A 18-Unit Value-Add Multifamily Investment Opportunity in Sacramento, California
6240 Martin Luther King Jr Blvd
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.
SACRAMENTO OFFICE980 9th Street
Suite 2500Sacramento, CA 95814
916.920.4400
SAN FRANCISCO OFFICE655 Montgomery Street
Suite 1705San Francisco, CA 94111
415.354.0777
LOS ANGELES OFFICE1875 Century Park East
Suite 1380Los Angeles, CA 90067
310.201.2060
MARC [email protected]
916.835.8844License CA: 01956176
NATE [email protected]
916.599.6523License CA: 01467941
CAMERON [email protected]
415.430.1037License CA: 02049950
6240 Martin Luther King Jr Blvd6240 Martin Luther King Jr Blvd
94
1113
TABLE OF CONTENTS
EXECUTIVE SUMMARY
PROPERTY OVERVIEW
COMPARABLE ANALYSIS
FINANCIAL ANALYSIS
REGIONAL OVERVIEW
6240 Martin Luther King Jr Blvd
17
4
6240 Martin Luther King Jr Blvd
MLK Jr BLVD
MLK Jr BLVD
MLK Jr BLVD
MLK Jr BLVD
45th AVE45th AVE45th AVE45th AVE
EXECUTIVE SUMMARY 6240 Martin Luther King Jr Blvd
5
6240 Martin Luther King Jr Blvd
THE OFFERINGARA Newmark, as the exclusive advisor, is pleased to present the opportunity to acquire 6240 Martin Luther King Jr Blvd, a 18-unit multifamily community located in Sacramento, CA.
PRICE$1,600,000
PRICE PER UNIT$88,889
PRICE PER SF$138
CAP RATE (MARKET) 7.5%
GRM (MARKET) 8.5
TERMS OF SALEDelivered free and clear
OFFER DATETBD
INVESTMENT SUMMARY
Address6240 Martin Luther King Jr Blvd
Sacramento, CA, 95824
County Sacramento
Year Built 1959
Total # of Units 18
Net Rentable SF* 11,560
# of Acres 0.49
Density 36.7
Total # of Buildings 2
Parking Spaces 18
Occupancy 100%
EXECUTIVE SUMMARY
UNIT MIX
UNIT TYPE # OF UNITS AVG SFIN-PLACE
RENTMARKET
RENT
1X1 14 620 $654 $850
2X1 4 720 $756 $950
TOTAL 18 11,560 $12,080 $15,700
*per tax records
6
6240 Martin Luther King Jr Blvd
Elverta Rd
Pfe Rd
Baseline Rd
Cirby Way
Oak Ave
Broadway14th Ave
Fruitridge Rd
47th Ave
Florin Rd
Elder Creek Rd
Gerber Rd
County Road 22
County Road 27
County Road 29
Tremont Rd
W Elverta Rd
King Rd
San Juan Rd
Riego Rd
Howsley Rd
Grant Line Rd
Bradshaw Rd
Excelsior Rd
Mace Blvd
F St
West St
Main AvedR
notr
aBLaird Rd
evA lairtsudnI
dR tnemyddiF
Watt Ave
Fulton AveHowe Ave
24th St
Power Line Rd
Folsom Blvd
Roseville
Rd
Antelope Rd
Taylor Rd
Old River Rd
Scott Rd
White Rock Rd
80
80
80
5
65
16
99113
113
70
50
80
Latrobe Rd
Jackson Rd
16
50
49
Green Valley Rd
S Shin
gle Rd
Dillard Rd
Grant Li
ne Rd
Elk Grove Blvd
Jeffer
son B
lvd
84
5
West SacramentoWest Sacramento
WOODLANDWOODLAND
DAVISDAVIS
NatomasNatomas
Florin/FruitridgeFlorin/Fruitridge
Elk GroveElk Grove
Rancho CordovaRancho Cordova
ArdenArden
Fair OaksFair Oaks
FolsomFolsom
RosevilleRoseville
DowntownDowntown
Greenhaven/Pocket
Greenhaven/Pocket
El Dorado Hills/Cameron Park
El Dorado Hills/Cameron Park
RocklinRocklin
Del PasoHeightsDel PasoHeights
CitrusHeightsCitrus
Heights
SacramentoSacramento
CarmichaelCarmichael
6240 MLK Jr BLVD
EXECUTIVE SUMMARY
7
6240 Martin Luther King Jr Blvd EXECUTIVE SUMMARY
NN
FRANKLIN BLVD
MLK Jr
BLVD
6240 MLK JrBlvd
Bowling GreenElementary School
Fern BaconMiddle School
Luther BurbankHigh School
SF SupermarketSacramento
8
6240 Martin Luther King Jr Blvd
Massive Value-Add OpportunityThe current average in-place rent at 6240 MLK Jr Blvd is $661 while the rent comparables are achieving $850 and $950 for 1- and 2-bedroom units respectively. By renovating the interior units, a new investor can greatly increase the income and achieve favorable returns making 6240 MLK Jr Blvd a superb investment opportunity with incredible cash-flow.
