Offering Memorandum. PARKTOP LANE APARTMENTS 9109 Parktop Lane Knoxville, TN 37923

Transcription

1 Offering Memorandum PARKTOP LANE APARTMENTS 9109 Parktop Lane Knoxville, TN

2 N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E Confidentiality and Disclaimer The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc Marcus & Millichap. All rights reserved. Non-Endorsement Notice 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. PARKTOP LANE APARTMENTS Knoxville, TN ACT ID Z

3 TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Offering Summary Regional Map Local Map Aerial Photo FINANCIAL ANALYSIS 02 Rent Roll Summary Rent Roll Detail Operating Statement Notes Pricing Detail Acquisition Financing MARKET COMPARABLES 03 Rent Comparables MARKET OVERVIEW 04 Market Analysis Demographic Analysis 3

4 INVESTMENT OVERVIEW 4

5 EXECUTIVE SUMMARY NUMBER OF UNITS UNIT TYPE VITAL DATA Price $300,000 CURRENT YEAR 1 Down Payment 25% / $75,000 CAP Rate 7.11% 11.72% Loan Amount $225,000 GRM Loan Type Proposed New Net Operating Income $21,330 $35,148 Interest Rate / Amortization 5.00% / 25 Years Net Cash Flow After Debt Service 7.39% / $5, % / $19,364 Price/Unit $75,000 Total Return 13.58% / $10, % / $24,241 Price/SF $68.18 Number of Units 4 Rentable Square Feet 4,400 Number of Buildings 1 Number of Stories 2 Year Built 1998 UNIT MIX 4 2BR 1.5 BA 1,100 4 Total 4,400 APPROX. SQUARE FEET OFFERING SUMMARY MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Countrywide Hr 8,000 Prologic Dist Svcs E LLC 2,093 Travelers Insurance 2,001 Baptist Hospital West 2,000 Rush Fitness Complex The 1,700 Shoneys of Knoxville Inc 1,300 Parkwest Medical Center 1,112 Follett Hgher Edcatn Group Inc 858 Acntv 782 Flying J Transportation LLC 763 Transforce Inc 700 Kellog 699 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2017 Estimate Pop 8,048 59, , Census Pop 7,801 56, , Estimate HH 3,686 26,511 55, Census HH 3,581 25,196 52,295 Median HH Income $44,074 $61,135 $65,885 Per Capita Income $28,217 $35,917 $38,154 Average HH Income $61,596 $80,608 $90,752 # 5

6 INVESTMENT OVERVIEW OFFERING SUMMARY Parktop Lane Apartments is situated in West Knoxville, Tennessee located just minutes from Interstate 40 and Interstate 75 for easy access. This investment is perfect for the new investor or adding to your portfolio. Present rents are below market with opportunity of increased rents after first year. Townhomes are convenient to the welldesired Cedar Bluff area and within one-and-a-half miles to major hospital and medical offices. Private and public schools are within a one-mile radius. Great opportunity! Nearby: Cedar Bluff Racquet Club Miles Knoxville Catholic High School Miles Cedar Bluff Middle School Miles Parkwest Hospital Miles Lincoln Memorial University 1.0 Mile Restaurants and Lodging Also Within 1.0 Mile Radius INVESTMENT HIGHLIGHTS Current Cap Rate 7.11 Percent Projected Year One Cap Rate Percent Current Cash-on-Cash 7.39 Percent Projected Year One Cash-on-Cash Percent 6

7 PROPERTY OVERVIEW Parktop Lane Apartments is located in Knoxville, Tennessee and presents as a fourplex property with eight bedrooms, eight bathrooms and approximately 3,960 square feet of living space with cedar siding. Each unit consisting of a twobedroom/one-and-one-half-bath townhome with 1,100 square feet. Tenants pay for electric and water. Each unit has washer and dryer hookups, range, dishwasher, microwave, private patio, storage and fenced yard. Property is well maintained with stable tenants. Common Area Amenities Minutes to Interstate 40 and 75 OFFERING SUMMARY Unit Amenities Range Dishwasher Microwave Private Patio Washer and Dryer Hookups # 7

