1321 E STREET
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16 MULTIFAMILY UNITS IN MIDTOWN SACRAMENTO, CALIFORNIA 1321 E STREET
Transcript of 1321 E STREET
16 MULTIFAMILY UNITS IN MIDTOWN SACRAMENTO, CALIFORNIA
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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 Newmark Knight Frank.
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.
LEAD CONTACTLEAD CONTACT
MARC ANDENMATTENMARC ANDENMATTENLicense CA: 01956176
916.835.8844
NATE OLESONNATE OLESONLicense CA: 01467941
916.599.6523
CONFIDENTIALITY AGREEMENT
0404 Executive Summary
1414Property Overview
1717 Comparable Analysis
2323Financial Analysis
Table of Contents
SACRAMENTO OFFICE980 9th St, Suite 2500
Sacramento, CA 95814
T 916.920.4400
SAN FRANCISCO OFFICE655 Montgomery St, Suite 1705
San Francisco, CA 94111
T 415.354.0777
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INVESTMENT SUMMARY
Price $3,750,000
Address 1321 E StSacramento, CA 95814
County Sacramento
Year Built / Renovated 1960 / 2019
Total # of Units 16
Net Rentable SF 6,142
# of Acres 0.17
Parking Spaces 7 Covered & 4 Surface
Parking Ratio 0.7
Total Buildings 1
Total # of Stories 2
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KEY INVESTMENT HIGHLIGHTS » Rare Class “A” Investment Opportunity: 1321 E Street offers investors the rare opportunity to purchase a renovated
Class A property in a core location. Renters pay premiums for the Midtown location due to its reputation and close proximity to downtown Sacramento.
» Fully Renovated Property: 1321 E Street underwent a complete interior and exterior renovation. Interior renovations include dual heat/AC window units, granite countertops, stainless steel appliances, new cabinetry, new bathroom vanities, lights, and mirrors, and new wood plank flooring throughout. Exterior renovations include new dual-pane windows, new paint, new doors, new laundry room, new mailboxes and water heater.
» “The” Place To be: Midtown is the center of Sacramento’s art, music and cultural scene, with an eclectic mix of boutiques, galleries, bars and restaurants. Many dynamic companies, start-ups and restaurants have followed large developments such as Sutter General hospital and B Street Theatre in choosing Midtown as the place to be. The newly opened Golden 1 Center, host to the Sacramento Kings Arena is just 1.1 miles away.
» Neighborhood: Midtown is one of the most popular areas to live in Sacramento. Renters are drawn to the charm of historic buildings, tree-lined streets and the close proximity to employers. Midtown residents enjoy close proximity to the multitude of restaurants, shops and nightlife Downtown Sacramento has to offer, all within walking distance or a short ride on the light Rail. The largely residential community features a mix of old Victorians, quaint boutiques and upscale lofts, all located on pedestrian- and bike friendly tree-lined streets. With easy access to highway 50 and Business 80, 1321 E residents have the added benefit of an excellent commuter location on top of a desirable residential neighborhood.
UNIT TYPE#
UNITS% OF
TOTALAVG SF
AVG CURRENT RENT
AVG MARKET RENT
1 BR x 1 BA 1 6% 650 $1,745 $1,695
STUDIO 15 94% 500 $1,293 $1,395
TOTAL/AVG 16 100% 509 $21,145 $22,620
UNIT MIX SUMMARY
THE OFFERINGNewmark Knight Frank, as the exclusive advisor, is pleased to present the opportunity to acquire 1321 E St, a 16-unit apartment community located in Midtown, Sacramento, CA.
