SILVER OAKS RARE APARTMENT OPPORTUNITY ACROSS FROM BOOMING GRAND CANYON UNIVERSITY 5510 N. 35TH AVENUE | PHOENIX, AZ | 85019 DOWNTOWN PHOENIX CENTRAL CORRIDOR SILVER OAKS OFFER SOLICITATION PROCESS 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 visitation will require advance notice and scheduling. OFFER SUBMISSION Offers should be presented in the form of a non-binding Letter of Intent, spelling out the significant terms and conditions of Purchasers’ offers including, but not limited to (1) asset pricing, (2) due diligence and closing time frame, (3) earnest money deposit, and (4) qualifications to close. The purchase terms shall require all cash to be paid at closing. Offers should be delivered to the attention of Ryan Ash and Mike Woodrick using the email or fax number information listed below. CONTACT INFORMATION Ryan Ash Senior Managing Director Tel: 602-852-3784 [email protected] Mike Woodrick Director Tel: 602-852-3789 [email protected] ARA - Phoenix 2398 E. Camelback Road Suite 950 Phoenix, Arizona 85016 Tel: 602-252-4232 Fax: 602-252-4236 www.ARAnewmark.com 2 TABLE OF CONTENTS 04 EXECUTIVE SUMMARY 08 VALUATION SUMMARY 12 COMPARABLE SALES 18 PROPERTY OVERVIEW 29 CONTACT EXECUTIVE SUMMARY CORDOVA ELEMENTARY SCHOOL SILVER OAKS EAST AERIAL 4 THE OPPORTUNITY INVESTMENT HIGHLIGHTS Silver Oaks is an attractive 36 unit apartment community located in Phoenix, Arizona. The property has great curb-appeal and tremendous frontage along 35th Avenue just north of Camelback Road. • Directly Across from Booming Grand Canyon The community is located directly across the street from the booming Grand Canyon University. The University’s 300 acre campus is going through a $1 billion dollar investment in technologies, University infrastructure, and expansion over the past 10 years, providing a tremendous benefit to the local • All Large 2 and 3 Bedrooms submarket through added employment, educational opportunities, and a sharp increase in rents • Tremendous Frontage and Curb Appeal and values. The campus enrollment in 2014 was 8,500 students and the 2018 enrollment has now surpassed 20,500 students. GCU’s 5 year forecast for enrollment is to grow to over 30,000 students • Block Construction, Individually Metered and will expand the 300 acres campus to 400 acres. GCU was ranked #7 in the nation for best college • Mature Landscaping and Grass Courtyards campus in 2017 due in large part to the University’s commitment to providing its students with a spirit of community and engagement coupled with the rapid expansion of student state-of-the-art facilities Throughout that have been built in the last 5 years. Among the new facilities in recent years are the Colangelo • Significant Rent Growth over the past 5 Years College of Business Building, new Mechanical and Biomedical Engineering Building, Student Life Building, Canyon Activity Center, New 4 Story Office Building, a new GCU Hotel and Restaurant, and • $300+ Upside in Rents through Interior several large high rise-parking garages. In addition, GCU has taken a huge leap forward in attracting Upgrades national athletic talent by adding state-of-the-art Sport Facilities including a new Soccer, Baseball, • Potential Student Housing Opportunity Softball, Tennis, and Beach Volleyball Stadiums, as well as GCU Arena(a 135K SF 7,000 seat stadium that hosts the men’s and women’s basketball teams along with conventions, concerts, and other • 2018 GCU on Campus Enrollment is 20,500, 5 sporting events). YR Forecast is 30,000+ Silver Oaks was built of block construction with a stucco exterior and is individually metered for electricity and individual electric water heaters and roof mounted HVAC’s. Community amenities include two on-site laundry facilities, grass courtyards, barbecue and picnic areas. In addition there is a rental office on-site for leasing and 17 storage units that are currently not being rented by ownership. There have been several improvements made to the property in recent years, including new roofs, new HVAC’s, most of the units have dual pane windows, and many of the units have upgraded cabinets. The property has lengthy frontage along 35th Avenue and benefits greatly from its attractive landscaping consisting of grass courtyards and mature ficus and oak trees providing a park like setting for residents