6820 7th Avenue 14 UNITS OFFERED FOR $1,065,000 (6.5% cap rate and 9.0x GRM) CONFIDENTIALITY, TERMS, AND CONDITIONS: The information contained herein is strictly confidential, furnished solely for the purpose of considering the acquisition of the property described herein and is not to be used for any other purpose or made available to any other person without the expressed written consent of ARA Pacific. It has been obtained from the Seller and may include other sources believed to be reliable, but no representation is being made with regard to its accuracy or completeness. Prospective investors should undertake their own investigations and reach their own conclusions without reliance upon the material contained herein. Neither the Seller nor the Agent nor any of their respective officers, agents or principals has made or will make any representations or warranties, expressed or implied, as to the accuracy or completeness of the Offering Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of the Offering Memorandum or its contents. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. The Seller and Agent expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and/or terminate discussions with any entity at any time with or without notice. The Seller shall have no legal commitment or obligations to any entity reviewing the Offering Memorandum or making an offer to purchase the Property unless and until such offer for the Property is approved by the Seller, and any conditions to the Buyer’s obligations there under have been satisfied or waived. CONTACT INFORMATION MARC ANDENMATTEN SACRAMENTO OFFICE DIRECTOR 980 9th Street License CA: 01956176 Suite 2500 [email protected] Sacramento, CA 95814 (916) 835-8844 SAN FRANCISCO OFFICE NATE OLESON 655 Montgomery Street MANAGING DIRECTOR Suite 1705 License CA: 01467941 San Francisco, CA 94111 [email protected] (916) 599-6523 2 FOUNTAIN CREST Real Estate A RENOVATED 48-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY Investment Services TABLE OF CONTENTS EXECUTIVE SUMMARY 5 The Offering 6 Investment Highlights 6 PROPERTY OVERVIEW 8 Property Information 9 Property Details 11 RENTAL MARKET STUDY 12 Rent Comparables Study 13 Rent Comparables Map 14 FINANCIAL ANALYSIS 16 Rent Roll 17 Pro Forma Underwriting 18 REGIONAL OVERVIEW 19 Regional Overview 20 Sacramento Highlights 21 Regional Employers 22 Major Developments 23 Job Growth 24 3 $2,550,000; 5.5% CAP RATE, 9.3X GRM 6.4% MARKET CAP RATE, 8.5X GRM A 33-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY 7TH AVENUE $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 4 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY Executive SUMMARY INVESTMENT HIGHLIGHTS THE OFFERING • Add-Value Opportunity - 6820 7th Avenue is an excellent value-add opportunity. The property consists of all 2-bedroom units. Current ownership has renovated half of the units with new cabinets, quartz countertops, ARA Newmark is pleased to provide the and new flooring. In addition, 75% of the windows have been upgraded to dual-pane. following Offering Memorandum pertaining to the exclusive marketing and sale of 6820 7th Avenue, a 14-unit apartment community • Rental Upside - 6820 7th Ave is constantly 100% occupied. The current average in-place is $706. ARA located in Rio Linda. estimates the current market rent to be $775 as evidenced by our sub-market rental survey. This 8.9% loss-to- lease represents an annual revenue increase of $11,592 that a new Buyer can capture by continuing to lease Offering Price units at slightly higher rates. • Sacramento Apartment Market - According to an article published in April on Axiometrics.com, Sacramento Price: $1,065,000 posted the highest annual effective rent growth among the nation’s top 50 markets. During the first quarter Price Per Unit: $76,071 Price Per SF: $117 of 2016, rents rose an average of 6.5% compared to the same quarter a year ago. CAP (Current / Market) 6.5% / 7.5% GRM (Current / Market) 9.0 / 8.2 SACRAMENTO AVERAGE RENT & VACANCY RATE $1,350 8.0% 7.4% Terms of Sale $1,300 Delivered free and clear. 