Offering Memorandum TOWNSIDE FLATS 7910 170th Pl NE Exclusively offered by Paragon Real Estate Advisors 1
Offering Summary Paragon Real Estate Advisors is pleased to exclusively offer for sale the Townside Flats, a 39-unit apartment building located in the highly sought-after and walkable Redmond neighborhood. The apartments have undergone many upgrades and renovations in the last three years including vinyl plank flooring and stainless steel appliances. With a Walkscore of 84 and modern looking units, Townside Flats caters well to tenants who work in the strong tech employment markets on the Eastside. Please contact listing brokers to arrange a tour of the property or for additional due diligence materials. Financing: It is proposed the Buyer pay all cash or obtain new financing. Luther Burbank Savings has quoted a loan amount of $7,700,000 with an interest rate of approximately 3.70%. Name Townside Flats Address 7910 170th Pl NE, Redmond WA 98052 Total Units 39 Built 1988 Square Feet 31,360 Total Net Rentable Price $12,900,000 Price Per Unit $330,769 Price Per Foot $411 Current GRM/CAP 15.10/4.55% (4% Vacancy) Market GRM/CAP 14.17/4.84% (4% Vacancy) Market Expense Per Unit $6,486/Year Terms Cash Out Lot Size 63,695 Square Feet Zoning R30 2
Investment Highlights Rare opportunity to purchase Eastside location apartments 39 well-appointed homes Renovated interiors including SS appliances and vinyl plank flooring All units have washer and dryers Well-suited mix of 1 Bd/1 Bth and 2 Bd/2 Bth units (804 Avg Sq.Ft.) Private decks or patios Controlled access building opening to renovated lobbies Ample on-site parking (67 spaces) Community areas including dog run, BBQ area, and bike storage Located in the heart of Redmond Close to tech employers of Microsoft, Amazon, and Google Walkscore of 84 - Very Walkable 3
Neighborhood Map SEATTLE CBD UNIVERSITY OF WASHINGTON BELLEVUE BRIDLE TRAILS STATE PARK KIRKLAND MARYMOOR PARK REDMOND TOWN CENTER 4
Redmond Redmond is the seventh most populous city in King County and the 15th most populous city in the State of Washington. The City is located 11 miles north east of downtown Seattle, at the east end of State Route 520 along the north end of Lake Sammamish. Redmond is well known as a center of technology and the location for a number of nationally known high-tech, gaming, aerospace and biomedical companies, as well as innovative start-ups. The daytime employment population is approximately 84,547. Redmond has acted to maintain a strong economy and a diverse job base. The city is the home to many small, medium-size and locally owned businesses and services, as well as nationally and internationally recognized corporations. Redmond has a comprehensive Plan, known as the Redmond 2030. The plan is set in place to help the city grow, develop, and enhance the livability of the neighborhoods, and to deliver high-quality services in partnership with the community by the year 2030. Redmond s 2030 transportation system offers people a variety of real choices for how we get between where we live, work, shop and play. Each year, more people walk, bicycle, carpool or use transit to travel within the city to access the regional bus and light rail system because land uses that reflect our vibrant community character have created a strong market demand for these options. The City has invested strategically and leveraged regional funds to ensure a safe, wellmaintained system, improve transportation choices and mobility, and support our two Urban Centers, Downtown and Overlake. Neighborhoods have increased access to the hubs of Downtown and Overlake, neighboring cities and the region. Median Household Income: $103,409 Redmond Population: 60,560 approx. Kirkland Population: 84,680 approx. Bellevue Population: 139,400 approx. **All populations obtained from the 2016 OFM King County Estimate 5
