Presented by: Jeff Louks, Brett Sanson WOODMAN AVE Sherman Oaks, CA Offering Memorandum

Transcription

1 Presented by: Jeff Louks, Brett Sanson Sherman Oaks, CA Offering Memorandum

2 NON-ENDORSEMENT AND DISCLAIMER NOTICE Non-Endorsements Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. Disclaimer THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap. All rights reserved. Sherman Oaks, CA ACT ID Y

3 PRESENTED BY Jeff Louks Brett Sanson Executive Managing Director Investments Senior Director - National Multi Housing Group Encino Office Tel: (818) Fax: (818) jeff.louks@marcusmillichap.com License: CA Senior Associate Director - National Multi Housing Group Encino Office Tel: (818) Fax: (818) brett.sanson@marcusmillichap.com License: CA

4 TABLE OF CONTENTS SECTION FINANCIAL ANALYSIS 01 Rent Roll Summary Rent Roll Detail Operating Statement Pricing Detail INVESTMENT OVERVIEW 02 Property Overview Regional Map Local Map Aerial Photo MARKET COMPARABLES 03 Comparables Rent Comparables MARKET OVERVIEW Market Analysis Demographic Analysis 04

5 FINANCIAL ANALYSIS 5

6 RENT ROLL SUMMARY FINANCIAL ANALYSIS 6

7 RENT ROLL DETAIL FINANCIAL ANALYSIS Units 2 & 4 are vacant as of 2/15/17 7

8 OPERATING STATEMENT FINANCIAL ANALYSIS Expenses are based off 2016 P&L/industry standard estimates. Please contact Listing agent for more details. 8

9 PRICING DETAIL FINANCIAL ANALYSIS 9

10 INVESTMENT OVERVIEW 10

11 PROPERTY OVERVIEW PROPERTY OVERVIEW 4427 Woodman Avenue, built in 1953 is a 15 unit apartment building comprised of six (6), two bedroom/one baths and nine (9) one bedroom/one baths. The property is located in the heart of Sherman Oaks on Woodman Avenue just north of Moorpark Street. The building is also a few blocks away from the 101 freeway. The property has a secured front gate entry into the building, gated parking in the rear for residents and a pool. This is a fantastic opportunity to own an investment property with a substantial amount of upside in one of the most sought after neighborhoods. Sherman Oaks is on the most premiere locations of San Fernando Valley. This prime location near Ventura Boulevard allows residents to enjoy some of the finest restaurants and shops the valley has to offer and its proximity to the highway offers easy access to get around the city. PROPERTY OVERVIEW Great unit mix of One and Two Bedrooms Great upside in rents Gated Parking Gated Entry Pool 11

12 PROPERTY PHOTOS 12

13 PROPERTY PHOTOS 13

14 PROPERTY PHOTOS Ventura Corridor Subject Property 14

15 PROPERTY PHOTOS 101 Ventura Freeway Subject Property 15

16 REGIONAL MAP 16

17 LOCAL MAP 17

18 AERIAL PHOTO 18

19 MARKET COMPARABLES 19

20 8 SALES COMPARABLES MAP (SUBJECT) Murietta Ave Dickens St Ventura Canyon Ave 4 Hazeltine Court Moorpark St Ventura Canyon Ave Ventura Canyon Ave Hazeltine Ave Hazeltine Ave Buffalo Ave SALES COMPARABLES 20

21 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Cap Rate 5 Avg. 3.86% Woodman Ave Murietta Ave Dickens St 4324 Ventura Canyon Ave Hazeltine Court Moorpark St 4220 Ventura Canyon Ave 4388 Ventura Canyon Ave 4540 Hazeltine 4545 Hazeltine Ave 5027 Buffalo Ave 21

22 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES SALES COMPS AVG SALES COMPARABLES Average GRM Avg Woodman Ave Murietta Ave Dickens St 4324 Ventura Canyon Ave Hazeltine Court Moorpark St 4220 Ventura Canyon Ave 4388 Ventura Canyon Ave 4540 Hazeltine 4545 Hazeltine Ave 5027 Buffalo Ave 22

23 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Price Per Square Foot $500 $450 $400 Avg. $337 $350 $300 $250 $200 $150 $100 $50 $ Woodman Ave Murietta Ave Dickens St 4324 Ventura Canyon Ave Hazeltine Court Moorpark St 4220 Ventura Canyon Ave 4388 Ventura Canyon Ave 4540 Hazeltine 4545 Hazeltine Ave 5027 Buffalo Ave 23

24 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Price Per Unit $400,000 $360,000 $320,000 Avg. $266,446 $280,000 $240,000 $200,000 $160,000 $120,000 $80,000 $40,000 $ Woodman Ave Murietta Ave Dickens St 4324 Ventura Canyon Ave Hazeltine Court Moorpark St 4220 Ventura Canyon Ave 4388 Ventura Canyon Ave 4540 Hazeltine 4545 Hazeltine Ave 5027 Buffalo Ave 24

