Offering Memorandum Philadelphia, PA 19123 1
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 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. 2018 Marcus & Millichap. All rights reserved. 823 N 3RD ST Philadelphia, PA ACT ID Z0300206 2
P R E S E N T E D B Y Daniel Litt Associate Philadelphia Office Tel: (215) 531-7091 Fax: (215) 531-7010 daniel.litt@marcusmillichap.com License: PA RS340012 Lawrence Gariano Senior Associate Philadelphia Office Tel: (215) 531-7072 Fax: (215) 531-7010 lawrence.gariano@marcusmillichap.com Licenses: NJ 790741, PA AB067647 David Beyel Senior Associate Member - National Office and Industrial Properties Group Philadelphia Office Tel: (215) 531-7062 Fax: (215) 531-7010 david.beyel@marcusmillichap.com Licenses: PA RS324739, NJ 1538049 3
INVESTMENT OVERVIEW 4
PROPERTY DESCRIPTION PROPERTY OVERVIEW Marcus and Millichap is pleased to offer to qualified buyers an investment opportunity at 823-29 N 3 rd Street- a 21,000 square foot industrial property and residence in the Northern Liberties neighborhood of Philadelphia. Northern Liberties, ranking in the Top 10 Zip Codes in the United States for home value growth from 2000 to 2016, saw a 203 percent increase in home values, 95 percent growth in household income, and a 230 percent increase in college-educated residents during that period. New developments and an established Business Improvement District continue to drive more businesses, families, and young professionals to the neighborhood. The property consists of a four story 20,600 square foot post & beam industrial building with an adjacent 2,200 square foot two story residence. The entirety of the 4 floors and basement of the SOHO style industrial building is currently used as an art studio, which contains heavy machinery used for the owners business. In addition to the two buildings, the parcel includes an enclosed 3,200 square foot courtyard with a fountain and garden. The zoning for the property is IRMX which allows for a height of 60 ft and a maximum Floor to Area Ratio of 500% by right. Notable features include hand plastered walls, large insulated arched windows, and stainless steel balconies. The buildings open lay out provides a blank canvas to be used by creative organizations, Information Technology (IT) companies, Design/Architect offices and various other mixed uses. The buildings are well maintained with a small freight elevator, a dry sprinkler system, 6 inch water main, and a new white silicone roof coating as of last year. The electrical systems consist of a 400 amp three phase meter with an additional 400 amp single phase meter. There are currently two gas meters with a setup for an additional five to six meters. The building is just a short walk between both the Girard and Spring Garden SEPTA train stops, which provide public transportation to Center City as well as the Universities in West Philadelphia. The property also benefits from nearby amenities and landmarks including: Liberty Lands Park, an ACME Supermarket, Target, The Piazza at Schmidts, Yards Brewery, The North Bowl, The Filmore, and many other popular restaurants, bars, cafes, and boutiques. PROPERTY OVERVIEW Developing Neighborhood with close proximity to Grocery Stores, Restaurants and nightlife Girard EL Stop provides convenient access to Center City and the Universities in West Philadelphia Business Improvement District projected to bring new infrastructure and economic development to the neighborhood Rare Off Street Parking 5
Zoning PROPERTY OVERVIEW Developing Neighborhood with close proximity to Grocery Stores, Restaurants and nightlife Girard EL Stop provides convenient access to Center City and the Universities in West Philadelphia Business Improvement District projected to bring new infrastructure and economic development to the neighborhood Rare Off Street Parking 6
