OFFERING MEMORANDUM 437 MELLON ST SE Washington, DC 20032 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 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. Â 2017 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. 437 MELLON ST SE Washington, DC ACT ID X0270786 2
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 Pricing Detail MARKET COMPARABLES 03 Sales Comparables Rent Comparables MARKET OVERVIEW 04 Market Analysis Demographic Analysis 3
INVESTMENT OVERVIEW 4
EXECUTIVE SUMMARY VITAL DATA Price $500,000 CURRENT PRO-FORMA Down Payment 25% / $125,000 CAP Rate 4.38% 7.41% Loan Amount $375,000 GRM 8.13 7.57 Loan Type Proposed New Net Operating Income $21,897 $37,025 Interest Rate / Amortization 4.50% / 25 Years Net Cash Flow After Debt Service -2.49% / ($3,116) 9.61% / $12,013 Price/Unit $125,000 Total Return 4.15% / $5,192 16.56% / $20,702 Price/SF $98.62 Number of Units 4 Rentable Square Feet 5,070 Year Built 1937 Lot Size 0.11 acre(s) UNIT MIX NUMBER OF UNITS UNIT TYPE 3 Two Bedroom 1 Three Bedroom 4 Total OFFERING SUMMARY MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Office of Secretary of Defense 23,000 US Doc 19,000 United States Dept of Navy 14,876 United States Dept of Army 14,174 World Bank Group 13,016 Meccanica Holdings Usa Inc 10,265 U S D A 9,718 Executve Ofc of The U S Govt 8,963 District of Clumbia Government 8,467 Usaid/Cambodia 8,000 US EPA 6,760 FBI 6,697 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 24,272 197,426 579,862 2016 Census Pop 21,441 177,645 519,802 2016 Estimate HH 8,517 85,653 265,261 2016 Census HH 7,592 76,534 235,976 Median HH Income $33,683 $55,911 $69,480 Per Capita Income $19,020 $37,225 $47,980 Average HH Income $52,381 $84,528 $103,641 ST. ELIZABETH S EAST CAMPUS # 5
OFFERING SUMMARY INVESTMENT OVERVIEW Marcus & Millichap is pleased to represent the ownership in the sale of 437 Mellon St SE. 437 Mellon St SE is a 4-unit apartment building located in the Congress Heights neighborhood of Southeast Washington, DC. Built in 1937, the property is comprised of three two-bedroom, one-bathroom units and one three-bedroom, one-bathroom unit. 437 Mellon St SE has a total gross building area of 2,848 SF and sits on a 4,800 SF lot, zoned R-3. Units are separately metered for electric. Appliances have been replaced as needed. Congress Heights, located in Ward 8 of Southeast Washington, D.C. is bounded by St. Elizabeth's Hospital Campus, which has a 180-acre mixed-use development plan. This economically diverse residential neighborhood runs along South Capitol Street, Martin Luther King Jr., Alabama and Mississippi Avenue. The residential neighborhood is also dense with commercial development along Malcolm X Avenue and Martin Luther King Jr. Avenue. The property is less than one mile from the Congress Heights Metro Station and the Saint Elizabeth s Hospital. 437 Mellon St SE presents a savvy investor with a value add opportunity to add to their portfolio east of the Anacostia. INVESTMENT HIGHLIGHTS 4-Unit Apartment Building Three Two-Bedroom Units; One Three-Bedroom Unit Located in Congress Heights Neighborhood of Southeast, DC Less than one mile from Congress Heights Metro 6
REGIONAL MAP 7
LOCAL MAP 437 MELLON ST SE ST. ELIZABETH S EAST DEVELOPMENT 8
AERIAL PHOTO 9
FINANCIAL ANALYSIS 10
RENT ROLL SUMMARY FINANCIAL ANALYSIS 11
RENT ROLL DETAIL FINANCIAL ANALYSIS Vacant 12
OPERATING STATEMENT FINANCIAL ANALYSIS 13
PRICING DETAIL FINANCIAL ANALYSIS 14
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 15
MARKET COMPARABLES 16
SALES COMPARABLES MAP 437 MELLON ST SE (SUBJECT) 1 2 3 4 5 6 4240 6th St SE 445 Mellon St SE 3207 11th Pl SE 431 Mellon St SE 420 Newcomb St SE 357 Parkland Pl SE SALES COMPARABLES 17
PROPERTY 437 MELLON NAME ST SE SALES COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Price Per Square Foot Average Price Per Unit $300.00 $270.00 $240.00 $210.00 $180.00 Avg. $170.09 $300,000 $270,000 $240,000 $210,000 $180,000 $150.00 $150,000 Avg. $134,971 $120.00 $120,000 $90.00 $90,000 $60.00 $60,000 $30.00 $30,000 $0.00 437 Mellon St SE 4240 6th St SE 445 Mellon St SE 3207 11th Pl SE 431 Mellon St SE 420 Newcomb St SE 357 Parkland Pl SE $0 437 Mellon St SE 4240 6th St SE 445 Mellon St SE 3207 11th Pl SE 431 Mellon St SE 420 Newcomb St SE 357 Parkland Pl SE 18