25 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES MARKETING TEAM SALES COMPARABLES 673 ISLE DRIVE 4427VISTA WOODMAN AVE WOODMAN AVE, SHERMAN OAKS, VISTA ISLE DRIVE, SUNRISE, FL, CA, MURIETTA AVE DICKENS ST MURIETTA AVE, SHERMAN OAKS, CA, DICKENS ST, SHERMAN OAKS, CA, rentpropertyname1 2 rentpropertyname1 Units rentpropertyname1 Units Unit Type Units Unit Type Offering Price: $4,495, Close Of Escrow: 2/1/ Bdr 1 Bath Unit Type Close Of Escrow: 12/6/ Studio 1 Bath Price/Unit: $299, Sales Price: $7,500, Bdr 1 Bath Sales Price: $3,300, Bdr 1 Bath Price/SF: $ Price/Unit: $312,500 Price/Unit: $253,846 CAP Rate: 3.52% Price/SF: $ Price/SF: $ GRM: Cap Rate: 3.50% Cap Rate: 3.80% Total No. of Units: 15 GRM: GRM: 16.2 Year Built: Total No. of Units: 24 Total No. of Units: 13 Year Built: 1955 Year Built: rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 25

26 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES MARKETING TEAM SALES COMPARABLES 4324 VENTURA CANYON AVE HAZELTINE COURT MOORPARK ST 4324 VENTURA CANYON AVE, SHERMAN OAKS, CA, HAZELTINE AVE, SHERMAN OAKS, CA, MOORPARK ST, SHERMAN OAKS, CA, rentpropertyname1 Units 5 rentpropertyname1 Units Unit Type 1 Studio 1 Bath Close Of Escrow: 9/1/ Bdr 1 Bath Close Of Escrow: 11/29/ Bdr 1 Bath $3,200, Bdr 1 Bath Sales Price: $3,350, Bdr 1 Bath Sales Price: $6,300, Bdr 2 Bath $266, Bdr 1 Bath Price/Unit: $223,333 Price/Unit: $315,000 $ Price/SF: $ Price/SF: $ Cap Rate: 3.50% Cap Rate: 3.87% Cap Rate: 3.45% GRM: 18.3 GRM: 15.1 GRM: 16.5 Total No. of Units: 12 Total No. of Units: 15 Total No. of Units: 20 Year Built: 1959 Year Built: 1958 Year Built: 1978 Close Of Escrow: 3/18/2016 Sales Price: Price/Unit: Price/SF: rentpropertyaddress1 Unit Type Units rentpropertyname1 rentpropertyaddress1 Unit Type rentpropertyaddress1 26

27 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES MARKETING TEAM SALES COMPARABLES 4220 VENTURA CANYON AVE 4388 VENTURA CANYON AVE 4540 HAZELTINE AVE 4220 VENTURA CANYON AVE, SHERMAN OAKS, CA, VENTURA CANYON AVE, SHERMAN OAKS, CA, HAZELTINE AVE, SHERMAN OAKS, CA, rentpropertyname1 Units rentpropertyname1 Unit Type Units rentpropertyname1 Unit Type Units Unit Type 6 1 Bdr 1 Bath $7,125, Bdr 2 Bath $309, Bdr 2 Bath Close Of Escrow: 6/28/ Bdr 1 Bath Close Of Escrow: 4/12/ Bdr 1 Bath Close Of Escrow: 12/30/2016 Sales Price: $1,330, Bdr 1 Bath Sales Price: $1,260, Bdr 1 Bath Sales Price: Price/Unit: $221,667 Price/Unit: $210,000 Price/Unit: Price/SF: $ Price/SF: $ Price/SF: $ Total No. of Units: 6 Cap Rate: 4.50% Cap Rate: 3.90% Year Built: 1948 Total No. of Units: 6 GRM: 14.4 Year Built: 1953 Total No. of Units: 23 Year Built: 1951 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 27

28 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES MARKETING TEAM SALES COMPARABLES 4545 HAZELTINE AVE 5027 BUFFALO AVE 4545 HAZELTINE AVE, SHERMAN OAKS, CA, BUFFALO AVE, SHERMAN OAKS, CA, rentpropertyname1 Units rentpropertyname1 Unit Type Units rentpropertyname1 Unit Type Close Of Escrow: 8/30/ Studio 1 Bath Close Of Escrow: 9/27/ Bdr 1 Bath Sales Price: $1,300, Bdr 1 Bath Sales Price: $3,500, Bdr 2 Bath Price/Unit: $260, Bdr 1 Bath Price/Unit: $291, Bdr 2 Bath Price/SF: $ Price/SF: $ Cap Rate: 4.07% Cap Rate: 4.14% GRM: GRM: 14.8 Total No. of Units: 5 Total No. of Units: 12 Year Built: 1954 Year Built: 1961 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 28

29 8 RENT COMPARABLES MAP (SUBJECT) Addison Street Weddington St Tyrone Ave Hazeltine Ave

30 PROPERTY 4427 WOODMAN NAMEAVE COMPARABLES AVERAGE RENT - MULTIFAMILY 1 Bedroom 2 Bedroom $2,000 $3,000 Avg. $1,762 $1,800 $2,700 $1,600 $2,400 $1,400 $2,100 $1,200 $1,800 $1,000 $1,500 $800 $1,200 $600 $900 $400 $600 $200 $300 $0 Avg. $2,078 $ Woodman Ave Addison Street Weddington St 4949 Tyrone Ave 4452 Hazeltine Ave 4427 Woodman Ave Addison Street Weddington St 4949 Tyrone Ave 4452 Hazeltine Ave 30

