875 S. Geneva Rd. | Orem, UT 84058 Offering Memorandum PROMENADE PLACE Rawley Nielsen Mark Jensen Darren Nielsen Colliers International +801 441 5922 +1 801 441 1200 +1 801 448 2662 111 Main Street | Suite 2200 [email protected] [email protected] [email protected] Salt Lake City, UT 84111 P: +1 801 947 8300 Table of Contents > Executive Summary..................................................................3 > Property Summary ................................................................. 10 > Market Summary .................................................................... 17 > Financial Overview .................................................................32 Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 2 PROMENADE PLACE Offering Memorandum > Executive Summary COLLIERS INTERNATIONAL EXECUTIVE SUMMARY Property Overview > THE MARKET > THE PROPERTY • No On-Campus Housing at UVU Newly constructed in 2017, Promenade Place is a transit-oriented 429-bed student housing project adjacent to • Utah’s Largest and Fastest-Growing Utah Valley University (UVU) -- the largest and fastest-growing university in Utah. UVU is located in Orem, Utah University: 7.1% UVU Enrollment Growth from -- the #1 best-performing economy in the nation in 2017 (Milken Institute) -- and is located about 10 minutes Fall 2017 (37,282) to Fall 2018 (39,942). from Brigham Young University and 45 minutes from Salt Lake City. Due to its proximity to UVU’s campus, the new pedestrian bridge, and its market-leading modern finishes, Promenade Place has gained a quick reputation • Fall 2018 UVU Enrollment is Outpacing as one of the most-desirable properties among students at UVU. Growth Projections by 6.3%. The 114 units at Promenade Place consist of either studio or four bedroom floor plans, featuring all private • UVU Enrollment is projected to approach bedrooms with either private or shared bathrooms. 100% of apartment units at Promenade Place are leased by 50,000 by 2025. the bed on 12-month leases. • Orem/Provo is the #1 Best-Performing Economy in the Nation (Milken Institute, 2017) OUTPACING GROWTH EXPECTATIONS IN AN ALREADY-UNDERSERVED STUDENT HOUSING MARKET UVU is already the largest university in the State of Utah and, based on a study two years ago, its enrollment • ULI #3 Emerging Market in 2018 was projected to grow more than 25% by 2025. As of Fall 2018, however, actual enrollment is outpacing this • #1 Highest Job/Population Growth in US previous estimate by 6.3%-- 2,365 students ahead of projections. From Fall 2017 to Fall 2018 alone, there has been a 7.1% growth in enrollment--a 2,660 single-year headcount growth. Due to this rapid pace, the • Current Market Occupancy for Purpose-Built university is currently at enrollment levels that, just two years ago, it did not project to reach until about Fall Student Housing at over 99% 2020. UVU has no on-campus housing and a very limited supply of off-campus housing. Due to both the existing shortage of student housing and the limited land around the university that could be developed into student housing, Promenade Place is well-positioned to continue to be fully-occupied and to experience ongoing rent growth for many years to come. Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 4 EXECUTIVE SUMMARY Executive Overview Property Promenade Place Name: Property 875 South Geneva Road Address: Orem, Utah 84058 Price: $40,395,000 Cap Rate: 5.00% Year Built 2017 APN: 49-863-0001 Lot Size: 3.42 acres Units 114 Beds: 429 4x2: 384 Beds/96 Units Unit Mix: 4x4: 36 Beds/9 Units Studio: 9 Beds/9 Units 266 Total Stalls Parking (116 Covered) Lease Types: 12-Month 5 Total Buildings (4 Resident & 1 Clubhouse) Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 5 EXECUTIVE SUMMARY Opportunity Highlights > PROMENADE PLACE • New construction. Completion in 2017. • 100% occupancy achieved very early on. Current opportunity exists to increase rents. • #1 State Economy (Utah) | #2 State for Higher Education • #1 City Economy (Orem/Provo) • Utah Valley University is Utah’s Largest and Fastest-Growing University: 7.1% UVU Enrollment Growth from Fall 2017 (37,282) to Fall 2018 (39,942). • Fall 2018 UVU Enrollment is Outpacing Previous Growth Projections by 6.3%. • UVU Enrollment is projected to approach 50,000, or more, by 2025. • Located next to Frontrunner (commuter rail), Utah Valley Express (new/free bus system), Orem Pedestrian Bridge (Bike/Walk), UVU West Campus • Best possible location to access both UVU East Campus, UVU West Campus, and the UVU Vineyard Expansion Campus-- All without the need for a car • Located minutes, via Frontrunner commuter rail, from the core Utah’s Silicon Slopes-- the cause of Utah’s nation-leading tech industry growth. (Computing Technology Industry Association, 2018) Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 6 EXECUTIVE SUMMARY The Strategic Core of UVU Student Housing New Covered Pedestrian Bridge. Completion Due in Fall 2019. Promenade Place is perfectly positioned