PROPERTY 437 MELLON NAME ST SE SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 437 MELLON ST SE 437 Mellon St SE, Washington, DC, 20032 4240 6TH ST SE 4240 6th St SE, Washington, DC, 20032 1 445 MELLON ST SE 445 Mellon St SE, Washington, DC, 20032 2 1 rentpropertyname1 rentpropertyname1 Units Unit Type Offering Price: $500,000 3 Two Bdr Price/Unit: $125,000 1 Three Bdr Price/SF: $98.62 CAP Rate: 4.38% GRM: 8.13 Total No. of Units: 4 Year Built: 1937 Units Unit Type Close Of Escrow: 7/21/2017 2 4 Bdr Bath Sales Price: $550,000 2 1 Bdr Bath Price/Unit: $137,500 Price/SF: $215.86 Total No. of Units: 4 Year Built: 1953 Units Unit Type Close Of Escrow: 9/19/2016 4 1 Bdr 1 Bath Sales Price: $401,000 Price/Unit: $100,250 Price/SF: $140.80 Total No. of Units: 4 Year Built: 1937 rentpropertyaddress1 Underwriting Criteria Income $43,034 Expenses $21,137 NOI $21,897 Vacancy ($18,478) rentpropertyaddress1 rentpropertyaddress1 NOTES Detached building 75% vacant 19
PROPERTY 437 MELLON NAME ST SE SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 3207 11TH PL SE 3207 11th Pl SE, Washington, DC, 20032 3 431 MELLON ST SE 431 Mellon St SE, Washington, DC, 20032 4 420 NEWCOMB ST SE 420 Newcomb St SE, Washington, DC, 20032 5 rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Close Of Escrow: 3/2/2017 4 2 Bdr 1 Bath Sales Price: $565,000 Price/Unit: $141,250 Price/SF: $178.35 Total No. of Units: 4 Year Built: 1948 Units Unit Type Close Of Escrow: 5/3/2017 4 1 Bdr 1 Bath Sales Price: $455,400 Price/Unit: $113,850 Price/SF: $181.58 Total No. of Units: 4 Year Built: 1947 Units Unit Type Close Of Escrow: 6/8/2017 4 1 Bdr 1 Bath Sales Price: $427,900 Price/Unit: $106,975 Price/SF: $142.63 Total No. of Units: 4 Year Built: 1941 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 20
PROPERTY 437 MELLON NAME ST SE SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 357 PARKLAND PL SE 357 Parkland Pl SE, Washington, DC, 20032 6 rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Close Of Escrow: 7/20/2017 2 4 Bdr 2 Bath Sales Price: $420,000 Price/Unit: $210,000 Price/SF: $161.29 Total No. of Units: 2 Year Built: 1942 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 21
8 RENT COMPARABLES MAP 437 MELLON ST SE (SUBJECT) 1 2 3 465 Mellon St SE 706 Brandywine Street SE 101 Wayne Pl SE 4 7 8 9 10 11 12 13 14 15 16 17 18 20 22
PROPERTY 437 MELLON NAME ST SE RENT COMPARABLES AVERAGE RENT - MULTIFAMILY 2 Bedroom 3 Bedroom $2,000 $1,800 $1,600 $1,400 $2,000 $1,800 $1,600 $1,400 Avg. $1,639 $1,200 $1,000 Avg. $973 $1,200 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 $0 437 Mellon St SE 465 Mellon St SE 706 Brandywine Street SE 101 Wayne Pl SE $0 437 Mellon St SE 465 Mellon St SE 706 Brandywine Street SE 101 Wayne Pl SE 23
PROPERTY 437 MELLON NAME ST SE RENT MARKETING COMPARABLES TEAM 437 rentpropertyname1 MELLON ST SE 437 Mellon St SE, Washington, DC, 20032 rentpropertyaddress1 465 MELLON ST SE 465 Mellon St SE, Washington, DC, 20032 1 706 BRANDYWINE STREET SE 706 Brandywine Street SE, Washington, DC, 20032 2 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF Two Bdr 3 $1,117 $0.00 Three Bdr 1 $1,776 $0.00 Total/Avg. 4 $1,282 Unit Type Units SF Rent Rent/SF 1 Bdr 1 Bath 7 600 $802- $1,171 $1.64 2 Bdr 2 Bath 3 750 $519- $925 $0.96 Total/Avg. 10 645 $907 $1.41 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath 2 650 $1,020- $1,221 $1.72 3 Bdr 1 Bath 3 725 $1,554- $1,724 $2.26 4 Bdr 2 Bath 5 850 $1,546- $1,870 $2.01 Total/Avg. 10 773 $1,570 $2.03 YEAR BUILT: 1937 YEAR BUILT: 1950 YEAR BUILT: 1953 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 24
PROPERTY 437 MELLON NAME ST SE RENT MARKETING COMPARABLES TEAM 101 WAYNE PL SE 101 Wayne Pl SE, Washington, DC, 20032 3 rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath 4 700 $931- $1,224 $1.54 Total/Avg. 4 700 $1,078 $1.54 YEAR BUILT: 1944 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 25
MARKET OVERVIEW WASHINGTON, DC 26