Price: $3,750,000
Price Per Unit: $234,375
Cap Rate (Current / Market): 4.5% / 5.2%
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BUSINESS 80
UC Davis J Street Clinic
Sutter’s Fort Historic Park
KEYSubject PropertyBusiness/RetailMedicalPark/RecreationDevelopment
State Capitol
Railyards Development240 Acre Mixed-Use development:
12,200 housing units | 2.4M SF office | 1.4M SF retail491K SF Mixed-use| 1,100 hotel rooms | 40+ acres open space
1321 E Street
California EPA935,000 SF
CalSTRS Headquarters
Ziggurat BuildingCalifornia Department of General Services
Raley Field: Home of AAA San Francisco Giants affilate
The Bridge District: 188-acre mixed-use redevelopment:
4,000 residential units5M SF commercial space
CalPERS Headquarters1M SF
East End Office Complex1.47M SF + 3700 employees
Golden 1 Center: Home of the
Sacramento Kings
Restaurants/Retail within 5 minute walk:- Aura | Japanese + Korean BBQ- Milka Coffee Roasters- Taqueria Jalisco- Sampino’s Towne Foods- Cookie’s & Milk Delivery- H Salt Fish & Chips- Shine Cafe
Restaurants/Retail within 10 minute walk:- Naked Lounge- Ella Dining Room & Bar- SAFE Credit Union Convention Center- 7-Eleven- Fino Artisan Chocolate- New Roma Bakery- Subway- Republic Bar & Grill- Esquire IMAX Theatre- The Melting PotRestaurants/Retail within 15 minute walk:- Public House Downtown- Mikuni- Cafeteria 15L- Rite Aid- Goldfield Trading Post- Easy On i - Bar & Grill- The Old Spaghetti Factory- Lucca Restaurant & Bar- Chipotle Mexican Grill
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ALL UNITS HAVE BEEN RENOVATED1321 E St features newly-renovated units that combine modern style with upscale interior finishes.
Exterior Upgrades1321 E St features significant exterior renovations that include the following:
EXTERIOR UPGRADES
New paint
New front and rear doors
New laundry room
New dual-pane windows
New sheetrock over popcorn ceiling
New mailboxes
New water heater
RENOVATION HIGHLIGHTS
Dual heat and window A/C
New dual-pane windows
Granite countertops
New stainless steel appliances
New cabinetry
New vinyl plank flooring
New bathroom vanities, lights, & mirrors
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BRAND NEW CABINETS
VINYL PLANK FLOORING
G R A N I T E COUNTERTOPS
BRAND NEW VANITIES
S T A I N L E S S STEEL APPLIANCES
BRAND NEW MIRRORS
BRAND NEW FIXTURES
BRAND NEW LIGHTS
BRAND NEW BATHTUB SURROUND
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EFFECTIVE RENT GROWTH BY MARKET Rent growth in Sacramento (4.0%) saw the second highest percentage increase in rent growth in terms of annualized effective rent growth by market in 2020.
OCCUPANCY RATE BY MARKET
Markets that benefitted from migration trends over the last 12 months have also seen the strongest rent growth in 2020. Markets such as Sacramento have seen the highest annual rent growth rates due in part to the large amount of renters taking advantage of flexible work-from home policies to migrate to lower-cost metros and less dense suburban markets outside of major metros. Sacramento lead the nation in occupancy (96.9%) for 2020.
NN EE WW MM AARR KK MULTIFAMILY CAPITAL MARKETS REPORT© 2020 Newmark. All rights reserved.
Effective Rent Growth by Market
Rent growth in the Sunbelt markets has continued to greatly outperform the national average, which fell to 0.1% over the last 12 months. Phoenix (5.4%) saw the highest percentage increase in rent growth and 6 of the top 10 markets in terms of annualized effective rent growth are all located in the Sunbelt region.
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AANNNNUUAALLIIZZEEDD
Source: Newmark Research, RealPage
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#2 IN NATION
NN EE WW MM AARR KK MULTIFAMILY CAPITAL MARKETS REPORT© 2020 Newmark. All rights reserved.
Occupancy Rate by Market
Markets that benefited from migration trends over the last 12 months have also seen the strongest rent growth in 2020. Sunbelt markets like Phoenix (4.5%), Sacramento (4.0%) and Las Vegas (2.2%) have seen the highest annual rent growth rates due in part to the large amount of renters taking advantage of flexible work-from-home policies to migrate to lower-cost metros and less dense suburban markets outside of major metros.