31 PROPERTY 4427 WOODMAN NAMEAVE RENT COMPARABLES MARKETING TEAM, SHERMAN OAKS, CA, ADDISON ST, SHERMAN OAKS, CA, Unit Type Units SF WEDDINGTON ST, SHERMAN OAKS, CA, Unit Type Units Rent Rent/SF 6 $1, $ Bdr 1 Bath $1, $ Bdr 2 Bath Total/Avg. 15 $1, Total/Avg WEDDINGTON STREER ADDISON STREET SF Rent Rent/SF Unit Type Units SF Rent $1,740 2 Bdr 1 Bath 1 $2,095 1 $2,040 Total/Avg. 1 $2, $1, Rent/SF YEAR BUILT: Units YEAR BUILT: Units, SHERMAN OAKS, CA, 91423, SHERMAN OAKS, CA, 91423, SHERMAN OAKS, CA,

32 PROPERTY 4427 WOODMAN NAMEAVE RENT COMPARABLES MARKETING TEAM 4949 TYRONE AVE 4452 HAZELTINE AVE 4949 TYRONE AVE, SHERMAN OAKS, CA, HAZELTINE AVE, SHERMAN OAKS, CA, TYRONE AVE Unit Type Units 2 Bdr 2 Bath 1 1 Bdr 1 Bath Total/Avg. SF Rent 4949 TYRONE AVE Rent/SF Unit Type Units SF 4949 TYRONE AVE Rent $2,100 1 Bdr 1 Bath 1 $1,795 1 $1,750 Total/Avg. 1 $1, $1, Rent/SF YEAR BUILT: Units YEAR BUILT: Units 4949 TYRONE AVE, SHERMAN OAKS, CA, TYRONE AVE, SHERMAN OAKS, CA, TYRONE AVE, SHERMAN OAKS, CA,

33 MARKET OVERVIEW 33

34 MARKET OVERVIEW SAN FERNANDO VALLEY Almost 2.5 million people reside in the San Fernando Valley, which includes the submarkets of Northridge-Northwest San Fernando Valley, Van Nuys-Northeast San Fernando Valley, Woodland Hills, Burbank-Glendale-Pasadena and Sherman Oaks-North Hollywood-Encino. The area s population is expected to increase by 1.9 percent through 2020, or by 47,400 new residents. Known for its entertainment industry, the Valley boasts more than 100 soundstages. Entertainment giants calling the Valley home include Walt Disney Co., Universal Studios, Warner Brothers, DreamWorks and Paramount Ranch. The entertainment industry continues to set the area s economic pulse. Local motion-picture and entertainment companies employ roughly 25,000 people. While the Valley has grown into the world s center for entertainment, aerospace giants Boeing and Northrop Grumman and 21st Century Insurance also generate numerous well-paying jobs. Healthcare is also a major source of employment with providers that include Kaiser Permanente and Providence Health & Services. As a result of its large concentration of high-salaries and successful companies, the area s median household income of $61,600 per year has risen dramatically in recent years. Although the median home prices dipped during the recession, affordability remains a challenge for much of the local population. High home prices keep the homeownership rate at 50 percent in the San Fernando Valley and provide a large rental base. SHARE OF TOTAL EMPLOYMENT SAN FERNANDO VALLEY EMP.: 915,700 MAJOR EMPLOYERS Services 46% Warner Bros. Entertainment Inc. Retail Trade 17% The Walt Disney Co. Manufacturing 9% Kaiser Permanente Finance, Insurance & Real Estate 8% UCLA Medical Center Public Administration 5% Yahoo! Inc. Transportation, Communications & Utilities 5% Providence Health & Services Construction 4% Boeing Unclassified 5% NBCUniversal 21st Century Insurance Co. Sources: Marcus & Millichap Research Services; Experian Northrop Grumman Corp. The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision. 34

35 MARKET OVERVIEW LOS ANGELES COUNTY Downtown Revitalization Highlights Supply Growth; Vacancy Declines Further 2016 Multifamily Forecast Consistent employment growth supporting demand for apartments; supply growth having little operational impact. Job creation, while slower than previous years in the cycle, remains broadly positive as numerous organizations continue hiring, specifically in healthcare and education. Labor market improvement has engineered a recovery in housing, which has largely been driven by the multifamily sector due to the high cost of single-family housing. As a result, developers have pushed the project pipeline to a new business cycle high in 2016, which also 1.7% increase in total employment represents one of the highest delivery schedules in more than two decades. The majority of new Employment: Los Angeles firms will hire 75,000 new workers this year, expanding payrolls by 1.7 percent. This follows the creation of 114,100 jobs in 2015, a 2.7 percent rate of growth. supply is targeting the Greater Downtown Los Angeles area, where the revitalization is in full swing. The broader slate of activity will also push completions in the South Bay to higher levels as corporate tenants flock toward office spaces in Silicon Beach. Higher prices have also piqued 12,900 builder interest in the Westside Cities, although supply will remain limited due to the lack of units will be completed building sites. While the injections will trigger transitory increases in vacancy over the coming months, the long-term picture of above-average rental demand and still-tight occupancy will foster a seventh straight year of rent growth. Supply injections sponsor slower pace of deal flow; listings remain constrained. Amid low 10 interest rates, investors have been steadily acquiring multifamily assets with robust cash flows. As basis point decrease in vacancy cap rates have slid into the mid-4 percent range, deal flow is shifting away from high-end assets in premium submarkets toward more affordable stock in the San Fernando Valley and Greater Construction: The quickest pace of development in more than two decades will prompt the delivery of 12,900 rentals during the course of 2016, far exceeding the 5,300 units brought to market in the previous year. The majority of supply will come online in the Greater Downtown Los Angeles submarket. Vacancy: Robust acceleration in deliveries will hamper metro occupancy, pushing vacancy down 10 basis points over the course of the year to 2.9 percent. In the prior four quarters, vacancy slipped 20 basis points as deliveries plummeted. Downtown Los Angeles markets. Transactions in these two markets accounted for more than half of closed deals over the past year, led by the San Fernando Valley, where more than a third of transactions took place over the past year. Meanwhile, institutions remain active in the Westside 5.0% Cities and South Bay, seeking to position themselves near corporate campuses and new retail increase in effective rents developments. However, listings in these markets have contracted significantly due to the number of willing buyers in the area. Consistent supply additions over the coming quarters will offer the Rents: High home prices will support a steady flow of households into rental accommodations, fostering a 5.0 percent rise in the average effective rent to $1,986 per month. This follows a 6.1 percent improvement in opportunity for buyers to deploy capital in merchant developer projects, while other owners may wish to sell into a strong market to avoid incoming competition. 35