Aerials and Exterior PROPERTY OVERVIEW 823-835 N 3 rd Street 7
Floor Plates Online Link to 3D Model: https://sketchfab.com/models/950316d72c10474f9db97483f9762860 PROPERTY OVERVIEW Developing Neighborhood with close proximity to Grocery Stores, Restaurants and nightlife Girard EL Stop provides convenient access to Center City and the Universities in West Philadelphia Business Improvement District projected to bring new infrastructure and economic development to the neighborhood Rare Off Street Parking 8
Interior Floors First Floor Second Floor PROPERTY OVERVIEW Third Floor Fourth Floor 9
Floor Plates PROPERTY OVERVIEW Online Link to 3D Model: https://sketchfab.com/models/950316d72c10474f9db97483f9762860 Developing Neighborhood with close proximity to Grocery Stores, Restaurants and nightlife Girard EL Stop provides convenient access to Center City and the Universities in West Philadelphia Business Improvement District projected to bring new infrastructure and economic development to the neighborhood Rare Off Street Parking 10
MARKET COMPARABLES 11
PROPERTY 823-29 N 3RD NAME ST SALES COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Price Per Square Foot $360.00 $330.00 $300.00 $270.00 $240.00 Avg. $241 $210.00 $180.00 $150.00 $120.00 $90.00 $60.00 $30.00 $0.00 823 N 3rd St 854-858 N 3rd St 1150 N American St 2157 E Norris St 4200-4224 Ludlow St 12
PROPERTY 823-29 N 3RD NAME ST SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 823 N 3RD ST 823 N 3rd St, Philadelphia, PA, 19123 854-858 N 3RD ST 854-858 N 3rd St, Philadelphia, PA, 19123 1 1150 N AMERICAN ST 1150 N American Street, Philadelphia, PA, 19123 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Price 7,000,000 Price/SF $307.02 Rentable SF 22,800 Zoning: IRMX Lot Size (SF): 8,500 Year Built 1915 Close of Escrow 1/17/2018 Sales Price $3,500,000 Rentable SF 14,164 Price/SF $247.11 Zoning: CMX-2 Lot Size(SF): 25,494 Year Built 1970 Close of Escrow 12/27/2017 Sales Price $2,600,000 Rentable SF 10,750 Price/SF $241.86 Zoning: IRMX Lot Size (SF): 17,071 Year Built 1935 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 13
PROPERTY 823-29 N 3RD NAME ST SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 2157-2185 E NORRIS ST 2157 E Norris Street, Philadelphia, PA, 19125 3 4200-4224 LUDLOW ST 4200-4224 Ludlow Street, Philadelphia, PA, 19104 4 Close of Escrow 01/17/2018 Sales Price $2,900,000 Rentable SF 14,016 Price/SF $207 Zoning: ICMX Lot Size (SF): 22,509 Year Built 1900 Close of Escrow 01/16/2018 Sales Price $5,500,000 Rentable SF 20,460 Price/SF $269 Zoning: CMX-4 Lot Size (SF): 20,597 Year Built 1950 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 14
823-29 PROPERTY N 3RD NAME ST RENT MARKETING COMPARABLES TEAM 709-715 N 2 nd Street 709-715 N 2 nd street, Philadelphia, PA, 19123 CALLOWHILL CENTER 421 N 7th St, Philadelphia, PA, 19123 937 SPRING GARDEN ST 937 Spring Garden St, Philadelphia, PA, 19123 rentpropertyname1 rentpropertyname1 rentpropertyname1 Rentable SF 25,429 Asking Rent/SF $22.00-$30.00 Year Built 1915 Type: Industrial/Retail Rentable SF 27,975 Asking Rent/SF $21.00 Year Built 1923 Type: Office Rentable SF 3,252 Asking Rent/SF $22.00 Year Built 1915 Type: Office rentpropertyaddress1 15
823-29 PROPERTY N 3RD NAME ST RENT MARKETING COMPARABLES TEAM CAMBRIDGE LOFTS 1133 N 4th St, Philadelphia, PA, 19123 811 N FRANKLIN ST 811 N Franklin St, Philadelphia, PA, 19123 rentpropertyname1 rentpropertyname1 Type Tenant Avg. SF Avg. Monthly Rent Rent/SF 2 Bdr 2 Bath 1,100 $3,000 $2.73 Unit Type Units SF Rent Rent/SF 1 Bdr 1 Bath 4 1000 $1,800 $1.80 rentpropertyaddress1 16
Financial Analysis 17
