452-UNIT NORTH RALEIGH MULTIFAMILY OPPORTUNITY. proven renovation rent growth in high barrier to entry submarket

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1 452-UNIT NORTH RALEIGH MULTIFAMILY OPPORTUNITY proven renovation rent growth in high barrier to entry submarket

2 INVESTMENT SUMMARY ADDRESS 7303 Hihenge Court Raleigh, NC WAKE COUNTY PINS , , and YEAR BUILT , 1993 ACREAGE NO. OF UNITS 452 DENSITY (UNITS/ACRE) 9.70 AVG. UNIT SIZE (SF) 1,054 TOTAL SQUARE FEET 476,408 RENOVATION SPEND (since 2013) $2.5 million CURRENT OPERATIONS (as of 9/13/2016) CURRENT OCCUPANCY % 93.8% CURRENT LEASED % 94.7% IN-PLACE EFFECTIVE RENT $1,005 EFFECTIVE RENT PSF $0.95 RESERVE/PHASE IV IN-PLACE EFFECTIVE $1,187 RESERVE/PHASE IV EFFECTIVE RENT PSF $1.00 (on larger 1,194 SF avg units) EXECUTIVE SUMMARY THE INVESTMENT OPPORTUNITY 452-unit North Raleigh multifamily opportunity: Proven renovation rent growth in high barrier to entry submarket Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a North Carolina licensed real estate broker ( HFF ), has been retained as the exclusive sales representative for the Apartments of Stonehenge. The Apartments of Stonehenge ( Stonehenge or the Property ) is a 452-unit garden apartment community in the heart of affluent North Raleigh ($100,000+ average household income in a one-mile radius) that is ripe for a high-impact value-add program that is bolstered by in-place $100 to $250 premiums at the updated Reserve phase of the Property. Located in the sought-after executive housing enclave of North Raleigh, Stonehenge benefits from an advantageous central location in the high-growth Raleigh-Durham MSA and is less than 20 minutes to Research Triangle Park (55,000+ employees) and Downtown Raleigh (45,000+ jobs), as well as the major employment and lifestyle nodes North Hills and Crabtree Valley. Stonehenge is wellpositioned off Creedmoor Road/NC Highway 50, a major north-south regional connector, and offers unique walkability to the high-quality Stonehenge Market, which includes grocery store Harris Teeter, Starbucks, and Rite Aid. After a recent $2.5 million capital investment program, the Property continues to push annual rents by 6% to 8% in recent years due to appealing single-family quality features and a largely built-out, high barrier to entry area with a significant dearth of new product. THE APARTMENTS OF STONEHENGE 2

3 STELLAR OPERATIONAL HISTORY Stonehenge has a well-established history of impressive occupancy, currently at 93.8%, and enviable rent growth (regularly 6% to 8% annually) as one of North Raleigh s most recognizable apartment communities. The Property continues to find the top of the market for classic and renovated units alike, with 3.6% T-12 collections growth and a number of additional value levers to pull from renovations, existing premiums, and potential other income programs. EXCEPTIONAL UPSIDE POTENTIAL WITH HIGH-IMPACT VALUE-ADD Stonehenge is ideally positioned for a substantial valueadd program, with more than $2.5 million invested since 2013 to upgrade amenity and clubhouse spaces, replace roofs and building systems, and refresh exterior paint and parking lots. Accordingly, new ownership can focus on a rapid rollout of targeted interior renovations that are expected to command $100-$250 premiums. PROVEN PREMIUMS IN THE UPGRADED RESERVE PHASE Built in 1993, the 96-unit Reserve phase of the Property already commands a $145+ average premium with moderate finish upgrades stainless steel appliances, granite and faux granite counters, vinyl wood plank flooring, and upgraded lighting and fixtures and supports immediately achievable 20% to 26% ROC. THE APARTMENTS OF STONEHENGE 3

4 EXCEPTIONAL CONNECTIVITY TO MAJOR EMPLOYMENT NODES Surrounded by North Raleigh s enviable executive housing base, the Property is proximate to many of the region s key employment areas, including R&Dfocused Research Triangle Park (50,000+ jobs), growing tech hub Downtown Raleigh (45,000+ employees), Duke Raleigh Hospital, UNC REX Hospital, North Hills/ Midtown Raleigh (First Citizens Bank, CAPTRUST, Bank of America), and the Colonnade/Forum (Allscripts and Genworth) office node. EXTREMELY LIMITED NORTH RALEIGH DEVELOPMENT PIPELINE Dominated by well-established single-family neighborhoods, the fully built-out North Raleigh area has only welcomed two new suburban developments (Junction Six Forks and Meridian at Sutton Square) totaling 454 units in the past five years. With an attractive $275+ rent delta from new communities, Stonehenge has an exceptional comparative value proposition. UNIQUE WALKABLE GROCERY AND STRONG RETAIL PROXIMITY Located adjacent to Stonehenge Market, the Property offers unique walkability to high-quality grocer Harris Teeter and is one of only a handful of Triangle apartment communities, such as top-tier product within the North Hills, Cameron Village, and Bradford areas with immediate grocery access. Stonehenge is also within seven minutes of 5.5 MSF of retail including Brennan Station (O2 Fitness, ACE Hardware), Market at Colonnade (Whole Foods), and the 1.3 MSF regional Crabtree Valley Mall. THE APARTMENTS OF STONEHENGE 4

