OFFERING MEMORANDUM Avenue 42, Bermuda Dunes, California 92203

Transcription

1 OFFERING MEMORANDUM Avenue 42, Bermuda Dunes, California PRESENTED BY: Ross Crowe, CPM National Director of Operations KENNEDY WILSON PROPERTIES GROUP 9701 Wilshire Boulevard, Suite 700, Beverly Hills, California (310) main

2 79420 Avenue 42 contact information Ross Crowe, CPM National Director of Operations Peter Lawson, CPM, CCIM, CIPS Managing Director KENNEDY WILSON PROPERTIES GROUP 9701 Wilshire Boulevard, Suite 700 Beverly Hills, California (310) main 2

3 TABLE OF CONTENTS I. Investment Summary Executive Summary Investment Highlights and Summary II. Property Description Property Description Property Information Site Plan Plat Map Area Location Map Area Detail Map III. Financial Analysis Rent Roll Operating Expenses IV. Market Data Regional Data Market Area Overview Sales Comparables Lease Analysis V. Area Overview Palm Springs Overview Local Demographics VI. Disclosure 3

4 I. INVESTMENT SUMMARY

5 79420 Avenue 42 investment summary EXECUTIVE SUMMARY Kennedy Wilson is pleased to offer for sale Avenue 42, a 9,178sf (+/-) 10-Unit Multifamily Apartment Property located in Bermuda Dunes, CA The property has been modestly maintained and under the ownership of the Singer Trust with US Bank as trustee. The area features the Bermuda Dunes Golf Club which has the unique distinction of having hosted the PGA tour event, The Bob Hope Classic, for 49 years. The Bermuda Dunes golf club has been home to world renowned celebrities such as Clark Gable and Arnold Palmer, who have both lived in the Bermuda Dunes community Avenue 42 offers investors a fully-leased income property. 5

6 79420 Avenue 42 investment summary INVESTMENT HIGHLIGHTS AND SUMMARY Product Type: Apartment Building Total Square Footage (of Buildings): 9,178 SF +/- Offering Price: $995,000 Price PSF: $ The 10-Unit Apartment Building is located on one parcel which is situated on the north side of Avenue 42. The width and depth is 200 The property is about ONE mile from the renowned Bermuda Dunes Country Club and less than a half-mile from the Bermuda Dunes Airport. 6

7 II. PROPERTY DESCRIPTION

8 79420 Avenue 42 property description PROPERTY DESCRIPTION Product Type: No. of Buildings: Multi Family 2 Stories: 1 Total SF: 9,178 +/- Land Area: 0.91 Acres Year Built: 1980 Site 8

9 79420 Avenue 42 property description PROPERTY INFORMATION The subject property is located in a portion of unincorporated Riverside County known as Bermuda Dunes. This area is positioned just north of La Quinta and just east of Palm Desert. The Interstate 10 Freeway is just north. There are several commercial developments along Washington Street, however the majority of buildings in the Bermuda Dunes area are residential in use. Most involve single family residences, however along Avenue 42 there are several 2-10 unit apartment buildings, ranging in height from one to two stories. There are very few buildings having over six units. 9

10 79420 Avenue 42 property description SITE PLAN PLAT MAP 10

11 79420 Avenue 42 property description AERIAL LOCATION MAP 11

12 79420 Avenue 42 property description AERIAL DETAIL MAP 12

13 III. FINANCIALS

14 79420 Avenue 42 financial analysis RENT ROLL AS OF AUGUST

15 79420 Avenue 42 financial analysis OPERATING EXPENSES YE 2013 OPERATING EXPENSES YTD AUG

16 IV. MARKET DATA

17 79420 Avenue 42 market data REGIONAL DATA The Bermuda Dunes area of the Coachella Valley is located just south/east of the so-called Sixty Mile Circle, which is an area within a radius of 60 miles of downtown Los Angeles. This 60-mile circle is comprised of about 11,310 square miles and encompasses almost all of the highly populated Counties of Los Angeles, Orange, Ventura, San Bernardino and Riverside. Most of the information contained in this section is from the Real Estate Research Council of Southern California report, which is a compilation from several sources of data including the Economic Development Department, Department of Finance and U.S. Census Bureau. Population The 2012 Los Angeles County population is 9,962,789 (an increase of l.5% from 2010), the Orange County population is 3,090,132 (a 2.7% increase from 2010) and the Riverside/San Bernardino County population is 4,350,096 (a 2.9% increase from 2010). Projections are for a stability in population over the next several quarters. Employment In Los Angeles County, the largest employment field is in business and management, followed by tourism In the table, the change in employment over the past several quarters is summarized. 17

18 79420 Avenue 42 market data MARKET AREA OVERVIEW Among all sectors of commercial real estate investment, multi-housing saw the earliest turnaround of investor interest, as the positive trends in income fundamentals seen over the last two years had been widely expected. The stabilizing influence of the debt provided by the government-sponsored enterprises (Freddie Mac and Fannie Mae) was an enormous help for market liquidity as well. Development activity is approaching pre-recession levels, with starts in the range of 275,000 units per year. Development equity is readily available but not easily accessible, as institutional investors maintain their laser-like focus on core-urban infill projects. Occupancies remain strong at 95%; however given new supply and the significant annual increases over the past two years of 4-7% it is anticipated the rent growth will moderate to 3-5% average through U.S. Multifamily Market Gains Momentum in the Spring Nationally, same-store rent growth strengthened to 3.2% on an annualized basis. Rentable multifamily completions are estimated to increase from 214,315 units in 2013 to 264,253 units in With job growth largely holding to its current pace as completions accelerate, the vacancy rate is expected to rise, but to remain near its historical norm. Rent growth will likely stay slightly above consumer price inflation. Q exit cap rates were flat from the prior quarter in six of the 14 prime markets tracked; increases were reported in six markets, and declines in two 18