Pricing Summary Summary Price Pri ce Per SqFt $ $ 7,000,000 325.78 Pricing Detail Lot Size (SqFt) 8,500 Rentable SqFt 21,487 Year Built 1915 Expenses 2018 Pro Forma Real Estate Taxes $ 12,041 [1] $ 76,503 Ins ura nce $ 17,099 $ 17,099 El ectri c $ 3,800 [2] $ 1,975 Wa ter, Sewer $ 1,200 $ 1,200 Ma i ntena nce $ 2,280 $ 2,280 Tota l Expens es $ 36,420 $ 99,057 [1] Pro Forma real estate taxes reflect an increase in assessed value at 75% of the sales price, with a 1.4572% millage rate [2] Current electric expense is based on owner utilizing two floors of the building Projected electric expense is reflective of a standard expense based on the square footage of the building, roughly $0.10/sq ft for common area electric with tenants paying their own electric 18
Rent Roll Pricing Detail Pricing Detail Commercial Pro Forma Suite Tenant Name SF % of Commercial GLA Annual Rent PSF Monthly C1 Office/Retail 1st floor 3,920 20% $ 86,240 $22.00 $7,186.67 C2 Office/Retail floor 2 3,920 20% $ 86,240 $22.00 $7,186.67 C3 Office/Retail floor 3 3,920 20% $ 86,240 $22.00 $7,186.67 C4 Office/Retail Floor 4 3,920 20% $ 86,240 $22.00 $7,186.67 CB Basement 4,062 21% $ 36,558 $9.00 $3,046.50 19,742 100% $381,518.00 Residential Unit Unit Type SF % of GLA Annual Rent PSF Monthly Residence1 Bed/1.5 Bath 1,745 100% $27,000 $1.29 $2,250 1,745 1 $27,000 $1.29 $2,250 Total Rentable Square Footage 21,487 Annual Commercial Income Annual Residential Income $381,518 $27,000 $408,518 $19.01 $34,043.17 19
Income & Expenses Pricing Detail Commercial Square Footage 19,742 Sq Ft Residential Square Footage 1,745 Sq Ft Rentable Building Area 21,487 Sq Ft Number of Units 5 Current Pro Forma Income %EGI %EGI Gross Potential Income $ - $ 417,116 Less Vacancy & Credit Loss $ - $ (20,856) 5% Reimbursements $ - $ 89,151 Effective Gross Income $ - $ 408,518 Expenses %EGI Per SF Per Unit %EGI Per SF Per Unit Property Taxes $ 12,041 $0.56 $2,408 $ 76,503 18.73% $3.56 $15,301 Insurance $ 17,099 $0.80 $3,420 $ 17,099 4.19% $0.80 $3,420 Water/Sewer $ 600 $0.03 $120 $ 1,200 0.29% $0.06 $240 Electric $ 3,800 $0.18 $760 $ 1,975 0.48% $0.09 $395 Maintenance $ 2,280 $0.11 $456 $ 2,280 0.56% $0.11 $456 Total Expenses $ 35,820 $ 99,057 24% $ 4.61 Net Operating Income $ (35,820) $ 309,461 Notes [1] Taxes reflect an increase in assessed value at 75% of sale price multiplied by the millage rate (1.4572%). Assuming NNN leases with Pro Rata share reimbursed by commercial tenants [2] Calculated at $0.75 / Sq Ft; Assuming NNN leases with Pro Rata share reimbursed by commercial tenants 20
Pricing Detail Summary Price # of Apartment Units # of Commercial Suites Price Per SqFt Lot Size (SqFt) Rentable SqFt PPUnit Year Rennovated (Approx.) $ 7,000,000 Operating Data Pricing Detail Pricing Detail 1 Income Pro Forma 1 Multifamily $ 325.78 Gross Scheduled Rent $ 27,000 8,500 All Other Income $ - 21,487 Vacancy $ - $7,000,000 Effective Gross Income $ 27,000 1915 Commercial Year 1 Gross Scheduled Rent $ 381,518 CAP Rate 5.42% Expense Reimbursements 90% $ 89,151 Cash-on-Cash 4.57% All Other Income $ - Debt Coverage Ratio 1.61 Vacancy 5% $ (19,076) Stabilized Return Year 1 5.14% Effective Gross Income $ 451,593 Combined Effective Gross Income (CEGI) $ 478,593 Financing Expenses $ (99,057) Purchase Price $ 7,000,000 Net Operating Income $ 379,536 Leasing Commissions $ 25,433 Tenant Improvements $ - Tenant Improvements $ 354,220 Leasing Commissions $ (25,433) Total Cost $ 7,379,653 Cash Flow Year 1 $ 354,104 Down Payment $ 2,951,861 Annual Debt Service $ (219,316.22) Loan Amount $ 4,427,792 60% Net Cash Flow After Debt Service $ 134,788 Loan Type Loan to Cost Cash on Cash Return (Year 1) 4.57% Interest Only Period 18 Months [1] Expenses Pro Forma Interest Rate 5.00% Real Estate Taxes $ 76,503 Amortization 25 Insurance $ 17,099 [1] Interest only period available for 18 months after acquisition to stabilization when financing will convert to perm. Please contact MMCC agent for more detail Water, Sewer, and Common Area Electricity $ 3,175 Maintenance $ 2,280 Total Expenses $ 99,057 21