36 MARKET OVERVIEW LOS ANGELES COUNTY Economy During the first three quarters of this year, local Los Angeles organizations hired 47,400 new workers, bringing the total over the past year to 73,500 jobs, expanding payrolls by 1.7 percent. In the prior 12 months, 93,400 positions were created, a 2.2 percent improvement year over year. Metro employment growth is being primarily driven by the education and health services sector, where 24,100 jobs were created over the past year. The leisure and hospitality sector was also a large contributor of job gains, tacking on 18,200 workers during the same time period. Well-paying positions in the professional and business services and IT fields are also swelling, with organizations in these sectors creating 15,900 and 1,250 jobs, respectively. The manufacturing sector was a modest detractor, with headcounts falling 8,200 places during the last year. Outlook: A slower pace of national growth will spur Los Angeles employers to hire 75,000 workers this year, a 1.7 percent rate of growth led by healthcare and hospitality firms. In the prior year, payrolls expanded by 114,100 slots. * Forecast Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; Economy.com Housing and Demographics Permitting activity has diverged over the past year, with single-family permitting activity roughly flat from the prior year, while multifamily permitting has declined nearly 15 percent. Over the past year ending in September, the average price for a single-family residence surged 7.1 percent to nearly $500,000, while the median household income rose to roughly $60,000 per annum. However, the minimum qualifying income necessary for a mortgage on a median-priced home is above $111,000 per year, signifying the vast majority of residents will not qualify for a mortgage. The average mortgage payment, after accounting for a 10 percent down payment, taxes and insurance, is more than $2,500 per month. In comparison, the average monthly rent payment is roughly $1,985 per month. Outlook: The high cost of single-family homes will restrict most metro residents from a mortgage, keeping demand elevated for rentals. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; Economy.com; NAR 36

37 MARKET OVERVIEW LOS ANGELES COUNTY Construction Developers completed roughly 7,100 apartments over the past three quarters, bringing completions for the year to more than 8,800 rentals. This pace more than doubles the prior year when more than 3,500 units were brought to market. Completions over the past year have skewed overwhelmingly toward submarkets in the Greater Downtown Los Angeles area. More than 2,700 have already been finished this year, with another 3,300 slated for delivery before the end of the year. Looking forward to 2017, developers will slow the pace of construction to 9,400 units, with more than two -thirds of expected deliveries coming online in the Greater Downtown Los Angeles area. Outlook: Developers will complete 12,900 apartments this year, far outpacing previous years in the current cycle. The majority of new construction will target urban submarkets in the metro core. * Forecast Sources: Marcus & Millichap Research Services; MPF Research Vacancy Over the past year, the metro vacancy rate declined 10 basis points to 2.6 percent as tenants scooped up a vast array of rentals. Vacancy declines were recorded in Class B properties, while Class A vacancy ticked up moderately. Class C assets recorded an unchanged vacancy level. Vacancy remains extremely tight in the San Fernando Valley submarkets, boosted by greater affordability. The Van Nuys/Northeast San Fernando Valley submarket posted the tightest operations over the past year, with vacancy declining 50 basis points to 1.2 percent. The Greater Downtown Los Angeles submarkets posted a small decrease in vacancy, despite receiving the majority of new supply over the past year, as declines in Hollywood and the Mid-Wilshire area offset a mild uptick in the Downtown Los Angeles submarket. Outlook: The quickest pace of construction in more than 16 years will lead the metro vacancy rate 10 basis points higher to 2.9 percent in 2016 as supply growth modestly exceeds net absorption. * Forecast Sources: Marcus & Millichap Research Services; MPF Research 37

