OLIVE ORCHARD - LoopNet

A 15-Unit Multifamily Investment Opportunity in Sacramento, California

OLIVE ORCHARDA P A R T M E N T S

MENDOCINO PALMSA P A R T M E N T H O M E S



CONFIDENTIALITY AGREEMENT

The information contained herein is strictly confidential, furnished solely for the purpose of considering the acquisition of the property described herein, and is not to be used for any other purpose or made available to any other person without the expressed written consent of ARA Newmark.

It has been obtained from the Seller and may include other sources believed to be reliable, but no representation is being made with regard to its accuracy or completeness.

Prospective investors should undertake their own investigations and reach their own conclusions without reliance upon the material contained herein. Neither the Seller nor the Agent nor any of their respective officers, agents or principals has made or will make any representations or warranties, expressed or implied, as to the accuracy or completeness of the Offering Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of the Offering Memorandum or its contents.

Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser.

The Seller and Agent expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and/or terminate discussions with any entity at any time with or without notice.

The Seller shall have no legal commitment or obligations to any entity reviewing the Offering Memorandum or making an offer to purchase the Property unless and until such offer for the Property is approved by the Seller, and any conditions to the Buyer’s obligations there under have been satisfied or waived.

ARA-NEWMARK SACRAMENTO980 9th Street., Suite 2500

Sacramento, CA 95814

NATE [email protected]

916.599.6523 License CA: 01467941

MARC ANDENMAT [email protected]

916.835.8844License CA: 01956176

CAMERON COR [email protected]

415.430.1037 License CA: 02049950





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TABLE OF CONTENTS

EXECUTIVE SUMMARY

PROPERTY OVERVIEW

COMPARABLE ANALYSIS

FINANCIAL ANALYSIS

REGIONAL OVERVIEW



4



HOWE AVE



E X E C U T I V E S U M M A R Y

6



THE OFFERINGARA Newmark, as the exclusive advisor, is pleased to present the opportunity to acquire Olive Orchard, a 15-unit multifamily opportunity located in Sacramento, CA.

PRICE$1,725,000

PRICE PER UNIT$115,000

CAP RATE (CURRENT/MARKET) 4.5% / 7.5%

GRM (CURRENT/MARKET) 11.4 / 8.7

TERMS OF SALEDelivered free and clear

INVESTMENT SUMMARY

Address 3024 Howe AveSacramento, CA 95821

County SacramentoYear Built 1984Total # of Units 15Net Rentable SF (tax record) 9,464# of Acres 0.54Total # of Buildings 2Parking 22Parking Ratio 1.46xOccupancy 100%


UNIT MIX

UNIT TYPE # OF AVG SF IN-PLACE RENT

MARKET RENT

1-BEDROOM 1-BATH 7 540 $816 $1,000

2-BEDROOM 1-BATH 8 710 $860 $1,200

TOTAL/AVG 15 631 $12,594 $16,600

7




INVESTMENT HIGHLIGHTS

Total Upside Opportunity

Total Income Obtainable

$56,232

In addition to capturing loss-to-lease of $48,072, a new owner can implement a RUBS

system of $40 for 1BR’s and $50 for 2BR’s to increase the total income by $56,232*.

Limited New Supply

New construction of multifamily properties

continues to remain limited throughout

Sacramento. There are very few projects

under construction or in planning in Arden.

Robust Employment Market

As of May 2018, the unemployment rate

in the Sacramento Metro dropped to 3.3%

while simultaneously adding 17,000 new

jobs.

Relative Affordability

The average market rent in Downtown

Sacramento is $789/month more than the

average market rent at Olive Orchard.

$789Rent Delta to Downtown Sacramento

Loss-To-Lease Upside

Avg. In-Place Rent Below Market

(24%)

With an avg. of $267 of loss-to-lease/unit,

a new owner can grow the property’s GPR

$48,072 by achieving $1,000 for 1BR’s and

$1,200 for 2BR’s.

Stabilized Cash Flow

Market Cap Rate

7.5%

The difference from Olive Orchard’s in-place income and market rent income, including RUBS & excluding vacancy equates to a 300

basis point spread.

