park terrace & tower arms...• resume and/or business letter indicating recent or current...
TRANSCRIPT
1 OFFERING MEMORANDUM
Park Terrace & Tower Arms1102 Sherman Ave Levelland, TX 79336
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Lisa AndersonDirector of Operations & Marketing(806) [email protected]
Grant Roehm, Realtor | Associate(281) [email protected]
Greg Brownd, CCIM(806) [email protected]
Offering Procedures
Offering Procedures• Letter of Intent• Resume and/or Business Letter Indicating Recent or Current Assets Ownedand Purchased• Transaction References• Banking References• Source of Equity for Acquisition
Property ToursProspective investors are encouraged to visit the subject property prior tosubmitting an offer. Please DO NOT contact the on-site management or staffwithout prior approval. All property showings are by appointment only. Pleasecontact us for more details.
Sales ConditionsInterested prospective investors should be aware that the owner of the propertyis selling the property in as-is, where-is condition with all faults, if any, andwithout representations or warranties of any kind of nature, expressed orimplied, written or oral.
Offer Due DateThe seller will review offers as they are submitted.
CommunicationsAll communications, inquiries and requests, including property tours, should beaddressed to the listing agent.
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Table of Contents
ExEcutivE Summary 4
ProPErty ovErviEw 5
Financial ovErviEw 8
ownEr FinancialS 9
FivE yEar caSh Flow 10
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Executive Summary
Property Name: Park Terrace and Tower ArmsAddress: 1102 Sherman Levelland, TX 79336Number of Units: 114Year Built: 3 Phases Mid 60’s to Mid 80’sLot Size: 7.6 acresBuilding Size: 102,875 SF
PROPERTY HIGHLIGHTS• Located across the street from South Plains College
• High occupancy
• Room to increase rents and implement value add program
• Limited supply in the market
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PROPERTY OVERVIEW
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Property DetailsTax Information Hockley CADYear of Construction Mid 60s to Mid 80s - Built in 3 PhasesUnits 114Parcel Size 7.6 AcresStyle GardenFoundation Concrete SlabFraming WoodExterior Brick, Stucco, Wood Facia and SoffitRoof Pitched Composition Shingles on Park Terrace
Pitched Metal on Tower Arms SouthFlat on Tower Arms North
UtilitiesElectricity (Xcel Energy) Tower Arms North - individually metered, paid by resident
Tower Arms South - individually metered, paid by residentPark Terrace - submetered, owner pays and bills tenant for actual usage
Water and Sewer (City of Levelland) Tower Arms North - Master metered, allocated with RUBS to residentTower Arms South - indivdually metered and paid by resident
Park Terrace - allocated with RUBS to residentOwer uses Meter Tex to allocate utilities
Trash (City of Levelland) Tower Arms North - Allocated to residentTower Arms South - Paid directly to city by resident
Park Terrace - Allocated to resident
Gas (Atmos) The 2 and 3 bedroom units at Park Terrace have gas - tenant pays
MechanicalHVAC Tower Arms North - Through the wall units
Tower Arms South - Individual HVACPark Terrace - Through the wall in 1 BRs, individual HVAC in 2 and 3 BR units
Hot Water Tower Arms North - Individual electricTower Arms South - Individual electric
Park Terrace - Efficiencies and 1 BRs have single gas boiler, 2 and 3 BRs have individual electric units
PersonalManagement Company Owner ManagedLeasing Office On-siteMaintenance On-site
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Tower Arms - North
