1828 S. Gramercy Pl OFFERING MEMORANDUM LOS ANGELES, CA 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! PRESENTED BY: KW COMMERCIAL Ventura Blvd

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1 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 S. Gramercy Pl LOS ANGELES, CA OFFERING MEMORANDUM KW COMMERCIAL Ventura Blvd Encino, CA PRESENTED BY: ANIE MAYELIAN Multifamily Investment Specialist anie@mayeliangroup.com BRE #

2 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! Confidentiality & Disclaimer LOS ANGELES, CA All materials and information received or derived from KW Commercial its directors, officers, agents, advisors, affiliates and/or any third party sources are provided without representation or warranty as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither KW Commercial its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significance to such party. KW Commercial will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. KW Commercial makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. KW Commercial does not serve as a financial advisor to any party regarding any proposed transaction. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions,vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. All properties and services are marketed by Mayelian Group in compliance with all applicable fair housing and equal opportunity laws. PRESENTED BY: KW COMMERCIAL Ventura Blvd Encino, CA ANIE MAYELIAN Multifamily Investment Specialist anie@mayeliangroup.com BRE # We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction. 2

3 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 PROPOSAL S. GRAMERCY FOR COMMERCIAL PL SERVICES PROPERTY INFORMATION 1 PROPERTY INFORMATION 1828 S. GRAMERCY PL PROPERTY INFORMATION 1 EXECUTIVE SUMMARY PROPERTY DETAILS 3

4 1828 S. GRAMERCY PL 1 PROPERTY INFORMATION Executive Summary SALE PRICE: $915,000 UNITS: 4 PRICE PER UNIT: $228,750 LOT SIZE: 8,929 SF BUILDING SIZE: 3,810 SF YEAR BUILT: 1905 RENOVATED: 1921 ZONING: [Q]LAR4 CROSS STREETS: East Of Arlington & South Of Venice PROPERTY FEATURES Mid City location. Cash offers only - property is fixer, 3 units will be delivered vacant at COE. Suitable for buyers who want to rehab and re-tenant at market rents. Consists of (1) 4+2, (1) 2+1, and (2) S+1. Proforma income will be $76,800, proforma GRM 11.9, Proforma cap 6% Subject has been identified as eligible for historic designation as part of SurveyLA Onsite parking Any inspection of the property should be done on Wednesday September 20th, pm-6pm Offers to be not contingent. No response to buyers/offers that have not viewed the property. 4

5 1828 S. GRAMERCY PL 1 PROPERTY INFORMATION Property Details STREET ADDRESS: 1828 S. Gramercy Pl CITY, STATE, ZIP: Los Angeles, CA APN: LOT SIZE: 8,929 SF BUILDING SIZE: 3,810 SF ZONING: [Q]LAR4 YEAR BUILT: 1905 NUMBER OF STORIES: 2 NUMBER OF UNITS: 4 5

6 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 PROPOSAL S. GRAMERCY FOR COMMERCIAL PL SERVICES CITY INFORMATION 2 CITY INFORMATION 1828 S. GRAMERCY PL CITY INFORMATION 2 CITY DESCRIPTIONS

7 CITY INFORMATION The only is the county diverse in population, it is also geographically diverse since it is k. steadily increasing booming triggered continue to e 8