*refer to Financial Analysis on page 22

8



EDIS

ON A

VE

MARCONI AVE

HOWE AVE

BELL ST

FULTON AVE

NN

McClellanBusiness Park

16M sq ft of office,

industrial, R&D, aviation,

multifamily

Dyer-KellyElementary School

Hampton Inn & Suites

New Holiday Inn Express

Greater SacSurgery Center

Haggin OaksGolf Complex

Heritage Oaks Hospital

Del Paso Country Club

OLIVE ORCHARD


9




TOP RANKED NATIONAL MARKETAs a late-cycle recovery market, Sacramento is only beginning to experience the rapid rent growth that has been characteristic of urban centers across the US over the last several years. Per Cantor Fitzgerald’s proprietary forecasting model, the Sacramento region is projected to be the third ranked multifamily market in the nation for above-average growth prospects in 2018.

• Robust Rent Growth: Sacramento continues to see strong rent growth and declining vacancy rates — annual rent growth exceeded 7% throughout the region, and vacancy rates are at 3.3% based on our market surveys.

• Strong Employment Gains: Sacramento employment figures continue to improve, with steady employment growth and declining unemployment rates. The MSA has surpassed its 2007 pre-recession peak and now stands at a new high of 1,070,262 total jobs as of May 2018.

• Limited New Supply: New construction of multifamily properties continues to remain limited throughout Sacramento. This lack of new supply combined with steady employment gains has continued to fuel rent growth.

Vacancy rates sit at a mere 3.3% as of the second quarter

of 2018

23,000 new jobs were added to the region over the past year — 2.5% Y-O-Y growth

Year over year rent growthexceeded 5% in the

Sacramento MSA betweenQ1-2018 and Q1-2017

10



STRONG JOB MARKETThe Sacramento regional employment market is rapidly growing, and is more diverse than ever. As the seat of California’s government, Sacramento has a stable job base anchored by various state and federal agencies, as well as an expanding private sector — HP, Kaiser, and Sutter all have significant presences locally. In total, the Sacramento region added approximately 23,000 jobs in the past 12 months (2.5% Y-O-Y growth), and has exceeded its previous employment peak by over 17,000 jobs. Furthermore, unlike the previous cycle (where employment was largely driven by construction) the jobs created in this cycle are far more stable and found in a wide variety of diverse industries, including healthcare, technology and education.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

Jun‐05

Dec‐0

5

Jun‐06

Dec‐0

6

Jun‐07

Dec‐0

7

Jun‐08

Dec‐0

8

Jun‐09

Dec‐0

9

Jun‐10

Dec‐1

0

Jun‐11

Dec‐1

1

Jun‐12

Dec‐1

2

Jun‐13

Dec‐1

3

Jun‐14

Dec‐1

4

Jun‐15

Dec‐1

5

Jun‐16

Dec‐1

6

Jun‐17

Dec‐1

7

Jun‐18

Employment Unemployment Rate

SACRAMENTO MSA EMPLOYMENT


11



$1,093

$1,086

$1,161

$1,185

$1,212

$1,256

$1,248

$1,281

$1,304

$1,297

$1,325

$1,353

2.7%

3.7%

2.9%

1.8%2.0%

2.6%

3.7%3.9%

3.7%4.1%

3.7% 3.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

$950

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

$1,300

$1,350

3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018

Arden Arcade vs Vacancy Rate

Average Rent Vacancy Rate

ARDEN ARCADE AVERAGE RENT & VACANCY RATES

EXCEPTIONAL SUBMARKET FUNDAMENTALSSince January 2017, rents in the Arden Arcade increased 8.4%, or $105 on average, while vacancy remained essentially flat. This strong rent growth can be attributed to a combination of continued job growth, very limited new construction, and a growing renter population. With none of these trends expected to change in the next year, rent growth should continue for the foreseeable future in Arden, as well as for Sacramento in general.




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P R O P E R T Y O V E R V I E W

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UTILITIES

PAID BY METHOD SUPPLIED BY

ELECTRIC Tenant Direct SMUD

GAS Tenant Direct PG&E

WATER/SEWER Owner County of Sacramento

TRASH Owner Atlas Disposal

CABLE Tenant Direct Varies


PROPERTY SUMMARY


County Sacramento

APN # 266-0131-027

Year Built 1984

Total # of Units 15

Net Rentable SF (tax record) 9,464

# of Acres 0.54

Total # of Buildings 2

Parking 22

Parking Ratio 1.46x

Framing Wood

Roof Pitched

Paving Asphalt

Plumbing Copper

Electrical Copper

Heating/Cooling Central HVACs

Washers and Dryers Laundry On-Site

UNIT MIX

UNIT TYPE # OF UNITS AVG SF IN-PLACE

RENTMARKET

RENT

1-BEDROOM 1-BATH 7 540 $816 $1,000

2-BEDROOM 1-BATH 8 710 $860 $1,200

TOTAL/AVG 15 631 $12,594 $16,600

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• On-site laundry room• Wood burning fireplaces in all 2 BR