Location Highlights Walkscore of 84 - Very Walkable Ten minutes from downtown Bellevue Twenty minutes from downtown Seattle Convenient access to Safeway, Trader Joe s, PCC Natural Markets and Whole Foods Blocks to Redmond Town Center Minutes away from Marymoor Park and Redmond Watershed Nature Preserve Close urban heart of the city, featuring local favorite restaurants, bars and delis like the Tipsy Cow, Molly Moon s Homemade Ice Cream, Mahoney s, Palmer s East and Woodblock Within ten minutes of some of the largest employers in the entire region including Microsoft and Amazon Redmond Named Best Place To Live In Washington - (Niche. com, 2017) 6
Redmond Housing and Affordability Housing Affordability and Credit Constraints: Stringent credit requirements prevent many households from entering the home ownership market, increasing demand for rental property. The median price for a home in Redmond is now $805,600, having appreciated over 18% in the last year (Zillow, Aug 2017). With a 20% down payment, a home buyer can expect to pay approximately $3,723 in monthly costs. When the Redmond single family market median pricing is compared to the 2bd/2ba units at Townside Flats with market rents of $1,795, there is a monthly premium differential of over $1,900/month. The proforma market rents at Townside Flats are 52% more affordable than the cost of owning a home. These homeownership barriers to entry will continue to benefit Townside Flats as many would-be homeowners will continue to gravitate towards rental housing. Median Home Price $805,600 Avg Monthly Mortgage Payment (20% Down) $3,723 Proforma 2BD/2BTH unit at Townside $1,795 Difference $1,928 Data provided by: Zillow, O Connor Consulting Group, LLC 7
Top 20 Redmond Employers Rank Company FTE Jobs * 1. Microsoft 34,341 2. Terex Washington & USA 2,656 3. Eurest Dining Services 1,041 4. Aerotek Inc. 978 5. Lake Washington School District 877 6. Nintendo of America 876 7. AT&T Mobility & Retail Stores 802 8. United Parcel Service 757 9. Physio-Control Inc. 706 10. Honeywell International Inc. 677 11. Aerojet 530 12. CBRE Inc. 491 13. Alstom Grid LLC 411 14. Wipro Limited 371 15. MV Public Transportation Inc. 354 16. Wyndham Vacation Ownership Inc. 318 17. Mindtree Limited 305 18. Univar USA Inc. 296 19. Pacific Bioscience Labs Inc. 290 20. Crane Electronics Inc. 266 Total 47,352 Microsoft Main Campus, Redmond WA * Full-time equivalent number of jobs - 2016 8
Employment Map 9
Improvements Townside Flats was built in 1988 and consists of a single three story wood frame building with 39 units. It has a relatively new pitched composition roof, low maintenance vinyl siding, and insulated glass thermo pane windows. The property features an abundance of parking including 26 covered and 41 uncovered parking stalls, a highly desirable amenity in the neighborhood. The subject property has undergone many upgrades/renovations in the last three years such an improved fire alarm system, an upgraded intercom system, added lampposts at the front entrance and carports for increased visibility at night. Each