WASHINGTON, D.C. OVERVIEW MARKET OVERVIEW Washington, D.C., is located on the Potomac River, just inland from the Chesapeake Bay. In addition to the District of Columbia, the Washington, D.C., metro encompasses 22 counties and jurisdictions. Nearly 20 percent of the District is parkland managed by the U.S. National Park Service. Areas surrounding the District of Columbia include portions of Maryland, Virginia and West Virginia. The District and inner-ring suburbs are densely populated. Washington, D.C., is the largest city in the metro with a population of nearly 700,000. The remaining population centers are much smaller; only Arlington and Alexandria have more than 100,000 residents. METRO HIGHLIGHTS HIGHLY SKILLED WORKFORCE Nearly half of all local residents age 25 and older have earned a bachelor s degree or higher, well above the U.S. level of 29 percent. STRONG JOB AND POPULATION GROWTH Employment gains contribute to population growth that outpaces the national average. More than 324,000 additional people are expected through 2021. DIVERSIFYING ECONOMY Jobs in professional services now outnumber federal government positions. 27
MARKET OVERVIEW ECONOMY The economy of the Washington, D.C., metro is one of the largest in the nation and is home to 15 Fortune 500 companies, including Freddie Mac, Northrop Grumman, AES, Danaher and Marriott. Employment is primarily information-based and focused on government, lobbying, defense contracting, data processing and news reporting. A large hospitality sector employs roughly 320,000 workers and supports more than 20 million annual visitors to the region s vast array of attractions. MAJOR AREA EMPLOYERS George Washington University Fannie Mae Federal Bureau of Investigation Lockheed Martin Georgetown University Capital One Financial Corp. Smithsonian Institution Washington Hospital Center CSC Corp. Joint Base Andrews * Forecast SHARE OF 2016 TOTAL EMPLOYMENT 2% MANUFACTURING 23% PROFESSIONAL AND BUSINESS SERVICES 22% 10% 5% GOVERNMENT LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES 13% TRADE, TRANSPORTATION AND UTILITIES 5% CONSTRUCTION + 13% EDUCATION AND HEALTH SERVICES 2% INFORMATION 6% OTHER SERVICES 28
MARKET OVERVIEW DEMOGRAPHICS Nearly 133,000 households are expected to be formed through 2021. The median home price of $401,000 is well above the national median and contributes to a homeownership rate of 63 percent, slightly below the national rate of 64 percent. Nearly 23 percent of residents age 25 and older hold a graduate or professional degree compared with 11 percent for the nation. SPORTS 2016 Population by Age 7% 0-4 YEARS 19% 5-19 YEARS 7% 20-24 YEARS 30% 25-44 YEARS 26% 45-64 YEARS 11% 65+ YEARS EDUCATION 2016 POPULATION: 6.1M Growth 2016-2021*: 5.3% 2016 HOUSEHOLDS: 2.3M Growth 2016-2021*: 5.8% 2016 MEDIAN AGE: 36.4 U.S. Median: 37.7 2016 MEDIAN HOUSEHOLD INCOME: $95,900 U.S. Median: $54,500 QUALITY OF LIFE The Washington, D.C., metro is one of the most dynamic in the U.S. It is the seat of the United States government. The region has a cosmopolitan air and is a destination for visitors from across the nation and around the world, containing numerous prominent public buildings and landmarks. It is home to many of the nation s leading media outlets, think tanks and universities. Washington, D.C., also has extraordinary museums, theaters and restaurants that are patronized by visitors and an affluent local population. Educational opportunities abound in the metro area s many institutions of higher learning. Prominent universities include George Washington University, American University, Georgetown University and the University of Maryland. ARTS & ENTERTAINMENT * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 29
WASHINGTON, D.C. MARKET OVERVIEW Elevated Supply Growth Weighing on Strong District Rental Performance Steady growth in high-wage professionals spurring rental demand. Buoyed by numerous high-wage industries including government, defense contractors and engineering, the Washington, D.C., metro is generating a consistent pace of economic growth. Coupled with expensive single-family homes inside the Beltway and a homeownership rate below the national average, an outsize portion of metro residents seek rental accommodations. While the pace of construction has surged over the past few years, net absorption has kept pace with new supply. However, overall