units• Private enclosed deck or patio in

most units• Vaulted ceilings in upstairs 1 BR units

• Central HVAC throughout• Immediate access to Business 80• 100% occupied

PROPERTY HIGHLIGHTS AND APARTMENT AMENITIES



CO M PA R A B L E A N A LY S I S

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RENT COMPARABLES MATRIX

Subject Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6

Property Name Olive Orchard Capitol City Ramada Village Portofino Church Terrace Marconi Villa Skyview Villa Average

Address 3024 Howe Ave 3100 Howe Ave 2112 Edison Ave 3060 Bell Ave 2306‐2312 Church Ave 2401 Marconi Ave 2509 Edison Ave

City Sacramento Sacramento Sacramento Sacramento Sacramento Sacramento Sacramento

Year Built 1984 1970 192 1970 1965 1963 1973 1613

Units 15 24 28 38 28 32 156 282

Avg Market Rent $1,107 $1,200 $1,109 $1,159 $1,171 $1,236 $1,116 $1,165

Avg SF 631 800 611 588 793 577 570 657

Avg Rent PSF $1.75 $1.50 $1.82 $1.97 $1.48 $2.14 $1.96 $1.77

Occupancy 100% 95.8% 96.4% 98.0% 98.4% 96.9% 98.1% 97.3%

Property Name Capitol City Ramada Village Portofino Church Terrace Marconi Villa Skyview Villa Average

1 Bedroom 1 Bath 7 Units 24 Units 14 Units 8 Units 4 Units 99 Units

Avg Market Rent $1,000 $1,095 $1,100 $1,100 $1,150 $1,080 $1,087

Avg SF 540 580 500 650 440 525 536

Avg Rent PSF $1.85 $1.89 $2.20 $1.69 $2.61 $2.06 $2.03

2 Bedroom 1 Bath 8 Units 24 Units 4 Units 20 Units 20 Units 24 Units 56 Units

Avg Market Rent $1,200 $1,200 $1,195 $1,200 $1,200 $1,250 $1,180 $1,200

Avg SF 710 870 795 650 850 600 650 709

Avg Rent PSF $1.69 $1.38 $1.50 $1.85 $1.41 $2.08 $1.82 $1.69

The average in-place rent at Olive Orchard is $816 and $860 for the 1-bedroom 1-bath and 2-bedroom 1-bath, respectively. This represents an average of $267 per unit type of loss-to-lease from market rents of $1,000 and $1,200, totaling $48,072 annually in loss-to-lease opportunity or 300 bps on cap rate with RUBS included.

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$1,000

$1,080 $1,087 $1,095 $1,100 $1,100

$1,150

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

Olive Orchard Skyview Villa Average Ramada Village Portofino Church Terrace Marconi Villa

1 Bedroom 1 BathMARKET RENT FOR 1-BEDROOMS

$1,180

$1,195$1,200 $1,200 $1,200 $1,200 $1,200

$1,250

$1,140

$1,160

$1,180

$1,200

$1,220

$1,240

$1,260

Skyview Villa Ramada Village Olive Orchard Church Terrace Portofino Capitol City Average Marconi Villa

2 Bedroom 1 BathMARKET RENT FOR 2-BEDROOMS

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RENT COMPARABLES MAP

Ramada Village

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

197228

$1,200611

$1.81

2

CAPITOL CITY

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

197024

$1,200800

$1.50

1

Church Terrace

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

196528

$1,200850

$1.41

4

Porto�no

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

197038

$1,200885

$1.36

3

Marconi Villa

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

196332

$1,200600

$2.00

5

Skyview Villa

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

1973156

$1,180650

$1.82

6

Olive Orchard

Year BuiltUnits

Avg Mkt RentsAvg SF

AVG Rent/PSF

198415

$1,107631

$1.75

S



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F I N A N C I A L A N A LY S I S

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The following section provides detailed information on the operations of the subject property, including rent roll, historic operations and our pro forma underwriting.