Proximity to EmployersThe Executive Airport is located 3.6 miles from 6240 MLK Jr Blvd which supports numerous jobs in the area. In addition, as of January 2015, Macy’s houses its newest goods fulfillment center at the Capital Commerce Center, the former location of a Campbell’s Soup Factory. Macy’s plans to invest $10.5M in capital improvements in the center, which will provide 175 full-time equivalent jobs.
Proximity to Retail2.8 miles to Florin Rd which is a massive retail center anchored by a Walmart Supercenter, Home Depot, and Sears; and 7 miles to Arden Fair Mall, a 1.1M SF mall anchored by Sears, Macy’s, Apple, Nordstrom, and Best Buy.
Proximity to Education3.7 miles to Sacramento City College with over 26,000 students. Mendocino Palms is also just 7 miles to Cal State Sacramento with 29,000 students.
State of the Sacramento Multifamily Market“Sacramento’s rent went up 11 percent compared to the same time last year. This is significantly more than California’s rent growth of 6.5 percent over the past 12 months” - Apartment List
“This confirms what we all know and are feeling in this city – that Sacramento is hot, and there is a lot interest in growing jobs, and building a robust economy. It is a signpost and a signal that Sacramento is seen in a different light.” - Mayor Darrell Steinberg on the city hiring 24 workers to handle Sacramento’s record-setting building boom
INVESTMENT HIGHLIGHTS
EXECUTIVE SUMMARY
6240 Martin Luther King Jr Blvd
SPRING MEADOWSA P A R T M E N T H O M E S
SPRING MEADOWSA P A R T M E N T H O M E S
9
PROPERTY OVERVIEW
MLK Jr BLVDMLK Jr BLVDMLK Jr BLVDMLK Jr BLVD
45th
AVE
45th
AVE
45th
AVE
45th
AVE
6240 Martin Luther King Jr Blvd
10
6240 Martin Luther King Jr Blvd
UTILITIESPAID BY METHOD SUPPLIED BY
ELECTRIC Tenant Direct SMUD
GAS Tenant Direct PG&E
WATER/SEWER
Owner N/A Sacramento County
TRASH Owner N/A Sacramento County
PROPERTY OVERVIEW
PROPERTY SUMMARY
Address6240 Martin Luther King Jr Blvd
Sacramento, CA, 95824
County Sacramento
Year Built 1959
Total # of Units 18
Net Rentable SF 11,560
Parcel # 252-0141-043
# of Acres 0.49
Density 36.7
Total # of Buildings 2
Open Parking 18
Parking Ratio 1:1
Framing Wood
Roof Pitched Composite Shingle
Paving Asphalt
Plumbing Galvanized
Electrical Aluminum
Heating/Cooling Gas heat wall unit, electric wall A/C
UNIT MIX
UNIT TYPE # OF UNITS AVG SFIN-PLACE
RENTMARKET
RENT
1X1 14 620 $654 $850
2X1 4 720 $756 $950
TOTAL 18 11,560 $12,080 $15,700
11
6240 Martin Luther King Jr Blvd RENT SURVEY COMPARABLES
2304 Grant St2304 Grant St, Berkeley , CA11 Units
RENT COMPARABLES
Comp # Location Unit Type Rent Notes1 2303 24th Ave 1 BR x 1 BA $850 Closer to Land Park, unrenovated unit.2 5207 Thurman Way 1 BR x 1 BA $825 Tiled flooring, granite counters, new cabinets, 600 sq ft.3 3908 43rd Ave 1 BR x 1 BA $870 Granite counters, vinyl flooring, new cabinets. 675 sq ft.4 5107 Thurman Way 1 BR x 1 BA $895 Halfplex wtith detached garage and own yard. 600 sq ft.