7.0% $1,250 6.1% 6.1% 6.0% 5.8% 5.6% 5.6% 6.0% 5.5% 5.5% 5.3% $1,200 4.9% 6820 7th Ave 5.0% $1,150 6820 7th Ave, Rio Linda, CA VALUATION4.1% SUMMARY 14 Units VALUATION $1,100 3.5% 4.0% 3.4% 3.5% PROPERTY INFORMATION $1,050PRICING PRO FORMA ASSUMPTIONS 3.0% CURRENT RENTS MARKET RENTS Address 6820 7th Ave Suggested Net $1,000Price $1,065,000 Rio Linda, CA Price Per Unit $76,071 Income 2.0% Units 14 Price Per SF $950 $117 GPR $118,440 $130,200 Net Rentable SF 9,120 Vacancy/Losses ($5,922) ($6,510) 1.0% Avg Unit Size 650 CURRENT RENTS $900 Other Income $1,450 $1,450 Year Built 1959 Cap. Rate 6.5% Total Income $113,968 $125,140 $1,003 $1,021 $1,001 $1,009 $1,036 $1,117 $1,228 $1,306 $950 $944 $969 $980 $997 $963 $975 Rent Roll March 2016 GRM $850 9.0 Expenses 0.0% 2002 2003 2004 2005 2006Operating 2007 2008 Expenses 2009 2010 2011 2012 2013 2014$42,107 2015 1Q16 $42,107 MARKET RENTS Replacement Reserves $3,150 $3,150 Cap. Rate 7.5% Total Expenses $45,257 $45,257 GRM 8.2 Net Operating Income $68,711 $79,883 UNIT MIX & RENTAL SUMMARY UNITS AVG SF* % MIX TOTAL APPROX SF AVG CONTRACT RENT PER SF AVG MKT RENT PER SF 2 BR x 1 BA 2 BR x 1 BA 14 650 100% 9,100 $705 $1.08 $775 $1.19 100% TOTAL / AVERAGE 14 650 100% 9,100 $705 $1.08 $775 $1.19 *SF has been estimated based the total square footage of the property. 6 VALUE MATRIX HIGH MID LOW SUGGESTED VALUE $1,065,000 $975,000 $925,000 PRICE PER UNIT $76,071 $69,643 $66,071 PRICE PER SF $117 $107 $101 CURRENT RENTS CAP RATE - CURRENT 6.5% 7.2% 7.6% GRM - CURRENT 9.0 8.2 7.8 CASH-ON-CASH - CURRENT 8.0% 10.3% 11.8% MARKET RENTS CAP RATE - MARKET 7.5% 8.3% 8.8% GRM - MARKET 8.2 7.5 7.1 CASH-ON-CASH - MARKET 11.5% 14.2% 15.9% *Cash-on-cash assumes 70% LTV at 4.00% with 30-year amortizing loan. N McClellan Business Park: Bell Acqua Lake 16M sq. ft. of office, industrial, R&D, Aviation, and Multifamily Waterski School Dry Creek Elementary Rio Linda Junior High School Rio Linda Prep Academy Rio Linda Senior High School Rio Linda Airport ELKHORN BLVD Rio Linda Shopping Center: Orchard Elementary Rio Linda Public Library 6820 7TH AVE $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 7 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY Property OVERVIEW PROPERTY INFORMATION Address 6820 7th Avenue, Rio Linda CA Intersection 7th Aveneu & M Street County Sacramento Year Built 1959 Number of Units 14 units Site Size 0.49 acres Parcel Number 206-0184-013-0000 Stories 1 & 2 Parking 14 assigned parking spaces Parking Ratio 1 Parking Space Per Unit $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 9 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY 7TH AVENUE PROPERTY DETAILS CONSTRUCTION Roof Pitched: Tile & Composition Shingle Exterior Walls Stucco Paving Asphalt MECHANICAL Cooling / Heating Window / wall units Hot Water 1 100G and 1 119G gas hot water heater Waste Removal Waste removal is located in the parking lot Electrical Copper Water Supply Lines Copper Sewer Lines Cast iron UTILITIES Electricity Paid for by tenants Gas Paid for by tenants Trash Paid for by owner Water Paid for by owner Sewer Paid for by owner $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 11 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY Rental Market OVERVIEW RENT COMPARABLES STUDY 6820 7th Ave 6820 7th Ave, Rio Linda, CA RENT COMPARABLES 14 Units RENT COMPARABLES Comp # Location Unit Type Rent Notes 1 Oak Lane 2 BR x 1 BA $785 831 sq ft, not doing major renovations. 2 Bell Acqua 1 BR x 1 BA $750 Large 1-bedroom unit, 850 sq. ft., much newer property. Comp Totals/Avgs. 2 BR x 1 BA $768 2 Bell Acqua 2 BR x 2 BA $850 Large 2-bedroom 2-bath unit, 1,150 sq. ft., much newer property. Subject 6820 7th Ave 2 BR x 1 BA $775 1 2 4 $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 13 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY 6820 7th Ave $775 | 2x1 S Oak Lane $785 | 2x1 1 Bell Acqua $750 | 1x1 $850 | 2x2 2 $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 14 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY N Bell Acqua Lake Waterski School Rio Linda Airport Dry Creek Elementary RIO LINDA BLVD ELKHORN BLVD Rio Linda Public Library Rio Linda Prep Academy Rio Linda Senior High School Rio Linda Shopping Center: Rio Linda Junior High School 6820 7TH AVE $1,065,000; 6.5% CAP RATE, 9.0X GRM 7.5% MARKET CAP RATE, 8.2X GRM 15 A 14-UNIT MULTIFAMILY INVESTMENT OPPORTUNITY Financial ANALYSIS 6820 7th Ave RENT ROLL 6820 7th Ave, Rio Linda, CA 14 Units RENT ROLL Current Asking Market Unit Unit Type Sq Ft* Rent Rent 1 2 BR x 1 BA 650 $750 $775 2 2 BR x 1 BA 650 $750 $775 3 2 BR x 1 BA 650 $695 $775 4 2 BR x 1 BA 650 $750 $775 5 2 BR x 1 BA 650 $650 $775 6 2 BR x 1 BA 650 $735 $775 7 2 BR x 1 BA 650 $725 $775 8 2 BR x 1 BA 650 $650 $775 9 2 BR x 1 BA 650 $600 $775 10 2 BR x 1 BA 650 $725 $775 11 2 BR x 1 BA 650 $665 $775 12 2 BR x 1 BA 650 $750 $775 13 2 BR x 1 BA 650 $750 $775 14 2 BR x 1 BA 650 $675 $775 AVERAGE 650 $722 $775 TOTAL 9,100 $9,870 $10,850 *SF has been estimated based on total bldg.