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400 Witmer Street. Offering Memorandum. 24 Units in Los Angeles Significant Improvements Excellent Upside Potential

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Offering Memorandum 400 Witmer Street 24 Units in Los Angeles Significant Improvements Excellent Upside Potential FOR MORE INFORMATION PLEASE CONTACT: BRYAN GLENN Senior Director (310)
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Offering Memorandum 400 Witmer Street 24 Units in Los Angeles Significant Improvements Excellent Upside Potential FOR MORE INFORMATION PLEASE CONTACT: BRYAN GLENN Senior Director (310) Lic. # Table of Contents 400 Witmer Street 1 PROPERTY OVERVIEW Executive Summary Investment Highlights Property Description Property Photographs Aerial Map Street Map 2 FINANCIAL SUMMARY Investment Summary Rent Roll Projected Annual Operating Summary 3 PROPERTY COMPARABLES Sales Comparables Sales Comparables Map Rent Comparables Rent Comparables Map 4 NEARBY DEVELOPMENTS Proposed and Under Construction Nearby Multifamily Developments Development Focus: Good Samaritan Hospital 5 MARKET OVERVIEW Central City West Downtown Los Angeles County of Los Angeles 6 CONTACT INFORMATION Page 2 Property Overview Executive Summary Charles Dunn Company is pleased to offer for sale 400 Witmer Street, a 24-unit multi-family investment opportunity in the Central City West area of Downtown Los Angeles. This property is perfectly located to take advantage of the explosive growth in Downtown Los Angeles and the sharp increase in rental rates. This 1920s asset has recently undergone significant capital improvements, including 14 unit renovations, new exterior and interior paint, and new carpet throughout the interior hallways. Subject Property 400 Witmer Street Los Angeles, CA With a unit mix of all singles and average rent of only $724, this asset offers excellent upside potential and a strong cash flow opportunity. Renter demand for singles is extremely strong and will continue to increase as rents continue to rise throughout Los Angeles. The proximity to the Financial District and other Downtown neighborhoods allow the Property to offer transit-oriented housing and excellent walkability. Located just west of Downtown Los Angeles, the strength of the submarket is exemplified by several new developments, including a 606-unit mixed-use project at 6 th and Bixel, where rents for studio apartments are expected to start at $1,500. Additionally, 400 Witmer is located just two blocks north of Good Samaritan Hospital, which is currently undergoing an $80 million expansion, and walking distance to multiple elementary, middle and high schools. Downtown LA Neighborhood Map INVESTMENT HIGHLIGHTS» Located in City West with easy access to Downtown and Koreatown» Priced at only $95,625 per unit» Fourteen units and common areas recently renovated» Separately metered for electric» Secured building with surveillance cameras throughout the property» Low vacancy and easy units to rent» Downtown Los Angeles is an employment center of 500,000 jobs FINANCIAL INDICATORS Price $2,295,000 Price Per Unit $95,625 Price Per Square Foot $ Gross Rent Multiplier Year Pro-Forma Gross Rent Multiplier 9.28 CAP Rate Year % Pro-Forma CAP Rate 6.26%» 17.4% upside potential in rents Page 4 Property Description PROPERTY DETAILS Assessor Parcel Number Lot Size 6818 square feet Zoning LACW Rent Control City of LA Rent Control BUILDING DETAILS Construction Woodframe / Stucco Number of Buildings 1 Number of Stories 2 Number of Units 24 Year Built 1924 Unit Mix Building Area Parking Utilities Laundry Security 24 Singles 9,800 square feet Street Parking Only Separately metered for electric Master metered for gas & water Hookups in basement no machines currently Secured front entry, surveillance cameras throughout the building Page 5 Property Photographs Property Photographs Property Photographs Aerial Map of Subject Property Page 9 Street Map of Subject Property East Hollywood Echo Park Koreatown Westlake Center City West Central City West Downtown LA