Offering Memorandum 12 Units 1765 Cedar Avenue, Long Beach, CA 90813 Presented by: John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com
Table of Contents Pages 1 3. 1. Location & Property Overview Pages 4 8. 2. Location Maps Pages 9-13... 3. Property Photos Pages 14 15. 4. Pricing Sheet Pages 16 17. 5. Rent Roll Pages 18 19. 6. Comparative Market Analysis Pages 20 21. 7. Sales Comparables Pages 22 23. 8. Sales Comparables Location Map Pages 24 25. 9. Rent Comparables John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com
1. Location & Property Overview John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 1
Location Overview: Long Beach is situated in Southern Los Angeles County approximately 22 miles south of downtown Los Angeles. Long Beach is the 3rd most populous city in Southern California. The city is home to approximately 474,172 people. The medium household income is approximately $54,971. The port of Long Beach is the 2 nd busiest container port in the United States and is among the world s largest shipping ports. The economy of Long Beach employs approximately 224,684 people. The economy of Long Beach is specialized in transportation and warehousing; entertainment, recreation; and wholesale trade, which employ respectively 1.52; 1.44; and 1.43 times more people than what would be expected in a location of this size. Long Beach is on the move with new developments underway and existing ones being renovated. A new, 17-story apartment tower called the Current just opened in downtown Long Beach at 707 East Ocean Blvd. It s the first high-rise, luxury apartment project to be built in Long Beach since the 1960s. A new 427-key hotel will soon be built on a vacant site at 100 Ocean Blvd. The Aquarium of the Pacific will go through a $53M renovation that reportedly will include a new plaza and new animal exhibits. Long Beach City College is breaking ground in the spring on a $20M project to renovate a few buildings. Urban Commons, which recently took over the lease agreement for the Queen Mary, plans to renovate the ship and redevelop the property around it. The first phase of the project will include upgrades to the Queen Mary, including the ship's restaurants and guest rooms. The second phase will include dining and retail on 45 acres near the Queen Mary. The upgrades are scheduled to be completed by next year. All of these new projects reflect developers and investors serious interest in the rental housing market all over the greater downtown Long Beach area. Rental units are very much in demand since over 56% of the population live in rental units. Neighborhood Overview: The Washington neighborhood is in the greater Downtown Long Beach area in proximity to the neighborhoods of South Wrigley, Willmore, North Pine, Cambodia Town, MacArthur Park, Lincoln and North Alamitos Beach. The subject property is a non-rent control multifamily asset situated in the Washington neighborhood of Long Beach on Cedar Avenue, a tree-lined residential block, between 17 th Street and Pacific Coast Highway. This block of Cedar Avenue is across from Educational Partnership High School, which is an alternative educational school that is part of the Long Beach Unified School District and hosts students grades 10 through 12. This multi-family residential community includes small to mid-size apartment buildings. *All information produced is deemed reliable but is not guaranteed. 2