8 PROPERTY SUMMARY THE OFFERING Property Parktop Lane Apartments Price $300,000 Property Address 9109 Parktop Lane, Knoxville, TN Assessors Parcel Number 119G C 004 SITE DESCRIPTION Number of Units 4 Number of Buildings 1 Number of Stories 2 Year Built/Renovated 1982 Rentable Square Feet 3960 Lot Size 0.30 Type of Ownership Fee Simple UTILITIES Water Utility Electric Electric OFFERING SUMMARY PROPOSED FINANCING First Trust Deed Loan Amount $225,000 Loan Type Proposed New Interest Rate 5.00% Amortization 25 Years Loan Term 25 Years Loan to Value 75% Debt Coverage Ratio

9 REGIONAL MAP 9

10 LOCAL MAP 10

11 AERIAL PHOTO 11

12 FINANCIAL ANALYSIS 12

13 RENT ROLL SUMMARY FINANCIAL ANALYSIS 13

14 RENT ROLL DETAIL FINANCIAL ANALYSIS 14

15 OPERATING STATEMENT FINANCIAL ANALYSIS 15

16 PRICING DETAIL FINANCIAL ANALYSIS 16

17 ACQUISITION FINANCING MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIES MMCC our fully integrated, dedicated financing arm is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms. We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options. Our dedicated, knowledgeable experts understand the challenges of financing and work tirelessly to resolve all potential issues to the benefit of our clients. Closed 1,651 debt and equity financings in 2016 National platform operating within the firm s brokerage offices $5.1 billion total national volume in 2016 Access to more capital sources than any other firm in the industry WHY MMCC? Optimum financing solutions to enhance value Our ability to enhance buyer pool by expanding finance options Our ability to enhance seller control Through buyer qualification support Our ability to manage buyers finance expectations Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file 17

18 MARKET COMPARABLES 18

19 8 RENT COMPARABLES MAP PARKTOP LANE APARTMENTS (SUBJECT) Parktop Lane 9101 Parktop Lane 9105 Parktop Lane

20 PROPERTY PARKTOP LANE NAME APARTMENTS AVERAGE OCCUPANCY RENT COMPARABLES 100 Avg % Parktop Lane Apartments 9100 Parktop Lane 9101 Parktop Lane 9105 Parktop Lane 20

21 PROPERTY PARKTOP LANE NAME APARTMENTS AVERAGE RENT - MULTIFAMILY RENT COMPARABLES 2 Bedroom $700 Avg. $695 $630 $560 $490 $420 $350 $280 $210 $140 $70 $0 Parktop Lane Apartments 9100 Parktop Lane 9101 Parktop Lane 9105 Parktop Lane 21

22 PROPERTY PARKTOP LANE NAME APARTMENTS RENT MARKETING COMPARABLES TEAM PARKTOP rentpropertyname1 LANE APARTMENTS 9109 Parktop Lane, Knoxville, TN, rentpropertyaddress PARKTOP LANE 9100 Parktop Lane, Knoxville, TN, PARKTOP LANE 9101 Parktop Lane, Knoxville, TN, rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 2BR 1.5 BA 4 1,100 $680 $0.62 Total/Avg. 4 1,100 $680 $0.62 Unit Type Units SF Rent Rent/SF 2 Bdr 1.5 Bath Twnhs 4 1,075-1,075 $695- $695 $0.65 Total/Avg. 4 1,075 $695 $0.65 Unit Type Units SF Rent Rent/SF 2 Bdr 1.5 Bath Twnhs 4 1,075-1,075 $695- $695 $0.65 Total/Avg. 4 1,075 $695 $0.65 YEAR BUILT: 1998 rentpropertyaddress1 OCCUPANCY: 100% YEAR BUILT: 1982 NOTES Refrigerator, Stove, Dishwasher, Washer/Dryer Hookups, Private Patio, rentpropertyaddress1 OCCUPANCY: 100% YEAR BUILT: 1982 NOTES Refrigerator, Stove, Dishwasher, Washer/Dryer Hookups, Private Patio, rentpropertyaddress1 22