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1122--MMOONNTTHH TTOOTTAALLSS
Source: Newmark Research, RealPage
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PROPERTY SUMMARY
Address 1321 E StSacramento, CA 95814
County Sacramento
Year Built / Renovated 1960 / 2019
Total # of Units 16
Net Rentable SF 6,142
Parcel # 002-0123-012-0000
# of Acres 0.17
Density 94
Parking Spaces 7 Covered & 3 Surface
Parking Ratio 0.63
Total Buildings 1
Total # of Stories 2
Framing Wood
Roof Shingle Membrane
Paving Asphalt
HVAC Dual Heat & Window AC
Electrical Copper
Water Heaters Electric
Laundry New laundry room
UTILITIESPAID BY METHOD SUPPLIED BY
Electric Owner Direct SMUD
Water/Sewer Owner Direct City of Sacramento
Trash Owner Direct Waste Management
Internet Owner Bulk Comcast
P R O P E R T Y O V E R V I E W
UNIT TYPE#
UNITS% OF
TOTALAVG SF
AVG CURRENT RENT
AVG MARKET RENT
1 BR x 1 BA 1 6% 650 $1,745 $1,695
STUDIO 15 94% 500 $1,293 $1,395
TOTAL/AVG 16 100% 509 $21,145 $22,620
UNIT MIX SUMMARY
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AMENITIES1317 F St features newly-renovated 2-Bedrooms and one 3-bedroom apartments that combine modern style with upscale interior finishes.
APARTMENT AMENITIES
Stainless Steel Appliances
Dual heat & window A/C
Granite counters
Luxury vinyl plank flooring
Dishwasher
All new cabinetry
New dual pane windows
Dial vanity in bathroom
Garbage disposal
Carbon monoxide & smoke alarm
Induction stoves
COMPARABLE ANALYSIS
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1918 F I N A N C I A L A N A LY S I S
Subject Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6
Property Name 1321 E Street 1325 H Street 800 J Lofts 800 21st Street 815 17th Street 1811 F Street 1620 G Street TTL / AVG
Address 1317 F St 1325 H Street 800 J Street 800 21st Street 815 17th Street 1811 F Street 1620 G Street
City Sacramento Sacramento Sacramento Sacramento Sacramento Sacramento Sacramento
Year Built / Renovated 1960 / 2019 1887 2019 1927 1900 1950 1959 / 2019
Units 16 2 19 2 4 4 20 9
Rent $1,414 $1,750 $1,835 $1,700 $2,000 $1,625 $1,700 1,732
Avg SF 509 1,000 734 1,000 820 850 750 777
Avg Rent PSF $2.78 $1.75 $2.50 $1.70 $2.44 $1.91 $2.27 $2.23
Renovated Yes Yes New Product Yes Yes Yes Yes
Property Name 1321 E Street 1325 H Street 800 J Lofts 800 21st Street 815 17th Street 1811 F Street 1620 G Street TTL / AVG
Studios 15 Units Units 2 Units Units 2 UnitsAvg Asking Rent $1,395 $1,600 $1,800 $1,700
Avg SF 500 547 650 599Avg Rent PSF $2.79 $2.93 $2.77 $2.841 Bedroom 1 Units 2 Units 6 Units 2 Units 2 Units 4 Units 6 Units
Avg Asking Rent $1,695 $1,750 $1,880 $1,700 $2,200 $1,625 $1,575 $1,751Avg SF 600 1000 745 1000 980 850 660 809
Avg Rent PSF $2.83 $1.75 $2.52 $1.70 $2.24 $1.91 $2.39 $2.17
RENT COMPARABLE MATRIX
The rent matrix below illustrates fair market rents for renovated and new product in Midtown. NKF research concluded market rents of $1,395 and $1,695 for the studios and 1-bedroom units, respectively.