Page 10 Financial Summary Investment Summary Price $2,295,000 Price Per Unit $95,625 Current GRM Current Cap Rate 4.72% Market GRM 9.28 Market Cap Rate 6.26% UNIT MIX & INCOME SUMMARY CURRENT MARKET Unit Type No. of Units Average Current Current Monthly Income Average Market Market Monthly Income Single 24 $724 $17,376 $850 $20,400 Laundry $200 Total $17,376 $20,600 Page 12 Rent Roll Unit Unit Type Current Rent Market Rent Notes Unit Unit Type Current Rent Market Rent Notes 1 Single $620 $ Single $679 $850 2 Single $652 $ Single $750 $850 3 Single $400 $ Single $795 $850 4 Single $795 $ Single $655 $850 5 Single $810 $ Single $795 $850 6 Single $750 $ Single $655 $850 7 Single $700 $ Single $756 $850 8 Single $678 $ Single $750 $850 9 Single $750 $ Single $750 $ Single $679 $ Single $810 $ Single $850 $850 Manager 25 Single $795 $ Single $850 $850 Vacant Total $17,376 $20, Single $652 $850 Page 13 Projected Annual Operating Summary INCOME CURRENT MARKET Gross Potential Rental Income $208,512 $244,800 Laundry Income -- $2,400 Scheduled Gross Income $208,512 $247,200 Less Vacancy Reserve 3.0% ($6,255) 3.0% ($7,416) Gross Operating Income $202,257 $239,784 Estimated Expenses Taxes (1.25%) $28,688 $28,688 Off-Site Management (4%) % $9,591 On-Site Manager $16,200 $10,200 Insurance $5,000 $3,430 Utilities $26,880 $26,880 Repairs & Maintenance $9,600 $9,600 Landscaping / Pest Control $1,500 $1,500 Rubbish (LADWP) Licenses & Permits $1,320 $1,320 Reserves $4,800 $4,800 Total Expenses: $93,988 $96,009 % of Scheduled Gross Income 45.08% 38.84% Per Unit $3, $4, Per S.F. $9.59 $9.80 Net Operating Income $108,269 $143,775 Loan Payments ($87,918) ($87,918) Pre-Tax Cash Flow 2.96% $20, % $55,858 Plus Principal Reduction (Year 1) $30,180 $30,180 Total Pre-Tax Return: 7.34% $50, % $86,038 Proposed Financing Loan Amount: $1,606,500 Interest Rate: 3.625% Down Payment: 30% $688,500 Amortization: 30 Debt Coverage 1.23 Monthly Payment $7, Loan Quote Provided By: Venture West Funding Jean-Marc Herrouin Senior Loan Officer (310) Page 14 Property Comparables Sales Comparables WITMER STREET LOS ANGELES, CA S. BONNIE BRAE STREET LOS ANGELES, CA UNION DRIVE LOS ANGELES, CA ¾ BURLINGTON AVENUE LOS ANGELES, CA Sale Price $2,295,000 Sale Price $1,760,000 Sale Price $2,050,000 Sale Price $3,025,000 Closing Date On-Market Closing Date 5/21/15 Closing Date 5/15/24 Closing Date 3/6/15 Year Built 1924 Year Built 1925 Year Built 1924 Year Built 1922 Gross SF 9,800 Gross SF 10,182 Gross SF 12,524 Gross SF 14,680 Total Units 24 Total Units 16 Total Units 24 Total Units 20 Price/Unit $95,625 Price/Unit $110,000 Price/Unit $85,417 Price/Unit $151,250 Price/SF $ Price/SF $ Price/SF $ Price/SF $ CAP 4.72% CAP 4.91% CAP - CAP - GRM GRM GRM - GRM - Page 16 Sales Comparables S. WITMER STREET LOS ANGELES, CA Sale Price $1,595,000 Closing Date 2/27/15 Year Built 1923 Gross SF 11,088 Total Units 20 Price/Unit $79,750 Price/SF $ CAP - GRM S. WITMER STREET LOS ANGELES, CA Sale Price $1,625,000 Closing Date 2/13/15 Year Built 1924 Gross SF 8,776 Total Units 20 Price/Unit $81,250 Price/SF $ CAP - GRM DOUGLAS STREET LOS ANGELES, CA Sale Price $2,600,000 Closing Date 1/21/15 Year Built 1926 Gross SF 10,720 Total Units 24 Price/Unit $108,333 Price/SF $ CAP - GRM - Page 17 Sale Comparables Summary Address Sale Price Closing Date Year Built Total Units Gross SF Price/ Unit Price/ SF CAP GRM S. Bonnie Brae Street Los Angeles, CA Union Drive Los Angeles, CA ¾ Burlington Ave Los Angeles, CA S. Witmer Street Los Angeles, CA S. Witmer Street Los Angeles, CA Douglas Street Los Angeles, CA Witmer Street Los Angeles, CA $1,760,000 5/21/ ,182 $110,000 $ % $2,050,000 5/15/ ,524 $85,417 $ $3,025,000 3/6/ ,680 $151,250 $ $1,595,000 2/27/ ,088 $79,750 $ $1,625,000 2/13/ $ $81,250 $ $2,600,000 1/21/ ,720 $108,333 $ % $2,295,000 TBD ,800 $95,625 $ % Page 18 Sales Comparables Map Page 19 Rent Comparables Notes Year Built Total Units Unit Mix Avg Current Rent Studio $724 Secured entry; video surveillance; laundry machine hookups in basement; tenant pays only electric. 