38 MARKET OVERVIEW LOS ANGELES COUNTY Rents Incredibly tight operations led the average effective rent to vault 6.0 percent over the last four quarters to $1,985 per month. This follows a 7.8 percent increase in the previous year. Submarkets in the San Fernando Valley recorded the sharpest rises over the past 12 months, with the vast majority of areas registering advancement greater than 5 percent. The Northridge/Northwest San Fernando Valley submarket led the entire metro with a 9.7 percent gain to $1,649 per month. The submarket still remains one of the most affordable in the city. The Santa Monica/Marina del Rey submarket was the only one to record a decline in average effective rents during the last four quarters, with advertised prices slipping 0.9 percent to $3,105 per month. Despite the pullback, the submarket is the most expensive in the metro. Outlook: The average effective rent will climb 5 percent this year as a quicker pace of development slows the rate of appreciation from prior years in the current cycle. * Forecast Sources: Marcus & Millichap Research Services; MPF Research Sales Trends Transaction volume rose roughly 10 percent over the past year as buyers remained active in the metro. Transactions favored the San Fernando Valley and Greater Downtown Los Angeles markets, which accounted for more than half of all transactions. The average price per unit on closed transactions topped $260,000 over the past year, up 8 percent from the prior yearlong period. Prices were propelled by the Westside Cities, with additional acceleration in the Mid-Wilshire submarket of Downtown Los Angeles. Cap rates slipped 25 basis points during the last four quarters to average in the 4.9 percent range, with the Westside Cities market pricing in the mid-3 percent range. Higher average cap rates can be found in the San Fernando Valley and South Bay. Outlook: Low interest rates will drive further allocations to apartment complexes. Concentrated pockets of development will result in a higher pace of transactions as merchant builders look to exit from recently completed projects. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics 38

39 MARKET OVERVIEW LOS ANGELES COUNTY GREATER DOWNTOWN LOS ANGELES MARKET Construction and Vacancy During the first three quarters of 2016, developers completed more than 2,770 rentals, bringing construction to more than 3,000 units. The majority of the new units targeted sites inside the Downtown Los Angeles submarket. Developers will complete another 3,300 rentals in the Greater Downtown Los Angeles market before year -end. The largest project underway, G12, located at 1200 Grand Ave., will contain 347 apartments in a seven-story building. The market vacancy rate ticked marginally tighter over the past year as a slight uptick in vacancy in Downtown Los Angeles was offset by declines in the Mid-Wilshire and Hollywood neighborhoods. While vacancy in the Mid-Wilshire and Hollywood submarkets is 2.0 percent, Downtown Los Angeles is currently registering 3.9 percent. Outlook: Developers will complete roughly 6,100 units this year, far exceeding the previous year s pace of * Forecast Sources: Marcus & Millichap Research Services; MPF Research more than 1,900 rentals. Vacancy will tick up slightly through year-end as construction accelerates. Rents Over the past year, greater competition for available units pushed up rental rates more than 5.0 percent to $2,281 per month. In the previous yearlong period, average effective rent climbed 6.5 percent. Rent gains were led by the Mid-Wilshire submarket, which recorded growth of 7.1 percent to $2,295 per month on average. The Downtown Los Angeles submarket also performed well, tacking on 4.3 percent to $2,251 per month. The Hollywood submarket lagged the average, swelling 3.1 percent to $2,277 per month. Growth in average effective rents was primarily driven by Class A properties, while modest downturns were recorded in Class B and C buildings. Class A appreciation was primarily driven by assets in Downtown Los Angeles and Hollywood, registering growth of 11.1 percent to $2,650 per month and 8.9 percent to $2,511 per month, respectively. Outlook: Rent growth will moderate over the coming year as supply increases are worked through, * Forecast Sources: Marcus & Millichap Research Services; MPF Research prompting a mid-single-digit rise in average effective rent. 39

40 MARKET OVERVIEW LOS ANGELES COUNTY GREATER DOWNTOWN LOS ANGELES MARKET Sales Trends Sales volume surged more than 30 percent over the past year as investors allocated assets ahead of several major mixed-use projects that will bring thousands of new residents into the market. Along with greater investor interest, the average price per unit on closed deals exceeded $240,000, down roughly $10,000 per door from the prior year. Higher-than-average prices were paid in the Mid-Wilshire and West Hollywood areas. Significant buyer activity pushed the average cap rate into the 4.2 percent range, down roughly 25 basis points from the previous year as investor interest was unfazed by greater anticipated deliveries. Outlook: Complexes near major shopping or event centers will garner significant interest from investors. Mixed-use offerings with ground-floor retail will also see bidders as operators seek to diversify cash flows. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; MPF Research 40

41 MARKET OVERVIEW LOS ANGELES COUNTY WESTSIDE CITIES MARKET Construction and Vacancy Over the past four quarters, developers placed 722 rentals into service in the Westside Cities market, slowing the pace of completions significantly from the previous year when 460 units were delivered. Builders focused primarily on the Brentwood/Westwood/Beverly Hills and Palms/Mar Vista submarkets, with all year-to-date completions coming to market in these two places. The Santa Monica/Marina del Rey submarket will receive just 76 units this year. Vacancy rose broadly across the market over the past year as higher prices prompted marginal tenant outflows. The Palms/Mar Vista submarket was most affected, with vacancy increasing 50 basis points to 2.4 percent, while Brentwood/Westwood/Beverly Hills and Santa Monica/Marina del Rey were unchanged and up 20 basis points, respectively. Outlook: Developers will complete nearly 870 rentals this year as construction rebounds throughout the county. As a result, the Westside Cities market vacancy rate will rise 30 basis points to 3.6 percent * Forecast Sources: Marcus & Millichap Research Services; MPF Research by year-end. Rents The Westside Cities market s pricing power is rising as tenants seek out luxury apartments in coveted neighborhoods. During the last year, the average effective rent rose 3.2 percent to $2,900 per month. The Santa Monica/Marina del Rey submarket slipped 0.9 percent to $3,105 per month. Rent performance was overwhelmingly driven by the Palms/Mar Vista and Brentwood/Westwood/Beverly Hills submarkets, which recorded average effective rent growth of 6.5 percent to $2,428 per month and 5.0 percent to $3,036 per month, respectively. While Class A properties registered tremendous rent increases, Class B assets struggled. Class A product in Brentwood/Westwood/Beverly Hills tacked on 6.1 percent to $3,152 per month, while Class B rental rates declined 17.9 percent to $1,925 per month. Outlook: Average effective rents will expand 4 percent to $2,890 per month by year-end as tenants migrate toward new apartments being constructed in the area. * Forecast Sources: Marcus & Millichap Research Services; MPF Research 41

