Hartsville Flats - Waterstone Multifamily Group

Hartsville Flats | Hartsville, SC
Hartsville Flats 712 S. 8th Street Hartsville, SC JOHN BERGIN, CCIM
704-804-3342
John@waterstonemfg.com
Chris Merlo
864-622-9116
Chris@waterstonemfg.com
CONFIDENTIAL AND EXCLUSIVE MULTI‐FAMILY IMVESTMENT OFFERING MEMORANDUM Comprehensive Multi-Family Investment Sales and Advisory Services
PROPERTY TOURS ARE TO BE CONDUCTED BY APPOINTMENT ONLY. PLEASE CONTACT WATERSTONE MULTIFAMILY GROUP TO ARRANGE PROPERTY TOURS AND TO RECIEVE ANY PROPERTY INFORMATION NOT PROVIDED IN THIS OFFERING MEMORANDUM. Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats | Hartsville, SC
Waterstone Mul ‐Family Group, LLC has been engaged as the exclusive lis ng Broker representa ve by the Owner for the sale of this property. No contact shall be made by any prospec ve purchaser or agents to the Owner, its execu ves, staff, personnel, tenants, or any other related en es. This Investment Offering Memorandum is a confiden al solicita on of interest, and the informa on provided herein is for the considera on of the purchase of the Property. The Owner expressly re‐
serves the right, at its sole discre on, to reject any or all expressions of interest to purchase the Prop‐
erty and expressly reserves the right, at its sole discre on, to terminate discussions with any en ty at any me with or without no ce. The Owner shall have no legal commitment or obliga on to any en ‐
ty reviewing the Investment Offering Memorandum or making an offer to purchase the Property un‐
less and un l the Owner executes and delivers a signed Purchase Agreement on terms acceptable to the Owner, at Owner’s sole discre on. By submi ng an offer, a prospec ve purchaser will be deemed to have acknowledged the foregoing and agrees to release the Owner from any liability with respect hereto. The enclosed materials are being provided solely to facilitate the prospec ve purchaser’s own due dili‐
gence for which the purchaser shall be fully and solely responsible. All informa on contained herein is confiden al in nature, and recipient agrees not to photocopy or duplicate, forward or distribute, nor solicit third party interest without wri en permission and consent from Owner or Waterstone Mul ‐
Family Group, LLC. Waterstone Mul ‐Family Group, LLC nor the Owner make any representa on or warranty, express or implied, as to the accuracy or completeness of the informa on contained herein, and nothing con‐
tained herein shall be relied upon as a promise or representa on as to the future performance of the Property. This Investment Offering Memorandum may include certain statements and es mates by Waterstone Mul ‐Family Group, LLC with respect to the projected future performance of the Property. These as‐
sump ons may or may not prove to be correct, and there can be no assurance that such es mates will be achieved. Further, Waterstone Mul ‐Family Group, LLC and the Owner disclaim any and all liability for representa ons or warran es, expressed or implied, contained in or omi ed from this Investment Offering Brochure, or any other wri en or oral communica on transmi ed or made available to the recipient. The recipient shall be en tled to rely solely on those representa ons and warran es that may be made to it in any final, fully executed and delivered Purchase Agreement between it and the Owner. SECTION I SECTION II Sec on III SECTION IV SUBJECT PROPERTY INFORMATION Offering Summary 4 Investment Highlights 5 FINANCIAL ANALYSIS Financial Assump ons Financial Analysis & Pro Forma 6 7 Property Overview Loca on Maps Aerials Survey/site plan Floor Plans Property Photos Property/Mechanical 8 9‐10 11 12 13‐14 15 MARKET ECONOMIC OVERVIEW Popula on Emploement Major Employers Employers by industry Demographics About Waterstone Hartsville Flats| Hartsville, SC
TABLE OF CONTENTS 16 17 18 19 20‐24 25 John Bergin, CCIM 8757 Red Oak Boulevard Suite 200 Charlo e, North Carolina 28217 704.804.3342 John@waterstonemfg.com Chris Merlo 5448 Apex Peakway Suite 116 Greenville, SC 864.622.9116 Chirs@waterstonemfg.com Comprehensive Multi-Family Investment Sales and Advisory Services