Comp Totals/Avgs. 1 BR x 1 BA $860Subject 6240 MLK 1 BR x 1 BA $850Comp Totals/Avgs.Subject 6240 MLK 2 BR x 1 BA $950
RENT COMPARABLES
4
7
S 1 2 3
65
8
4
1 2 3 4
12
6240 Martin Luther King Jr Blvd RENT COMPARABLES MAP
6240 MLK BLVD
2303 24TH AVE
N HUNTER5207 THURMAN WAY
5107 THURMAN WAY
708 SUTTER3908 43RD AVE
6240 Martin Luther King Jr Blvd
NN
SacramentoCity College
William LandGolf Course
Downtown Sacramento
UC DavisMedical Center
47th AVE
FRAN
KLIN
BLV
D
MLK
Jr B
LVD
6240 MLK JrBlvd
Christian BrothersHigh School
Sacramento Executive Airport
SPRING MEADOWSA P A R T M E N T H O M E S
SPRING MEADOWSA P A R T M E N T H O M E SFINANCIAL ANALYSIS 6240 Martin Luther King Jr Blvd
14
6240 Martin Luther King Jr Blvd
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
Price $1,600,000
Address6240 Martin Luther King Jr Blvd
Sacramento, CA, 95824
County Sacramento
Year Built 1959
Total # of Units 18
Net Rentable SF 11,560
# of Acres 0.49
Density 36.7
Total # of Buildings 2
Parking Spaces 18
Parking Ratio 1:1
Occupancy 100%
FINANCIAL ANALYSIS
UNIT MIX
UNIT TYPE # OF UNITS AVG SFIN-PLACE
RENTMARKET
RENT
1X1 14 620 $654 $850
2X1 4 720 $756 $950
TOTAL 18 11,560 $12,080 $15,700
15
6240 Martin Luther King Jr Blvd
RENT ROLL
FINANCIAL ANALYSIS6240 Martin Luther King Jr Blvd6240 Martin Luther King Jr Blvd, Sacramento, CA18 Units
Unit Unit Type Sq Ft* Market Rent Actual Rent Status
1 2x1 720 $950 $700 OCCUPIED2 2x1 720 $950 MANAGER3 1x1 620 $850 $695 OCCUPIED4 1x1 620 $850 $675 OCCUPIED5 1x1 620 $850 $675 OCCUPIED6 1x1 620 $850 $625 OCCUPIED7 1x1 620 $850 $645 OCCUPIED8 1x1 620 $850 $695 OCCUPIED9 1x1 620 $850 $625 OCCUPIED10 2x1 720 $950 $650 OCCUPIED11 2x1 720 $950 $725 OCCUPIED12 1x1 620 $850 $625 OCCUPIED13 1x1 620 $850 $645 OCCUPIED14 1x1 620 $850 $675 OCCUPIED15 1x1 620 $850 $625 OCCUPIED16 1x1 620 $850 $675 OCCUPIED17 1x1 620 $850 $675 OCCUPIED18 1x1 620 $850 $600 OCCUPIED
AVERAGE 642 $872 $661TOTAL 11,560 $15,700 $11,230
*In-Place Rents is based on the actual rents plus vacant units at market rents.
