674 W 22ND STREET | SAN PEDRO, CA 90731 OFFERING MEMORANDUM 1 LISTED BY NABIL AWADA DAVID HARRINGTON Associate EVP & National Director D: (310) 844-9362 D: (310) 295-1170 M: (310) 469-2974 M: (310) 497-5590 E: [email protected] E: [email protected] License No. 02046840 (CA) License No. 01320460 (CA) AREA OVERVIEW 674 W 22nd Street San Pedro, CA 90731 4 PROPERTY OVERVIEW 8 LOCATION OVERVIEW 12 FINANCIAL OVERVIEW PROPERTY OVERVIEW 4 PROPERTY OVERVIEW Matthews Real Estate Investment Services is proud to offer 674 W 22nd Street. This is an opportunity for an investor or owner-user to purchase a 3-unit property located in the heart of San Pedro. This investment allows for an owner to live in one unit and enjoy the rental income from the others. This opportunity also allows for a potential investor to obtain residential financing. The front building consists of two units; (1) three bedroom/two-bathroom and a bonus non-conforming (1) one bedroom/one-bathroom which may be permitted* or used as a guest room for an owner-user. The three-bedroom unit has a brand-new modern kitchen with granite counter-tops, stainless steel appliances, and easy garage/front lawn access. Back building has two legal units that are occupied and a vacant non-conforming fully-functional studio that may be permitted*. Occupied units consist of (1) two bedroom/one-bathroom and (1) one bedroom/one-bathroom. The two-bedroom unit is located upstairs with a spacious kitchen, granite counter-tops, and new appliances. The one-bedroom unit downstairs has a built-in laundry hook-up and easy access to garage parking. Building has been well-maintained, and family owned since 1977. As the area continue to experience growth, a buyer can capitalize on the tight rental market and rents in this neighborhood by implementing a strategic unit interior renovation plan, which will upgrade the units and allow the buyer to command top of the market rents. Rents at the high end of the range result in 40% upside. *Buyer to verify permitting status with city for non-conforming units. PROPERTY HIGHLIGHTS » 3 Units + (2) Bonus Vacant Units* » Gross Building Size of 2,903 Square Feet. » Built in 1986, Front Building Consists of 3bed/2bath Owner’s Unit + (1) Bonus Vacant 1bed/1bath. » Built in 1933, Rear Building Consists of 2bed/1bath and 1bed/1bath Units + (1) Bonus Vacant Studio. » Lot Size of 4,999 Square Feet. » Total of (4) Attached One-Car Garages. Garages attached to rear units have alley access. » Located conveniently within a mile from Downtown San Pedro, the San Pedro Public Market development, and 22nd Street Landing. 5 PHYSICAL DESCRIPTION $ NO. OF UNITS YEAR BUILT APN GROSS SF AVG SF PER UNIT LOT SIZE 3 1933/1986 7462-029-026 2,903 968 4,999 PARCEL MAP 6 7 LOCATION OVERVIEW 8 SAN PEDRO, CA San Pedro is a community within the city of Los Angeles, CA. The port of Los Angeles is partially located within San Pedro. The area has gone from being a dominant fishing industry to a primarily working class community within Los Angeles. Investors have continued to find value in San Pedro, through its location adjacent to the coast, its solidified renter base, and the ample upside found in local property. San Pedro is home to many attractions. Downtown San Pedro has much to offer including fine dining, unique shops, entertainment, events, art studios, and DEMOGRAPHICS merchants. San Pedro also hosts a variety of attractions near the USS Iowa’s new home at First st & Harbor Blvd, including the Los Angeles Maritime Museum, the Cabrillo Marine Aquarium, the SS Lane Victory, the Warner Grand Theatre, the Population 1 Mile 3 Mile 5 Mile Mueller House, Ports O’ Call Village, the San Pedro Bay Historical Society and 2010 Census 37,036 89,499 167,572 more. 2019 Estimate 38,338 93,159 174,029 2024 Projection 39,349 95,869 179,019 PORTS O’CALL REDEVELOPMENT Population Growth 1 Mile 3 Mile 5 Mile Port O’Call, located in San Pedro, is undergoing a major redevelopment and will Growth 2010-2019 3.52% 4.09% 3.85% be the San Pedro Public Market. Construction of the new building is expected to Households 1 Mile 3 Mile 5 Mile being between late 2018 and early 2019, with a 2020 opening for the first phase of the new complex. The 2010 Census 14,276 33,851 58,189 $100-million plan put forth by developers plans to fully transform 30 acres of 2019 Estimate 14,751 35,154 60,289 space at the waterfront into a Grove-style outdoor mall. 2024 Projection 15,136 36,165 61,993 The hands-down biggest attraction is the San Pedro Fish Market, which sees a Income 1 Mile 3 Mile 5 Mile steady flow of weekend visitors coming to enjoy trays of seafood by the water. The fish market will stay open during the demolition of and construction on the Average HH Income $89,519.09 $106,674.62 $103,131.52 rest of