rent growth has remained subdued for several years due to the influx of Class A units at the high end of the market, averaging 2 percent since 2012. Construction highlighted by assets inside the Beltway. Driven by demand for rentals from professionals in the urban core, builders have responded with projects inside the Beltway. Overall completions are mostly situated in D.C., although the largest sites are in first-tier suburbs such as Rockville and McLean. Looking forward to 2018, development will top 16,700 rentals, representing the highest pace of construction since 2014. As a result, extensive supply has prompted a more elevated concessions environment as operators offer incentives to lease up new units. Multifamily 2017 Outlook 14,700 units will be completed 40 basis point increase in vacancy 4.0% increase in effective rents Construction: Development falls marginally below 2016 levels yet will be surpassed in 2018 as builders push completions to more than 16,700 next year. Vacancy: A heightened pace of construction and slowing net absorption will contribute to a 40-basis-point rise in vacancy to 4.2 percent metrowide in 2017. Rents: Building on robust gains in the first half of 2017, average effective rents climb 4 percent to $1,680 per month this year. Investment Trends * Cap rates trailing 12 months through 3Q17; 10-year Treasury rate through Oct. 20. Sources: CoStar Group, Inc.; Real Capital Analytics Driven by fully valued pricing at the upper end of the marketplace, investors are pursuing Class C properties, particularly inside the District. These assets offer mid-5 percent cap rates and prices per unit that will begin in the mid- $150,000s. Opportunities are most abundant in Anacostia and Columbia Heights. Coastal capital remains highly active in the marketplace, seeking returns that are up to 50 basis points higher than their home markets. Local investors backed by capital from New York are also prevalent, generating a dynamic marketplace for attractively priced properties. The overabundance of Class A properties inside the Beltway is beginning to impact pricing and deal flow, with investors undertaking more due diligence before closing a transaction. Growing concessions activity and marginal rent growth is weighing on the potential returns in the sector, prompting a wider bid/ask spread. 30
WASHINGTON, D.C. MARKET OVERVIEW 3Q17 12-Month Period * Forecast EMPLOYMENT CONSTRUCTION VACANCY RENTS increase in total 1.7% employment Y-O-Y 15,000 units completed Y-O-Y 50 basis point increase in vacancy Y-O-Y increase in effective 1.1% rents Y-O-Y During the past year, Washington, D.C., organizations created 53,600 jobs, boosting total employment by 1.7 percent. New additions were led by the professional and business services sector, where 18,500 positions were added during the period. Tight labor market conditions have pushed the metro unemployment rate to 3.7 percent. Developers completed slightly more than 15,000 units over the past year, increasing the pace of construction from the prior yearlong period when 12,500 rentals were brought online. There are an additional 5,175 apartments slated for delivery before year end, with sites spread evenly across Virginia, Maryland and the District. A quicker rate of supply growth, coupled with weak net absorption, pushed the metro vacancy rate up 50 basis points to 4.2 percent during the last four quarters. Vacancy rose the most in the District, elevating 70 basis points to 3.7 percent. Despite the increase, the area remains tightest overall, followed by Suburban Virginia at 3.9 percent and Suburban Maryland at 4.6 percent. Upward pressure on vacancy trimmed overall average effective rent growth in the marketplace, rising 1.1 percent to $1,673 per month. Rent growth over the past year was led by the College Park/Greenbelt submarket, surging 10 percent to $1,842 per month. The Navy Yard/Capitol South submarket underperformed, sliding 5.3 percent to $2,013 per month. 31