42 MARKET OVERVIEW LOS ANGELES COUNTY WESTSIDE CITIES MARKET Sales Trends Buyer interest in the Westside Cities market was roughly unchanged over the past year as investors maintained a pace of steady acquisitions. Deal flow centered around properties with addresses in Santa Monica and Culver City. The average price per unit on closed transactions was more than $530,000 per unit as buyers paid up for premium assets in the market. This level represents a 20 percent rise over the previous yearlong period. Cap rates remain in the mid-3 percent range during the past year, down roughly 15 basis points from the prior year. Assets in Beverly Hills and Malibu priced at a premium to the market average. Outlook: Limited construction and robust property values will encourage real estate investors to continue allocating capital to the market. The majority of deal flow will target complexes with less than 50 units due to the institutional ownership profile of larger assets. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; MPF Research 42

43 MARKET OVERVIEW LOS ANGELES COUNTY SAN FERNANDO VALLEY/TRI-CITIES MARKET Construction and Vacancy Over the past four quarters, builders completed 1,500 units in the market, with the majority of construction in the Van Nuys/Northeast San Fernando Valley submarket, where more than 790 rentals were brought to market. Construction will remain elevated through year-end, with more than 1,600 apartments slated for delivery. Developers will shift their emphasis to Burbank/Glendale/Pasadena submarket, where 1,480 units are underway. Altana I in Glendale is the largest project with 507 rentals. Operational performance in the market was bifurcated, with vacancy contracting based on strong performance in the Woodland Hills and Van Nuys/NE San Fernando Valley submarkets. The submarkets posted vacancy declines of 30 basis points to 2.8 percent and 50 basis points to 1.2 percent. Outlook: Completions will exceed 2,700 rentals this year as development ramps up in the market. As * Forecast Sources: Marcus & Millichap Research Services; MPF Research a result, vacancy will be unchanged at 3.3 percent. Rents The average effective rent soared 6.9 percent over the past year to $1,865 per month as tenant demand was roughly in line with deliveries. The Northridge/Northwest San Fernando Valley submarket recorded the largest increase, up 9.7 percent to $1,649 per month. All submarkets in the San Fernando Valley posted rent increases above 4.0 percent. While the Northridge/Northwest San Fernando Valley submarket posted the biggest gain, the Van Nuys/Northeast San Fernando Valley submarket rose 8.6 percent to $1,562 per month, contributing to strong market performance. The Van Nuys/Northeast San Fernando Valley submarket remains the most affordable in the San Fernando Valley, contributing to strong rent performance even as supply growth accelerated. Outlook: One of the most affordable markets in Los Angeles County will continue to draw renters to the market, fostering a high-single-digit average effective rent growth over the coming year. Increased supply * Forecast Sources: Marcus & Millichap Research Services; MPF Research will do little to halt this trend, prompting tighter vacancy in the months ahead. 43

44 MARKET OVERVIEW LOS ANGELES COUNTY SAN FERNANDO VALLEY/TRI-CITIES MARKET Sales Trends Over the past year, transaction volume in the San Fernando Valley vaulted 13.3 percent as buyers bid for above-market-average yields. Dollar volume during this period exceeded $2.4 billion, with average transaction prices above $4.8 million. Greater investor interest also spilled over into the average price per unit, rising to more than $225,000 per door. The bulk of deal flow was based in the Westlake, Glendale and Studio City/North Hollywood, while higher than average prices were paid in Burbank and Sherman Oaks. Initial cap rates in the market will average in the mid-4 percent band while extending into the mid-5 percent range farther from the metro core. The vast majority of deal flow will range from the low- to mid-4 percent area. Outlook: Buyers seeking higher initial yields will seek outlying areas of the market for assets. Higher-end assets will receive multiple offers, particularly with value-add opportunities. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; MPF Research 44