8 Los Angeles Overview CITY INFORMATION MARKET OVERVIEW The Los Angeles apartment market is comprised of 790,574 units in thirty-seven geographic concentrations ranging in size from the 54,389 unit Hollywood/Silver Lake submarket to the Tujunga/La Crescenta/Montrose submarket, which accounts for 5,448 units. In the nine-year period beginning with Q1 2007, the Downtown submarket has experienced the greatest introduction of new inventory, 7,321 units, amounting to 16.9% of all new market rate rentals added to the market. ECONOMIC OVERVIEW California is a big state, and Los Angeles is its biggest city. The Los Angeles economy is basically sound. The latest Current Employment Statistics (CES) data from the U.S. Bureau of Labor Statistics (BLS) show that total non-farm employment for the Los Angeles Metropolitan Division increased by 70,600 jobs (1.6%) in the 12 months ending in November Total private employment increased by 59,000 (1.6%). These are not very strong gains, but there is job growth here. The various employment sectors showed losses and gains, with variances across blue-collar and professional categories. EMPLOYMENT OVERVIEW The BLS reports a seasonally unadjusted unemployment rate of 4.8% in November 2016 for the Los Angeles Metropolitan Division, down from 5.8% one year earlier. Total non-farm employment in Los Angeles was up 1.6% year- over-year in November, according to the BLS. Moody s Economy.com reports a fourth quarter 2016 average household income of $165,426 for Los Angeles. Average household incomes of $145,374 and $155,257 are reported for the top metros in the nation and West region, respectively. OUTLOOK OVERVIEW Los Angeles has a 4.8% unemployment rate, down 100 basis points over the year. The labor force, which counts those working and those seeking work, increased by 115,000 (2.3%) while employment, which includes freelance workers and those commuting outside the Metropolitan Division, increased by 160,000 (3.4%). The Los Angeles area s job base is expanding, and people who are looking for work are finding it. The city has some good employment numbers in its hip pocket as 2017 continues. Over the next eight quarters, developers are expected to deliver a total of 17,132 units. Net new household formations at the metro level over the same period are projected to average 1.1% annually, enough to facilitate an absorption rate averaging 5,786 units per year. Because this amount does not exceed the forecasted new construction, the market vacancy rate will rise by 60 basis points to finish 2018 at 3.9%. On an annualized basis through 2017 and 2018, asking and effective rents are anticipated to rise by 3.7% and 3.5%, respectively, to finish 2018 at $1,908 and $1,844. 9

9 SUBMARKET HIGHLIGHT CENTRAL LOS ANGELES CITY INFORMATION The 14,065-unit South/Central Los Angeles submarket reports a vacancy rate of 2.6% and an average asking rent of $988 per month in the fourth quarter of The vacancy rate was unchanged in the fourth quarter. It is down 10 basis points from a year earlier. The average asking rent and the average effective rent increased 0.9% and 1.0% over the quarter, the latter to $966 per month. The year-over-year increase is 2.5% asking and 2.2% effective. For the 47,029-unit Wilshire/Westlake submarket, Reis reports a fourth quarter 2016 vacancy rate of 3.8%, down 30 basis points from the prior quarter and unchanged year-over-year. The average asking rent of $1,531 per month is unchanged over the quarter and up 2.8% over the year. The average effective rent of $1,510 per month unchanged for the quarter and up 2.9% year-over-year. Construction here is active Wilshire, with 209 units, and 7 West, with 80 units, are under construction to complete in March of The Phase II of Wilshire and Lucas, with 600 units, is forecast to complete in July th Street and Bixel Street, with 606 units, is under construction for completion in July as well. In the 13,675-unit Downtown submarket, the fourth quarter 2016 vacancy rate is 7.3%, and the average asking rent is $2,382 per month. The vacancy rate is down 30 basis points over the quarter and up 310 from a year earlier. The average asking and average effective rents were down 0.9% and 0.8%, respectively, over the quarter, the latter to $2,263 per month. The year-over-year gains are 2.9% and 1.4%. Downtown continues to generate considerable developer and tenant interest. The Downtown neighborhood is quite active with all types of commercial development, including multifamily construction and condominiums. The G 12, with 347 units, is under construction in this submarket for completion in February Building 1 of Broadway Palace, with 236 units, Olive DTLA, Phase I of the Project at Pico, and Topaz, with 293, 362, and 159 units, respectively, are all under construction for completion in February S. Broadway, E. on Grand, and Grether & Grether Lofts, with 214, 112, and 72 units, respectively, are all under construction Downtown with March 2017 completion dates. The 54,389-unit Hollywood/Silver Lake submarket has a vacancy rate of 4.1% in the fourth quarter of 2016 and an average asking rent of $2,109 per month, Reis reports. The vacancy rate is down 30 basis points over the quarter and up 40 basis points from a year earlier. The average asking rent and the average effective rent were unchanged over the quarter and are up 8.8% and 8.6% year-over-year. The average effective rent is $2,044 per month. Highline West, with 280 units, is under construction for completion in February of 2017, as is Domain West Hollywood, with 166 units (133 market-rate). For the 45,486-unit Sherman Oaks/Studio City/North Hollywood submarket, Reis reports a fourth quarter 2016 vacancy rate of 2.6% and an average asking rent of $1,788 per month, up 0.9% for the quarter and 2.9% for the year. The vacancy rate is down 10 basis points from the prior quarter and down 30 for the year. The effective rent of $1,768 per month is up 0.9% for the quarter and 3.3% for the year. 0

