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5350 2ND AVENUE>>>A 24-UNIT MIXED USE OPPOR TUNIT Y IN SOUTH LOS ANGELES
N O N - E N D O R S E M E N T & D I S C L A I M E R N OT I C E
CO N F I D E N T I A L I T Y & D I S C L A I M E RThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Marcus & Millichap. All rights reserved.
N O N - E N D O R S E M E N T N OT I C EMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
O F F E R I N G M E M O R A N D U M
5350 2 N D AV E N U E, LO S A N G E L E S , C A 90043
E XC LU S I V E LY L I S T E D BY
WWW.NEEMAAHADIAN.COM
NEEMA AHADIANSenior Vice President InvestmentsWest Los AngelesOffice [email protected] CA BRE# 01346750
PROPERTY DESCRIPTION
I N V E S T M E N T O V E R V I E W
Marcus & Millichap is pleased to present 5350 2nd Avenue, a twenty-four unit mixed use building located in South Los Angeles. With a current CAP rate of 6.40% and GRM of 9.07, this offering gives an investor the unique opportunity to acquire an asset in a densely populated Los Angeles neighborhood with strong cash flow.
Built in 1922, 5350 2nd Avenue consists of seventeen residential units on the second floor. Each of those units are SRO units. The bottom floor consists of three one bedrooms and four retail units. There is retail potential for all units on the ground floor, allowing an investor to increase rents for a retail use that will pay more than a residential tenant.
The Subject Property is located in the Park Mesa Heights neighborhood, with population growth of 1.60% year-over-year as well as employment opportunities within walking distance. This opportunity provides an investor the chance to own a low maintenance asset with tremendous current cash flow.
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I N V E S T M E N T H I G H L I G H T S ► THE OPPORTUNITY: 5350 2nd Ave is a 24 unit
mixed-use investment opportunity located in the
densely populated Park Mesa Heights neighborhood
of Los Angeles, between Crenshaw Blvd & S Western
Ave
► RETURN ON INVESTMENT: The subject property
is factoring a 10% vacancy and offers an investor
strong returns with a current CAP rate of 6.40% and
GRM of 9.07
► UNIT MIX: Great unit mix consisting of 17 single
room occupancy units, three one bedroom units,
and four retail units
► STRONG DEMOGRAPHICS: Population of over
400,000 people within a 3-mile radius of the subject
property, continued employment growth with over
375,000 jobs within 5 miles
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P R O P E R T Y D E TA I L S
5350 2ND AVENUE, LOS ANGELES, CA 90043
APN 5005-004-012
Zoning C2-1VL-CPIO
Number of Units 24*
Year Built 1922
Gross Square Feet 6,394 SF
Lot Size 3,577 SF
Ownership Fee Simple
UTILITIES
Water Master Metered
Gas Master Metered
Electric Master Metered
CONSTRUCTION
Foundation Concrete
Framing Wood Frame
Exterior Stucco
Roof Asphalt
*Buyer to verify, no certificate of occupancy on record
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A R E A O V E R V I E W
Los Angeles is the second-most populous city in the United States, after New York City, and the most populous city in the Western United States. With an estimated population of four million, Los Angeles is the largest and most populous city in the state of California and the cultural, financial, and commercial center of Southern California.
Nicknamed the “City of Angels” partly because of its name’s Spanish meaning, Los Angeles is known for its Mediterranean climate, ethnic diversity, and sprawling metropolis. The city is also one of the most substantial economic engines within the nation, with a diverse economy in a broad range of professional and cultural fields. Los Angeles is also famous as the home of Hollywood, a major center of the world entertainment industry. A global city, it has been ranked 6th in the Global Cities Index and 9th in the Global Economic Power Index. The Los Angeles combined statistical area also has a gross metropolitan product of $831 billion (as of 2008), making it the third-largest in the world, after the Greater Tokyo and New York metropolitan areas.