OVERVIEW INVESTMENT SUMMARY


County Sacramento

Year Built 1984Total # of Units 15Net Rentable SF (tax record) 9,464# of Acres 0.54Total # of Buildings 2Parking 22Parking Ratio 1.46xOccupancy 100%


UNIT MIX

UNIT TYPE # OF UNITS AVG SF IN-PLACE

RENTMARKET

RENT

1-BEDROOM 1-BATH 7 540 $816 $1,000

2-BEDROOM 1-BATH 8 710 $860 $1,200

TOTAL/AVG 15 631 $12,594 $16,600

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RENT ROLL

F I N A N C I A L A N A LY S I S3024 Howe Ave3024 Howe Ave, Sacramento, CA15 Units

Unit Unit Type Sq Ft* Actual Rent Market Rent

1 2 BR x 1 BA 710 $895 $1,200

2 2 BR x 1 BA 710 $895 $1,200

3 2 BR x 1 BA 710 $945 $1,200

4 2 BR x 1 BA 710 $945 $1,200

5 1 BR x 1 BA 540 $895 $1,000

6 1 BR x 1 BA 540 $695 $1,000

7 1 BR x 1 BA 540 $695 $1,000

8 1 BR x 1 BA 540 $845 $1,000

11 1 BR x 1 BA 540 $990 $1,000

12 1 BR x 1 BA 540 $849 $1,000

13 2 BR x 1 BA 710 $895 $1,200

14 2 BR x 1 BA 710 $895 $1,200

15 2 BR x 1 BA 710 $695 $1,200

16 2 BR x 1 BA 710 $715 $1,200

17 1 BR x 1 BA 540 $745 $1,000AVERAGE 631 $840 $1,107

TOTAL 9,460 $12,594 $16,600*SF has been estimated based on total bldg. Sq. Ft.

RENT

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UNDERWRITING

F I N A N C I A L A N A LY S I S3024 Howe Ave3024 Howe Ave, Sacramento, CA15 Units

ACTUAL PER UNIT PER MONTH ACTUAL PER UNIT PER MONTH

INCOME GROSS POTENTIAL RENT $151,128 % GPR $10,075 $12,594 $199,200 % GPR $13,280 $16,600Less: VACANCY LOSS ($7,556) -5.0% ($504) ($630) ($9,960) -5.0% ($664) ($830) NET RENTAL INCOME $143,572 $9,571 $11,964 $189,240 $12,616 $15,770Plus: OTHER INCOME $1,266 $84 $106 $1,266 $84 $106Plus: UTILITY REIMBURSEMENTS $0 $0 $0 $8,160 $544 $680 TOTAL INCOME $144,838 $9,656 $12,070 $198,666 $13,244 $16,556

EXPENSES$1,875 $125 $156 $1,875 $125 $156

TURNOVER $4,500 $300 $375 $4,500 $300 $375REPAIRS & MAINTENANCE $4,500 $300 $375 $4,500 $300 $375UTILITIES $20,214 $1,348 $1,685 $20,214 $1,348 $1,685LANDSCAPING / GROUNDS $800 $53 $67 $800 $53 $67TOTAL CONTROLLABLE EXPENSES $31,889 $2,126 $2,657 $31,889 $2,126 $2,657MANAGEMENT FEE $5,794 4.0% $386 $483 $7,947 4.0% $530 $662INSURANCE $3,375 $225 $281 $3,375 $225 $281REAL ESTATE TAXES $21,123 1.22% $1,408 $1,760 $21,123 1.22% $1,408 $1,760SPECIAL ASSESSMENTS $510 $34 $42 $510 $34 $42TOTAL OPERATING EXPENSES $62,690 $4,179 $5,224 $64,843 $4,323 $5,404CAPEX / RESERVES $3,750 $250 $313 $3,750 $250 $313TOTAL EXPENSES $66,440 $4,429 $5,537 $68,593 $4,573 $5,716

NOI AFTER RESERVES $78,398 $5,227 $6,533 $130,073 $8,672 $10,839

LIST PRICEPRICE PER UNITCAP. RATEGROSS RENT MULTIPLIER

$1,725,000$115,000

4.5%11.4

PRO FORMA -CURRENT RENTS PRO FORMA -MARKET RENTS

$1,725,000$115,000

7.5%8.7

ADMINISTRATIVE

VALUATION SUMMARY

UNDERWRITINGVALUATION

PRO FORMA -CURRENT RENTS PRO FORMA -MARKET RENTS

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INVESTMENT OPPORTUNITY - PORTFOLIO SALE

In addition to OLIVE ORCHARD at 3024 Howe Ave in Sacramento, ARA Newmark would also like to bring to your attention to another property for sale by the same owner - EDISON COURT at 2223 Edison Ave. The properties are being listed individually, but can be purchased together creating numerous economies of scale to an investor.