carport underwent a complete re-roof. The lobby has been fully updated with new furniture, paint, and ceramic tile, wood cladding around the mailboxes, and corridor upgrades including new carpet, paint, lighting and signage. The elevator lobbies (including the 2nd and 3rd floor), received new tile flooring, paint, lighting and furniture. The grounds of the property have also undergone a large update with the addition of new grass & flowers, removal of old trees and replacement trees planted, and a new stone tile walkway added to create another walking path between the parking lot and side entrance. The build-out of the outdoor bike storage/work area and the dog park added great value for the tenants of Townside. The unit mix is extremely well-tailored to the local market and consists of 8 one bedroom/one bathroom units of approximately 620 square feet and 31 two bedroom/two bathroom units of approximately 820 square feet. All units feature attractive entryways, a private deck or patio, and washers/ dryers. Units have been renovated with new vinyl plank flooring, stainless steel appliance packages, tile in the kitchen and bathrooms, compact wall heaters, tri-view medicine cabinets and vanity lights, all around baseboards, quartz countertops in the kitchen and bathrooms with a 4 backsplash and new paint. Ceiling fans and energy saving light fixtures have been added as well. An abundant amount of storage is available in walk-in closets, deck storage closets, or separate storage units inside the hallways of the building. This property is well maintained, attractive, and very well located. 10
Renovation Highlights Unit Renovations Stainless steel appliance package Common Area Renovations New exterior paint Other Renovations Complete re-roof of all carports Washer and dryer updates Build out of metal entry awning Repaired carport gutters Complete refinish of cabinets New tile and wood cladding in lobby Irrigation repairs Quartz countertops in kitchens and baths 2nd and 3rd floor lobbies updated Asphalt repair and re-striping New vinyl plank flooring in living spaces New carpet and lighting in corridors New carpet in bedrooms Build out of bike storage and work area Fresh paint throughout Build out of new dog park Plumbing including sinks and fixtures Build out of BBQ area and deck Lighting fixtures Updated monument signage and banners Bathroom mirrors Landscaping improvements Window blinds Elevator upgrades including lighting 11
S E N Proximity to Redmond Town Center MARYMOOR PARK REDMOND TOWN CENTER ANDERSON PARK BEAR CREEK SHOPPING CENTER TOWNSIDE FLATS W 12
Building Photos 13
Building Photos 14
Building Photos 15
Building Photos 16
Unit Photos 17
Unit Photos 18
Site Map CARPORT PARKING OPEN PARKING 170TH PLACE NE 19
Floor Plans 113 101 104 112 Storage 102 103 Lobby Storage 105 106 111 110 109 108 107 FIRST FLOOR 20
Floor Plans 213 201 204 212 Storage 202 203 Lobby Storage 205 206 211 210 209 208 207 SECOND FLOOR 21
Floor Plans 313 301 304 312 Storage 302 303 Lobby Storage 305 306 311 310 309 308 307 THIRD FLOOR 22
Typical Floor Plans Deck Deck Bedroom Living Room Bedroom Bedroom Living Room W D Closet Bath W/D Kitchen Bath Bath Kitchen 1 BD UNIT - 626 SQ.FT. AVG 2 BD UNIT - 850 SQ.FT. AVG 23
Potential Storage Area Renovations General Use Lounge Business Center Game Lounge 24
