1320 Fair Way – Calistoga, CA12 Unit Multifamily Property with Development Potential

$3.095 MM offering price

Executive Summary

Extensively Remodeled in 2015 this 12 unit 4 building apartment complex is 100% occupied and historically operates at 3% or less vacancy rate. Located in the heart of Napa County wine country, 1320 Fair Way sits under 5 minutes walking distance from every downtown Calistoga amenity. The world famous Silverado Trail, Solage Resort, and the soon to be completed Four Seasons are all less than 1 mile away.

This property is charming, up to date, and in high demand. Tenant diversity is comprised of winery owners, cellar masters, hotel executives, chefs, massage therapists, skilled and unskilled labor. Housing comes at premium for this region, as current housing stock and proposed projects cannot satisfy demand. Given this fact, 1320 Fair Way is unique opportunity to be in the path of progress in one of the regions fastest growing destinations for tourists and permanent housing for local residents.

Included with this purchase are plans to build two new duplexes on site. The build has been approved by council and permits are ready pending an approved bid for underground improvements. Zoned for up to 15 units, by combining two the studios into a one bedroom this property will see a significant jump in rents with the added units. Market rate rent comparables suggest $2,300-$2,500 for each two bedroom 2 bath unit. Although by itself with the additional units this property is strong addition to any investors portfolio, this unique opportunity to add units has tremendous upside.

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Executive Summary

Description Specification

Building Size (GLA) 23,225 sq. ft.

Occupancy 100%

Units 12

Walkscore 83

Year Built 1955

Year Renovated 2015

Stories 1

Acquisition Price $3,095,000

Price Per Unit $257k

Cap Rate 5.0%

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Description Specification

Total Acquisition Price $3,095,000

Year 1 NOI $126,474

Development Costs $1,200,000

Total Project Budget $4,295,000

Stabilized NOI $295,466

Stabilized Valuation $5,909,000

Stabilized Yield 6.8%%

Property Location Highlights

The subject property is located near the middle of Calistoga, which provides easywalkability to downtown Calistoga and a number of wineries, restaurants, and otherforms of entertainment and employment. With high barriers to entry driven by thetown’s historic status this existing multifamily property represents an unique opportunityto acquire a desirable clash flowing asset with upside potential in an affluent market.

Other Property Highlights

• High barrier to entry market eliminates the threat of new supply making this an ideal long term investment

• Ample parking, including parking spaces for new units, meets tenant demand

• Extremely limited inventory and transaction history within Calistoga and Napa County

• Current ownership has already secured drawings for additional units and the property could be expanded in as little as 12 months

• Prime location just west of Lincoln Ave places the property within walking distance of local retail amenities and employers

• Recently completed value add improvements demonstrate the demand for highly quality housing in Calistoga

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Area Overview

Calistoga, CA

Calistoga is a city of approximately 5,100 people located at the northern end of NapaCounty, approximately 54 miles north of San Francisco and 60 miles west of Sacramento.The city is a major tourist draw in wine country as it aims to create a more authenticwine country experience thanks to its ban on franchised restaurants and other nationalchains.

Calistoga is still a 1 stoplight town, but it has more wineries, spas and hot springs thanone can mention. Its small town feel with an abundance of hiking, relaxing and romanticspas and restaurants, and world class wineries embroil it as eclectic and overwhelminglycharming. What once was seen as a “must see stop” in the Napa Valley, Calistoga nowstands on its own as a “must stay destination.” The growth in tourism and hospitality, aswell as the production of world class wines, are creating jobs and industry, but housinghas not followed suit. A major housing shortage exists in this region and Calistoga is noexception. Local hotels, spas and wineries bus/shuttle employees in from neighboringcommunities to full employment needs.

The major employers in Calistoga include: Solange Resort, Calistoga School District,Indian Springs Calistoga Resort, and Calistoga Spa Hot Springs. The largest of the nearbyvineyards is Sterling Vineyards. Calistoga was named a “Distinctive Destination” by theNational Trust for Historic Preservation and tourism continues to be a major driver ofeconomic growth.

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Demographics

• Napa County is one of the most affluent communities in the US and housingprices greatly exceed both the state and national average

• Population growth, in Napa County and Calistoga, is below the national averagemainly due to lack of developable land, NIMBY pushback on proposed newdevelopments, and expensive land prices

• The affluent population of Calistoga and Napa County create favorable demandfactors for renovated multifamily units with contemporary finishes

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1 Mile 3 Mile 5 Mile

2018 Population 5,211 6,244 7,344

2023 Population 5,204 6,220 7,312

Average Age 41 42 43

Total Households 2,040 2,479 2,962

Median Household Income $57,259 $62,000 $66,276

Avg. Household Size 2.5 2.5 2.4

Median Home Value $618,481 $658,928 $690,918

Median Year Built 1972 1972 1972

Macro Location

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13 miles to Santa Rosa

57 miles to San Francisco

60 miles to San Sacramento

Micro Location

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Aerial Map

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Property Exterior Pictures

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Property Interior Pictures

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Rent Roll

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Unit Rent Misc. Charges Total Monthly Income Total Annual Income Move In Date Lease End Date