23 PROPERTY PARKTOP LANE NAME APARTMENTS RENT MARKETING COMPARABLES TEAM 9105 PARKTOP LANE 9105 Parktop Lane, Knoxville, TN, rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 2 Bdr 1.5 Bath Twnhs 4 1,075-1,075 $695- $695 $0.65 Total/Avg. 4 1,075 $695 $0.65 OCCUPANCY: 100% YEAR BUILT: 1982 NOTES Refriderator, Stove, Dishwasher, Patio, Outside Storage rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 23

24 MARKET OVERVIEW 24

25 KNOXVILLE OVERVIEW The Knoxville metro area is in the eastern portion of Tennessee and is the third largest after Nashville and Memphis. The city of Knoxville is the county seat of Knox County. The metro consists of nine counties: Anderson, Blount, Campbell, Grainger, Knox, Loudon, Morgan, Roane and Union. The local metro economy centers primarily around economic hubs created by the University of Tennessee and Great Smokey Mountain tourism. METRO HIGHLIGHTS HIGHER EDUCATION The University of Tennessee has 28,000 students and 9,800 employees. It is estimated the school has a $1.6 billion impact on the state s economy. INTERNATIONAL PORT As an international port, it is connected to the nation s inland waterways and the Gulf of Mexico via channels on the Mississippi and Tennessee Rivers. MARKET OVERVIEW GREAT SMOKEY MOUNTAIN CULTURE The Knoxville region has a strong arts community, contributing to bluegrass and country music with bands such as Flatt & Scruggs and the Everly Brothers. In nearby Pigeon Forge, the park Dollywood hosts 3 million tourists in a season. ECONOMY Technology and research activities are also growing in the metro, with multiple National Science Foundation-funded centers associated with the University of Tennessee. In addition, multiple research and development firms are located in the Tennessee Technology Corridor. Diversification has brought major employers a variety of industries such as media and healthcare with companies like Regal Entertainment Group, Scripps Networks Interaction and TeamHealth. While diversifying from its manufacturing roots into media and professional service jobs, the metro still houses big manufacturing operations, including a Coca-Cola bottling plant and a Gerdau Ameristeel plant. DEMOGRAPHICS 2016 POPULATION: 866K Growth *: 4.1% 2016 HOUSEHOLDS: 352K Growth *: 4.6% 2016 MEDIAN AGE: 40.5 U.S. Median: MEDIAN HOUSEHOLD INCOME: $46,100 U.S. Median: $57,200 * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 25

26 TENNESSEE METROS MARKET OVERVIEW New Supply Weighing on Vacancy; Metro Performance Diverging Significantly Job creation supporting housing demand in Tennessee metros; cyclical high in development impacting local operations. Steady employment growth in the largest Tennessee metros is expanding residential demand as these positions fill, prompting a rise in apartment construction. The resulting supply increases will push deliveries to a cycle high in 2017, particularly in Nashville and Memphis. Though net absorption of new rentals over the past eight years has been positive, the resulting impacts from a large surplus of supply are beginning to weigh heavily on local operations in Nashville and Memphis as these new Class A luxury units open. Rent growth driven by Class C offerings amid significant supply at the high end of the marketplace. Amid the most robust pipelines in more than a decade, vacancy rates are moving up across the board in Tennessee. While core submarkets in Nashville have seen the sharpest increases, cyclical highs in development have strained a broad swath of submarkets, limiting rental growth as operators deploy a greater amount of incentives to lease up the new buildings. However, noncore submarkets and more affordable offerings retain high levels of occupancy, allowing strong increases in overall cash flows and capital returns. Multifamily 2017 Outlook Metro Investment Trends Nashville Vacancy Y-O-Y BasisPoint Change Effective Rent Y-O-Y Change Knoxville 3.8% 20 $ % Memphis 6.6% 130 $ % Nashville 6.9% 270 $1, % Class B and C offerings in the $1 million to $10 million range will draw the bulk of buyer activity, particularly for assets located near Downtown and the University. Cap rates in the low-7 percent range will continue to encourage investors to deploy capital to the metro, particularly properties in the Westside. Memphis Value-add assets in Central Memphis will motivate investors looking for sharp increases in rental rates. A broad spectrum of cap rates provide returns ranging from the low-6 to high-10 percent range. Knoxville A lack of listings is prompting a widespread approach to capital allocation. The West End/CBD submarket is drawing the most attention, although buyers are also pursuing properties in Southeast Nashville. Cap rates will begin in the high-6 percent return spectrum, pushing toward the low-8 percent band for outlying and second-tier suburban locations. * Cap rates trailing 12 months through 3Q17; 10-year Treasury rate through Oct. 20. Sources: CoStar Group, Inc.; Real Capital Analytics 26