Operating Summary Units 39 Year built 1988 Rentable Area 31,360 Sq.Ft. Down Payment $5,200,000 40% Loan Amount $7,700,000 60% Interest Rate Amortization 3.70% Fixed 30 Years Price $12,900,000 Price Per Unit $330,769 Per Square Foot $411 Current GRM 15.10 Current CAP 4.55% Market GRM 14.17 Market CAP 4.84% Units Type Size Current Rent Current Income Market Rent Market Income 8 1Bd/1Bth 626 $1,429 - $1,677 $11,889 $1,575 $12,600 31 2Bd/2Bth 850 $1,597 - $1,880 $52,160 $1,795 $55,645 39 Avg S.F. 804 $2.04 $64,049 $2.18 $68,245 Annualized Operating Expenses Current Market Real Estate Taxes 2017 Actual $78,266 $92,457 Insurance Quote $6,996 $6,996 Utilities 07/17 T12 $46,172 $46,172 Property Management 3.5% $28,828 $30,705 On-Site Management Proforma $21,060 $21,060 Maintenance/Repairs Proforma $35,100 $35,100 Landscaping Proforma $5,850 $5,850 Advertising & Admin Proforma $5,850 $5,850 Reserves Proforma $8,775 $8,775 Total Expenses $236,896 $252,965 Annualized Operating Data Current Market Monthly Scheduled Rent $64,049 $68,245 Scheduled Gross Rents $768,588 $818,940 Less Vacancy/Concessions 4.0% ($30,744) 4.0% ($32,758) Utility Bill Back 07/17 T12 $38,695 $38,695 Non-Refundable Fees 07/17 T12 $7,250 $7,250 Forfeits/Late/NSF Fees 07/17 T12 $6,873 $6,873 Parking/Carport 08/17 T12 $22,080 $22,080 Storage (30 Lg/39 Sm) 07/17 T12 $127 $20/$10 $5,430 Pet Fee 07/17 T12 $6,534 $6,534 Miscellaneous 07/17 T12 $4,253 $4,253 Total Collected Income $823,657 $877,298 Less Expenses ($236,896) ($252,965) Net Operating Income $586,760 $624,333 Annual Debt Service ($35,442) ($425,301) ($425,301) Cash Flow Before Tax 3.10% $161,459 3.83% $199,031 Principal Reduction $142,807 $142,807 Total Return Before Tax 5.85% $304,266 6.57% $341,838 Current Operations Expenses/Unit Expenses/Foot Percent of EGI $6,074 $7.55 30.82% Market Operations Expenses/Unit Expenses/Foot Percent of EGI $6,486 $8.07 30.89% 25
Sale Comparables SUBJECT -TOWNSIDE FLATS 7910 170th Pl NE, Redmond WA Year Built 1988 Units 39 Sales Price $12,900,000 Price/Unit $330,769 Price/Foot $411 GRM/CAP 15.1/4.6% Sales Date TBD 1. SUMMIT 14820 NE Redmond Way, Redmond WA Year Built 1981 Units 96 Sales Price $29,600,000 Price/Unit $308,333 Price/Foot $307 GRM/CAP 13.5/4.5% Sales Date 9.1.2017 2. MARINWOOD 3628 24th Pl W, Seattle WA Year Built 1980 Units 30 Sales Price $12,520,000 Price/Unit $417,333 Price/Foot $373 GRM/CAP 16.6/3.8% Sales Date 8.18.2017 4. PARC3 AT WOODRIDGE 3005 125th Ave SE, Bellevue WA Year Built 1980 Units 34 Sales Price $11,910,000 Price/Unit $350,294 Price/Foot $398 GRM/CAP 14.0/4.9% Sales Date 5.25.2017 3. ISHERWOOD 3628 Linden Ave N, Seattle WA Year Built 1989 Units 32 Sales Price $11,550,000 Price/Unit $360,938 Price/Foot $417 GRM/CAP 18.0/3.4% Sales Date 7.31.2017 5. STANDARD AT BELLEVUE 2801 130th Ave SE, Bellevue WA Year Built 1968 Units 24 Sales Price $8,400,000 Price/Unit $350,000 Price/Foot $406 GRM/CAP 13.8/5.1% Sales Date 5.12.2017 26
Sale Comparables 6. RESIDENCES AT 518 518 2nd St, Kirkland WA Year Built 1901 Units 10 Sales Price $3,150,000 Price/Unit $315,000 Price/Foot $582 GRM/CAP 17.4/4.3% Sales Date 4.19.2017 7. MADISON GATE 2501 E Madison St, Seattle WA Year Built 1990 Units 40 Sales Price $14,475,000 Price/Unit $361,875 Price/Foot $434 GRM/CAP 14.7/4.6% Sales Date 11.30.2016 8. WALLINGFORD APTS 3426 Wallingford Ave N, Seattle WA Year Built 1986 Units 18 Sales Price $5,900,000 Price/Unit $327,778 Price/Foot $641 GRM/CAP 17.0/4.0% Sales Date 11.29.2016 27