EDISON COURT2223 Edison Ave, Sacramento

16 Units Total12 - 1Br x 1BA units & 4 - 2Br x 1BA TH units

OFFERED AT $1,850,000

OLIVE ORCHARD3024 Howe Ave, Sacramento

15 Units Total7 - 1Br x 1BA units & 8 - 2Br x 1BA units

OFFERED AT $1,725,000



R E G I O N A L O V E R V I E W

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SACRAMENTO REGIONAL OVERVIEWLocated approximately 80 miles northeast of the San Francisco Bay Area at the foothills of the Sierra Nevada Mountains, Sacramento is one of the premier markets in the state of California. As the Capitol City, Sacramento is the 25th largest metropolitan area in the United States with a total population in excess of 2.5M. The region has recently emerged as one of the strongest economies in the State of California, offering businesses lower operating costs than the Bay Area, a positive business climate, world class research and educational institutions, and a highly qualified technical workforce. In fact, Sacramento has been one of the fastest growing regions in the state, and posted particularly strong employment numbers in December (gaining nearly 23,000 jobs from a year earlier – a gain of 2.5%). Over the same period, California gained 265,000 jobs, a 1.5% increase.

The presence of many state and federal agencies, the nation’s largest pension fund (CalPERS), and the State Capitol have provided economic stability, while prominent companies like Intel, Apple and HP all have a major presence in the region and are helping revitalize the private sector. Now that regional economic recovery is underway, optimism surrounding the Sacramento rental market has been strong. In fact, the Sacramento MSA is projected to be the #3 multifamily market for rent growth in the US in 2016.

Sacramento features an abundance of recreational opportunities and lifestyle amenities. The region is home to the Sacramento Kings, the Sacramento Rivercats AAA baseball team, Folsom Lake, the American River, and numerous regional parks. Additionally, Sacramento residents are within a few hours’ drive of world-renowned ski resorts in Lake Tahoe, famous wineries in the Napa Valley, and all the lifestyle attractions the San Francisco Bay Area has to offer.

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POCKET

NATOMAS

FLORIN

CITRUS HEIGHTS

ROSEVILLE

ROSEMONT

ELK GROVE

WOODLAND FOLSOM

ARDEN-ARCADE

DAVIS

5

5

50

5

OLIVE ORCHARD

SACRAMENTO

RANCHO CORDOVA

SACRAMENTOINTERNATIONAL

AIRPORT

50

50

5

5

99

99

99

TRANSPORTATIONInterstate 80 – This is the major east-west route in the area, leading west to Sacramento (and I-5) and then to San Francisco. Heading east, I-80 leads to the Sierra Nevada Mountain Range and the Reno Tahoe area.

Highway 50 – Another major east-west route, Highway 50 runs through Folsom and connects Downtown Sacramento to the El Dorado National Forest and South Lake Tahoe.

Interstate 5 – This is the major north-south route running throughout California and intersecting with Sacramento. I-5 provides easy access to downtown Sacramento.

Light Rail – Olive Orchard is located just 10 minutes to the nearest Sacramento Regional Transit stop, which offers bus and light rail service to and from Sacramento seven days a week.

Sacramento International Airport – This airport serves the Northern California region with access to major cities across the U.S. and the world.

Amtrak (Capitol Corridor) – Amtrak Capitol Corridor provides daily service between the Sacramento region and the Bay Area.

27




EXCEPTIONAL SCHOOLSSacramento has an abundance of higher education options throughout the region that meet different needs of the students. American River College and Sacramento City College are two-year institutions that offer associate degrees and serve as feeder institutions to the University of California, Davis. Both the University of California Davis and California State University Sacramento offers bachelors, masters and PhD degrees and programs in a variety of subjects. The distance from Olive Orchard and the number of students at these establishments can be seen below:

• University of California Davis (32,000 students and 24 miles)• California State University, Sacramento

(23,000 students and 4 miles)• Sacramento City College (26,000 students and 8 miles)• American River College (34,502 students and 5 miles)

ARA NEWMARK | CONTACT INFORMATION

ARA-NEWMARK SACRAMENTO980 9th Street., Suite 2500

Sacramento, CA 95814

NATE [email protected]

916.599.6523 License CA: 01467941

MARC ANDENMAT [email protected]

916.835.8844License CA: 01956176

CAMERON COR [email protected]

415.430.1037 License CA: 02049950

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