| OFFERING MEMORANDUM a Berkshire Hathaway and Jefferies Financial Group company 110 Units Delivered Vacant-Unique Opportunity Variety of Uses-Affordable, Market, Co-Living, Short Term Rare Large Core Los Angeles Asset-172 Units 96 Walk Score and Steps to Metro Station Currently Operated as a Hotel and Apartment Building Massive Unutilized Common Areas to Add Amenities 110 Units Delivered Vacant THE OLYMPIC 725 S WESTLAKE AVENUE | LOS ANGELES, CA 90057 172 UNITS | BUILT 1925 OFFICE INVESTMENT ADVISORS BRENT SPRENKLE Senior Managing Director 310.470.4892 [email protected] CA BRE License #01290116 MORTGAGE BANKING ALLAN FREEDMAN Managing Director 310.209.3243 [email protected] SOUTH BAY LOS ANGELES 2321 Rosecrans Avenue, Suite #3235 El Segundo, CA 90245 Office: (424) 239-5900 Fax: (424) 239-5901 FRONTMATTER THE PROPERTY 4 THE LOCATION 8 THE OPPORTUNITY 18 FINANCIALS 26 COMPARABLE PROPERTIES 28 ECONOMIC & DEMOGRAPHIC OVERVIEW 40 MULTIFAMILY FORECAST 56 DISCLAIMER 59 BERKADIA 3 THE PROPERTY PROPERTY SUMMARY Units 172 Year Built 1925 Parcel Number(s) 5141-019-013 Type of Buildings 1, Four-Story, Rentals Roofs Flat Exterior Brick PRO P ERT Y PROPERTY DESCRIPTION SUMMAR The Olympic is a 172-unit apartment complex/hotel situated in the redeveloping Westlake district of Los Angeles, just west of downtown. The Olympic will be delivered with a minimum of 110 units vacant at the close of escrow. The property is steps away from Wilshire Boulevard, Alvarado Street, MacArthur Park, and the Metro Station. The Olympic was built in 1925 and is a four-story complex constructed of reinforced brick with two large basements and a massive lobby. All units are efficiencies and have private Y bathrooms and a closet but no kitchen. No units share bathrooms. The certificate of occupancy from 1926 states the property is a “four-story, Class C, 172 Rooms, Hotel”. As the property was originally a hotel, all utilities are master-metered. The property is serviced by four staircases and an elevator in a central hallway configuration with a courtyard between the u-shaped structure. There is a large lobby that features a leasing desk as well as a private office. There are two large basements on either side of the property with the basement to the north having a separate entrance to the street. This space could possibly be leased for additional income. The Olympic Hotel boasts a walk score of 96 which is defined as a “Walker’s Paradise” as it is a two-minute walk to the Metro Purple Line and Red Line. The property has been featured in movies, television commercials and shows and additional income has been received by the current owner for filming purposes. BERKADIA 5 PROPERTY PHOTOS Y SUMMAR Y ERT P PRO 6 BERKADIA PROPERTY PHOTOS PRO P ERT Y SUMMAR Y BERKADIA 7 THE LOCATION NEIGHBORHOOD SHOPPING DEMAND DRIVER LOS ANGELES, CA FROM THE FROM THE 1.3mi PROPERTY 0.8mi PROPERTY THE OLYMPIC N E IGHBORHOOD QUICK FACTS SF SHOPPING JOBS 330k DESTINATION 1.3k SUPPORTED TOTAL HOSPITAL 30 STORES 408 BEDS 618.2k H&M | Nordstrom | Zara Good Samaritan Hospital Population (Within Three Miles) NEIGHBORHOOD CONVENIENCES DEMAND DRIVER PRO % FROM THE P 78 ERT PROPERTY Renter Occupied Housing Units 2.5mi (Within Three Miles) Y JOBS SUMMAR 20.9k SUPPORTED $ STUDENTS 922.4k 48.5k ENROLLED Median Housing Unit Value Y Within a two-mile radius of the property University of Southern California (Within Three Miles) $ 42.2k PRIMARY EDUCATION DEMAND DRIVER Median Household Income STUDENTS FROM THE (Within Three Miles) 673.8k SERVED 1.2mi PROPERTY SCHOOLS JOBS 1.4k AND CENTERS 25.0k SUPPORTED 4.0% SF OF City Unemployment Rate JOBS COMMERCIAL SUPPORTED SPACE (December 2019) 66.5k 5.6m MacArthur Park ES | John H. Liechty MS | Belmont Sr. HS L.A. Live BERKADIA 9 LOCATION MAP ON I AT C E LO TH 10 BERKADIA LOCATION MAP TH E LO C AT I ON BERKADIA 11 PROPERTY BOUNDARY AERIAL ON I AT C E LO TH 12 BERKADIA PROPERTY POINT OF INTEREST AERIAL TH E LO C AT I ON BERKADIA 13 LOCATION DESCRIPTION Westlake – With the recent upscale boom, young artists and professional are drawn to the Westlake neighborhood, now featuring stylish lofts, swanky nightclubs, bars, and theaters. Residents enjoy the area’s cultural aspects, some of LA’s best-known historic dining establishments, convenient location close to Downtown Los Angeles, public transit options, and rolling park land. Over the last seven years, rent has increased significantly in the neighborhood, but is still economical compared to downtown living. As Westlake continues to redevelop, the city of Los Angeles is requiring developers to include affordable housing in new apartment projects. Downtown - Downtown Los Angeles (DTLA) is the city’s central business district featuring a wide spectrum of companies with highly skilled workers, cultural activities, and is surrounded by popular neighborhood destinations such as Silverlake, Echo Park, and Koreatown. Downtown