Sales Comparables Map Townside Flats 7910 170th Pl NE 1. Summit 14820 NE Remdond Way 2. Marinwood 3628 24th Pl W Seattle, WA 6 1 3. Isherwood 3628 Linden Ave N Seattle, WA 2 3 8 4. Parc3 at Woodridge 3005 125th Ave SE Bellevue, WA 7 5. Standard at Bellevue 2801 130th Ave SE Bellevue, WA 6. Residences at 518 518 2nd St Kirkland, WA 7. Madison Gate 2501 E Madison St Seattle, WA 4 5 8. Wallingford Apts 3426 Wallingford Ave N Seattle, WA 28
Rent Comparables Property Units Age Unit Type Size Rent Rent/Sq.Ft. Townside Flats - Current 7910 170th Pl NE 39 1988 1Bd/1Bth 2Bd/2Bth 626 850 $1,429 - $1,677 $1,597 - $1,880 $2.28 - $2.68 $1.88 - $2.21 Townside Flats - Market 7910 170th Pl NE 39 1988 1Bd/1Bth 2Bd/2Bth 626 850 $1,575 $1,795 $2.52 $2.11 1. Heights at Bear Creek 17771 NE 90th St 227 1993 1Bd/1Bth 3Bd/2Bth 694-889 1,019-1,195 $1,649 - $1,804 $1,984 - $2,304 $2.03 - $2.39 $1.93 - $1.95 2. Delano Apartments 7805 170th Pl NE 126 2009 1Bd/1Bth 2Bd/2Bth 654-727 962-1,240 $1,609 - $1,741 $2,198 - $2,428 $2.39 - $2.46 $1.96 - $2.28 3. Peloton Apartments 7435 159th Pl NE 150 1988 1Bd/1Bth 2Bd/2Bth 708 981 $1,837 $1,887 - $1,941 $2.59 $1.92 - $1.97 4. Red160 16015 Cleveland St 250 2011 1Bd/1Bth 2Bd/2Bth 696-843 1,130-1,193 $1,712 - $1,913 $2,327 - $2,562 $2.27 - $2.46 $2.06 - $2.15 29
Rent Comparables Property Units Age Unit Type Size Rent Rent/Sq.Ft. Townside Flats - Current 7910 170th Pl NE 39 1988 1Bd/1Bth 2Bd/2Bth 626 850 $1,429 - $1,677 $1,597 - $1,880 $2.28 - $2.68 $1.88 - $2.21 Townside Flats - Market 7910 170th Pl NE 39 1988 1Bd/1Bth 2Bd/2Bth 626 850 $1,575 $1,795 $2.52 $2.11 5. The Luke 8280 164th Ave NE 208 2015 1Bd/1Bth 2Bd/2Bth 602-664 961-1,119 $1,772 - $1,782 $2,470 - $2,628 $2.68 - $2.94 $2.35 - $2.57 6. Core83 16590 NE 83rd St 120 2016 1Bd/1Bth 2Bd/2Bth 576-791 916-1,114 $1,785 - $1,995 $2,525 - $2,745 $2.52 - $3.10 $2.46 - $2.76 7. Chelsea Square 16340 NE 83rd St 113 1990 1Bd/1Bth 2Bd/2Bth 751 1,517 $1,856 $2,519 $2.47 $1.66 30
Rent Comparables Map Townside Flats 7910 170th Pl NE 1. Heights at Bear Creek 17771 NE 90th St 1 2. Delano Apartments 7805 170th Pl Ne 3. Peloton Apartments 7435 159th Pl NE 4. Red160 16015 Cleveland St 3 4 7 5 2 6 5. The Luke 8280 164th Ave NE 6. Core83 16590 NE 83rd St 7. Chelsea Square 16340 NE 83rd St 31
Paragon Real Estate Advisors ABOUT PARAGON Paragon Real Estate Advisors is the leading Seattle real estate investment firm for multifamily property sales in Washington State. We have accrued over $3 billion in sales and have closed nearly 1,700 successful real estate transactions. We are locally owned, client-focused and highly experienced. When it comes to apartments and investment real estate in the Puget Sound region, we are the smart choice to partner with. At Paragon, we build long-term partnerships that help our clients reach their long- and short-term real estate investment goals while maintaining maximum profitability for them. Our brokers have an in-depth knowledge of the Washington state real estate market, particularly in the greater Seattle area and the I-5 corridor, that comes from more than 20 years experience in the industry. Paragon s unique focus on sharing knowledge, teamwork and collaboration within the brokerage industry leverages our collective intellect for all our clients. Our brokers provide superior customer representation through our innovative and effective marketing campaigns, co-brokerage, skilled negotiations, and ongoing partnerships. The information found in this offering memorandum has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed 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. 32