Execu ve Summary Hartsville Flats is a 64 unit apartment community located in the city of Hartsville, SC. The prop‐
erty is located in a very strategic central location as it is very close to job formation and just blocks from Downtown Hartsville and is geographically just Northwest of City of Florence, SC. Overall, the surrounding neighborhood would be described as working class as the property is the biggest detractor. This opportunity offers a new ownership group I an opportunity to economically purchase a 64 unit complex in need of a complete rehabilitation. The structure and underground infrastruc‐
ture appear to be in solid shape but as one would expect for a property of this vintage, alumi‐
num wire, potential asbestos, and lead based paint are potential issues that will need to be ad‐
dressed. . The fixtures, appliances, windows, doors, and décor have been removed and little is left from their original vintage. PROPERTY: The Four Seasons Apartments NUMBER OF UNITS: 64 YEAR OF CONSTRUCTION: 1969 OFFERING PRICE: TBD TOTAL LSF: 61792 PRICE PER UNIT: TBD PRICE PER SF: TBD OCCUPANCY: 0% ACREAGE: approx. 6 acres (6.35) PROPERTY TYPE: Mul ‐Family CAPITALIZATION RATE: TBD FINANCING: All Cash/New Debt
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
OFFERING SUMMARY UNIT AMENITIES
NONE
COMMUNITY
AMENITIES
None
unit mix number sq . rate/month rate/psf month income 2 bd/1 ba 16 764 640 0.84 10,240 3 bd/1 ba 16 968 730 0.75 11,680 4bd/1.5 ba 32 1065 770 0.72 24,640 64 Totals $46560 Utility
Provider
Paid by
Electric
Gas
TV/Internet
Telephone
Water/Sewer
Trash
Duke Energy
local provider
local provider
local provider
City of Hartsville
City of Hartsville
Tenant
Tenant
Tenant
Tenant
Landlord
Landlord
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
INVESTMENT HIGHLIGHTS 1
Market Rent: Based on current market fundamentals and demand, 1% annual rate increases are assumed for the entire hold term.
Unit
SH ‐1 BR/1 BA SH ‐2 BR/1 BA
SH ‐3 BR/1.5 BA
SF
# of Each
Rent
Per SF
764
16
$640
$0.84
Monthly 10,240
Annual
122,880
968
16
$730
$0.75
11,680
140,160
1,065
32
$770
$0.72
24,640
295,680
Total Annual Rental Income:
558,720
2
Loss to Lease: Loss to lease is not tracked by the current owners.
3
Vacancy Loss:
The overall vacancy for this submarket is between 8‐10% and downward trending, thus 10% vacancy is assumed in Years 1‐5 after stabliziation .
4
Concessions:
3% concessions are assumed for years 1‐5 to remain consistent with current market trends. This level will likely drop, however 3% is assumed to remain conservative.
5
Office/Model Units:
The income loss to model is not assumed on a property of this size
6
Employee Units:
Employee units is not tracked by the current owners, as there are no employee rent discounts being given.
7
Bad Debt:
Bad debt is assumed to be 3% of GPI for Years 1‐5.
8
Other Income:
Other income is assumed to maintain a level of 3% of Effective Rental Income, as has been the historic rate for the property. This figure is primarily calcuated from the laundry facility, therfore, the rate appears sustainable and repeatable.
9
Repairs and Maintenance:
$300 per unit, per year is assumed in year one, with 2% increases annually.
Salary and Payroll:
The property is to be staffed with the following personnel and their corresponding salaries. 15% of salary expenses is assumed for additional payroll expense. This combined expenses is anticipated to increase 2% annually.
10
Position
# of Each
Salary Total
Leasing agent (avg)
0.75
35,000
26,250
Maintenance Tech
1.5
35,000
52,500
2.25
70,000
Subtotal
Payroll Expenses
78,750
11,813
TOTAL:
90,563
11
General and Admin:
General and adminstrative is not tracked by the current owners.
12
Marketing:
Marketing is not tracked by the current owners but we have included a nominal fee.
13
Contractor Services:
Contractor service expenses are assumed to be $300 per unit for Year 1, with 2% annual increases thereafter.
14
Utilities:
$600 per unit is assumed to be the ongoing utility expense in the Year 1 pro forma, with 3% annual increases thereafter.