8 THE BEYEL-GARIANO GROUP Marcus & Millichap Real Estate Investment Services of Seattle, Inc. Ph# (215) 531-7000 PA License # RB062197C P R E S E N T E D BY David Beyel Associate Philadelphia Office Tel: (215) 531-7062 Cell: (609) 432-2500 Fax: (215) 531-7010 david.beyel@marcusmillichap.com Licenses: PA RS324739, NJ 1538049 Lawrence Gariano Senior Associate Philadelphia Office Tel: (215) 531-7072 Cell: (609) 220-3583 Fax: (215) 531-7010 lawrence.gariano@marcusmillichap.com Licenses: NJ 790741, PA AB067647 Matthew C. Bess Associate Philadelphia Office Tel: (215) 531-7085 Cell: (610) 301-9219 Fax: (215) 531-7010 matthew.bess@marcusmillichap.com License: PA RS336509 Dan Litt Associate Philadelphia Office Tel: (215) 531-7091 Cell: (610) 755-1325 Fax: (215) 531-7010 daniel.litt@marcusmillichap.com Licenses: PA RS340012 22
823 N 3RD ST Pricing Detail Redevelopment Summary Price # of Apartment Units # of Commercial Suites Price Per SqFt Lot Size (SqFt) Rentable SqFt PPUnit Year Built $ 7,000,000 Operating Data Pricing Detail Pricing Detail 1 Income Current Pro Forma 1 Multifamily $ 307.02 Gross Scheduled Rent $ - $ 434,704 8,500 All Other Income $ - $ - 22,800 Vacancy 5% $ - 5% $ (21,735) $7,000,000 Effective Gross Income $ - $ 412,969 1915 Commercial Current Year 1 Gross Scheduled Rent $ - $ - CAP Rate -0.84% 4.65% Expense Reimbursements 0% 0% Cash-on-Cash -12.60% -68.76% All Other Income $ - $ - Debt Coverage Ratio -0.14-5.22 Vacancy 5% $ - 5% $ - Stabilized Return Year 1 n/a 3.41% Effective Gross Income $ - $ - Combined Effective Gross Income (CEGI) $ - $ 412,969 Financing Expenses $ (59,138) $ (87,811) Purchase Price $ 7,000,000 Net Operating Income $ (59,138) $ 325,158 T.I. / Capital Costs $ 2,473,375 Tenant Improvements $ - $ (2,463,375) Leasing Commissions $ 62,863 Leasing Commissions $ - $ (62,863) Total Cost $ 9,536,238 Cash Flow Year 1 $ (59,138) $ (2,201,079) Down Payment $ 3,814,495 LTC Annual Debt Service $ (421,638) $ (421,638) Loan Amount $ 5,721,743 60% Net Cash Flow After Debt Service $ (480,776) $ (2,622,717) Loan Type LTC Cash on Cash Return (Year 1) -12.60% -68.76% Interest Rate 5.50% Expenses Current Pro Forma Amortization 25 Years Real Estate Taxes $ 15,139 $ 15,139 Term 5 Years Insurance $ 17,100 $ 17,099 Minimum DSCR 1.25 Water, Sewer, and Common Area Electricity $ 5,000 $ 11,399 Operating Expenses - Combined $ 13,139 $ 17,099 Management Fee $ - $ 15,675 Reserves $ 8,760 $ 11,399 Total Expenses $ 59,138 $ 87,811 23
823 N 3RD ST Redevelopment Income and Expenses with Tax Abatement Pricing Detail Pro Forma Pricing Detail Income Gross Potential Income Less Vacancy & Credit Loss Other Income Effective Gross Income Expenses Property Taxes Insurance Total Utilities Repairs & Maintenance Management Fee Reserves Total Expenses Net Operating Income %EGI $494,040 -$24,702 5% $0 $469,338 %EGI Per SF Per Unit $15,320 3% $0.87 $15,320 [1] $13,139 3% $0.75 $13,139 [2] $10,000 2% $0.57 $10,000 $13,139 3% $0.75 $13,139 [3] $14,080 3% $0.80 $14,080 [4] $8,760 2% $0.50 $8,760 [5] $74,438 16% $394,900 Notes [1] Taxes estimated from 2019 assessment with 10 year tax abatement on improvements [2] Based upon $0.75 / Squarefoot [3] Based upon $0.75 / Squarefoot [4] Estimated at 3% of effective gross income [5] Estimated at $0.50 / Squarefoot 24