16
6240 Martin Luther King Jr Blvd
UNDERWRITING
FINANCIAL ANALYSIS
6240 Martin Luther King Jr Blvd6240 Martin Luther King Jr Blvd, Sacramento, CA18 Units
ACTUAL PER UNIT PER MONTH ACTUAL PER UNIT PER MONTH
INCOME GROSS POTENTIAL RENT $146,160 % GPR $8,120 $12,180 $188,400 % GPR $10,467 $15,700Less: VACANCY LOSS ($7,308) -5.0% ($406) ($609) ($9,420) -5.0% ($523) ($785) NET RENTAL INCOME $138,852 $7,714 $11,571 $178,980 $9,943 $14,915Plus: OTHER INCOME $2,640 $147 $220 $2,640 $147 $220 TOTAL INCOME $141,492 $7,861 $11,791 $181,620 $10,090 $15,135
EXPENSESPAYROLL $3,600 $200 $300 $3,600 $200 $300
$1,800 $100 $150 $1,800 $100 $150TURNOVER $4,500 $250 $375 $4,500 $250 $375REPAIRS $4,500 $250 $375 $4,500 $250 $375UTILITIES $15,000 $833 $1,250 $15,000 $833 $1,250LANDSCAPING / GROUNDS $1,800 $100 $150 $1,800 $100 $150CONTRACT SERVICES / OTHER $2,700 $150 $225 $2,700 $150 $225TOTAL CONTROLLABLE EXPENSES $33,900 $1,883 $2,825 $33,900 $1,883 $2,825INSURANCE $4,500 $250 $375 $4,500 $250 $375REAL ESTATE TAXES $18,184 $1,010 $1,515 $18,184 $1,010 $1,515SPECIAL ASSESSMENTS $1,549 $86 $129 $1,549 $86 $129TOTAL OPERATING EXPENSES $58,133 $3,230 $4,844 $58,133 $3,230 $4,844CAPEX / RESERVES $3,600 $200 $300 $3,600 $200 $300TOTAL EXPENSES $61,733 $3,430 $5,144 $61,733 $3,430 $5,144
NOI AFTER RESERVES $79,759 $4,431 $6,647 $119,887 $6,660 $9,991
LIST PRICEPRICE PER UNITPRICE PER S.F.CAP. RATEGROSS RENT MULTIPLIER
$936,000 59% 4.75% ($59,164.05) $936,000 59% 4.75% ($59,164.05)$664,000 3.10% $20,594.95 $664,000 9.15% $60,722.95
1.35 2.03
UNDERWRITINGVALUATION
PRO FORMA - MARKET RENTS
PRO FORMA - CURRENT RENTS PRO FORMA - MARKET RENTS
ADMINISTRATIVE
VALUATION SUMMARY PRO FORMA - CURRENT RENTS
$1,600,000 $1,600,000
5.0% 7.5%10.9 8.5
$88,889 $88,889$138 $138
17
6240 Martin Luther King Jr BlvdREGIONAL OVERVIEW 6240 Martin Luther King Jr Blvd
18
6240 Martin Luther King Jr Blvd
SACRAMENTO REGIONAL OVERVIEWLocated approximately 80 miles northeast of the San Francisco Bay Area at the foothills of the Sierra Nevada Mountains, Sacramento is the premier secondary market in the state of California. As the Capital 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 strong employment numbers in 2017 (gaining nearly 12,700 jobs from a year earlier – a gain of 1.32%). Over the same period, California gained 265,000 jobs, a 1.5% increase. The Sacramento MSA has reached its lowest unemployment rate since the Great Recession after dropping 1.5% since last quarter. The Sacramento unemployment rate now stands at 3.7%, .9% below the California Preliminary U-3 Unemployment number reported by the Bureau of Labor Statistics for November 2017.
The presence of many state and federal agencies, the nation’s largest pension fund (CalPERS), and the State Capital 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 strength is evident, optimism surrounding the Sacramento rental market has been strong.
REGIONAL OVERVIEW
Few cities in the US are experiencing negative rent growth these days, but the Sacramento MSA stands above them all with the highest year-over-year rent growth of 7.70%.
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.
19
6240 Martin Luther King Jr Blvd
Elverta Rd
Pfe Rd
Baseline Rd
Cirby Way
Oak Ave
Broadway14th Ave
Fruitridge Rd
47th Ave
Florin Rd
Elder Creek Rd
Gerber Rd
County Road 22
County Road 27
County Road 29
Tremont Rd
W Elverta Rd
King Rd
San Juan Rd
Riego Rd
Howsley Rd
Grant Line Rd
Bradshaw Rd
Excelsior Rd
Mace Blvd
F St
West St
Main AvedR
notr
aBLaird Rd
evA lairtsudnI
dR tnemyddiF
Watt Ave
Fulton AveHowe Ave
24th St
Power Line Rd
Folsom Blvd
Roseville
Rd
Antelope Rd
Taylor Rd
Old River Rd
Scott Rd
White Rock Rd