15
Management Fee:
Management expense is assumed to be 3% of Effective Gross Income, as this is consistent with market rates.
16
Insurance:
Pro forma assumes an insurance expense of $220 per unit, per year. This is consistent with present cost and with market averages.
17
Real EstateTaxes:
The pro forma assumed current tax rates will significantly increase after a rehab is performed with a 2% annual increase and this may be considered aggressive.
18
Capital Reserves:
$200 per unit, per year is assumed, as this is consistent with current lender requirements and capital needs for product of this age and quality. Again, assuming a total rehab. No annual increases are assumed.
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
FINANCIAL ASSUMPTIONS Hartsville Flats
Income Growth Assumed
Expense Increase Assumed
Loss to Lease
Vacancy
Concessions
Model/Employee
Bad Debt
Economic Vacancy
Proforma after stablization
Continued
Pro Forma Year 1
0.0%
10.0%
5.0%
0.0%
5.0%
20.0%
0.0%
10.0%
5.0%
0.0%
5.0%
20.0%
0.0%
10.0%
5.0%
0.0%
5.0%
20.0%
Year 2
2.0%
1.0%
0.0%
6.0%
3.0%
0.0%
1.0%
10.0%
Year 3
3.0%
1.0%
0.0%
6.0%
3.0%
0.0%
1.0%
10.0%
Year 4
2.0%
1.0%
0.0%
6.0%
3.0%
0.0%
1.0%
10.0%
Year 5
3.0%
1.0%
0.0%
6.0%
3.0%
0.0%
1.0%
10.0%
INCOME
1
Market Rent
2
Loss‐to‐Lease
GROSS POTENTIAL RENT
3
Vacancy Loss
4
Concessions
5
Model Units
6
Employee Units
7
Bad Debt
EFFECTIVE RENTAL INCOME
8
Other Income*
EFFECTIVE GROSS INCOME
558,720
‐
558,720
(55,872)
(27,936)
‐
‐
(27,936)
446,976
16,762
463,738
Per Unit
8,730
‐
8,730
(873)
(437)
‐
‐
(437)
6,984
262
7,246
558,720
‐
558,720
(55,872)
(27,936)
‐
‐
(27,936)
446,976
16,762
463,738
Per Unit
8,730
‐
8,730
(873)
(437)
‐
‐
(437)
6,984
262
7,246
558,720
‐
558,720
(27,936)
(16,762)
‐
‐
(5,587)
508,435
16,762
525,197
Per Unit
8,730
‐
8,730
(437)
(262)
‐
‐
(87)
7,944
262
8,206
569,894
‐
569,894
(34,194)
(17,097)
‐
‐
(5,699)
512,905
17,097
530,002
586,991
‐
586,991
(35,219)
(17,610)
‐
‐
(5,870)
528,292
17,610
545,902
598,731
‐
598,731
(35,924)
(17,962)
‐
‐
(5,987)
538,858
17,962
556,820
616,693
‐
616,693
(37,002)
(18,501)
‐
‐
(6,167)
555,024
18,501
573,524
EXPENSES
9
Repairs & Maintenance*
10
Salaries and Payroll
11
General & Admin
12
Marketing
13
Contractor Services
14
Utilities
15
Management Fee
16
Insurance
17
Taxes
TOTAL EXPENSES
66,932
90,563
2,500
2,500
12,000
38,400
13,409
12,800
22,500
261,604
Per Unit
1,046
1,415
39
39
188
600
210
200
352
4,088
68,000
92,000
2,500
2,500
12,000
40,000
14,000
13,000
23,000
267,000
Per Unit
1,063
1,438
39
39
188
625
219
203
359
4,172
19,200
136,850
‐
1,280
19,200
41,200
15,756
12,800
23,000
269,286
Per Unit
300
2,138
‐
20
300
644
246
200
359
4,208
19,392
138,219
‐
1,293
19,392
41,612
15,913
12,928
23,230
271,979
19,586
139,601
‐
1,306
19,586
42,028
16,073
13,057
23,462
274,699
19,782
140,997
‐
1,319
19,782
42,448
16,233
13,188
23,697
277,446
19,980
142,407
‐
1,332
19,980
42,873
16,396
13,320
23,934
280,220
53.7%
52.7%
52.1%
51.1%
258,023
12,800
245,223
1,858,099
93,646
27,139
(120,785)
271,203
12,800
258,403
1,829,571
92,257
28,528
(120,785)
279,374
12,800
266,574
1,799,584
90,798
29,987
(120,785)
293,304
12,800
280,504
1,768,062
89,263
31,522
(120,785)
159,367
9.72%
13.3%
124,438
9.8%
137,618
10.3%
145,789
10.7%
159,720
11.2%