WASHINGTON, D.C. MARKET OVERVIEW Submarket Trends Lowest Vacancy Rates 3Q17 Submarket Vacancy Rate Y-O-Y BasisPoint Change Effective Rent Y-O-Y% Change Hyattsville/Riverdale 2.2% -30 $1,327 0.1% * 2017-2022 **2016 Sales Trends Class C Deal Flow in Maryland Dominates Transactions; Prices Contracting at High End Driven by a slowdown in pricing and deals at the top end of the market, average prices per unit slipped to the low-$190,000 per unit range. Meanwhile, prices for Class C properties advanced nearly 10 percent. Deal flow has moved toward the suburbs of Maryland and inside the District, which encompass more than two-thirds of closed transactions. First-year returns are broadly in the mid-5 percent range. Outlook: Smaller assets in prime neighborhoods have become a major target for all investor groups, seeking to locate in highly trafficked areas. Navy Yard/Capitol South 2.2% -160 $2,013-5.3% Southeast D.C. 2.3% -50 $1,141 1.8% East Silver Spring/Takoma Park/Adelphi Seven Corners/Baileys Crossroads/Annandale 2.8% -20 $1,405 4.0% 2.8% 120 $1,580 0.3% East Alexandria 3.1% 30 $1,854 0.9% Manassas/Far SW Suburbs 3.4% 130 $1,380 1.9% Central DC 3.4% 70 $2,420-0.7% Columbia Pike 3.5% -60 $1,702 0.7% West Fairfax County 3.6% 50 $1,669 0.1% Fredericksburg/Stafford 3.7% 90 $1,236 3.5% Overall Metro 4.2% 50 $1,673 1.1% * Trailing 12 months through 3Q17 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics 32
WASHINGTON, D.C. MARKET OVERVIEW Capital Markets Monetary policy in transition. Despite the Fed raising its benchmark short-term rate three times in seven months and signaling another rise before the end of the year, long-term rates have remained stable. The yield on the 10-year U.S. Treasury bond remained in the low- to mid-2 percent range throughout the third quarter of 2017. The Federal Reserve wants to normalize monetary policy and, in addition to raising its funds (or overnight lending) rate, has announced it will begin to taper its balance sheet by allowing an initial $10 billion in securities to mature without reinvestment. By reducing its acquisitions of securities, 10-year Treasury rates should drift upward, thereby widening the spread between short- and long-term rates. Increase in interest rates over the course of the year, pushing up the cost of capital. While commercial real estate fundamentals remain strong, rising costs associated with debt financing will tighten the spread between cap rates and lending benchmarks. This environment could weigh on transaction activity as investors evaluate their yield options. Cap rates have remained relatively stable over the last year, but upward movement in Treasury rates has amplified the expectation gap between buyers and sellers. The capital markets environment continues to be highly competitive. Government agencies continue to consume the lion s share, just slightly over 50 percent, of the apartment lending market. National and regional banks control approximately a quarter of the market. Growing uncertainty about federal policy and global geopolitical concerns are keeping longterm interest rates down with pricing residing in the 4 percent realm with maximum leverage of 80 percent. Portfolio lenders will typically require loan-to-value ratios closer to 75 percent with interest rates in the high-3 to mid-4 percent range. As uncertainty remains regarding the possibility of tax policy revision, rental demand remains strong with the national apartment vacancy at 4.5 percent. * Trailing 12 months through 2Q17 ** Through first half 2017 Include sales $2.5 million and greater Sources: CoStar Group, Inc.; Real Capital Analytics 33
PROPERTY 437 MELLON NAME ST SE Created on December 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 23,486 198,895 591,732 2016 Estimate Total Population 24,272 197,426 579,862 2010 Census Total Population 21,441 177,645 519,802 2000 Census Total Population 24,356 170,815 489,416 Daytime Population 2016 Estimate 27,711 283,017 1,114,285 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 8,591 88,947 278,369 2016 Estimate Total Households 8,517 85,653 265,261 Average (Mean) Household Size 2.66 2.19 2.09 2010 Census Total Households 7,592 76,534 235,976 2000 Census Total Households 7,728 70,765 214,209 Growth 2015-2020 0.87% 3.85% 4.94% HOUSING UNITS 1 Miles 3 Miles 5 Miles Occupied Units 2021 Projection 8,591 88,947 278,369 2016 Estimate 9,223 90,724 279,026 Owner Occupied 1,713 26,876 96,686 