Crenshaw High SchoolVan Ness Recreation Center
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5350 2nd Avenue
A R E A O V E R V I E W
Los AngelesContinued population growth in the immediate area of estimated 1.60% year-over-year since the 2010 census
Current average household income within a 3 mile radius of the Subject Property is $53,387
Close proximity to Downtown Los Angeles and public transportation
Consistent employment growth in the area with jobs exceeding 379,000 within a five mile radius
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PRICING & FINANCIALS
UNIT UNIT TYPE CURRENT RENT PRO FORMA RENT
1 SRO $960 $1,150
2 SRO $988 $1,150
3 SRO $988 $1,150
4 SRO $988 $1,150
5 SRO $988 $1,150
6 SRO $988 $1,150
7 SRO $1,328 $1,150
8 SRO $988 $1,150
9 SRO $1,124 $1,150
10 SRO $988 $1,150
11 SRO $1,015 $1,150
12 SRO $988 $1,150
13 SRO $998 $1,150
14 SRO $988 $1,150
15 SRO $988 $1,150
16 SRO $988 $1,150
17 SRO $988 $1,150
18 1 BD/1 BA $1,800 $1,800
19 1 BD/1 BA $1,500 $1,800
20 1 BD/1 BA $1,800 $1,800
21 Retail* $1,900 $1,900 Medical Marijuana
22 Retail* $1,900 $1,900 Medical Marijuana
23 Retail $2,000 $1,800 Storage
24 Retail $1,800 $1,800 Storage
0 TOTAL - VACANT N/A N/A
24 TOTAL - OCCUPIED $29,981 $32,350
R E N T R O L L
*Units 21 & 22 are combined, current rent is $3,800 ($1,900 per unit)
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INCOME CURRENT PRO FORMA
GROSS SCHEDULED RENT $363,972 $398,400
Less: Vacancy/Collection Allowance (GPR) 10.0% / $36,397 10.0% / $39,840
EFFECTIVE RENTAL INCOME $327,575 $358,560
LED Billboard Income N/A $6,000
Vending Machine Income $1,800 $1,800
Laundry Income $2,400 $2,400
EFFECTIVE GROSS INCOME $327,575 $358,560
EXPENSES CURRENT PER UNIT PRO FORMA PER UNIT
Real Estate Taxes (1.19%) $39,270 $1,636 $39,270 $1,636
Insurance $2,558 $107 $2,558 $107
Utilities $24,480 $1,020 $24,480 $1,020
Maintenance $12,000 $500 $12,000 $500
Waste Removal $3,240 $135 $3,240 $135
On-Site Manager $13,800 $575 $13,800 $575
Management Fee (5%) $16,379 $683 $17,928 $747
Cleaning/Pest Control/Landscape $4,500 $188 $4,500 $188
TOTAL EXPENSES $116,226 $117,776
Expenses per Unit $4,843 $4,907
Expenses per SF $18.18 $18.42
% of EGI 35.5% 32.9%
NET OPERATING INCOME $211,348 $240,784
Buyer must verify the accuracy of all figures independently.
I N CO M E & E X P E N S E S
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F I N A N C I A L A N A LY S I S & P R I C I N G
Loan information is time sensitive and subject to change.
SCHEDULED INCOME
UNITS UNIT TYPE APPROXIMATE SF AVERAGE CURRENT RENT MONTHLY INCOME PRO FORMA RENT MONTHLY INCOME
17 SRO 150 $1,017 $17,281 $1,150 $19,550
5 Retail A 1,000 $1,780 $8,900 $1,800 $9,000
2 Retail B 2,000 $3,800 $3,800 $3,800 $3,800
24 TOTAL $29,981 $32,350
5350 2ND AVENUE, LOS ANGELES, CA 90043
PRICE $3,300,000
Down Payment 50% / $1,650,000
Number of Units* 24
Price per Unit $137,500
Gross Square Feet 6,394 SF
FINANCING - FIRST TRUST DEED
Loan Amount $1,650,000
Interest Rate 4.75%
Amortization 30 Years
EXPENSES CURRENT PRO FORMA
Real Estate Taxes (1.19%) $39,270 $39,270
Insurance $2,558 $2,558
Utilities $24,480 $24,480
Maintenance $12,000 $12,000
Waste Removal $3,240 $3,240
On-Site Manager $13,800 $13,800
Management Fee (5%) $16,379 $17,928
Cleaning/Pest Control/Landscape $4,500 $4,500