27 TENNESSEE METROS: KNOXVILLE MARKET OVERVIEW 3Q17 12-Month Period * Forecast EMPLOYMENT CONSTRUCTION VACANCY RENTS decrease in total 1% employment Y-O-Y 835 units completed Y-O-Y 10 basis point increase in vacancy Y-O-Y increase in effective 7.9% rents Y-O-Y During the past 12 months, Knoxville organizations added 3,800 positions, detracted by the professional and business services sector, where 1,900 people were let go. Several sectors added to payrolls, led by the education and healthcare subset, where 1,800 jobs were added. Unemployment in the metro has sunk to 3.2 percent, the lowest rate since Over the last four quarters, builders slowed the pace of construction from more than 1,200 rentals to 835 units. Completions were focused on the Downtown/University/South Knoxville and West Knoxville submarkets. An additional 600 apartments will be delivered by year end. Aventine Northshore in Southwest Knoxville is the largest project at 246 units. Despite a slower pace of construction, this year s weak net absorption pushed the vacancy rate up 10 basis points to 3.8 percent. Submarket performance was mixed. North Knoxville remained extremely tight at 1.8 percent. Meanwhile, the Downtown/University/South Knoxville submarket s vacancy rate increased 60 basis points to 5 percent. Powered by an 18 percent gain in the Downtown/University/South Knoxville submarket to $1,140 per month, the overall metro average effective rent recorded a 7.9 percent climb to $890 per month. All four submarkets generated an advancement of 3 percent or higher. The Southwest Knoxville submarket recorded a 4 percent rise to $839 per month. 27

28 TENNESSEE METROS: KNOXVILLE MARKET OVERVIEW Submarket Trends Lowest Vacancy Rates 3Q17 Submarket Vacancy Rate Y-O-Y BasisPoint Change Effective Rent Y-O-Y% Change * **2016 Sales Trends Sharp Decline in Activity Amid a Lack of Listings as Prices Escalate Transaction volumes were incredibly light over the past year, driven by a lack of listings and opportunities to deploy capital. Prices per unit reached the high-$60,000 per door band. Cap rates approached the low-8 percent range, providing investors with stable cash flows. Assets in the Westside and Northside drew the most attention from buyers when assets were listed. North Knoxville 1.8% -80 $ % Southwest Knoxville 4.0% 60 $ % West Knoxville 4.3% 0 $ % Outlook: Higher relative rates of return compared with larger Tennessee markets and East Coast metros may draw investors to the market. Downtown/University/S outh Knoxville 5.0% 60 $1, % Overall Metro 3.8% 10 $ % * Trailing 12 months through 3Q17 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics 28