to enjoy. The unit mix is extremely rare for the midsize apartment market and consists of all large 2 (800 square feet) and 3 (938 square feet) bedroom floor plans. Currently Silver Oaks is not a student housing property but due to its location being directly across from Grand Canyon University, coupled with the unit mix consisting of all 2 and 3 bedrooms, and the sharp increase in enrollment the potential to convert the community from traditional apartments to student housing provides huge upside in rents and value. Traditional value-add upside in rents of $300+ could be achieved through interior upgrades and the implementation of washer & dryers in the units. Silver Oaks offers an investor the tremendous opportunity to acquire an attractive apartment community consisting of all large 2 and 3 bedrooms that is located adjacent to the rapidly growing Grand Canyon University. 5 TERMS OF THE OFFERING TOTAL UNITS 36 YEAR BUILT 1959 PRICE $3,500,000 PRICE PER UNIT $97,222 RENTABLE SF 29,750 AVERAGE SF PER UNIT 826 PROFORMA CAP RATE 7.59% AVERAGE RENT PER UNIT $938 AVERAGE RENT PER SF $1.13 PROPERTY DETAILS SQUARE PROFORMA MARKET PROFORMA MARKET UNIT TYPE NO. OF UNITS Silver Oaks Apartments FEET RENT/MONTH RENT/SQUARE FOOT 5510 N. 35th Avenue 2 BED / 1 BATH 26 800 $910 $1.14 ADDRESS: Phoenix, AZ 85019 3 BED / 1 BATH 10 895 $1,010 $1.13 COUNTY: Maricopa TOTAL / AVG. 36 826 $938 $1.13 YEAR BUILT: 1959 MECHANICAL SYSTEMS / METERING AMENITIES NUMBER OF UNITS: 36 ELECTRICITY: Individually metered, resident paid LAUNDRY ROOMS LARGE BALCONIES NUMBER OF WATER/SEWER: Owner paid 4 BUILDINGS: LARGE GRASS COURTYARDS TRASH DISPOSAL: Owner paid DUAL ENTRY STORIES: 2 CONSTRUCTION FEATURES INDIVIDUAL STORAGE UNITS RENTABLE AREA: 29,750 • Stucco Exterior • Block Construction • Flat and Pitched Roofs AVERAGE UNIT SIZE: 826 LAND AREA: 1.38 acres 7 VALUATION SUMMARY 8 Financial Analysis Executive Summary Silver Oaks EXECUTIVE SUMMARY Phoenix, Arizona PROPERTY OVERVIEW Proforma Number of Units 36 Per Unit Dollars Year Built 1959 Effective Gross Income $11,391 $410,064 List Price $3,500,000 Less: Operating Expenses 3,758 135,274 Price per Unit $97,222 Less: Capital Reserves 250 9,000 Price per Square Foot $117.65 Net Operating Income 7,383 265,790 Rentable Square Feet 29,750 Debt Service 148,964 Average Square Feet per Unit 826 Net Cash Flow (11.12%) $116,826 Average Rent per Unit $938 Average Rent per SF $1.13 Financial Return Financing Terms Down Payment $1,050,000 Proforma Cap Rate 7.59% Proposed New Loan $2,450,000 Proforma Cash on Cash Return 11.12% Loan-to-Value 70% Interest Rate 4.50% Loan Term 5 Years Amortization 30 Years Disclaimer This information has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. 9 Unit Mix andUNIT Current MIXand Proforma AND Rents CURRENT MARKET RENTS Silver Oaks Phoenix, Arizona Proforma Proforma Proforma Monthly Annual Unit No. of % Unit Proforma Rent Rent Rent Total Description Units Type Sq. Ft. Rents /Sq. Ft. Total Total Sq. Ft. 2 Bdrm / 1 Bath 26 72.2% 800 $910 $1.14 $23,660 $283,920 20,800 3 Bdrm / 1 Bath 10 27.8% 895 $1,010 $1.13 $10,100 $121,200 8,950 Total / Avg. 36 100.0% 826 $938 $1.13 $33,760 $405,120 29,750 Unit Mix By Bedroom Type By Square Feet 1 Bed Eff 3% 2% 200 300 2% 3% 2 Bed 95% 800 95% 10 Market Underwriting Analysis Silver Oaks MARKETPhoenix, Arizona UNDERWRITING ANALYSIS Proforma INCOME Assumptions Gross Scheduled Rent $405,120 Gross Potential Income $405,120 Less: Vacancy (5.0%) (20,256) Total Rental Income 95.00% $384,864 Plus : Laundry 200 7,200 Plus: Other Income 500 18,000 Effective Gross Income $410,064 EXPENSES per unit Repairs & Maintenance $500 $18,000 Contract Services 200 7,200 Administrative/Advertising 75 2,700 Payroll 800 28,800 Utilities 1,250 45,000 Total Variable Expenses $2,825 $101,700 Taxes 355 12,779 Insurance 150 5,400 Management Fee 4.00% 15,395 Total Operating Expenses $3,758 $135,274 Plus: Capital Reserves 250 9,000 Total Expenses $4,008 $144,274 NET OPERATING INCOME $265,790 Debt Service New Financing - $2,450,000 (70% LTV) Debt Service (4.50% P & I) $148,964 Cash Flow After Debt Service (11.12%) $116,826 11 COMPARABLE SALES 12 SILVER OAKS COMPARABLE SALES APARTMENT NAME CITY UNITS PRICE $/UNIT $/SQ. FT. YOC SALE DATE S Silver Oaks Phoenix 36 $3,500,000 $97,222 $117.65 1959 TBD 1 Tana Lea Phoenix