For more information contact: Broker farajkerendian@gmail.com 01022002 Entitlements for 27 new condos and 68 parking Waiver to tenant relocation fee from most tenants 20% rental upside while preparing for new development Walking distance to markets, shops and restaurants Minutes to Tarzana Hospital, 101 and 405 freeways Phone: (323) 640-7000 1058 S. Holt Avenue Los Angeles, Ca 90035
Table of Contents SECTION 1 - DETAILS SECTION 2 - PROPERTY OVERVIEW SECTION 3 - INVESTMENT OUTLOOK SECTION 4 - INVESTMENT DETAILS SECTION 5 - INVESTMENT RETURNS SECTION 6 - ADDITIONAL INFORMATION
Details
Real Estate Investment Details ANALYSIS Analysis Date: March 2013 PROPERTY Property: Property Address: Year Built: 1959 Clark Apartments PURCHASE INFORMATION Property Type: MultiFamily Purchase Price: $3,950,000 Units: 25 Total Rentable Sq. Ft.: 17,485 FINANCIAL INFORMATION Down Payment: $1,382,500 LOANS Debt Term Amortization Rate Payment LO Costs Adjustable $2,567,500 30 years 30 years 3.5% $11,529 INCOME & EXPENSES Gross Operating Income: $270,135 Monthly GOI: $22,511 Total Annual Expenses: ($107,421) Monthly Expenses: ($8,952) CONTACT INFORMATION farajkerendian@gmail.com 01022002 The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 4 of 28
Property Overview
Property Description PROPERTY DESCRIPTION is comprised of a multifamily property with 25 existing units in the heart of Tarzana, California. The unit mix consists of twenty 1+1, three 2+1 and two 2+2 on a 22,500 SF lot with alley in the back, zoned R-3, and built in 1959. Currently, it is 100% occupied with gross annual income of $270K and NOI of $162K. In 2006 it was entitled for 27 new condos with a gross buildable area of approximately 60,000 SF and 68 subterranean parking spaces which may be increased to 37 units and approximately 80,000 SF by exercising the density bonus option. Plus, most tenants have already signed a waiver to tenant relocation fee. Besides the cash-flow from the existing units, there is the potential to 20% rental upsides while preparing for a future development. Common area amenities include nice landscaping, a gated swimming pool, on-site laundry, and 25 parking spaces. This location is one of the most desirable neighborhoods in Tarzana with average household income of $70,000 and average home prices of $700,000. It is one block North of Ventura Blvd and walking distance to varieties of shops, restaurants and markets. Minutes to Tarzana Hospital, 101 and 405 freeways. page 6 of 28
Clark Apartments Property Photos Clark Apartment Pool View page 7 of 28
Two Bedroom Living Room Two Bedroom page Breakfast 8 of 28 Room
Two Bedroom Master Bedroom Two Bedroom page 9 of 2 nd 28 Bedroom
Two Bedroom Kitchen Two Bedroom page 10 of Bathroom 28
One Bedroom Apartment One Bedroom Kitchen page 11 of 28 One Bedroom Living Room
Maps and Aerials Aerial Photo Aerial page 12 of 28
Maps and Aerials Street Map page 13 of 28
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Investment Outlook
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $3,950,000 Investment - Cash $1,382,500 First Loan $2,567,500 INVESTMENT INFORMATION Purchase Price $3,950,000 Price per Unit $158,000 Price per Sq. Ft. $225.91 Income per Unit $11,130 Expenses per Unit ($4,297) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $278,256 Total Vacancy and Credits ($8,121) Operating Expenses ($107,421) Net Operating Income $162,714 Debt Service ($138,351) Cash Flow Before Taxes $24,363 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 1.76% Debt Coverage Ratio 1.18 Capitalization Rate 4.12% Gross Rent Multiplier 14.20 Gross Income / Square Feet $15.91 Gross Expenses / Square Feet ($6.14) Operating Expense Ratio 39.77% page 19 of 28
Pro Forma Summary INCOME Actual Per Unit Market Per Unit Gross Potential Rent $270,696 $10,828 $328,200 $13,128 Less: Vacancy ($8,121) ($325) ($9,846) ($394) Misc. Income $7,560 $302 $3,720 $149 Effective Gross Income $270,135 $10,805 $322,074 $12,883 OPERATING EXPENSES Actual Per Unit Market Per Unit Property Taxes $49,375 $1,975 $49,375 $1,975 Insurance $4,690 $188 $4,960 $198 Utilities $27,850 $1,114 $27,850 $1,114 Repairs & Maintenance $6,791 $272 $6,791 $272 Management Fee $12,000 $480 $12,000 $480 Gardening $1,560 $62 $1,800 $72 Trash Removal $3,120 $125 $360 $14 License & Permit Fees $1,075 $43 $3,600 $144 Pool Service $960 $38 $1,075 $43 $0 $0 $1,200 $48 Total Expenses ($107,421) ($4,297) ($109,011) ($4,360) Net Operating Income $162,714 $6,509 $213,063 $8,523 page 20 of 28
