchasers are encouraged to independently confirm the measurement of all units.
Timbers 13 Floor Plans
2 Bed/1 Bath • Unit 3 Bed/1.5 Bath • Unit
4 Bed/1.5 Bath • Unit
Timbers 14 Financial Analysis
Stabilized Proforma
YEAR 1 STABILIZED PROFORMA
INCOME % of GSR Totals Per Unit Per SF Per Month
Gross Scheduled Rent 100.00% $1,387,536 $13,341 $12.14 $115,628
(Gain)/Loss-to-Lease 1.00% 13,875
Gross Potential Income 99.00% $1,373,661 $13,208 $12.02 $114,472
Vacancy 4.00% 55,500
Non-Revenue Units
Collection Loss
Concessions Total Rental Income 95.00% $1,318,161 $12,675 $11.53 $109,846
% of GSR Totals Per Unit Per SF Per Month
Other Income 153,186
Total Other Income 153,186 Effective Gross Income $1,471,347 $14,147 $12.87 $122,612
EXPENSES % of EGI Totals Per Unit Per SF Per Month
Repairs and Maintenance $60,000
Payroll 183,000
Administrative 104,000
Marketing 11,250
Turnover 20,000 96,000 Utilities Total Variable Expenses 34.4% $474,250 $4,560 $4.14 $39,520
Taxes 78,000
Insurance 44,000
Management Fee 58,853
Total Operating Expenses 52.04% $655,103 $6,299 $5.73 $54,591
Plus: Capital Reserves 26,000
Total Expenses 53.81% $681,103 $6,549 $5.96 $56,758
Net Operating Income $790,244 * $7,598 $6.91 $65,853
* Prior to replacement reserve and PMI deposits Financial Analysis
Post- Renovation Proforma
YEAR 1 POST-RENOVATION PROFORMA INCOME % of GSR Totals Per Unit Per SF Per Month
Gross Scheduled Rent 100.00% $1,542,336 $14,830 $13.49 $128,528
(Gain)/Loss-to-Lease 1.00% 15,424
Gross Potential Income 99.00% $1,526,912 $14,681 $13.35 $127,242
Vacancy 4.00% 61,696
Non-Revenue Units
Collection Loss
Concessions Total Rental Income 95.00% $1,465,216 $14,088 $12.82 $109,846
% of GSR Totals Per Unit Per SF Per Month
Other Income 153,186
Total Other Income 153,186 Effective Gross Income $1,618,402 $15,561 $14.16 $134,866
EXPENSES % of EGI Totals Per Unit Per SF Per Month
Repairs and Maintenance $60,000
Payroll 183,000
Administrative 104,000
Marketing 11,250
Turnover 20,000 96,000 Utilities Total Variable Expenses 29.30% $474,250 $4,560 $4.14 $39,520
Taxes 78,000
Insurance 44,000
Management Fee 58,853
Total Operating Expenses 40.47% $655,103 $6,299 $5.73 $54,591
Plus: Capital Reserves 26,000
Total Expenses 42.08% $681,103 $6,549 $5.96 $56,758
Net Operating Income $937,299* $9,012 $8.20 $78,108
* Prior to replacement reserve and PMI deposits Financial Assumptions Market Rents Expenses
The Harrison and Lear Marketing Pro Forma in this proposal uses Projected operating expenses are based on the 2017 budget for the assumptions to re flect a value of current operations were achieving Property. Total operating expenses, including real estate taxes, are stabilized 95% occupancy with current in place average rents based projected at $6,549 per unit for 2017 which is average for on no collection loss and 1% loss to lease. comparable properties of this vintage and class. Vacancy Loss Management Fees
Vacancy Loss is projected to be 4.00% annually throughout the The Pro Forma assumes an annual management fee of 4.0% of analysis per valuation standards for a new agency loan. Effective Gross Income.
Non-Revenue Units Real Estate Taxes Real Estate Taxes are based on the Property’s current assessed Analysis assumes continuation of 1 Model Unit. value at the current tax rate of $1.15 per $100 of assessed value. Other Income
Total other income is $153,186 or $1,472 per unit. Other income includes laundry income and various fees.
Timbers 17 Market Overview
Hampton Roads Apartment Market
Hampton Roads has developed into one of the strongest and most fundamentally sound apartment markets in the Southeastern United States. Since April 2009, rents have risen from a low of $869 to an all- time high of $1,033 in January 2017. Renter demand for apartments has continued with vacancy dropping to 6.1% in January 2017. Fast Facts Demand for apartments in May 2015 Jan 2017 the Hampton Roads area has remained strong with 1,789 Rent $997 $1,033 units having been absorbed as Vacancy 7.10% 6.10% of January 2017, while 2,081 new units were completed Netabsorption 884 -192 during the same period.
While rent growth has been impressive at 3.0%, rental rates increased to healthy at $1,033 per month, or $1.13 psf. One bedroom units currently rent for $866 per month, two bedroom units for $980 per month and three bedroom units for $1,154 per month. Norfolk Class C Properties have the lowest vacancy rate of 5.6% on the Southside while maintaining an average rental rate of $0.99 psf. There are almost 2,800 units under construction throughout Hampton Roads. While there is a significant amount of development in Hampton Roads, there are several mitigating factors reducing concerns regarding over development.
These factors include the physical attributes of the region (wetlands, no build zones surrounding military installations, etc), and an ever- growing insurgence of public sentiment calling for the halt of urban sprawl. With this, the long-term construction growth in the area is limited.
Timbers 18 Rent Comparables
Subject Comp 1 Comp 2 Comp 3 Property name Timbers Merrimack Landing Colony Point Pinewood Gardens
Address 7004 Northgate Dr 8807 Monitor Way 986 Armfield Circle 1731 E Little Creek Rd Yearbuilt 1973 1942 1964 1963 Unit count 104 492 344 761 Average unit size 1,099 656 1,017 1,049 Averagemarketrent $1,112 $691 $931 $1,035 Averagerentpsf $1.01 $1.05 $1.13 $1.00 Occupancy 91.3% 95% 92% 93%
2 Bedroom Subject Comp1 Comp 2 Comp 3 # of units 22 248 224 409 Sf 955 650 1,055 1,038 Rent $950 $702 $1,175 $1,035 Average rent psf $1.00 $1.08 $1.11 $1.00 3 Bedroom Subject Comp1 Comp 2 Comp 3 # of units 50 68 28 59 Sf 1,100 775 1,225 1,115 Rent $1,125 $772 $1,405 $1,115 Average rent psf $1.02 $1.00 $1.15 $1.00 4 Bedroom Subject Comp1 Comp 2 Comp 3
# of units 32 N/A N/A N/A Sf 1,200 Rent $1,199
Average rent psf $1.00 As demonstrated above, Timber’s average rent per square foot is low relative to the local market comparables. The significant spread in average rent per square foot represents a tremendous opportunity to realize upside in gross scheduled rent and effective gross income. The Vacancy Rate for 4 bedroom apartment homes in Norfolk is 4.5% which illustrates the strong demand for this product .
Timbers 19