at the core of what has purposefully become the largest concentration of student housing available at Utah Valley University--the fastest growing university in THE HUB Utah. As the beneficiary of a strategic unified effort by (PROPOSED DEVELOPMENT) state, local, and university officials, Promenade Place STE sits directly next to the Orem Intermodal Center (Frontrunner/UVX) and the New Orem Pedestrian Bridge, making it a uniquely pedestrian-friendly environment for walking, cycling, catching a free shuttle, or riding the train. This project truly is the ideal gateway to access the main UVU East Campus, the expanding UVU West Campus, and Utah’s fast growing employment center--the Silicon Slopes. While historically there has been a limited supply of PARKWAY LOFTS (2016) purpose-built student housing at the university, the rapid growth of the university has led to a major WOLVERINE CROSSING (2003) increase in demand for the product. This demand can no longer be supported by surrounding conventional apartments. The university has chosen to leave all UNIVERSITY DOWNS LAND housing development to private off-campus housing (PROPOSED DEVELOPMENT) developers in order to focus university resources on constructing and managing its expanding portfolio of academic buildings. The Orem Intermodal Center--and the new development of purpose-built student projects like Promenade Place and The Hub-- are ensuring indefinitely that this area will continue to have a gravitational pull for students at the largest university in the state. Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 7 EXECUTIVE SUMMARY The Strategic Core of UVU Student Housing UVU Vineyard Expansion Campus UVU Expansion Land New Covered Pedestrian Bridge. Completion Due in Fall 2019. STE THE HUB (PROPOSED DEVELOPMENT) UTAH VALLEY UNIVERSITY VINEYARD EXPANSION UVU owns more than 250 acres of land in Vineyard, which sits about 1.5 miles north of the West Campus, also on the west side of I-15. Current plans contemplate a further densification of academic buildings on the existing campus with expanded athletic and academic facilities on the UVU expansion land in Vineyard. The location of Promenade Place on Geneva Road, and next to the Orem Frontrunner Station, give the property ideal access to this forthcoming expansion. Promenade Place | Offering Memorandum COLLIERS INTERNATIONAL P. 8 EXECUTIVE SUMMARY The Strategic Core of UVU Student Housing: UVX UTAH VALLEY EXPRESS (UVX) BUS SYSTEM > ARTICLE: The Utah Valley Express bus system is brand new, just recently STUDENTS EMBRACE UVX AS KEY beginning service on August 13, 2018, and features new infrastructure with exclusive lanes and stops in Orem/Provo. It TRANSIT TOOL has already been a gamechanger for students at UVU and BYU, (THE DAILY UNIVERSE, 9/18/2018) allowing them to access campus, shopping, and social A new high-capacity bus rapid transit system called the Stevenson said she became aware UTA services were experiences without the need of a car--all for free. With Utah Valley Express is a key part of student life in free to BYU students through an Instagram post. She Promenade Place’s location next to the UVX stop at Orem Provo and Orem this fall. said she now uses UVX occasionally to go shopping. Station, the value of this already ideally-located property According to Utah Transit Authority, UVX is meant to Ewerton Barroso, a 24-year-old student at Provo continues to get better. connect FrontRunner train stations with key locations in language center Internexus, said he uses UVX for his Utah Valley. Designed to increase urban mobility and daily commute, carrying his bicycle on the bus with provide more travel options, UVX uses buses with him. He said UVX works more effectively than the dedicated lanes and traffic signal priority to transport bus rapid transit systems in his hometown of Manaus, though UVX could do more to move quickly STE commuters. Brazil, through traffic. UVX began operating on Aug. 13, and students from BYU and UVU have already come to rely on the Though neither Tanner nor Stevenson said they have system to get around. UVX will be free to use for the access to other forms of transportation, the UVX next three years, according to Utah Transit Authority. system is also useful to students with vehicles. The line connects the Provo and Orem FrontRunner Daniel McPherson, a junior studying physics at BYU, train stations, wrapping to BYU and UVU along the has access to a car, but said he uses UVX daily in way. tandem with the older bus system. Still, McPherson Citing the bus system’s reliability and frequent stops, said he uses UVX to save gas and share a car with his students ride UVX for everything from daily commutes wife. to Walmart trips. UVX is particularly helpful for Grace Green, a freshman at UVU, owns a car but said UVX BUS ROUTE: students who have limited access to other she uses UVX for her daily commute so she does not BUSES AT OREM STATION EVERY transportation. have to deal with campus parking.