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Tower Arms - South Park Terrace
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Tower Arms - South Park Terrace
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Park Terrace & Tower Arms | 1102 Sherman, Levelland TX 79336
Property Overview Unit Type No. of Units Avg. SF Asking Rent per Unit Rent/SF
Units 114 Tower Arms North 1x1 28 665 $425 $0.64Stories 2 Tower Arms South 1x1 8 740 $525 $0.71Year Built 3 Phases Mid 60’s to Mid 80’s Tower Arms South 2x2 16 1010 $680 $0.67Utilities RUBS Tower Arms South 3x2.5 16 1311 $750 $0.57
Park Terrace Efficiency 11 409 $385 $0.94Park Terrace 1x1 10 561 $425 $0.76Park Terrace 2x1 6 885 $550 $0.62Park Terrace 2x1 8 1097 $665 $0.61Park Terrace 3x2 8 1362 $750 $0.55Park Terrace 3x2 2 1858 $775 $0.42House 3x2 1 2392 $935 $0.39Totals / Avg. 114 902 $581 $0.64
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FINANCIAL OVERVIEWOwner FinancialsFive Year Cash FlowUnderwriting Notes
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Historic and Proforma Financials
May 2020 T12
May 2020 T6
May 2020 T3 Proforma
Rental IncomeGross Potential Rents $ 794,760 $ 794,760 $ 794,760 $ 794,760 Less: Vacancy $ (53,667) $ (55,915) $ (67,476) $ (67,476)
Effective Rental Income $ 741,093 $ 738,845 $ 727,284 $ 727,284
RUBS $ 71,097 $ 69,534 $ 68,110 68,110 Laundry $ 4,700 $ 4,380 $ 4,069 4,069 Late Fees $ 5 $ $ - Misc. Other Income $ 308 $ 614 $ 814 814
Gross Operating Income $ 817,202 $ 813,373 $ 800,277 $ 800,277
Operating ExpensesAdmin $ 10,498 $ 5,018 $ 5,778 $ 10,498 T12Advertising $ 2,585 $ 2,865 $ 3,131 $ 2,585 T12Maintenance & Repairs $ 118,530 $ 125,128 $ 149,082 $ 79,800 700/unitManagement Fee $ 135,500 $ 137,000 $ 146,000 $ 32,011 adjustedPayroll $ $ $ $ 80,000 adjustedInsurance $ 37,000 $ 37,000 $ 37,000 $ 39,900 adjustedProperty Taxes $ 62,878 $ 62,878 $ 62,878 $ 87,750 adjustedGas $ 7,272 $ 8,925 $ 4,580 $ 7,272 T12Electric - Common $ 33,490 $ 29,134 $ 28,849 $ 33,490 T12Water, Sewer, and Trash $ 51,263 $ 47,335 $ 46,755 $ 51,263 T12Misc. Other Expenses $ 2,426 $ 4,853 $ 8,244 Replacement Reserves $ $ $ $ 34,200 adjusted
Total Operating Expenses $ 461,444 $ 460,136 $ 492,297 $ 458,770
Net Operating Income (NOI) $ 355,758 $ 353,237 $ 307,980 $ 341,507
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Owner Financials
Income May T-3 Annualized % of GPR Per Unit Pro Forma % of GPR Per Unit
Gross Potential Rents $794,760 100% $6,972 $794,760 100% $6,972Less: Vacancy -$67,476 -8.5% -$592 -$67,476 -8.5% -$592Net Rental Income $727,284 91.5% $6,380 $727,284 91.5% $6,380RUBS $68,110 8.6% $597 $68,110 8.6% $597Laundry $4,069 0.5% $36 $4,069 0.5% $36Total Operating Income $800,277 100.7% $7,020 $800,277 100.7% $7,020
Expenses May T12 % of GPR Per Unit Pro Forma % of GPR Per UnitAdmin $10,498 1.3% $150 $10,498 1.3% $92 *Advertising $2,585 0.3% $37 $2,585 0.3% $23 *Landscaping $0 0.0% $0 $0 0.0% $0Maintenance & Repairs $118,530 14.9% $1,693 $79,800 10.0% $700 *Management Fee $135,500 17.0% $1,936 $32,011 4.0% $281 *Payroll $0 0.0% $0 $80,000 10.1% $702Insurance $37,000 4.7% $529 $39,900 5.0% $350 *Property Taxes $62,878 7.9% $898 $87,750 11.0% $770 *Cable & Internet $0 0.0% $0 $0 0.0% $0Gas $7,272 0.9% $104 $7,272 0.9% $64Electric - Common $33,490 4.2% $478 $33,490 4.2% $294Electric - Vacant $0 0.0% $0 $0 0.0% $0Water, Sewer, and Trash $51,263 6.5% $732 $51,263 6.5% $450Misc. Other Expenses $2,426 0.3% $35 $0 0.0% $0Replacement Reserves $0 0.0% $0 $34,200 4.3% $300 *Total Expenses $461,444 58.1% $4,048 $458,770 57.7% $4,024
Net Operating Income $338,834 42.6% $2,972 $341,507 43.0% $2,996
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Five Year Cash Flow