400 WITMER STREET LOS ANGELES, CA Year Built Total Units Unit Mix Asking Rent Studio $845 Notes Elevator; onsite laundry; refrigerators not included; tenant pays gas and electric. 430 S UNION AVENUE LOS ANGELES, CA Year Built Total Units Unit Mix Asking Rent Studio $850 Notes Granite countertops; hardwood floors; blinds; ceramic bath tile; ceiling fans. 401 WITMER STREET LOS ANGELES, CA Page 20 Rent Comparables 3 Year Built Total Units Unit Mix Asking Rent Studio $900 Notes On-site laundry; controlled/intercom entry system; video surveillance. 463 HARTFORD AVENUE LOS ANGELES, CA Year Built Total Units Unit Mix Asking Rent Studio $875 Notes Laundry on-site, street parking; all utilities included. 463 S BIXEL STREET LOS ANGELES, CA Page 21 Rent Comparables Summary Address Year Built Total Units Unit Mix Asking Rent South Union Avenue Los Angeles, CA Witmer Street Los Angeles, CA Hartford Avenue Los Angeles, CA South Bixel Street Los Angeles, CA Witmer Street Los Angeles, CA Studio $ Studio $ Studio $ Studio $ Studio $850 Page 22 Rent Comparables Map Page 23 Nearby Developments Proposed & Under Construction Multifamily Developments Wilshire Coronado Condominiums 2525 Wilshire Boulevard Los Angeles, CA Wilshire Boulevard Los Angeles, CA MacArthur Park Metro Apartments 678 S Alvarado Street Los Angeles, CA Valencia 1501 Wilshire Boulevard Los Angeles, CA Subject Property 400 Witmer Street Los Angeles, CA Sixth & Bixel 611 S Bixel Street Los Angeles, CA Wilshire Boulevard Los Angeles, CA W Seventh Street Los Angeles, CA W Seventh Street Los Angeles, CA Page 25 Development Focus: Good Samaritan Hospital The Good Samaritan Hospital is undergoing an expansion project estimated at approximately $80 million. The development, designed by BSA LifeStructures and constructed by Hunt Construction Group, includes a 190,000-square-foot, seven-story medical office building; the structure will house an outpatient surgical center, five levels of physicians offices and a pharmacy, as well as Good Samaritan s cardiology, orthopedics and primary care clinics. This building is scheduled to open in mid All of Good Samaritan s new property assets are seeking LEED certification. Good Samaritan Hospital has 408 beds and diversified intensive and specialized care centers. The hospital center primarily serves residents in downtown and Central Los Angeles. Page 26 Market Overview MARKET OVERVIEW : City West Overview City West, also known as Central City West, is a name sometimes given to refer to the eastern edge of the neighborhood of Pico-Union in Los Angeles, California. The term is often used by residents, newspapers, and developers as part of an attempt to include the area immediately west of the 110 Freeway as a part of Downtown Los Angeles. Although City West is occasionally considered either part of Pico-Union or an outlying area of Westlake, its high-rise skyline mimics the adjacent Downtown Financial District more than any other surrounding neighborhood. City West includes historic single family homes, apartments, and hotels (now apartments as well) that were built when the streetcar system passed through the area, allowing residents to commute to jobs in the downtown business district. It also includes a short stretch of Wilshire Boulevard, which was originally populated with stately homes and apartments as well, but which grew into a booming business district when the 110 (Harbor) Freeway opened in the 1950s. Wilshire Boulevard in City West was an extremely fashionable place to do business in the 1960s and 1970s when the skyscraper height limit was lifted. Buildings from Pershing Square s park to MacArthur park sprouted up dozens of stories high to meet the demands of business with employees who could commute from all over the city to arrive conveniently in City West. Population Size (2014) 3,936 Total Land Area 2.72 square miles Median Income $43,084 Median Age 28.5 years Education, ages 25 + No High School Diploma.34.0% High School Graduate.16.5% Some College.13.0% College Degree+.36.4% The area suffered as a result of the urban blight in the late 1970s and 1980s, and