The Washington neighborhood has excellent multi-family demographic fundamentals in place: there is no rent control, the average residents age is 44 years old, rental demand is high since there is only an 11% home ownership throughout the neighborhood, and there are more than 30 restaurants and coffee shops within a 15 minute walk of the neighborhood. According to Nextdoor.com, residents love Washington for the freeway access, short drive to the beach, food and restaurants, walkability, and it is welcoming and friendly. The subject property has superior freeway access to the 710 and 405 freeways. The property is zoned LBR4N. This zoning district is a medium-density multi-family residential district intended to meet the demand of a broad segment of the population which provides a diversity of housing choices (Long Beach Planning Department). Walkscore.com categorizes the location of the property as very walkable, most errands can be accomplished on foot, and credits the property with an 83 out of 100 walkability score. The property location is also categorized as very bike-able, flat as a pancake, and has some bike lanes Furthermore, the property location is also categorized as having good transit, and receives a 68 out of 100 transit score. 2028 Summer Olympics During the 2028 Summer Olympics, downtown Long Beach will host BMX Cycling, Water Polo, Triathlon and Open Water Swimming. Property Description: 1765 Cedar Avenue, Long Beach, CA 90813 (12 Units) This 12-unit property has a top-heavy unit mix of two 2 Bed/ 2 Bath, five 2 Bed/ 1 Bath, and five 1 Bed/ 1 Bath units. The building is highly sought after 1960s balcony-style construction with eight dedicated covered-garage spaces and plenty of street parking due to extra public parking along the extended school block. These units all boast large square footage for the area. The two-bedroom two-bath units are approximately 950 sq ft, the two-bedroom one-bath units are approximately 850 sq ft, and the one-bedroom one-bath units are approximately 600 sq ft. The building has great curb-appeal, frontage, visibility, large units with plenty of natural lighting which creates a nice atmosphere and vibe for residents, on-site laundry and great parking. These features produce a competitive advantage to attract tenants. *All information produced is deemed reliable but is not guaranteed. 3
2. Location Maps John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 4
Location Maps 5
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3. Property Photos John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 9
Property Photos 10
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4. Pricing Sheet John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 14
Property Address: 1765 Cedar Avenue Long Beach 90813 12 units List Summary Proposed Financing Price: $2,375,000 First Loan Amount: $1,231,382 Chase Assumption Down Payment: 48% $1,143,618 Terms: 4.24% Term/Yrs 30 Number of units: 12 Payment $6,092.80 *6.5 yr fixed Cost per Unit: $197,917 * Financing quote courtesy of Steve Reilly-Platinum Capital Partners 310-291-1421 Current GRM: 14.93 John Mociak Market GRM: 11.63 The Ensbury Group/Keller Williams Commercial Current CAP: 3.68% Multifamily Investments Market CAP: 5.49% 830 South Sepulveda Boulevard, Suite 200 Year Built / Age: 1963 El Segundo, CA 90245 john@theensburygroup.com Approx. Gross RSF: 9,136 310-872-0963 Cost per Net RSF: $259.96 CA DRE License # 01708711 Annualized Operating Data Current Rents Market Rents Scheduled Gross Income: $159,060 $204,180 Vacancy Rate Reserve: 7,881 5.00% 