the Ports O’ Call, and when the dust clears, it will move to a new building at the north of the new complex and continue to serve as a “main anchor” of the development. The first wave of changes will wash over 16 acres of the site and bring estaurants, shopping, fresh markets, boutique-style office space and more than half a mile of waterfront promenade. A new route for a handful of Red Car trolleys, which will be refurbished to run on light rail in the project. LOS ANGELES MSA As the second largest metropolitan area in the United States, the Los Angeles Metropolitan Statistical Area, or the Southland, consists of both Los Angeles and Orange Counties. These two counties also make up the inner core of the Greater Los Angeles urbanized region. Los Angeles County, one of California’s original 27 counties, is one of the nation’s largest counties both in land area and population. With nearly 10 million residents, the Los Angeles population accounts for approximately 27 percent of California’s population. The area continues to grow, especially given the vigorous residential development in downtown LA. Downtown LA’s re-emergence has been stimulated by an influx of new residents, restaurants and major league sports. Crowds flock to the sports and entertainment combination of the Staples Center, home to both the Lakers (NBA) and the Kings (NHL), and LA LIVE, which has become a local hotspot. The now Los Angeles Rams (NFL) play a few miles down the road at the Los Angeles Memorial Coliseum, just across the street from the University of Southern California campus. Dodger Stadium, on the other hand, is farther up north towards Echo Park and is home to the Los Angeles Dodgers (MLB). Hollywood, Beverly Hills, and Santa Monica have all influenced Los Angeles’ claim to fame. Visitors explore the TCL Chinese Theatre and the Hollywood Walk of Fame with the hope of encountering their favorite celebrities’ stars. Beverly Hills boasts the famous Rodeo Drive full of high-end shopping and world-class restaurants. The Santa Monica Pier and beach draw vacationers from all over the world year-round, and especially during the summer months. The county coastline offers 75-miles of some of the world’s greatest beaches. Each seaside town is unique, offering charm and sophistication. From its near- perfect weather to some of the world’s most iconic landmarks and attractions, Los Angeles holds many distinctions. It is one of the few cities in the world where it’s possible to ski in the morning and surf in the afternoon. 10 ECONOMY Famously known for a heavy entertainment industry based economy, the Los Angeles metropolitan area attracts many visitors. Consequently, leisure and hospitality is also a leading industry and has experienced recent growth in employment. It is now the sixth largest hotel market in the United States. The Los Angeles-Orange County metro area alone has an enormous economy with an estimated $866 billion GMP. Together with Ventura, Riverside and San Bernardino Counties, Orange and Los Angeles county make up the Greater Los Angeles Area, a combined statistical area that is the third largest economic center in the world after the Greater Tokyo and New York metropolitan areas. The LA economy is famously and heavily based on the entertainment industry, with a particular focus on television, motion pictures, interactive games, and recorded music - the Hollywood district of Los Angeles and its surrounding areas are known as the “Movie Capital of the United States” due to the region’s extreme commercial and historical importance to the American motion picture industry. Other significant sectors include shipping/ international trade - particularly at the adjacent Port of Los Angeles and Port of Long Beach, together comprising the United States’ busiest seaport - as well as aerospace, technology, petroleum, fashion and apparel, and tourism. TOP EMPLOYERS 11 FINANCIAL OVERVIEW 12 INVESTMENT SUMMARY 674 W 22nd Street San Pedro, CA 90731 Number of Units: 3 Year Built: 1933 | 1986 Price/ Price/ CURRENT MARKET Offering Price APN: 7462-029-026 Unit Foot Cap Rate GRM Cap Rate GRM Gross Sq. Ft.: 2,903 $900,000 $300,000 $310.02 5.76% 12.50 7.83% 9.87 Average S.F. Per Unit: 968 Lot Size (S.F.): 4,999 Zoning LARD1.5 UNIT MIX RENT ROLL Current Current Market Market Unit Mix Rent Market Rent Total Unit Unit Mix Avg Monthly Units Mix % Monthly 1 3+2 $2,000 $2,450 Rent Rent Rent Rent 2 2+1 $1,250 $1,850 1 1+1 33% $750 $750 $1,300 $1,300 3 1+1 $750 $1,300 1 2+1 33% $1,250 $1,250 $1,850 $1,850 TOTALS $4,000 $5,600 1 3+2 33% $2,000 $2,000 $2,450 $2,450 3 AVERAGES $1,333 $1,867 Scheduled Monthly Rent: $4,000 $5,600 Scheduled Yearly Rent: $48,000 $67,200 13 ANNUALIZED OPERATING DATA Current Pro Forma Market Scheduled Gross Income: $48,000 $48,000