45 MARKET OVERVIEW LOS ANGELES COUNTY SOUTH BAY/LONG BEACH MARKET Construction and Vacancy During the last 12 months, developers completed 2,750 apartments, with the majority of the new supply coming online in the South Bay. Less than 500 of these rentals were delivered in Long Beach. The biggest complexes brought to market over the past year are highlighted by the two stages of the Villas at Playa Vista and Altitude. The projects contain nearly 1,200 and 545 rentals, respectively. Despite considerable development over the last four quarters, vacancy has moderately tightened during this period. A minor increase in vacancy in the South Bay was offset by a sharp drop in Long Beach, which was primarily driven by robust supply growth rather than a slowdown in demand. Outlook: Rising construction will be offset by elevated net absorption, leading vacancy to slip marginally through A slower pace of development next year will also boost local operations. * Forecast Sources: Marcus & Millichap Research Services; MPF Research Rents Surging supply growth limited the growth in average effective rents this year, rising 3.6 percent to more than $1,900 per month. Both submarkets performed nearly identically, driven by Class A and B product. The Long Beach submarket, benefiting from a slower pace of development, posted considerable growth in Class A buildings, where average effective rents soared 7.7 percent to $2,308 per month. Class B assets also benefited, swelling 8.4 percent to $1,692 per month. South Bay assets performed incredibly well, even as construction reached the highest pace in over a decade. Class A buildings, weighed down by pressure from new offerings, tacked on 3.4 percent to $2,624 per month. Class B buildings bucked this trend, vaulting 8 percent to $1,992 per month. Outlook: The influx of multiple large corporations such as Google and Snapchat to Silicon Beach will trigger greater demand for apartments, leading the average effective rent to advance in the mid-singledigit range. * Forecast Sources: Marcus & Millichap Research Services; MPF Research 45

46 MARKET OVERVIEW LOS ANGELES COUNTY SOUTH BAY/LONG BEACH MARKET Sales Trends Investor appetite is soaring in the market, with closed transactions up more than 30 percent over the past year. Deal flow is widespread, with concentrations in Hawthorne and Long Beach. More than half of all transactions were in these two cities. The average price of properties that exchanged ownership over the last year rose 3.7 percent to more than $190,000 per door. Several complexes in El Segundo and Redondo Beach traded well above the average, while below-average prices were paid in Manhattan Beach and Hermosa Beach. Greater investor interest in the market fostered a shrinkage in first-year yields, which were roughly unchanged in the high-4 percent band. Cap rates can range from the mid-3 percent band to the mid-5 percent range, depending on asset quality and location. Outlook: A rising corporate presence, coupled with robust market operations, will encourage investors to deploy more capital. Assets near shopping destinations and major freeways will be in high demand. ** Trailing 12 months through 3Q Sources: Marcus & Millichap Research Services; MPF Research 46

47 MARKET OVERVIEW LOS ANGELES COUNTY Submarket Vacancy Ranking Capital Markets The initial reading of third quarter GDP of 2.9 percent and consistent growth in employment are fanning expectations that the Federal Reserve will raise Rank Submarket Vacancy Y-O-Y Effective Rate bps Change Rents Y-O-Y % Change 1 East Los Angeles 0.7% 180 $1, % 2 Van Nuys/NE San Fernando Valley 1.2% 50 $1, % stabilization of oil prices around $50 per barrel offer signals that the U.S. 3 South San Gabriel Valley 1.5% 250 $1, % economy is growing at a sustainable pace. 4 Southeast Los Angeles 1.8% 50 $1, % 5 Mid-Wilshire 2.0% 20 $2, % 6 Hollywood 2.0% 60 $2, % have responded to growing demand and favorable demographic trends by 7 Long Beach 2.1% 50 $1, % ramping up construction. Completions will rise to 320,000 units this year and 8 2.3% 0 $3, % 2.3% -30 $1, % its benchmark short-term lending rate at its December meeting. Other economic data showing steady improvement in the housing market and the Increasing rental housing demand underpinned a decline in the U.S. apartment vacancy rate of 60 basis points to 3.5 percent year to date through the third quarter, the lowest level this cycle. Apartment builders peak in Capital markets remain highly competitive, offering an assortment of fixed- 9 Brentwood/Westwood/Bever ly Hills Northridge/NW San Fernando Valley rate products available through commercial banks, life-insurance 10 Palms/Mar Vista 2.4% -50 $2, % companies, CMBS and agency lenders. Fannie Mae and Freddie Mac are 11 South Los Angeles 2.5% -110 $1, % 12 South Bay 2.7% -10 $2, % 13 Woodland Hills 2.8% 30 $2, % 14 Santa Clarita Valley 2.9% 50 $1, % 3.0% -120 $2, % 3.1% -20 $3, % underwriting loans of 10 years at maximum leverage of 80 percent. Rates will typically reside in the high-3 to low-4 percent range, depending on underwriting criteria. Portfolio lenders will also price in this vicinity but will typically require loan-to-value ratios in the 65 to 75 percent band. Floatingrate bridge loans and financing for asset repositioning are typically underwritten with LTVs 70 to 75 percent of stabilized value (80 to Sherman Oaks/N Hollywood/Encino Santa Monica/Marina del Rey percent of cost) and price 300 basis points above Libor for recourse deals 16 and 17 North San Gabriel Valley 3.2% 30 $1, % 18 Antelope Valley 3.5% -20 $1, % 19 Burbank/Glendale/Pasadena 3.6% -150 $2, % 20 Downtown Los Angeles 3.9% -20 $2, % extending to 450 non-recourse transactions. basis points above Libor for 47