1321 E Street currently does not charge RUBS and provides high speed internet services to tenants free of charge.
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ACTUAL PER UNIT PER MONTH ACTUAL PER UNIT PER MONTH
INCOME GROSS POTENTIAL RENT $253,740 % GPR $15,859 $21,145 $271,440 % GPR $16,965 $22,620Less: VACANCY LOSS ($12,687) -5.0% ($793) ($1,057) ($13,572) -5.0% ($848) ($1,131) NET RENTAL INCOME $241,053 $15,066 $20,088 $257,868 $16,117 $21,489Plus: OTHER INCOME $13,800 $863 $1,150 $15,000 $938 $1,250Plus: UTILITY REIMBURSEMENTS $0 $0 $0 $9,600 $600 $800 TOTAL INCOME $254,853 $15,928 $21,238 $282,468 $17,654 $23,539
EXPENSESPAYROLL $1,800 $113 $150 $1,800 $113 $150
$1,600 $100 $133 $1,600 $100 $133TURNOVER $4,000 $250 $333 $4,000 $250 $333REPAIRS & MAINTENANCE $4,000 $250 $333 $4,000 $250 $333UTILITIES $14,986 $937 $1,249 $14,986 $937 $1,249TOTAL CONTROLLABLE EXPENSES $26,386 $1,649 $2,199 $26,386 $1,649 $2,199MANAGEMENT FEE $10,194 4.0% $637 $850 $11,299 4.0% $706 $942INSURANCE $4,000 $250 $333 $4,000 $250 $333REAL ESTATE TAXES $42,641 1.14% $2,665 $3,553 $42,641 1.14% $2,665 $3,553SPECIAL ASSESSMENTS $1,784 $112 $149 $1,784 $112 $149TOTAL EXPENSES $85,006 $5,313 $7,084 $86,110 $5,382 $7,176
NOI AFTER RESERVES $169,847 $10,615 $14,154 $196,358 $12,272 $16,363
LIST PRICEPRICE PER UNITPRICE PER S.F.CAP. RATEGROSS RENT MULTIPLIER
PRO FORMA -MARKET RENTS
PRO FORMA -CURRENT RENTS PRO FORMA -MARKET RENTS
ADMINISTRATIVE
VALUATION SUMMARY PRO FORMA -CURRENT RENTS
$3,750,000 $3,750,000
4.5% 5.2%14.8 13.8
$234,375 $234,375$460 $460
The following section provides detailed information on the operations of the subject property, including an analysis of revenue trends, historic operations, and our pro forma underwriting and assumptions.
FINANCIAL ANALYSIS
The following section provides detailed information on the operations of the subject property, including an analysis of revenue trends, historic operations, and our pro forma underwriting and assumptions.
OVERVIEW
INVESTMENT SUMMARY
Price $3,750,000
Address 1321 E StSacramento, CA 95814
County Sacramento
Year Built / Renovated 1960 / 2019
Total # of Units 16
Net Rentable SF 6,142
# of Acres 0.17
Parking Spaces 7 Covered & 4 Surface
Parking Ratio 0.7
Total Buildings 1
Total # of Stories 2
Total # of Stories 2
Occupancy 100%
UNIT TYPE#
UNITS% OF
TOTALAVG SF
AVG CURRENT RENT
AVG MARKET RENT
1 BR x 1 BA 1 6% 650 $1,745 $1,695
STUDIO 15 94% 500 $1,293 $1,395
TOTAL/AVG 16 100% 509 $21,145 $22,620
UNIT MIX SUMMARY
REGIONAL OVERVIEWLocated approximately 75 miles northeast of San Francisco, the Greater Sacramento Region,
consisting of El Dorado, Placer, Yolo, and Sacramento counties, is known as one of the most vibrant
areas in California. Situated at the intersection of Interstate 80 and Interstate 5, and surrounded
by the Sacramento Valley to the north and San Joaquin Valley to the south, Sacramento lies in the
center of one of the world’s richest agricultural regions.