1 10,065 5.00% 1 Gross Operating Income: 151,179 194,115 Expenses: 63,821 40.12% 1 63,821 31.26% 1 Net Operating Income: 87,358 130,294 Loan Payments: 73,114 73,114 Debt Coverage Ratio 1.19 1.78 Pre Tax Cash Flows: 14,244 1.25% 2 57,180 5.00% 2 Principal Reduction: 20,832 20,832 Total Return Before Taxes: 35,076 3.07% 2 78,012 6.82% 2 1 As a percent of Scheduled Gross Income 2 As a percent of Down Payment Scheduled Income Annualized Expenses: Current Rents Market Rents No. of Bdrms/ Approx. AVG. Monthly Monthly Monthly Monthly Taxes (New) 1.21% $29,687 Units Baths Sq. Ftg. Rent/Unit Income Rent/Unit Income Assessments new $1,846 Insurance.35/s.f. $3,198 5 1+1 600 $930 $4,650 $1,250 $6,250 Management 5% g.s.i. $7,890 Electricity/Gas common area $1,500 5 2+1 850 $1,222 $6,110 $1,475 $7,375 Water/Swg/Trash current $11,000 2 2+2 950 $1,188 $2,375 $1,575 $3,150 Multi-Residential Investment - Operating Information Repairs 400/unit $4,800 Reserves 250/unit $3,000 Gardner/Cleanup 75/mo $900 Total Scheduled Rent: $13,135 $16,775 Laundry $10/unit-$20/Unit $120 $240 Monthly Scheduled Gross Income: $13,255 $17,015 Total Expenses: $63,821 Annualized Scheduled Gross Income: $159,060 $204,180 Per Net Sq. Ft: $6.99 Utilities Paid by Tenant: Electricity & Gas Per Unit: $5,318 THIS INFORMATION 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. BUYER MUST VERIFY THE INFORMATION AND BEARS ALL RISK FOR INACCURACIES 15
5. Rent Roll John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 16
Property Address: 1765 Cedar Avenue, Los Angeles, CA 90813 RENT ROLL Unit Tenant Bed / Bath SQFT Rent Move In Date Lease 1 E. Hernandez 2 +2 950 $ 1,180.00 1/16/2016 Month-To-Month 2 Black 2 +1 850 $ 1,200.00 6/2/2009 Month-To-Month 3 Carriagan 2 + 1 850 $ 1,175.00 10/1/2014 Month-To-Month 4 A. DeAquino 1 + 1 600 $ 925.00 11/26/2010 Month-To-Month 5 D. Perez 2 + 1 850 $ 1,185.00 7/1/2007 Month-To-Month 6 M. Hernandez 2 + 2 950 $ 1,195.00 1/16/2016 Month-To-Month 7 Acosta 2 + 1 850 $ 1,175.00 1/17/2016 Month-To-Month 8 Mendoza 2 +1 850 $ 1,375.00 8/9/2016 Month-To-Month 9 Cervantes 1 + 1 600 $ 900.00 1/4/2005 Month-To-Month 10 Mackey 1 + 1 600 $ 925.00 12/1/2008 Month-To-Month 11 Hu 1 + 1 600 $ 975.00 8/27/2016 Month-To-Month 12 R. DeAquino 1 + 1 600 $ 925.00 1/18/2016 Month-To-Month MONTHLY TOTAL: $ 13,135.00 *All information produced is deemed reliable but is not guaranteed. 17
6. Comparative Market Analysis John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 18
Comparative Market Analysis Sales Comparables Long Beach 2017-2018 YTD Address # of Units Unit Mix Sales Price Building Sq Ft Lot Sq Ft $/SF GSI GRM Cap Rate (%) $/Unit Year Built COE Date 336 E 8th Street 13 9 1 Bd/ 1 Ba 3 2 Bd/ 2 Ba 1 3 Bd/ 2 Ba $3,577,500 11,992 9,997 $298 $264,000 13.55 4.40% $275,192 1983 10/12/2017 436 E 16th Street 8 4 1 Bd/ 1 Ba 4 2 Bd/ 1 Ba $1,600,000 7,488 6,482 $214 $116,400 13.75 4.43% $200,000 1913 10/12/2017 1370 Gaviota Avenue 8 8 2 Bd/ 1 Ba $1,500,000 5,348 6,525 $280 $105,600 14.2 4.00% $187,500 1960 10/25/2017 1035-1035 1/2 Orange Avenue 6 2 1 Bd/ 1 Ba 3 2 Bd/ 1 Ba 1 3 Bd/ 1 Ba $1,250,000 4,093 7,498 $305 $83,700 14.9 3.87% $208,333 1923 12/8/2017 Averages: $274 14.10 4.18% $217,756 Subject Property: Address # of Units 1765 Cedar Avenue 12 Unit Mix List Price Building Sq Ft $/SF GSI GRM 5 1 Bd/ 1 Ba 5 2 Bd/ 1 Ba 2 2 Bd/ 2 Ba Cap Rate (%) $/Unit Year Built $2,375,000 9,136 $260 $159,060 14.93 3.68% $197,917 1963 John Mociak Investment Associate, BRE #01708711 *All information produced is deemed reliable but is not guaranteed. 19
