2305 North Street Beaumont, TX 77702 Erica C. Goss 623539 Associate 409-899-3300 x102 egoss@naiwheeler.com Lee Wheeler, CCIM 467055 President 409-899-3300 lwheeler@naiwheeler.com Lit Corner at North & 7th Street 3 Buildings in Historic Old Town Abundant Parking Value Add Opportunity Asking $315,000 All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. 2660 Sweetgum Lane Beaumont, TX 77703 (409) 899-3300 (p) www.naiwheeler.com
S E C T I O N I Property Information
Property Description Located in Historic Old Town The is situated in the Historic Old Town district of Beaumont, TX. It offers a wide range of office sizes, from the single small office user up to several thousand square feet for multiple employees. The Old Town area is known for large beautiful trees and homes that remind you of the late 1800's and early 1900's. Many of which are on the historic registry. 7th Street was just recently widened and refinished by the City of Beaumont. Sidewalks and a turning lane were added to support the heavier traffic load this area has seen. Calder Avenue, which is two blocks South was also redone and offers red brick sidewalks. This area is on the upswing and becoming more and more beautiful with each passing day. Currently the building is occupied by a multitude of tenants, to include; insurance, tax professionals, a foundation and many other types of users. Contact our office to arrange a tour of the complex. We would love to show you the benefits of owning a multi-tenant office complex in Historic Old Town, Beaumont, TX. All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 3 of 18
Property Photos Property Pictures Main Two Buildings Building 3 Main Lobby in Building 1 Front Entrance to Building 1 Building 2 Building 1 All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 4 of 18
Maps and Aerials Aerial Photos Looking South Looking North All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 5 of 18
Maps and Aerials Surrounding Area Aerial Photo Surrounding Area All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 6 of 18
S E C T I O N I I Financials
Real Estate Investment Details ANALYSIS Analysis Date October 2014 Scenario ProForma PROPERTY Property Property Address Year Built 1978 2305 North Street Beaumont, TX 77702 PURCHASE INFORMATION Property Type Office Purchase Price $315,000 Tenants 28 Total Rentable Sq. Ft. 9,404 Resale Valuation 12.0% (capitalization of noi) Resale Expenses 8.0% FINANCIAL INFORMATION Down Payment $94,500 Closing Costs $3,000 LT Capital Gain 15.00% Federal Tax Rate 28.0% Discount Rate 6.00% LOANS Debt Term Amortization Rate Payment LO Costs Balloon $220,500 5 years 15 years 5.0% $1,744 $2,205 INCOME & EXPENSES Gross Operating Income $96,785 Monthly GOI $8,065 Total Annual Expenses ($63,408) Monthly Expenses ($5,284) CONTACT INFORMATION Lee Wheeler, CCIM 409-899-3300 lwheeler@naiwheeler.com 467055 Erica C. Goss 409-899-3300 x102 egoss@naiwheeler.com 623539 All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 8 of 18
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $320,205 Investment - Cash $99,705 First Loan $220,500 INVESTMENT INFORMATION Purchase Price $315,000 Price per Tenant $11,250 Price per Sq. Ft. $33.50 INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $115,461 Total Vacancy and Credits ($18,676) Operating Expenses ($63,408) Net Operating Income $33,377 Debt Service ($20,924) Capital Expenses and Costs ($5,680) Expended Reserves $0 Cash Flow Before Taxes $6,772 Total Interest (Debt Service) ($10,795) Depreciation and Amortization ($6,825) Taxable Income (Loss) $15,758 Tax Savings (Costs) ($4,412) Cash Flow After Taxes $2,360 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 6.79% Optimal Internal Rate of Return (yr 6) 22.48% Debt Coverage Ratio 1.60 Capitalization Rate 10.60% Gross Income / Square Feet $12.28 Gross Expenses / Square Feet ($6.74) Operating Expense Ratio 65.51% All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 9 of 18