29 PROPERTY PARKTOP LANE NAME APARTMENTS Created on March 2018 POPULATION 1 Miles 3 Miles 5 Miles 2022 Projection Total Population 8,313 63, , Estimate Total Population 8,048 59, , Census Total Population 7,801 56, , Census Total Population 8,177 49, ,561 Daytime Population 2017 Estimate 16,022 76, ,772 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2022 Projection Total Households 3,812 28,424 59, Estimate Total Households 3,686 26,511 55,479 Average (Mean) Household Size Census Total Households 3,581 25,196 52, Census Total Households 3,647 21,805 44,170 Growth % 7.22% 7.56% HOUSING UNITS 1 Miles 3 Miles 5 Miles Occupied Units 2022 Projection 3,812 28,424 59, Estimate 4,087 28,264 58,725 Owner Occupied 1,130 15,158 36,262 Renter Occupied 2,556 11,353 19,217 Vacant 400 1,753 3,245 Persons In Units 2017 Estimate Total Occupied Units 3,686 26,511 55,479 1 Person Units 39.28% 33.21% 28.70% 2 Person Units 33.91% 35.14% 35.56% 3 Person Units 13.19% 14.69% 15.83% 4 Person Units 8.41% 10.98% 12.97% 5 Person Units 3.36% 4.05% 4.70% 6+ Person Units 1.90% 1.94% 2.22% MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2017 Estimate $200,000 or More 2.82% 4.78% 6.47% $150,000 - $199, % 5.02% 5.92% $100,000 - $149, % 14.56% 16.02% $75,000 - $99, % 15.11% 15.10% $50,000 - $74, % 19.48% 18.84% $35,000 - $49, % 13.08% 12.47% $25,000 - $34, % 9.06% 8.31% $15,000 - $24, % 9.33% 8.43% Under $15, % 9.56% 8.45% Average Household Income $61,596 $80,608 $90,752 Median Household Income $44,074 $61,135 $65,885 Per Capita Income $28,217 $35,917 $38,154 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2017 Estimate Total Population 8,048 59, ,244 Under % 22.62% 24.35% 20 to 34 Years 32.45% 24.42% 21.74% 35 to 39 Years 7.24% 7.19% 7.05% 40 to 49 Years 11.49% 12.80% 13.42% 50 to 64 Years 15.33% 18.08% 19.33% Age % 14.86% 14.11% Median Age Population 25+ by Education Level 2017 Estimate Population Age 25+ 5,580 41,713 91,098 Elementary (0-8) 2.42% 1.90% 1.71% Some High School (9-11) 2.13% 2.90% 3.38% High School Graduate (12) 17.57% 16.90% 17.83% Some College (13-15) 22.48% 19.47% 19.44% Associate Degree Only 7.43% 8.00% 7.59% Bachelors Degree Only 28.14% 29.76% 29.08% Graduate Degree 19.41% 20.27% 20.36% Population by Gender 2017 Estimate Total Population 8,048 59, ,244 Male Population 50.56% 48.34% 48.50% Female Population 49.44% 51.66% 51.50% Source: 2017 Experian 29

30 PROPERTY PARKTOP LANE NAME APARTMENTS MARKETING DEMOGRAPHICS TEAM Population In 2017, the population in your selected geography is 8,048. The population has changed by -1.58% since It is estimated that the population in your area will be 8, five years from now, which represents a change of 3.29% from the current year. The current population is 50.56% male and 49.44% female. The median age of the population in your area is 33.44, compare this to the US average which is The population density in your area is 2, people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 77.00% White, 8.62% Black, 0.01% Native American and 6.33% Asian/Pacific Islander. Compare these to US averages which are: 70.42% White, 12.85% Black, 0.19% Native American and 5.53% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 7.88% of the current year population in your selected area. Compare this to the US average of 17.88%. Households There are currently 3,686 households in your selected geography. The number of households has changed by 1.07% since It is estimated that the number of households in your area will be 3,812 five years from now, which represents a change of 3.42% from the current year. The average household size in your area is 2.10 persons. Housing The median housing value in your area was $180,802 in 2017, compare this to the US average of $193,953. In 2000, there were 1,421 owner occupied housing units in your area and there were 2,226 renter occupied housing units in your area. The median rent at the time was $533. Income In 2017, the median household income for your selected geography is $44,074, compare this to the US average which is currently $56,286. The median household income for your area has changed by 14.68% since It is estimated that the median household income in your area will be $50,143 five years from now, which represents a change of 13.77% from the current year. Employment In 2017, there are 8,578 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 71.51% of employees are employed in white-collar occupations in this geography, and 27.96% are employed in blue-collar occupations. In 2017, unemployment in this area is 4.86%. In 2000, the average time traveled to work was minutes. The current year per capita income in your area is $28,217, compare this to the US average, which is $30,982. The current year average household income in your area is $61,596, compare this to the US average which is $81,217. Source: 2017 Experian 30

31 8 DEMOGRAPHICS 31

32 P R E S E N T E D B Y Gloria Gregory Senior Associate Member - National Multi Housing Group Knoxville Office Tel: (865) Fax: (865) gloria.gregory@marcusmillichap.com License: TN