19 79420 Avenue 42 market data SALES COMPARABLES 19

20 79420 Avenue 42 market data LEASE ANALYSIS All previous apartment comparables (page 19) are from the immediate market area. All were unfurnished, and the new tenants had to pay their own gas/electric. In the following table, a rent roll summary for the Avenue 42 is detailed. The rent roll information is dated YE December of Some of the subject units appear to be rented well below-market. The estimated average market rent for units in the subject property is $875/month, assuming the deferred maintenance is cured. An additional $5/unit/month for laundry facilities will also be included. Thus, the total Potential Annual Income is $105,600. From the potential annual market income, vacancy and expenses should be deducted. The vacancy rate has been stable over the past two years. Based on observation of vacancy trends in the subject market area, the overall market appears to be experiencing around a 5% vacancy rate as of the date of value. This rate will be utilized for the subject property. To date, none of the units are vacant. 20

21 V. AREA OVERVIEW

22 79420 Avenue 42 area overview PALM SPRINGS OVERVIEW Nestled at the base of the majestic San Jacinto Mountains, the City of Palm Springs is the ancestral home of the Agua Caliente Band of Cahuilla Indians. The village atmosphere has been preserved and embellished over the years. The streets, lined with palm trees, invite you to explore boutique shops, art galleries and museums while soaking up the sunshine or dining outdoors among stunning desert scenery. The ultimate desert playground for outdoor adventure, arts and culture, gaming and entertainment. Palm Springs has since been sprinkled with Hollywood stardust, where the holiday homes of stars such as Frank Sinatra, Bob Hope and Lucille Ball paved the way for the visionary efforts of former Mayor Sonny Bono to occur; namely, the Palm Springs International Film Festival. If that isn t enough, Palm Springs is becoming the center of Desert Modernism," with stellar examples of mid-century modern architecture tucked throughout the community and available to enjoy. Palm Springs offers a wealth of activities and events throughout the year. Soar to the top of Mount San Jacinto on the world famous Palm Springs Aerial Tramway, play a round of golf at Tahquitz Creek Golf Resort, or hike the ancient palm groves of the Indian Canyons. Tour celebrity and mid-century homes, attend fabulous theatre performances, or wind down with a poolside massage. In the evening, stroll the year round Villagefest, then relax with a swim under the stars. Location Palm Springs, California lies on the western edge of the Coachella Valley, within the Colorado Desert. Located approximately 110 miles southeast of Los Angeles and 140 miles northeast of San Diego, it's an easy two hour drive by freeway. The permanent year-round Palm Springs population is 45,000, and doubles during the winter season. To the east of Palm Springs, are several other desert cities including Cathedral City, Rancho Mirage, Desert Hot Springs, Palm Desert, Indian Wells, La Quinta, and Indio. Climate and Geography Palm Springs has more than 350 days of sunshine and less than 5.2 inches of rain, winter temperatures average in the 70s with nights in the mid-40s. The dry desert heat of summer pushes daytime temperatures into the 100s, which is enjoyed by sun seekers. The geography gives Palm Springs its famed warm, dry climate. At 487 feet above sea level, Palm Springs is sheltered by the Little San Bernardino Mountains to the north, the Santa Rosa Mountains on the south, and the San Jacinto Mountains to the west with its towering 10,831 foot Mt. San Jacinto, site of the Palm Springs Aerial Tramway. 22

23 VI. DISCLOSURE

24 79420 Avenue 42 disclosure DISCLAIMER This Offering Memorandum has been prepared by Broker for use by a limited number of parties and does not necessarily purport to provide an accurate summary of the Property or any of the documents related thereto, nor does it purport to be all-inclusive or to contain all of the information which prospective investors may need or desire. All projections have been developed by Broker and designated sources and are based upon assumptions relating to the general economy, competition, and other factors beyond the control of Broker and Owner, and therefore are subject to variation. No representation is made by Broker or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of the Property. Although the information contained herein is believed to be correct, Broker and Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient. The Offering Memorandum does not constitute a representation that there has not been a change in the business or affairs of the Property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective Purchaser. Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers regarding the Property and/or terminate discussions with any entity at any time with or without notice. Neither the Offering Memorandum, nor any offer or inquiry made by any entity reviewing the Offering Memorandum, nor any negotiations or discussions among Owner, Broker or any such entity, shall be deemed to create a binding contract between Owner and such entity. If Owner accepts an offer made by any such entity, it is expected that a written contract for the purchase of the Property will be negotiated between the parties. All legal rights and obligations between such entity, on the one hand, and Owner, on the other hand, will come into existence only when such a purchase contract is fully executed, delivered and approved by owner and its legal counsel, and any conditions to Owner s obligations there under have been satisfied or waived, and the legal rights and obligations of the parties shall at that time be only those which are set forth in the purchase contract and other documents specifically referred to in the purchase contract. This Offering Memorandum and the contents, except information which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting the Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose the Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you if necessary, for your determination of whether or not to make a proposal and from whom you obtained an agreement of confidentiality) without the prior written authorization of Owner, and that you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or Broker. 24