132001 $1,650 $67 $1,717 $20,610 7/9/2018 6/30/2019

132003 $1,600 $67 $1,667 $20,010 7/8/2017 3/31/2018

132004 $1,450 $67 $1,517 $18,210 11/4/2017 10/31/2019

132005 $1,750 $67 $1,817 $21,810 9/1/2018 8/31/2019

132006 $1,600 $67 $1,667 $20,010 10/14/2015 9/30/2019

132007 $1,310 $67 $1,377 $16,530 5/5/2018 4/30/2019

132008 $1,350 $0 $1,350 $16,200 11/9/2018 10/31/2019

132009 $1,250 $67 $1,317 $15,810 2/16/2018 1/31/2019

132010 $1,200 $67 $1,267 $15,210 8/4/2018 8/31/2018

132011 $1,250 $67 $1,317 $15,810 9/29/2018 8/31/2019

132012 $1,200 $37 $1,237 $14,850 9/8/2018 9/30/2019

132013 $2,300 $0 $2,300 $27,600 11/3/2018 10/31/2019

Total $17,910 $645 $18,555 $222,659

Historical Operating Expenses

13Fixed rate water and sewer passed through to tenants starting in July 2018. 2019 owner expenses should be reduced to approximately $3,000.

Opex 2018 Total Per Unit

Leasing Commissions $2,216 $185

Ext Repairs/Maintenance $10,922 $910

Int Repairs/Maintenance $1,220 $102

Clean Up and Hauling $0 $0

Appliance Repairs $2,283 $190

Appliance Replacement $0 $0

Management Fee $12,368 $1,031

Cleaning $86 $7

Plumbing $2,182 $182

Heating/AC $0 $0

Grounds Maintenance $2,469 $206

Security Alarm $1,936 $161

Interior Painting $1,474 $123

PGE $1,966 $164

Water and sewer $14,715 $1,226

Trash $2,208 $184

Property Taxes $35,064 $2,922

Legal & Accounting $1,600 $133

Insurance $4,776 $398

Total $97,485 $8,124

In Place & Stabilized Proforma

14*Stabilized scenarios assumes 4 additional units will be built at a cost of $300k per unit and generate a monthly rent of $2,200 and market rent for existing units will increase to $2,000

In-Place Proforma Stabilized Proforma*

Rental Income $222,659 Rental Income $342,000

Other Income $1,300 Other Income $1,300

Total Income $223,959 Total Income $343,300

Leasing Commissions $2,216 Leasing Commissions $2,260

Ext Repairs/Maintenance $10,922 Ext Repairs/Maintenance $11,140

Int Repairs/Maintenance $1,220 Int Repairs/Maintenance $1,245

Clean Up and Hauling $0 Clean Up and Hauling $0

Appliance Repairs $2,283 Appliance Repairs $2,328

Appliance Replacement $0 Appliance Replacement $0

Management Fee $12,368 Management Fee $12,615

Cleaning $86 Cleaning $87

Plumbing $2,182 Plumbing $2,225

Heating/AC $0 Heating/AC $0

Grounds Maintenance $2,469 Grounds Maintenance $2,518

Security Alarm $1,936 Security Alarm $1,975

Interior Painting $1,474 Interior Painting $1,504

PGE $1,966 PGE $2,006

Water and sewer $14,715 Water and sewer $3,000

Trash $2,208 Trash $2,252

Property Taxes $35,064 Property Taxes $35,765

Legal & Accounting $1,600 Legal & Accounting $1,632

Insurance $4,776 Insurance $4,872

Total Operating Expenses $97,485 Total Operating Expenses $87,425

NOI $126,474 NOI $255,875

Comparable Rental Properties

• There is strong demand for high quality rental housing in the Napa County MSAand tenants have demonstrated a willingness to pay a premium for upgradedunits

• Rent growth at the subject property is expected to remain strong as there is nosupply scheduled to be delivered in the property’s submarket

• The potential to develop additional units on site should generate an attractivereturn, command premium pricing, and lease quickly due to strong captivedemand

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Property Name Address City Year Built Units Occupancy Avg. Sq. Ft. Rent

1320 Fair Way (Subject) 1320 Fair Way Calistoga 1955 12 100% 1,935 $1,493

Wineridge Apartments 1714 Washington Street Calistoga 1986 32 94% 906 $1,275

1402 Washington Street 1402 Washington Street Calistoga 1990 10 100% 1,200 $1,399

1001 Mission 1001 Mission Blvd Santa Rosa 1977 26 96% 985 $1,792

932 Brown 932 Brown Street Saint Helena 2002 4 100% 935 $2,715

1327 Monte Vista 1327 Monte Vista Ave Saint Helena 1968 6 100% 1,020 $1,586

Comparable Sales

• 1320 Fair Way’s asking price of $257k per unit represents an attractive pricepoint when compared to recent nearby sales

• The lack of new supply and captive demand for multifamily units has drivenstrong exit prices

• The high barriers to entry and lack of new supply bodes well for future propertylevel appreciation

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Property Name Address Year Built Units Sale Price Price Per Unit Sale Date

Parkwood Apartments 6899 Montecito Blvd 1978 56 $15,000,000 $267,857 Jan-19

Market Place Apartments 2315 Lomitas Ave 2004 28 $7,115,000 $254,107 Apr-18

Oaktree Apartments 16914 Sonoma Hwy 1987 18 $4,500,000 $250,000 Jul-17

Plaza Del Sol Townhomes 736 2nd Street 1973 33 $8,375,000 $253,788 Jan-18

Cypress Apartments 8564 Cypress Ave 1969 17 $3,800,000 $223,529 Jul-17

Madrone Apartments 15411 Marty Dr 1963 42 $9,950,000 $236,905 Aug-18

Development Rendering

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Development Plan

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