Pro Forma Summary UNIT MIX & ANNUAL SCHEDULED INCOME Type Units Actual Total Market Total 1+1 20 $10,418 $208,356 $12,600 $252,000 2+1 3 $14,140 $42,420 $15,000 $45,000 2+2 2 $9,960 $19,920 $15,600 $31,200 TOTALS 25 $270,696 $328,200 INVESTMENT SUMMARY Price: $3,950,000 Year Built: 1959 Units: 25 Price/Unit: $158,000 RSF: 17,485 Price/RSF: $225.91 Lot Size: 22,560 sf Floors: 2 ANNUALIZED INCOME Actual Market Gross Potential Rent $270,696 $328,200 Less: Vacancy ($8,121) ($9,846) Misc. Income $7,560 $3,720 Effective Gross Income $270,135 $322,074 Less: Expenses ($107,421) ($109,011) Net Operating Income $162,714 $213,063 Debt Service ($138,351) ($138,351) Net Cash Flow after Debt Service $24,363 $74,712 Principal Reduction $49,274 $49,274 Total Return $73,637 $123,986 Parking Spaces: 25 spaces APN: 2160-007-018 Cap Rate: 4.12% Market Cap Rate: 5.39% GRM: 14.2 Market GRM: 11.9 FINANCING SUMMARY Loan Amount: $2,567,500 Down Payment: $1,382,500 Loan Type: Adjustable Interest Rate: 3.5% Term: 30 years Monthly Payment: $11,529 DCR: 1.18 ANNUALIZED EXPENSES Actual Market Property Taxes $49,375 $49,375 Insurance $4,690 $4,960 Utilities $27,850 $27,850 Repairs & Maintenance $6,791 $6,791 Management Fee $12,000 $12,000 Gardening $1,560 $1,800 Trash Removal $3,120 $360 License & Permit Fees $1,075 $3,600 Pool Service $960 $1,075 $0 $1,200 Total Expenses $107,421 $109,011 Expenses Per RSF $6.14 $6.23 Expenses Per Unit $4,297 $4,360 page 21 of 28
Investment Details
Unit Rent Roll Unit Description Approx. Sq. Ft. Current Rent Pro Forma Rent Comments 1 1+1 700 $987 $1,050 2 2+2 825 $700 $1,300 3 1+1 700 $950 $1,050 4 1+1 700 $917 $1,050 5 1+1 700 $800 $1,050 6 1+1 700 $890 $1,050 7 1+1 700 $890 $1,050 8 1+1 700 $773 $1,050 9 1+1 700 $824 $1,050 10 1+1 700 $824 $1,050 11 2+2 825 $960 $1,300 12 2+1 825 $1,185 $1,250 14 1+1 700 $965 $1,050 15 2+1 825 $1,184 $1,250 16 1+1 700 $774 $1,050 17 1+1 700 $827 $1,050 18 1+1 700 $773 $1,050 19 1+1 700 $945 $1,050 20 1+1 700 $890 $1,050 21 1+1 700 $890 $1,050 22 1+1 700 $890 $1,050 23 2+1 825 $1,166 $1,250 24 1+1 700 $850 $1,050 25 1+1 700 $776 $1,050 26 1+1 700 $928 $1,050 page 23 of 28
Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 GROSS SCHEDULED INCOME $278,256 $286,377 $294,741 $303,357 $312,231 Turnover Vacancy ($8,121) ($8,365) ($8,615) ($8,874) ($9,140) Total Operating Expenses ($107,421) ($107,421) ($107,421) ($107,421) ($107,421) NET OPERATING INCOME $162,714 $170,591 $178,705 $187,062 $195,669 Loan Payment ($138,351) ($138,351) ($138,351) ($138,351) ($138,351) NET CASH FLOW (b/t) $24,363 $32,241 $40,354 $48,711 $57,319 Cash On Cash Return b/t 1.76% 2.33% 2.92% 3.52% 4.15% Footnotes: b/t = before taxes;a/t = after taxes page 24 of 28
Investment Returns
Internal Rate of Return Analysis BEFORE TAX IRR Time Future Cash Flows Initial Investment ($1,382,500) End of Year 1 $24,363 End of Year 2 $32,241 End of Year 3 $40,354 End of Year 4 $48,711 End of Year 5* $1,704,346 IRR = 6.24% * ($57,319 + $1,647,028) AFTER TAX IRR Time Future Cash Flows Initial Investment ($1,382,500) End of Year 1 $24,363 End of Year 2 $32,241 End of Year 3 $40,354 End of Year 4 $48,711 End of Year 5* $1,527,821 IRR = 4.06% * ($57,319 + $1,470,502) page 26 of 28
Additional Information
Biography PROFESSIONAL BIO served as a Senior Advisor at Sperry Van Ness in Brentwood California specializing in the sale of multifamily apartment buildings, shopping centers, office buildings and land development in Southern California. Prior to joining Sperry Van Ness, Faraj worked at Major Properties, specializing in the sales and leasing of industrial properties in downtown Los Angeles and the nearby cities. While at Major Properties, he was ranked as one of the top agents and received several sales awards, acknowledgements and trophies. With over 24 years of commercial real estate experience in investment and development, Faraj has negotiated and secured over 100 transactions and is recognized by his clients as being a hardworking, diligent, and responsive broker with the highest degree of integrity and devotion to the best interest of his client. Additionally, Faraj is a CCIM candidate (Certified Commercial Investment Member) working as an independent broker. He has a Bachelor of Science degree from Hayward State University and has been featured in several publications including The Los Angeles Business Journal for various transactions. He brings a wealth of knowledge and experience in the areas of effective marketing, negotiation, investment and development. page 28 of 28