was settled by impoverished refugees from neighboring Westlake. However, the tide is changing again as capital, developments, and new generations arrive into the city to work and live. City West is currently experiencing great amounts of growth due to the downtown Los Angeles renaissance and the preference of the younger workforce for pedestrian-friendly, compact urban communities. One of the most notable developments to spur residential living just outside downtown s western border (at the 110 freeway) is the Medici, a 658-unit modern apartment complex located at 725 S. Bixel Street. Other notable projects include the high-end condominiums at 1100 Wilshire Boulevard, converted from an older office building in 2006, and a large retail-anchored residential development at Sixth Street and Bixel Street. Page 28 MARKET OVERVIEW : Downtown Los Angeles Notable Locations Museum of Contemporary Art The Colburn School LA Convention Center» L.A. Live/Staples Center A 4 million-square-foot/$2.5 billion Downtown Los Angeles The Music sports, residential & entertainment district adjacent to the Los Angeles Convention Center. ThisCenter area also features a 54-story, 1,000-room convention hotel, Club Nokia, L.A. Live, a 2,200 capacity live music venue, a 14-screen Regal Cineplex, a broadcast facility for ESPN along with entertainment, restaurant and office space. Staples Center opened its doors on October 17, 1999 and in each of its Disney first two Concert years, Staples Center received the prestigious Pollstar-CIC Arena of the Year Award. Staples Center Hallis also host to over 250 events and has nearlyour 4 million Lady Cathedral visitors a year. of Angeles» Pershing Square Pershing Square was originally established Mark in Taper 1866, Forum, redesigned in the 1950s and again in the early Ahmanson Theater 1990 s. Pershing Square is now an outdoor concert and event center in the heard of Downtown Los Angeles. The park is exactly one square block in size bounded by 5 th Street to the north, 6 th Street to the south, Hill Street to the east, and Olive Street to the west. Staples Center LA Live L.A. Live/Staples Center» Historic Core Neighborhood The Historic Core neighborhood is located in Downtown Los Angeles between Hill Street and Main Street on the west and east, and 3 rd and 9 th Street on the north and south. It is a heavily residential neighborhood and many of those residences are adaptive reuse loft units created from formerly vacant historic commercial and officemedici buildings. Apartments Pershing Square City West Neighborhood Historic Core Page 29 MARKET OVERVIEW : Downtown Los Angeles Overview Downtown Los Angeles is rapidly transforming into one of the most densely populated metropolitan areas in the United States. Thousands of well-educated young professionals who are eager for an urban lifestyle have helped to drive business and development into the areas, producing an extraordinary commercial and residential renaissance. Additionally, popular cultural venues such as L.A. Live, Staples Center, the Disney Concert Hall, and a number of museums has inspired the rebirth of downtown as a cultural artery. All major modes of transportation pass surround or pass through downtown Los Angeles, making it the most well-connected part of Los Angeles County. The four main freeways in the region, which include the Interstate 10 (Santa Monica), Interstate 110 (Harbor), State Route 101 (Hollywood), and Interstate 5 (Golden State), define the boundaries of downtown, and are served by a sophisticated network of surface streets. The county s main train Station, Union Station, transports people and freight out nearly 24 hours a day, and the area has the highest concentration of Metro Transit Authority s subway, lightrail, and bus systems in Southern California. Historically, it was also the hub of the streetcar system that prefaced modern public transit. With some 40,000 residents, a weekday population of about 500,000 people and 10 million annual visitors, Downtown Los Angeles is an economic engine for Southern California. Many of the county