7. Sales Comparables John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 20
Sales Comparable #1 Address # of Units Unit Mix Sales Price 336 E 8th Street 13 Sales Comparable #2 9 1 Bd/ 1 Ba 3 2 Bd/ 2 Ba 1 3 Bd/ 2 Ba Building Sq Ft Lot Sq Ft $/SF GSI GRM Cap Rate (%) $/Unit Year Built COE Date $3,577,500 11,992 9,997 $298 $264,000 13.55 4.40% $275,192 1983 10/12/2017 Parking Notes: Plenty of on-site garage parking. Address # of Units Unit Mix Sales Price Building Sq Ft Lot Sq Ft $/SF GSI GRM Cap Rate (%) $/Unit Year Built COE Date 436 E 16th Street 8 Sales Comparable #3 4 1 Bd/ 1 Ba 4 2 Bd/ 1 Ba $1,600,000 7,488 6,482 $214 $116,400 13.75 4.43% $200,000 1913 10/12/2017 Parking Notes: No on-site parking. Address # of Units Unit Mix Sales Price Building Sq Ft Lot Sq Ft $/SF GSI GRM Cap Rate (%) $/Unit Year Built COE Date 1370 Gaviota Avenue 8 8 2 Bd/ 1 Ba $1,500,000 5,348 6,525 $280 $105,600 14.2 4.00% $187,500 1960 10/25/2017 Sales Comparable #4 Parking Notes: 5 on-site dedicated spaces. Address # of Units Unit Mix Sales Price 1035-1035 1/2 Orange Avenue 6 2 1 Bd/ 1 Ba 3 2 Bd/ 1 Ba 1 3 Bd/ 1 Ba *All information produced is deemed reliable but is not guaranteed. Building Sq Ft Lot Sq Ft $/SF GSI GRM Cap Rate (%) $/Unit Year Built COE Date $1,250,000 4,093 7,498 $305 $83,700 14.9 3.87% $208,333 1923 12/8/2017 Parking Notes: 8-12 uncovered on and off-site spaces. 21
8. Sales Comparables Location Map John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 22
Address City Property Info Sale Info 1 336 E 8th St Long Beach 11,992 SF Multi- Family/Apartments Sold: $3,577,500 ($275,192/Unit) 2 436 E 16th St Long Beach 7,488 SF Multi-Family/Apartments Sold: $1,600,000 ($200,000/Unit) 3 1370 Gaviota Ave Long Beach 5,348 SF Multi-Family/Apartments Sold: $1,500,000 ($187,500/Unit) 4 1035-1035 1/2 Orange Ave Long Beach 3,960 SF Multi-Family/Apartments Sold: $1,250,000 ($208,333/Unit) Copyrighted report licensed to Ensbury Group / KW Commercial - 608454. 23
9. Rent Comparables John Mociak Senior Investment Associate, BRE #01708711 830 South Sepulveda Boulevard, Suite 200 El Segundo, CA 90245 Office: (310) 939-9359 Cell: (310) 872-0963 John@TheEnsburyGroup.com 24
Rent Comparable Summary Long Beach 90813: Within 0.5 Mile Radius of Subject Property One Bedrooms Address Cross Street Distance to Subject Property Closed Date 1602 Cedar Avenue 17th Street 0.17 miles October 2017 $1,195 1600 Cedar Avenue 17th Street 0.18 miles January 2018 $1,395 1577 Pine Avenue 16th Street 0.28 miles February 2018 $1,250 1439 Cedar Avenue 15th Street 0.35 miles January 2018 $1,250 1576 Locust Avenue 17th Street 0.39 miles December 2017 $1,295 1415 Cedar Avenue 14th Street 0.4 miles October 2017 $1,195 2010 Pine Avenue 20th Street 0.44 miles March 2018 $1,250 Two Bedrooms Address Cross Streets Distance to Subject Property Closed Date Rent AVERAGE $1,261 1602 Cedar Avenue 17th Street 0.17 miles January 2018 $1,595 1880 Cedar Avenue 19th Street 0.18 miles August 2017 $1,500 1575 Chestnut Avenue 15th Street 0.24 miles February 2018 $1,525 1754 Pine Avenue Pacific Coast Highway 0.24 miles January 2018 $1,749 1548 1/2 Pine Avenue 16th Street 0.33 miles February 2018 $1,495 1544 Pine Avenue 16th Street 0.34 miles November 2017 $1,595 357 W 14th Street Chestnut Avenue 0.45 miles November 2017 $1,525 1450 Locust Avenue 15th Street 0.48 miles February 2018 $1,500 Rent AVERAGE $1,569 *All information produced is deemed reliable but is not guaranteed. 25