also serves as a hub for the Metro rapid transit system, and is known for its government buildings, parks, theaters, and public spaces. Like many cities, DTLA is continually undergoing revitalization efforts with developers investing billions of dollars into the area. The area is currently home to thousands of residents and over 1,000 new stores, restaurants, and companies. As the region’s economic engine, DTLA’s population has tripled since 1999 and is expected to double again over the next decade. The ON 2018 Survey by the Downtown Center Business Improvement District states “a growing population I of residents, workers, and visitors - enthusiastically embracing the culture, community, and AT convenience that are defining Downtown Los Angeles as one of the most dynamic city centers of C the 21st Century.” Some of the most popular venues and attractions in DTLA include the Staples Center, Exposition Park, The Music Center, The Broad, Downtown LA ArtWalk, LA Convention E LO Center, MOCA Los Angeles, Walt Disney Hall, and L.A. Live sports and entertainment district. TH 14 BERKADIA LOCATION DESCRIPTION Downtown Los Angeles Tenant Highlights TH E LO C AT I ON BERKADIA 15 LOCATION DESCRIPTION Transportation Downtown Los Angeles serves as a regional transportation hub, home to six freeways, six Metrolink lines, and five Metro rail lines. The city’s core is bounded by the 10 (San Bernardino), 101 (Santa Ana), and 110 (Harbor) freeways, which connect to Greater Los Angeles’ extensive freeway network. The property boast a Walkscore of 96 which is considered a Walker’s Paradise The Regional Connector, a transformative public transit project, is underway which will eventually connect the Blue, Expo, and Gold Lines. Both LAX and Burbank Airport are within 15 minutes of DTLA, and Long Beach Airport is about 25 miles away. LAX is the third-busiest airport in the nation and seventh-busiest airport in the world. Nightlife, Dining, & Entertainment Downtown is a mix of unique neighborhoods offering a variety of amenities and activities all connected by a sophisticated transit system, streetscapes, and public spaces. Young professionals are drawn to the Downtown lifestyle, where the average downtown resident is within a five-minute walk from about 34 restaurants, cafes, and bars. • Downtown LA has a walkability score of 97, the highest in Los Angeles. ON I • DTLA offers over 1,000 new bars, restaurants, and nightclubs. AT C • There are 65 bike share stations with 800 bikes and 15 miles of bike lanes • The area is home to over 100 live music venues, 60 art galleries, and 15 farmers markets, grocers, and coffee roasters E LO TH Some of the most popular venues and attractions in DTLA include the Staples Center, Dodger Stadium, Exposition Park, The Music Center, The Broad, Downtown LA ArtWalk, LA Convention Center, MOCA Los Angeles, Walt Disney Hall, and L.A. Live sports and entertainment district. 16 BERKADIA THE LOCATION 17 BERKADIA THE OPPORTUNITY VALUE-ADDED OPPORTUNITIES The Olympic, with a minimum of 110 units delivered vacant, is a true value-added opportunity that is a prime candidate for a variety of uses including: Short Term Housing Co-Living or Communal Housing Affordable Housing and Market Rate Senior Housing Unit Descriptions-All units are very similar. The property was originally a hotel and all units have a private bathroom, a small closet and a main room. No units share bathrooms and no units have kitchens. The property is master-metered for all utilities. Unutilized Common Areas: Basements-The property has two basements that are completely underutilized. The basement to the south is mostly building mechanical equipment T but the basement to the north, which is estimated to be over 5,000 square feet (buyer to verify), is completely unused and has a direct entrance from H the street as well as a formal staircase from the lobby. It is rumored but not verified that this area was previously a restaurant. This basement is currently E O closed to the occupants of the building and could be utilized for a variety of uses including: PP » Storage Lockers ORTUN » Communal kitchen » Laundry Facility I T » Restaurant or retail use Y » Gym or Fitness Center » Recreation Room » Tenant Lounge » Community Medical Center Courtyard-There is a large courtyard accessed through the lobby that is underutilized. Various amenities could be added including: » Bicycle Racks » Landscaping and Fountains » Fire Pits or Barbeques » Patio Furniture BERKADIA 19 VALUE-ADDED OPPORTUNITIES - RECENT CAPITAL IMPROVEMENTS Existing Long-Term Tenants-Approximately 35% of the units are leased to long term tenants at below market lease rates. A new owner will be able to capitalize on higher rents upon the turnover of these units. The units are subject to the Los Angeles rent stabilization ordinance (rent control) which currently allows for annual rent increases of 6%.