10 CITY HIGHLIGHTS LAFC Stadium CITY INFORMATION Los Angeles Football Club (LAFC) is a Major League Soccer s newest team in Los Angeles, set to debut in The stadium, named Banc of California Stadium, will be the first open-air stadium in the heart of LA since 1962, utilizing 140,000 square feet of open space.. LAFC is committed to building a 22,000-seat soccerspecific venue, bringing $350 million in private investment to South Los Angeles, which will increase provide more job opportunities for residents in the area. The group estimated the project would create 1,200 temporary construction jobs and 1,800 full-time jobs, generating $2.5 million in annual tax revenue. 11

11 LA Live Disney Concert Hall University Village

12 Pershing Square Fig At 7th

13 The Standard Ritz Carlton Wilton - Bonaventure

14 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 PROPOSAL S. GRAMERCY FOR COMMERCIAL PL SERVICES LOCATION INFORMATION 3 LOCATION INFORMATION 1828 S. GRAMERCY PL LOCATION INFORMATION 3 RETAILER MAP REGIONAL MAP LOCATION MAPS AERIAL MAP

15 1828 S. GRAMERCY PL 3 LOCATION INFORMATION Retailer Map 15

16 1828 S. GRAMERCY PL 3 LOCATION INFORMATION Regional Map 1828 S. Gramercy Pl 16

17 1828 S. GRAMERCY PL 3 LOCATION INFORMATION Location Maps 17

18 1828 S. GRAMERCY PL 3 LOCATION INFORMATION Aerial Map 18

19 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 PROPOSAL S. GRAMERCY FOR COMMERCIAL PL SERVICES FINANCIAL ANALYSIS 4 FINANCIAL ANALYSIS 1828 S. GRAMERCY PL FINANCIAL ANALYSIS 4 FINANCIAL SUMMARY - PROFORMA UNIT MIX SUMMARY

20 1828 S. GRAMERCY PL 4 FINANCIAL ANALYSIS Financial Summary - Proforma INVESTMENT OVERVIEW PROFORMA Price $915,000 Price per Unit $228,750 GRM 11.9 CAP Rate 6.0% Cash-on-Cash Return (yr 1) 6.04 % Total Return (yr 1) $55,296 Debt Coverage Ratio - OPERATING DATA PROFORMA Gross Scheduled Income $76,800 Other Income - Total Scheduled Income $76,800 Vacancy Cost $2,304 Gross Income $74,496 Operating Expenses $19,200 Net Operating Income $55,296 Pre-Tax Cash Flow $55,296 FINANCING DATA PROFORMA Down Payment $915,000 Loan Amount - Debt Service - Debt Service Monthly - Principal Reduction (yr 1)

21 1828 S. GRAMERCY PL 4 FINANCIAL ANALYSIS Unit Mix Summary UNIT TYPE COUNT % TOTAL RENT MARKET RENT 4+2 (Vacant-Proforma) $0 $2, (Vacant-Proforma) $0 $2,000 S+1 (Vacant-Proforma) $0 $800 S $169 $800 Totals / Averages 4 100% $169 $6,

22 4 UNITS IN MID-CITY! 3 UNITS DELIVERED VACANT! 1828 PROPOSAL S. GRAMERCY FOR COMMERCIAL PL SERVICES DEMOGRAPHICS 5 DEMOGRAPHICS 1828 S. GRAMERCY PL DEMOGRAPHICS 5 DEMOGRAPHICS MAP

23 1828 S. GRAMERCY PL 5 DEMOGRAPHICS Demographics Map POPULATION 0.5 MILES 1 MILE 1.5 MILES TOTAL POPULATION 16,855 64, ,450 MEDIAN AGE MEDIAN AGE (MALE) MEDIAN AGE (FEMALE) HOUSEHOLDS & INCOME 0.5 MILES 1 MILE 1.5 MILES TOTAL HOUSEHOLDS 5,552 21,034 48,365 # OF PERSONS PER HH AVERAGE HH INCOME $40,008 $43,620 $46,242 AVERAGE HOUSE VALUE $621,309 $590,299 $526,844 RACE 0.5 MILES 1 MILE 1.5 MILES % WHITE 28.3% 27.3% 26.1% % BLACK 21.3% 19.4% 17.3% % ASIAN 12.9% 15.8% 18.2% % HAWAIIAN 0.0% 0.0% 0.1% % INDIAN 0.2% 0.3% 0.4% % OTHER 33.4% 34.8% 35.9% ETHNICITY 0.5 MILES 1 MILE 1.5 MILES % HISPANIC 58.9% 58.8% 58.2% * Demographic data derived from 2010 US Census 23

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