s largest businesses have corporate offices in downtown, especially banking, real estate, and utilities, prompting the largest cluster of skyscrapers to gain the moniker Financial District. The area is culturally renowned, and historic venues along with venues built within the past 15 years enrich the visual and participatory value of living in or visiting Downtown. Some of the cultural institutions that have named Downtown Los Angeles as their home include: Population Size (2014) 43,620 Total Land Area 1.03 square miles Median Income $28,112 Median Age 39.4 years Education, ages 25 + No High School Diploma.29.2% High School Graduate.18.6% Some College.16.8% College Degree+.35.3%» Disney Concert Hall» Southern California Institute of Architecture» Cathedral of Our Lady of Los Angeles» Museum of Contemporary Art» Ahmanson Theater» Fashion Institute of Design & Merchandising» Dorothy Chandler Pavilion» Los Angeles Center Studios» Mark Taper Forum» Los Angeles Central Public Library» Japanese American History Museum» LA County Natural History Museum» LA County Museum of Science & Industry» Museum of Neon Art» Colburn School for Performing Arts Page 30 MARKET OVERVIEW : Los Angeles County Overview The County of Los Angeles, whose 4,083 square miles span a variety of landscapes, consists of 88 cities, 140 unincorporated communities, and two islands: San Clemente Island and Santa Catalina Island. Known for its coastal communities along 70 miles of Pacific Ocean as well as for its eastern county farmland, national and state parks, major rivers, deserts, and mountain ranges, the county is as geographically diverse as its population. The county seat (also the largest city by population and land area), Los Angeles, boasts a population of over 3.8 million and lends its name to the county. With a population of over 10 million residents which is steadily increasing, LA County s job growth in burgeoning industries such as entertainment, technology, and e-commerce continues to attract residents to its metropolitan hubs despite its higher cost of living. Multifamily markets across the county are highly active, with nearly half of residents spending 30% or more of their income on housing. The demand for housing in metro areas has spurred increased activity in retail markets as well, with higher densities of Los Angeles County residents driving up demand for local amenities. Page 31 MARKET OVERVIEW : Los Angeles County Snapshot As the largest and most ethnically diverse county in the United States, the county of Los Angeles has a larger population than 42 US states. With approximately 27% of California s residents within its borders, it is extremely diverse and represents more than 140 cultures and as many as 224 languages. POPULATION SIZE (2014) 10,043,730 TOTAL LAND AREA 4,083 square miles EDUCATION, AGES 25 + No High School Diploma 23.3% Some College 19.7% MEDIAN INCOME $64,354 MEDIAN AGE 35.0 years High School Graduate 20.4% College Degree % LARGEST CITIES IN LOS ANGELES COUNTY 467, , , , , , , ,020 3,863, ,000,000 2,000,000 3,000,000 4,000,000 5,000,000 Los Angeles Long Beach Santa Clarita Glendale Lancaster Palmdale Pomona Torrance Pasadena Page 32 MARKET OVERVIEW : Los Angeles County Economy TOP 10 EMPLOYERS IN LOS ANGELES COUNTY Additionally, LA County is among the world s 20 largest economies with a GDP of $583.9 billion. More than ten million residents are served by the largest local government in the nation, which employs 103,000 people and administrates a $26.1 billion budget. The county is home to the biggest players in the entertainment industry, with six major film studios (Columbia Tri-Star Motion, Dream Works, Paramount Pictures, Sony Pictures Entertainment, Walt Disney Co and Warner Bros Studio) housed within its borders. The Ports of Long Beach and Los Angeles--the busiest ports in the nation and the fourth largest by trade volume contribute to the county's prominent manufacturing and international trade. In 2012, the Los Angeles Area Chamber of Commerce reported t
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