823 N 3RD ST Pricing Detail Redevelopment with Tax Abatement Summary Price # of Apartment Units # of Commercial Suites Price Per SqFt Lot Size (SqFt) Rentable SqFt PPUnit Year Built $ 7,000,000 Operating Data Pricing Detail Pricing Detail 1 Income Current Pro Forma 1 Multifamily $ 307.02 Gross Scheduled Rent $ - $ 394,900 8,500 All Other Income $ - $ - 22,800 Vacancy 5% $ - 5% $ (19,745) $7,000,000 Effective Gross Income $ - $ 375,155 1915 Commercial Current Year 1 Gross Scheduled Rent $ - $ - CAP Rate -0.85% 4.30% Expense Reimbursements 0% 0% Cash-on-Cash -24.67% -11.84% All Other Income $ - $ - Debt Coverage Ratio -0.12 0.46 Vacancy 5% $ - 5% $ - Stabilized Return Year 1 n/a 3.25% Effective Gross Income $ - $ - Combined Effective Gross Income (CEGI) $ - $ 375,155 Financing Expenses $ (59,319) $ (74,438) Purchase Price $ 7,000,000 Net Operating Income $ (59,319) $ 300,717 T.I. / Capital Costs $ 2,199,875 Tenant Improvements $ - $ - Leasing Commissions $ 62,863 Leasing Commissions $ - $ (62,863) Total Cost $ 9,262,738 Cash Flow Year 1 $ (59,319) $ 237,855 Down Payment $ 2,315,684 LTC Annual Debt Service $ (511,932) $ (511,932) Loan Amount $ 6,947,053 75% Net Cash Flow After Debt Service $ (571,251) $ (274,077) Loan Type LTC / LTV Cash on Cash Return (Year 1) -24.67% -11.84% Interest Rate 5.50% Expenses Current Pro Forma Amortization 25 Years Real Estate Taxes $ 15,320 $ 15,320 Term 5 Years Insurance $ 17,100 $ 13,139 Minimum DSCR 1.25 Water, Sewer, and Common Area Electricity $ 5,000 $ 10,000 Operating Expenses - Combined $ 13,139 $ 13,139 Management Fee $ - $ 14,080 Reserves $ 8,760 $ 8,760 Total Expenses $ 59,319 $ 74,438 25
PROPERTY DESCRIPTION PROPERTY OVERVIEW Marcus and Millichap is pleased to offer to qualified buyers an investment opportunity at 823-29 N 3 rd Street- a 22,800 square foot industrial property in the Northern Liberties neighborhood of Philadelphia. Northern Liberties, ranking in the Top 10 Zip Codes in the United States for Home Value Growth from 2000 to 2016, saw a 203 percent increase in home values, 95 percent growth in household income, and a 230 percent increase in college-educated residents during that period. New developments and an established Business Improvement District continue to drive more Businesses, families, and young professionals to the neighborhood. The property, once an old chocolate warehouse in the late 19 th century, consists of a 20,600 square foot industrial building, a 2,200 square foot residence and a 3,200 square foot courtyard behind the residence which has vehicle access off of 3 rd street. All of the properties four stories and basement are currently being used as art studio space, which contain heavy machinery used for the owners business. The zoning for the property is IRMX which allows for a height of 60 ft and a maximum Floor to Area Ratio of 500% by right. The buildings are well maintained with a small freight elevator, a dry sprinkler system, 6 inch water main, and a new white silicone roof coating as of last year. The electrical systems consist of a 400 amp three phase meter with an additional 400 amp single phase meter. There are currently two gas meters with a setup for an additional five to six meters. The building is just a short walk between both the Girard and Spring Garden SEPTA train stops, which provide public transportation to Center City as well as the Universities in West Philadelphia. The property also benefits from nearby amenities and landmarks including: Liberty Lands Park, an ACME Supermarket, Target, The Piazza at Schmidts, Yards Brewery, The North Bowl, The Filmore, and many other popular restaurants, bars, cafes, and boutiques. PROPERTY OVERVIEW Developing Neighborhood with close proximity to Grocery Stores, Restaurants and nightlife Girard EL Stop provides convenient access to Center City and the Universities in West Philadelphia Business Improvement District projected to bring new infrastructure and economic development to the neighborhood Rare Off Street Parking 26