Income May T-3 Annualized Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5
Gross Potential Rents $ 794,760 $ 794,760 $ 818,603 $ 843,161 $ 868,456 $ 894,509 Less: Vacancy $ (67,476) $ (67,476) $ (69,500) $ (71,585) $ (73,733) $ (75,945)Net Rental Income $ 727,284 $ 727,284 $ 749,103 $ 771,576 $ 794,723 $ 818,565 RUBS $ 68,110 $ 68,110 $ 70,153 $ 72,258 $ 74,426 $ 76,659 Laundry $ 4,069 $ 4,069 $ 4,191 $ 4,317 $ 4,446 $ 4,580 Total Operating Income $ 800,277 $ 800,277 $ 824,285 $ 849,014 $ 874,484 $ 900,719
Expenses May T12Admin $ 10,498 $ 10,498 $ 10,708 $ 10,923 $ 11,141 $ 11,364 Advertising $ 2,585 $ 2,585 $ 2,637 $ 2,690 $ 2,744 $ 2,799 Maintenance & Repairs $ 118,530 $ 79,800 $ 81,396 $ 83,024 $ 84,684 $ 86,378 Management Fee $ 135,500 $ 32,011 $ 32,651 $ 33,304 $ 33,970 $ 34,650 Payroll $ - $ 80,000 $ 81,600 $ 83,232 $ 84,897 $ 86,595 Insurance $ 37,000 $ 39,900 $ 40,698 $ 41,512 $ 42,342 $ 43,189 Property Taxes $ 62,878 $ 87,750 $ 89,505 $ 91,295 $ 93,121 $ 94,983 Gas $ 7,272 $ 7,272 $ 7,418 $ 7,566 $ 7,717 $ 7,872 Electric - Common $ 33,490 $ 33,490 $ 34,160 $ 34,843 $ 35,540 $ 36,250 Water, Sewer, and Trash $ 51,263 $ 51,263 $ 52,289 $ 53,334 $ 54,401 $ 55,489 Misc. Other Expenses $ 2,426 $ - $ - $ - $ - $ - Replacement Reserves $ - $ 34,200 $ 34,884 $ 35,582 $ 36,293 $ 37,019 Total Expenses $ 461,444 $ 458,770 $ 467,946 $ 477,305 $ 486,851 $ 496,588
Net Operating Income $ 338,834 $ 341,507 $ 356,340 $ 371,710 $ 387,634 $ 404,131
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Underwriting Notes Current / Actual
Income All Income Items Underwritten Trailing 3 through December 2019Other Income - Underwriting Trailing 3 through December 2019
Expenses All Expenses Underwritten Trailing 12 through Decemer 2019
Pro Forma / Year 1
Income Market Rent - Pro Forma Rents with growth at 3.0% annuallyVacancy/Credit Loss - used Trailing 3 months actualsOther Income - Increased by 3.0% annually
Expenses All Expenses grown by 2.0% annuallyAdmin - Trailing 12 actualsAdvertising - Trailing 12 actualsMaintenance & Repairs- Adjusted to industry standardManagement Fee (4.0%) Payroll - Added $80,000 to cover one full-time manager and one full-time maintenance employeeInsurance - Adjusted to industry standard Real Estate Taxes - Current Mileage Rate of 2.25% times 70% of expected sales priceReplacement Reserves - $300 per Unit
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All materials and information received or derived from KW Commercial its directors, officers, agents, advisors, affiliates and/or any third party sources are provided without representation or warranty as to completeness , veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial per-formance of the property for any party’s intended use or any and all other matters.
Neither KW Commercial its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party’s active conduct of its own due diligence to determine these and other matters of sig-nificance to such party. KW Commercial will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing.
EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE.
Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. KW Commercial makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. KW Commercial does not serve as a financial advisor to any party regarding any proposed transaction.
All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or perfor-mance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions,vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. All properties and services are marketed by Lubbock in compliance with all applicable fair housing and equal opportunity laws.
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