Renter Occupied 6,804 58,777 168,575 Vacant 707 5,071 13,765 Persons In Units 2016 Estimate Total Occupied Units 8,517 85,653 265,261 1 Person Units 31.35% 41.02% 43.87% 2 Person Units 24.75% 29.10% 29.61% 3 Person Units 17.76% 13.98% 12.60% 4 Person Units 12.25% 8.22% 7.43% 5 Person Units 6.95% 4.18% 3.51% 6+ Person Units 6.94% 3.50% 2.99% MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $200,000 or More 1.97% 6.49% 9.97% $150,000 - $199,000 2.80% 5.95% 7.94% $100,000 - $149,000 7.16% 14.49% 16.71% $75,000 - $99,999 9.35% 11.54% 12.30% $50,000 - $74,999 14.57% 15.60% 15.12% $35,000 - $49,999 12.64% 11.72% 10.18% $25,000 - $34,999 10.23% 8.78% 7.13% $15,000 - $24,999 12.87% 8.52% 7.19% Under $15,000 28.41% 16.90% 13.45% Average Household Income $52,381 $84,528 $103,641 Median Household Income $33,683 $55,911 $69,480 Per Capita Income $19,020 $37,225 $47,980 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 24,272 197,426 579,862 Under 20 36.52% 25.38% 21.51% 20 to 34 Years 22.89% 27.49% 30.32% 35 to 39 Years 5.39% 7.18% 7.98% 40 to 49 Years 11.55% 12.62% 13.00% 50 to 64 Years 16.26% 17.36% 17.07% Age 65+ 7.39% 9.98% 10.14% Median Age 28.55 33.42 34.10 Population 25+ by Education Level 2016 Estimate Population Age 25+ 13,483 132,387 409,501 Elementary (0-8) 2.56% 2.27% 2.74% Some High School (9-11) 16.50% 9.46% 7.62% High School Graduate (12) 41.95% 30.41% 22.71% Some College (13-15) 19.30% 18.36% 16.21% Associate Degree Only 5.36% 4.05% 3.82% Bachelors Degree Only 8.07% 17.18% 22.22% Graduate Degree 4.83% 17.45% 23.77% Population by Gender 2016 Estimate Total Population 24,272 197,426 579,862 Male Population 44.95% 47.01% 47.75% Female Population 55.05% 52.99% 52.25% Source: 2016 Experian 34
PROPERTY 437 MELLON NAME ST SE MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 24,272. The population has changed by -0.34% since 2000. It is estimated that the population in your area will be 23,486.00 five years from now, which represents a change of -3.24% from the current year. The current population is 44.95% male and 55.05% female. The median age of the population in your area is 28.55, compare this to the US average which is 37.69. The population density in your area is 7,716.56 people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 5.66% White, 91.00% Black, 0.06% Native American and 0.43% Asian/Pacific Islander. Compare these to US averages which are: 70.60% White, 12.83% Black, 0.19% Native American and 5.43% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 2.81% of the current year population in your selected area. Compare this to the US average of 17.77%. Households There are currently 8,517 households in your selected geography. The number of households has changed by 10.21% since 2000. It is estimated that the number of households in your area will be 8,591 five years from now, which represents a change of 0.87% from the current year. The average household size in your area is 2.66 persons. Housing The median housing value in your area was $282,452 in 2016, compare this to the US average of $190,673. In 2000, there were 1,566 owner occupied housing units in your area and there were 6,162 renter occupied housing units in your area. The median rent at the time was $471. Income In 2016, the median household income for your selected geography is $33,683, compare this to the US average which is currently $55,159. The median household income for your area has changed by 49.82% since 2000. It is estimated that the median household income in your area will be $37,959 five years from now, which represents a change of 12.69% from the current year. Employment In 2016, there are 7,849 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 56.03% of employees are employed in white-collar occupations in this geography, and 43.51% are employed in blue-collar occupations. In 2016, unemployment in this area is 18.24%. In 2000, the average time traveled to work was 38.00 minutes. The current year per capita income in your area is $19,020, compare this to the US average, which is $30,249. The current year average household income in your area is $52,381, compare this to the US average which is $79,207. Source: 2016 Experian 35
8 DEMOGRAPHICS 36