48 PROPERTY 4427 WOODMAN NAMEAVE DEMOGRAPHICS MARKETING TEAM Created on January 2017 POPULATION 2020 Projection Total Population 1 Miles 3 Miles 5 Miles 29, , , Estimate Total Population 28, , ,461 27, , , Census Total Population 2000 Census Total Population 25, , ,544 Daytime Population 2015 Estimate 26, , ,914 HOUSEHOLDS 2020 Projection 1 Miles 3 Miles 5 Miles Total Households 14,242 89, , Estimate Total Households Average (Mean) Household Size 14,087 87, , ,212 82,245 Growth HOUSING UNITS Occupied Units 13,155 81,098 3 Miles 5 Miles 10.22% 13.20% 10.61% $150,000 - $199, % 6.53% 5.19% $100,000 - $149, % 13.78% 12.36% $75,000 - $99, % 11.51% 10.91% $50,000 - $74, % 17.33% 16.70% $35,000 - $49, % 11.68% 12.40% $25,000 - $34, % 8.66% 9.90% $15,000 - $24, % 9.39% 10.69% Under $15, % 10.50% 11.63% Average Household Income $119,245 $104,884 $99,939 Median Household Income $70,969 $63,360 $57,526 Per Capita Income $58,329 $45,790 $39,328 1 Miles 3 Miles 5 Miles POPULATION PROFILE Population By Age 28, , , % 20.40% 22.36% 20 to 34 Years 23.66% 23.20% 24.31% 35 to 39 Years 9.47% 8.24% 7.80% 193, to 49 Years 16.74% 15.68% 15.16% 50 to 64 Years 19.34% 19.32% 18.20% Age % 13.14% 12.17% , Census Total Households $200,000 or More 1 Miles Under Census Total Households HOUSEHOLDS BY INCOME 2015 Estimate 1.10% 1.68% 1.88% 1 Miles 3 Miles 5 Miles 2015 Estimate Total Population Median Age 2020 Projection 14,242 89, ,294 Population 25+ by Education Level 2015 Estimate 2015 Estimate Population Age , , ,141 Elementary (0-8) 0.90% 4.69% 8.14% Some High School (9-11) 2.36% 4.69% 7.18% High School Graduate (12) 11.44% 14.93% 17.39% Some College (13-15) 21.51% 21.78% 20.68% 14,276 89, ,395 Owner Occupied 5,525 34,834 82,075 Renter Occupied 8,561 52, , ,586 5,029 Vacant Persons In Units 2015 Estimate Total Occupied Units 14,087 87, ,367 Associate Degree Only 6.28% 6.96% 6.41% 1 Person Units 39.46% 34.76% 31.24% Bachelors Degree Only 38.60% 30.54% 25.75% 2 Person Units 34.51% 32.35% 30.01% Graduate Degree 18.67% 15.21% 12.66% 3 Person Units 13.89% 14.87% 15.06% Population by Gender 4 Person Units 9.06% 10.94% 12.40% 28, , ,461 5 Person Units 2.21% 4.33% 6.14% Male Population 47.77% 49.05% 49.89% 6+ Person Units 0.87% 2.75% 5.15% Female Population 52.23% 50.95% 50.11% 2015 Estimate Total Population Source: 2016 Experian 48

49 PROPERTY 4427 WOODMAN NAMEAVE DEMOGRAPHICS MARKETING TEAM Population Race and Ethnicity In 2016, the population in your selected geography is 28,822. The population has changed by 11.90% since It is estimated that the population in your area will be 29, five years from now, which represents a change of 1.36% from the current year. The current population is 47.77% male and 52.23% female. The median age of the population in your area is 39.48, compare this to the US average which is The population density in your area is 9, people per square mile. The current year racial makeup of your selected area is as follows: 79.58% White, 5.00% Black, 0.10% Native American and 6.79% Asian/Pacific Islander. Compare these to US averages which are: 70.98% White, 12.77% Black, 0.19% Native American and 5.25% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. Households Housing There are currently 14,087 households in your selected geography. The number of households has changed by 7.08% since It is estimated that the number of households in your area will be 14,242 five years from now, which represents a change of 1.10% from the current year. The average household size in your area is 2.03 persons. The median housing value in your area was $714,730 in 2016, compare this to the US average of $185,104. In 2000, there were 5,330 owner occupied housing units in your area and there were 7,825 renter occupied housing units in your area. The median rent at the time was $834. Income Employment In 2016, the median household income for your selected geography is $70,969, compare this to the US average which is currently $54,148. The median household income for your area has changed by 30.15% since It is estimated that the median household income in your area will be $85,334 five years from now, which represents a change of 20.24% from the current year. In 2016, there are 13,259 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 84.15% of employees are employed in white-collar occupations in this geography, and 16.18% are employed in blue-collar occupations. In 2016, unemployment in this area is 8.28%. In 2000, the average time traveled to work was minutes. People of Hispanic origin make up 12.58% of the current year population in your selected area. Compare this to the US average of 17.53%. The current year per capita income in your area is $58,329, compare this to the US average, which is $29,638. The current year average household income in your area is $119,245, compare this to the US average which is $77,468. Source: 2016 Experian 49

50 PRESENTED BY Jeff Louks Brett Sanson Executive Managing Director Investments Senior Associate Senior Director - National Multi Housing Group Encino Office Tel: (818) Director - National Multi Housing Group Encino Office Tel: (818) Fax: (818) Fax: (818) jeff.louks@marcusmillichap.com brett.sanson@marcusmillichap.com License: CA License: CA

51 PRESENTED BY Kent Williams Broker Tel: (858) License: CA