UNLEVERAGED BTCF (2,500,000)
243,111
245,223
258,403
266,574
3,481,556
LEVERAGED BTCF (625,000)
FINANCING ASSUMPTIONS
LOAN TO VALUE
75%
INTEREST RATE
5.00%
AMORTIZATION
30
159,367
124,438
137,618
145,789
1,624,230
Expense % of EGI
56.4%
NOMINAL NOI
18
Capital Reserves
ECONOMIC NOI
DEBT SERVICE
Interest Principle
TOTAL DEBT SERVICE
202,133
12,800
189,333
BEFORE TAX CASH FLOW
CAP RATE
Unleveraged IRR*
Leveraged IRR*
*IRR ASSUMPTIONS:
Purchase Price
Hold Period
Terminal Cap Rate
Cost of Sale
$2,500,000
5 Years
8.50%
3.0%
14.5%
36.3%
57.6%
3,158
200
2,958
196,738
12,800
183,938
51.3%
3,074
200
2,874
Cash on Cash 255,911
12,800
243,111
1,885,238
93,983
(10,238)
(83,744)
3,999
200
3,799
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
FINANCIAL ANALYSIS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
LOCATION MAPS Hartsville Flats| Hartsville, SC
AERIALS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
AERIALS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
SITE PLAN Comprehensive Multi-Family Investment Sales and Advisory Services
Floor Plans
2 Bedroom/1 bath
3 Bedroom/ 1 bath
4 Bedroom/ 1.5 bath
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
UNIT FLOORPLANS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
PROPERTY PHOTOS Overall, in need of a complete rehab. The foundation,
lower level brick wall structure and roof framing appear to be in in very good shape. Everything else
does appear to need a complete rehab.
Units appear to be electric air and lighting and gas
heated. Appears to be wired in aluminum wiring .
The interior was unseen except through broken windows but appear to be vandalized and graffiti-ed.
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
PROPERTY PHOTOS Property Attributes
Style
64 Two-Story Townhome Style
Foundation
Concrete Slab
Buildings
8 Two-Story Apartment Buildings with one office
Exterior Walls
Brick lower/vinyl top
Stairways
Interior
Floors
NEED REPLACED
Windows
Single Pane—NEED REPLACED
Roof
Pitched Shingles
Piping/Electrical
All drain lines are PVC, copper wiring
Water/Sewer
City water & sewer-not separately metered
HVAC
NEED REPLACED
Site Size/ Density
6.35 Acres/10.08 units
Hot Water Heaters
NEED REPLACED
Fire Safety
NONE
Trash
NONE
Staff
N/A
Zoning
Multi-family
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
PROPERTY / MECHANICAL SC Unemployment
rate by county
Darlington County Currently
8.5%
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
POPULATION / EMPLOYMENT Hartsville Flats| Hartsville, SC
POPULATION Comprehensive Multi-Family Investment Sales and Advisory Services
Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
MAJOR EMPLOYERS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
MAJOR EMPLOYERS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Comprehensive Multi-Family Investment Sales and Advisory Services
Hartsville Flats| Hartsville, SC
DEMOGRAPHICS Hartsville Flats| Hartsville, SC
ABOUT WATERSTONE John Bergin Chris Merlo 704‐804‐3342 864‐622‐9116 John@Waterstonemfg.com Chris@Waterstonemfg.com Waterstone Mul ‐Family Group, LLC | 8757 Red Oak Blvd, Suite 200, Charlo e, NC 28217 ● CHARLOTTE ● RALEIGH ● TRIAD ● GREENVILLE‐SPARTANBURG ● COLUMBIA Comprehensive Multi-Family Investment Sales and Advisory Services