5 $2.5 MILLION IN RECENT CAPITAL INVESTMENT Stonehenge s renovation repositioning has already begun with $2.5+ million in investment since 2013 to refresh exteriors and amenity spaces, including parking surface repaving and restriping, exterior painting, roof renovations, HVAC upgrades, and new signage. Additionally, the clubhouse has undergone a complete modernization with a two-story fitness center, gourmet demo kitchen, and numerous gathering areas. AFFLUENT NORTH RALEIGH DEMOGRAPHICS Stonehenge s appeal is bolstered substantially by its affluent nearby residential base, with homes priced between $300,000 and $2 million in nearby subdivisions such as Greystone, Wildwood, and Heritage Point. The Property is able to tap into North Raleigh s high concentration of executive housing, sought-after retail, well-ranked schools, proximity to high-caliber employers, and strong one-mile radius demographics with $100,000+ average household incomes. DEMOGRAPHICS RADIUS 1-MILE 3-MILE 5-MILE 2016 Population 10,491 79, ,008 Census Population (2000) 9,818 73, ,499 Historical Population Cagr ( ) 0.4% 0.6% 0.6% Avg Household Income $100,887 $94,811 $104,299 % Household Income Over $100, % 33.7% 36.7% Avg. Median Income $81,272 $75,110 $81,626 Per Capita Income $48,965 $44,002 $46,641 Median Age % Bachelor's Degree Or Higher 59.3% 57.7% 59.5% Median Home Value $256,921 $262,296 $282,850 Estimated Monthly Cost To Own (1) $1,627 $1,661 $1,791 (1) 4.5% interest rate, 25% additional ownership expenses in addition to monthly mortgage payments Source: Regis THE APARTMENTS OF STONEHENGE 5

6 STONEHENGE ALREADY ACHIEVING IMPRESSIVE RENT boost from value-add renovations, with 251 classic units remaining for upgrades RESERVE UPGRADE 4 UPGRADE 5 UPGRADE LEVEL Reserve Upgrade 4 Upgrade 5 # OF UNITS AVERAGE RENT PREMIUM $145+ $65 $85 TYPICAL ACHIEVED ROC 20% 26% 26% COUNTERTOPS Faux granite with granite breakfast bar Formica (new) Sprayed APPLIANCE PACKAGE Stainless steel Stainless steel Black KITCHEN/BATHROOM FLOORING Faux wood-plank vinyl Sheet vinyl (new) Sheet vinyl (new) CABINETRY Espresso doors and new box Refinished Refinished LIGHTING PACKAGE Upgraded throughout N/A Upgraded in the kitchen HARDWARE Brushed nickel New hardware Brushed nickel EXCLUSIVE PACKAGE $250 signed rent premium Quartz countertops, grey paint, new white Shaker cabinetry, new carpet, etc. CLASSIC PACKAGE 251 units remaining for upgrades THE APARTMENTS OF STONEHENGE 6

7 THE APARTMENTS OF STONEHENGE investment advisors JEFF GLENN Managing Director JUSTIN GOOD Managing Director ALLAN LYNCH Director analyst SARAH GODWIN Senior Real Estate Analyst NORTH HILLS: $2+ billion mixed-use destination 850,000 SF high-end boutique retail, 1 MSF top-tier office SHELLY LAKE PARK & GREENWAY ACCESS DOWNTOWN RALEIGH: 45,000+ EMPLOYEES Red Hat HQ, Citrix, Duke Energy, Wells Fargo, State of North Carolina SHELLY LAKE PARK & GREENWAY ACCESS W. MILLBROOK ROAD KROGER LYNN ROAD 50 CRABTREE VALLEY MALL (1.3 MSF RETAIL DESTINATION): Belk, Macy s, Brooks Brothers, Apple, Pottery Barn, McCormick & Schmicks STONEHENGE MANORS (NEW BUILD): $550,000+ single-family homes 70 debt advisors TRAVIS ANDERSON Senior Managing Director tanderson@hfflp.com GREYSTONE SUBDIVISIONS: $300,000-$1m singlefamily homes SAWMILL ROAD BRENT BOWMAN Director bbowman@hfflp.com CORY FOWLER Associate Director cfowler@hfflp.com THE APARTMENTS OF STONEHENGE STONEHENGE MARKET (221,000 SF): Harris Teeter, Starbucks, Stein Mart, Rite Aid Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp a North Carolina licensed real estate broker ( HFF ) HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter at twitter.com/hff. HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. BRIDGEPORT DRIVE CREEDMOOR ROAD 32,000 VPD SEVEN OAKS SWIM & RACQUET CLUB THE APARTMENTS OF STONEHENGE 7