80
80
80
5
65
16
99113
113
70
50
80
Latrobe Rd
Jackson Rd
16
50
49
Green Valley Rd
S Shin
gle Rd
Dillard Rd
Grant Li
ne Rd
Elk Grove Blvd
Jeffer
son B
lvd
84
5
West SacramentoWest Sacramento
WOODLANDWOODLAND
DAVISDAVIS
NatomasNatomas
Florin/FruitridgeFlorin/Fruitridge
Elk GroveElk Grove
Rancho CordovaRancho Cordova
ArdenArden
Fair OaksFair Oaks
FolsomFolsom
RosevilleRoseville
DowntownDowntown
Greenhaven/Pocket
Greenhaven/Pocket
El Dorado Hills/Cameron Park
El Dorado Hills/Cameron Park
RocklinRocklin
Del PasoHeightsDel PasoHeights
CitrusHeightsCitrus
Heights
SacramentoSacramento
CarmichaelCarmichael
INTELCORPORATION
State of California73,243 Employees
Multiple Locations
Kaiser Permanente5,421 Employees
Wells Fargo2,190 Employees
Raley’s3,289 Employees
EDS1,643 Employees
UC Davis Health System9,905 Employees
Sutter Health7,352 Employees
Health Net Inc.2,512 Employees
Intel Corp.6,000 Employees
Dignity Health6,292 Employees
PG&E2,169 Employees
Vision Service Plan Inc.2,382 Employees Franklin Templeton Investments
1,000 Employees
PRIDE Industries Inc.2,841 Employees
Hewlett-Packard Co.3,000 Employees
Aerojet1,710 Employees
DST Output1,300 Employees
Marshall Medical Center1,040 Employees
Cache Creek Casino Resort2,460 Employees
Eskaton1,054 Employees
Teichert2,500 Employees
Blue Shield of California1,705 Employees
Apple2,500 Employees
Westfield Galleria at Roseville4,000 Employees
EMPLOYER MAP
REGIONAL OVERVIEW
20
6240 Martin Luther King Jr Blvd
Elverta Rd
Pfe Rd
Baseline Rd
Cirby Way
Oak Ave
Broadway14th Ave
Fruitridge Rd
47th Ave
Florin Rd
Elder Creek Rd
Gerber Rd
County Road 22
County Road 27
County Road 29
Tremont Rd
W Elverta Rd
King Rd
San Juan Rd
Riego Rd
Howsley Rd
Grant Line Rd
Bradshaw Rd
Excelsior Rd
Mace Blvd
F St
West St
Main AvedR
notr
aBLaird Rd
evA lairtsudnI
dR tnemyddiF
Watt Ave
Fulton AveHowe Ave
24th St
Power Line Rd
Folsom Blvd
Roseville
Rd
Antelope Rd
Taylor Rd
Old River Rd
Scott Rd
White Rock Rd
80
80
80
5
65
16
99113
113
70
50
80
Latrobe Rd
Jackson Rd
16
50
49
Green Valley Rd
S Shin
gle Rd
Dillard Rd
Grant Li
ne Rd
Elk Grove Blvd
Jeffer
son B
lvd
84
5
West SacramentoWest Sacramento
WOODLANDWOODLAND
DAVISDAVIS
NatomasNatomas
Florin/FruitridgeFlorin/Fruitridge
Elk GroveElk Grove
Rancho CordovaRancho Cordova
ArdenArden
Fair OaksFair Oaks
FolsomFolsom
RosevilleRoseville
DowntownDowntown
Greenhaven/Pocket
Greenhaven/Pocket
El Dorado Hills/Cameron Park
El Dorado Hills/Cameron Park
RocklinRocklin
Del PasoHeightsDel PasoHeights
CitrusHeightsCitrus
Heights
SacramentoSacramento
CarmichaelCarmichael
6240 MLK Jr BLVD
TRANSPORTATION
Interstate 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 – 6240 MLK Jr Blvd is located just 5 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.
REGIONAL OVERVIEW
21
6240 Martin Luther King Jr Blvd
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 6240 MLK Jr. Blvd and the number of students at these establishments can be seen below:
• University of California Davis (32,000 students and 19 miles)• California State University, Sacramento (23,000 students and 5 miles)• Sacramento City College (26,000 students and 4 miles)• American River College (34,502 students and 14 miles)
REGIONAL OVERVIEW
ARA NEWMARK | CONTACT INFORMATION
SACRAMENTO OFFICE980 9th Street
Suite 2500Sacramento, CA 95814
916.920.4400
SAN FRANCISCO OFFICE655 Montgomery Street
Suite 1705San Francisco, CA 94111
415.354.0777
LOS ANGELES OFFICE1875 Century Park East
Suite 1380Los Angeles, CA 90067
310.201.2060
MARC [email protected]
916.835.8844License CA: 01956176
NATE [email protected]
916.599.6523License CA: 01467941
CAMERON [email protected]
415.430.1037License CA: 02049950