As the Capital of California, both the City of Sacramento and the outer suburbs benefit from a strong
governmental presence. Government employees make up more than 25% of the employment
sector, and much of the state’s $115+ billion budget flows through Sacramento in some form. In
addition to government-related industries, over the past two decades Sacramento has become
increasingly attractive to non-governmental industries including technology, life sciences,
education, and healthcare, which have been drawn to the region’s high quality workforce, lower
cost of living, lack of seismic activity, and extensive infrastructure connecting it easily to other
metropolitan areas throughout the west coast.
#1“CALIFORNIA’S NEWEST REAL
ESTATE HOT SPOT”
#1“CALIFORNIA’S FASTEST
GROWING BIG CITY”
#2“METRO FOR BAY AREA
RESIDENT INFLOW”
REGIONAL JOB GROWTHSacramento’s strong economic base and diversifying industry sectors continue
to create job opportunities that attract the growing population. Economic health,
combined with relatively affordable rents, and a desirable quality of life will continue
supporting in-migration of individuals and companies that seek access to the
expanding, highly-skilled employment base. Landlords, in particular, will benefit
from the population expansion and job growth as employees in leading job creation
sectors such as construction, education, health services, and leisure, are historically
drawn to rentals.
DOWNTOWN SACRAMENTO• Downtown Sacramento is home to Capitol Park, which houses
the California State Capitol and its museum.
• There is a busy dining and nightlife scene in Downtown
Sacramento which includes farm-to-table restaurants, cocktail
bars, and performing arts theaters.
• The NBA's Sacramento Kings play their games at the Golden 1
Center located in the heart of Downtown Sacramento.
• Golden 1 Center anchors Downtown Commons, a 1.8 million
square foot work-in progress.
• During the summer months, the Downtown Sacramento
Partnership hosts the Concerts in the Park series.
• With a daytime population of nearly 100,000, Downtown
Sacramento also represents the region’s largest employee
base.
Sacramento
Lincoln Auburn
5
80
50
99
99
49
Arden
80
South Natomas
North Natomas
Rancho Cordova
Folsom
Roseville
Rocklin
Carmichael
Fair Oaks
Antelope
Davis
Woodlands
Elk Grove
80
5
80
Florin
West Natomas
Midtown
DEMOGRAPHICS — 1, 3, 5 MILE RADIUS
DEMOGRAPHICINFORMATION 1, 3, 5 MILE RADIUS
$83,092AVERAGE ANNUAL HOUSEHOLD
INCOME WITHIN 3-MILES
3.69%MEDIAN HOUSEHOLD INCOME
ANNUAL GROWTH RATE
34.6MEDIAN AGE WITHIN
5-MILES
SOLID DEMOGRAPHICSThe average annual household income within a three-mile of 1321 E St is approximately
$83,092. According to ESRI, median household income is expected to grow by 3.74% per year for
the next five years within a one-mile radius of the property, as the Midtown micro-location continues
to benefit from a business-accommodative policy and spillover from downtown Sacramento and
the Bay Area.
2019 1 MILE 3 MILES 5 MILES
Population 19,377 149,889 361,190
Households 10,892 66,111 144,189
Families 2,011 30,249 75,755
Avg Household Size 1.51 2.20 2.46
Median Age 37.1 36.3 34.6
Avg Household Income $64,853 $83,092 $76,797
5 YEAR ANNUAL GROWTH
Population 1.60% 1.00% 0.91%
Households 1.77% 1.01% 0.85%
Families 1.70% 0.86% 0.78%
Median Household Income 3.69% 3.34% 3.09%
NEWMARK KNIGHT FRANK980 9th St, Suite 2500Sacramento, CA 95814T 916.920.4400
F O R M O R E I N F O R M AT I O N O N T H I S O F F E R I N G M E M O R A N D U M , P L E A S E C O N TA C T :
1321 E STREET
MARC [email protected]
916.835.8844 License CA: 01956176
NATE [email protected]
916.599.6523 License CA: 01467941