Internal Rate of Return Analysis BEFORE TAX IRR Time Future Cash Flows Initial Investment ($99,705) End of Year 1 $6,772 End of Year 2 $7,036 End of Year 3 $7,686 End of Year 4 $8,346 End of Year 5 $9,016 End of Year 6 $30,620 End of Year 7 $31,308 End of Year 8 $32,006 End of Year 9 $32,713 End of Year 10* $355,128 IRR = 21.93% * ($33,429 + $321,699) AFTER TAX IRR Time Future Cash Flows Initial Investment ($99,705) End of Year 1 $2,360 End of Year 2 $2,398 End of Year 3 $2,663 End of Year 4 $2,926 End of Year 5 $3,186 End of Year 6 $22,025 End of Year 7 $22,465 End of Year 8 $22,909 End of Year 9 $23,358 End of Year 10* $328,363 IRR = 17.7% * ($23,734 + $304,628) All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 10 of 18
Financial Indicators Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier 2.45 2.44 2.42 2.41 2.40 2.38 2.37 2.35 2.34 2.32 Capitalization Rate 10.60% 10.78% 11.04% 11.31% 11.58% 11.86% 12.14% 12.43% 12.72% 13.02% Cash On Cash Return b/t 6.79% 7.06% 7.71% 8.37% 9.04% 11.59% 11.85% 12.12% 12.39% 12.66% Cash On Cash Return a/t 2.37% 2.41% 2.67% 2.93% 3.20% 8.34% 8.51% 8.67% 8.84% 8.99% Debt Coverage Ratio 1.60 1.62 1.66 1.70 1.74 N/A N/A N/A N/A N/A Gross Income per Sq. Ft. $12.28 $12.65 $13.02 $13.42 $13.82 $14.23 $14.66 $15.10 $15.55 $16.02 Expenses per Sq. Ft. ($6.74) ($6.96) ($7.19) ($7.43) ($7.68) ($7.93) ($8.19) ($8.46) ($8.74) ($9.03) Net Income Multiplier 8.48 8.54 8.54 8.53 8.53 8.53 8.53 8.53 8.53 8.53 Operating Expense Ratio 65.51% 65.86% 66.05% 66.23% 66.43% 66.62% 66.82% 67.02% 67.23% 67.44% Loan To Value Ratio 74.37% 68.92% 63.52% 58.15% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Footnotes: b/t = before taxes; a/t = after taxes All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 11 of 18
Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $115,461 $118,919 $122,486 $126,161 $129,945 $133,844 $137,859 $141,995 $146,255 $150,642 GROSS SCHEDULED INCOME $115,461 $118,919 $122,486 $126,161 $129,945 $133,844 $137,859 $141,995 $146,255 $150,642 Turnover Vacancy ($18,676) ($19,483) ($20,068) ($20,670) ($21,290) ($21,929) ($22,586) ($23,264) ($23,962) ($24,681) GROSS OPERATING INCOME $96,785 $99,435 $102,418 $105,491 $108,656 $111,915 $115,273 $118,731 $122,293 $125,962 Expenses 5003 Other Repairs ($500) ($525) ($551) ($579) ($608) ($638) ($670) ($704) ($739) ($776) 5004 Commissions ($1,500) ($1,545) ($1,591) ($1,639) ($1,688) ($1,739) ($1,791) ($1,845) ($1,900) ($1,957) 5005 Insurance ($8,500) ($8,925) ($9,371) ($9,840) ($10,332) ($10,848) ($11,391) ($11,960) ($12,558) ($13,186) 5010 Taxes ($8,000) ($8,240) ($8,487) ($8,742) ($9,004) ($9,274) ($9,552) ($9,839) ($10,134) ($10,438) 5011 Electric Utilities ($20,000) ($20,600) ($21,218) ($21,855) ($22,510) ($23,185) ($23,881) ($24,597) ($25,335) ($26,095) 5015 Gas & Propane ($2,000) ($2,060) ($2,122) ($2,185) ($2,251) ($2,319) ($2,388) ($2,460) ($2,534) ($2,610) 5017 Water & Sewer ($655) ($675) ($695) ($716) ($737) ($759) ($782) ($806) ($830) ($855) 5018 Waste ($600) ($618) ($637) ($656) ($675) ($696) ($716) ($738) ($760) ($783) 5103 Other Expenses ($600) ($618) ($637) ($656) ($675) ($696) ($716) ($738) ($760) ($783) 6001 Management Fee ($9,453) ($9,736) ($10,029) ($10,329) ($10,639) ($10,958) ($11,287) ($11,626) ($11,975) ($12,334) 6002 Lawn Maintenance ($800) ($824) ($849) ($874) ($900) ($927) ($955) ($984) ($1,013) ($1,044) 6005 Janitorial ($2,500) ($2,575) ($2,652) ($2,732) ($2,814) ($2,898) ($2,985) ($3,075) ($3,167) ($3,262) 6006 Maintenance ($3,000) ($3,090) ($3,183) ($3,278) ($3,377) ($3,478) ($3,582) ($3,690) ($3,800) ($3,914) 6007 Electrical Repairs ($500) ($515) ($530) ($546) ($563) ($580) ($597) ($615) ($633) ($652) 6008 A/C Repairs ($3,500) ($3,605) ($3,713) ($3,825) ($3,939) ($4,057) ($4,179) ($4,305) ($4,434) ($4,567) All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 12 of 18
Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 6009 Office Supplies ($100) ($103) ($106) ($109) ($113) ($116) ($119) ($123) ($127) ($130) 6015 Janitorial Supplies ($400) ($412) ($424) ($437) ($450) ($464) ($478) ($492) ($507) ($522) 6017 Alarm/Monitoring ($800) ($824) ($849) ($874) ($900) ($927) ($955) ($984) ($1,013) ($1,044) TOTAL OPERATING EXPENSES ($63,408) ($65,490) ($67,644) ($69,872) ($72,176) ($74,560) ($77,027) ($79,579) ($82,219) ($84,952) NET OPERATING INCOME $33,377 $33,945 $34,774 $35,619 $36,479 $37,355 $38,246 $39,152 $40,073 $41,010 All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 13 of 18
Investment Return Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cash Flow - To Date $2,360 $4,758 $7,421 $10,347 $13,534 $35,559 $58,024 $80,933 $104,291 $128,026 Net Resale Proceeds $50,369 $67,252 $84,798 $103,034 $121,636 $289,491 $293,036 $296,668 $300,386 $304,628 Invested Capital ($99,705) ($99,705) ($99,705) ($99,705) ($99,705) ($264,103) ($264,103) ($264,103) ($264,103) ($264,103) Net Return on Investment ($46,975) ($27,695) ($7,486) $13,676 $35,464 $60,947 $86,957 $113,498 $140,574 $168,551 Internal Rate of Return N/A N/A N/A 3.38% 6.55% 22.48% 20.64% 19.36% 18.41% 17.70% Modified IRR -47.11% -14.93% -2.41% 3.47% 6.52% 21.92% 19.93% 18.44% 17.28% 16.36% NPV (cash flow + reversion) ($45,798) ($27,200) ($9,402) $7,623 $23,641 $158,413 $170,041 $181,370 $192,398 $203,369 PV (NOI + reversion) $277,003 $298,976 $320,180 $340,640 $360,376 $379,412 $397,767 $415,464 $432,521 $448,958 Footnotes: a/t = after taxes; Modified IRR = Modified Internal Rate of Return; PV = Present Value; NPV = Net Present Value; NOI = Net Operating Income Reversion = Amount received from the resale; Net Return on Investment = Cash Flow (a/t To Date) + Net Proceeds from Resale - Invested Capital. All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 14 of 18
Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $115,461 $118,919 $122,486 $126,161 $129,945 $133,844 $137,859 $141,995 $146,255 $150,642 Turnover Vacancy ($18,676) ($19,483) ($20,068) ($20,670) ($21,290) ($21,929) ($22,586) ($23,264) ($23,962) ($24,681) Total Operating Expenses ($63,408) ($65,490) ($67,644) ($69,872) ($72,176) ($74,560) ($77,027) ($79,579) ($82,219) ($84,952) NET OPERATING INCOME $33,377 $33,945 $34,774 $35,619 $36,479 $37,355 $38,246 $39,152 $40,073 $41,010 Loan Payment ($20,924) ($20,924) ($20,924) ($20,924) ($20,924) $0 $0 $0 $0 $0 Capital Costs ($5,680) ($5,984) ($6,164) ($6,349) ($6,539) ($6,735) ($6,938) ($7,146) ($7,360) ($7,581) NET CASH FLOW (b/t) $6,772 $7,036 $7,686 $8,346 $9,016 $30,620 $31,308 $32,006 $32,713 $33,429 Cash On Cash Return b/t 6.79% 7.06% 7.71% 8.37% 9.04% 11.59% 11.85% 12.12% 12.39% 12.66% NET OPERATING INCOME $33,377 $33,945 $34,774 $35,619 $36,479 $37,355 $38,246 $39,152 $40,073 $41,010 Depreciation ($6,384) ($6,662) ($6,662) ($6,662) ($6,662) ($6,662) ($6,662) ($6,662) ($6,662) ($6,386) Amortization ($441) ($441) ($441) ($441) ($441) $0 $0 $0 $0 $0 Loan Interest ($10,795) ($10,277) ($9,732) ($9,159) ($8,557) $0 $0 $0 $0 $0 TAXABLE INCOME (LOSS) $15,758 $16,566 $17,940 $19,357 $20,819 $30,693 $31,584 $32,490 $33,412 $34,623 Income Taxes ($4,412) ($4,638) ($5,023) ($5,420) ($5,829) ($8,594) ($8,844) ($9,097) ($9,355) ($9,695) CASH FLOW (a/t) $2,360 $2,398 $2,663 $2,926 $3,186 $22,025 $22,465 $22,909 $23,358 $23,734 Cash On Cash Return a/t 2.37% 2.41% 2.67% 2.93% 3.20% 8.34% 8.51% 8.67% 8.84% 8.99% Footnotes: b/t = before taxes;a/t = after taxes All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 15 of 18
S E C T I O N I I I Rent Roll
Lease Rent Roll Suite Tenant Start Date Expire Date RSF $/RSF Annualized Rent Tenant Improvements Commissions Renewal Term Renewal Increase Notes 05-101/102 Republic Payment Plan 01/02/1900 586 $8.52 $4,994 $0.00 $270.31 1 year NA Month-to-month. Current Rent below market 05-103 Lisa Martin Insurance 01/02/1900 454 $9.51 $4,316 $0.00 $233.60 1 year NA Month-to-month. Below market rent 05-107 VACANT 01/02/1900 164 $14.77 $2,422 $0.00 $116.54 1 year NA 05-108 VACANT 01/02/1900 149 $14.77 $2,200 $0.00 $105.87 1 year NA 05-109 Pro Delivery 01/02/1900 171 $12.98 $2,219 $0.00 $120.14 1 year NA Month-to-month. Slightly below market 05-110 Donald Wise Insurance 01/02/1900 377 $12.26 $4,624 $0.00 $250.29 1 year NA Month-to-month. Slightly below market 05-204 Owner Use 01/02/1900 174 $0.00 $0 $0.00 $0.00 1 year NA Owner uses this unit for storage 05-205 Pan Tauras 07/12/2013 10/31/2015 165 $14.56 $2,402 $0.00 $0.00 1 year $72.06 05-206 Associated Drivers Corp 12/01/2013 11/30/2014 172 $14.35 $2,468 $0.00 $133.92 1 year $72.23 05-210 VACANT 01/02/1900 830 $13.56 $11,254 $0.00 $541.51 1 year NA 07-101 Liberty Logistics 07/31/2014 01/02/1900 451 $10.25 $4,624 $0.00 $250.29 1 year NA Below market rent 07-104 Annuities Plus 01/02/1900 442 $7.67 $3,391 $0.00 $183.55 1 year NA Month-to-month. Below market rent 07-105 Vacant 01/02/1900 205 $14.76 $3,026 $0.00 $145.60 1 year NA 07-107 Business Telephone 01/02/1900 168 $9.39 $1,578 $0.00 $85.43 1 year NA Month-to-month. Below market rent. All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 17 of 18
Lease Rent Roll Suite Tenant Start Date Expire Date RSF $/RSF Annualized Rent Tenant Improvements Commissions Renewal Term Renewal Increase Notes 07-108 VACANT 01/02/1900 442 $13.55 $5,991 $0.00 $288.26 1 year NA 07-111 VACANT 01/02/1900 174 $15.85 $2,757 $0.00 $132.68 1 year NA 15-102 VACANT 01/02/1900 186 $31.36 $5,833 $0.00 $280.69 1 year NA 15-109 VACANT 01/02/1900 303 $13.56 $4,110 $0.00 $197.74 1 year NA 15-110 VACANT 01/02/1900 781 $13.55 $10,586 $0.00 $509.38 1 year NA 15-202 VACANT 01/02/1900 540 $13.57 $7,328 $0.00 $352.60 1 year NA 15-208 VACANT 01/02/1900 329 $13.62 $4,480 $0.00 $202.08 1 year NA 15-209 Tidewater Medical 05/07/2014 11/30/2014 193 $18.45 $3,561 $0.00 $193.22 1 year $104.22 15-210 VACANT 01/02/1900 171 $14.76 $2,524 $0.00 $121.47 1 year NA 15-214 VACANT 01/02/1900 430 $13.56 $5,832 $0.00 $280.62 1 year NA 7-101 Barbara Gale Alteration 01/02/1900 379 $11.39 $4,316 $0.00 $233.60 1 year NA Month-to-month. Below market rent. 7-102 Benign Essential 01/02/1900 676 $8.85 $5,980 $0.00 $323.71 1 year NA Month-to-month. Below market rent. 7-104 VACANT 01/02/1900 195 $13.57 $2,645 $0.00 $127.28 1 year NA 05-000 Owner Use 01/02/1900 97 $0.00 $0 $0.00 $0.00 1 year NA Owner use. All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. No liability of any kind is to be imposed on the broker herein. page 18 of 18