TOTAL EXPENSES $116,226 $117,776
Expenses per Unit $4,843 $4,907
Expenses per SF $18.18 $18.42
% of EGI 35.5% 32.9%
INCOME CURRENT PRO FORMA
GROSS SCHEDULED INCOME $363,972 $398,400
Less: Vacancy/Colection Allowance (GPR) $36,397 $39,840
Less: Expenses $116,226 $117,776
NET OPERATING INCOME $211,348 $240,784
Reserves $4,800 $4,800
Less: Debt Service $100,324 $100,324
Pre-Tax Cash Flow 6.4% / $106,225 8.5% / $140,461
Principal Reduction $27,046 $27,046
TOTAL RETURN BEFORE TAXES 8.1% / $133,271 10.2% / $167,507
CAP Rate - Current 6.40%
CAP Rate - Pro Forma 7.33%
GRM - Current 9.07
GRM - Pro Forma 8.28
Year Built 1922
Lot Size 3,576 SF
Type of Ownership Fee Simple*Includes retail units
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MARKET COMPARABLES
PROPERTY NAME YEAR BUILT SALES PRICE PRICE/UNIT PRICE/SF CAP RATE GRM
5350 2nd Avenue 1922 $3,300,000 $137,500 $516.11 6.40% 9.07
1. 936 W Beach Avenue 1954 $2,490,000 $249,000 $325.41 3.87% 16.24
2. 1444 W 28th Street 1923 $1,985,000 $220,556 $360.12 N/A N/A
3. 866 W 42nd Place 1927 $4,460,000 $446,000 $612.13 N/A N/A
4. 3903 W 27th Street 1954 $1,850,000 $185,000 $339.57 4.60% 13.79
5. 1015 Leighton Avenue 1923 $2,650,000 $220,833 $256.78 5.50% 12.92
S A L E S CO M PA R A B L E S – S U M M A R Y
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5350 2nd Avenue
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936 W Beach AvenueInglewood, CA 90302
5350 2nd AvenueLos Angeles, CA 90043
1
S A L E S CO M PA R A B L E S
UNIT MIX
SRO 17
1 BD/1 BA 3
Retail 4
UNIT MIX
1 BD/1 BA 6
2 BD/1 BA 4
SALES PRICE $3,300,000
Sale Date N/A
Number of Units 24
Year Built 1922
Price per Unit $137,500
Price per SF $516.11
CAP Rate 6.40%
GRM 9.07
SALES PRICE $2,490,000
Sale Date 8/17/2018
Number of Units 10
Year Built 1954
Price per Unit $249,000
Price per SF $325.41
CAP Rate 3.87%
GRM 16.24
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866 W 42nd PlaceLos Angeles, CA 90037
3
UNIT MIX
1 BD/1 BA 4
2 BD/1 BA 6
SALES PRICE $4,460,000
Sale Date 5/29/2018
Number of Units 10
Year Built 1927
Price per Unit $446,000
Price per SF $612.13
CAP Rate N/A
GRM N/A
1444 W 28th StreetLos Angeles, CA 90007
2
UNIT MIX
Single 9
SALES PRICE $1,985,000
Sale Date 6/6/2018
Number of Units 9
Year Built 1923
Price per Unit $220,556
Price per SF $360.12
CAP Rate N/A
GRM N/A
S A L E S CO M PA R A B L E S
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S A L E S CO M PA R A B L E S
3903 W 27th StreetLos Angeles, CA 90018
4
UNIT MIX
1 BD/1 BA 8
2 BD/1 BA 2
SALES PRICE $1,850,000
Sale Date 2/16/2018
Number of Units 10
Year Built 1954
Price per Unit $185,000
Price per SF $339.57
CAP Rate 4.60%
GRM 13.79
1015 Leighton AvenueLos Angeles, CA 90037
UNIT MIX
2 BD/1 BA 12
SALES PRICE $2,650,000
Sale Date 1/3/2018
Number of Units 12
Year Built 1923
Price per Unit $220,833
Price per SF $256.78
CAP Rate 5.50%
GRM 12.92
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WWW.NEEMAAHADIAN.COM
NEEMA AHADIANSenior Vice President Investments
West Los AngelesOffice 310.909.5444
[email protected] CA BRE# 01346750
MARCUS & MILLICHAPWest Los Angeles
12100 West Olympic BoulevardSuite #350
Los Angeles, CA 90064Main 310.909.5500
O F F E R I N G M E M O R A N D U M
5350 2 N D AV E N U E, LO S A N G E L E S , C A 90043