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7654 FOUNTAIN AVE. WEST HOLLYWOOD West Hollywood, CA 90046 Offering Memorandum THE LIBEROW GROUP

7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

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Page 1: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

7654 FOUNTAIN AVE.WEST HOLLYWOOD

West Hollywood, CA 90046

Offering Memorandum

THE LIBEROW GROUP

Page 2: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

Non-Endorsement and Disclaimer NoticeThe 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.

Non-Endorsement NoticeMarcus & 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.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

SAM LIBEROW

First Vice President InvestmentsDirector, National Multi Housing Group

16830 Ventura Blvd. Suite 100Encino, CA 91436(818) 212-2795 Direct (818) 698-6464 Fax [email protected] License: CA 01933858

EXCLUSIVELY LISTED BY:

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TABLE OF CONTENTS1

2

3

Executive Summary

Investment Highlights

Property Overview

Financial Analysis

Comparables

Area Overview

4

5

6

Page 4: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one of the most sought after neighborhoods in Los Angeles. Built in 1962, this property is comprised of 10,458 of rentable square feet and a lot size of 6,600 square feet.

The building consists of seven (7) one-bedroom/one-bathroom units and four (4) two-bedroom/two-bathroom units. A selection of the units include private balconies. On-site laundry is also available for tenants along with gated parking, providing 11 parking spaces - one for each unit.

7654 Fountain is conveniently located just steps away from the endless shopping, entertainment, and dining outlets on Santa Monica Blvd. Situated just east of Fairfax, the property is just minutes to Runyon Canyon, Whole Foods, the Laugh Factory, the Hollywood Bowl, the Walk of Fame, the Chinese Theater and many other places. Various other attractions include the Hollywood and Highland Center, The Grove, Sunset Plaza, and the Beverly Center.

This well located asset provides an excellent opportunity for an investor to obtain significant upside potential through tenant repositioning and renovation program.

EXECUTIVE SUMMARY

DEMOGRAPHICS

$90,808 $91,359 860,4385-Mile RadiusAverage Household Income

1-Mile RadiusAverage Household Income

5-Mile Radius Population

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PROPERTY OVERVIEW

FINANCIAL OVERVIEW

Property Address 7654 Fountain Ave.

Building SF 10,458 SFLot Size 6,600 SFUnits 11APN 5530-004-014Year Built 1962Zoning WDR2

Sales Price $3,825,000CAP Rate 3.76%GRM 16.49Price/Unit $347,727Price/SF $365.75ProForma CAP Rate 6.08%ProForma GRM 11.83

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INVESTMENT HIGHLIGHTS• • Long-Term Passive OwnershipLong-Term Passive Ownership

This property has been under the same ownership for over 34 years, making this a true

value-add investment for an experienced investor

• • Excellent West Hollywood LocationExcellent West Hollywood Location Situated right on Fountain Blvd, just North of Santa Monica Blvd and south of Sunset Blvd,

giving this property a Walkscore of 90 (Walker’s Paradise)

• True Value-Add Opportunity Significant increase in rental income through tenant repositioning and renovation program

• Highly Amenitized Sub-Market Within minutes to Runyon Canyon, Whole Foods, the Laugh Factory, Orangetheory Fitness,

and other various dining and entertainment outlets close by

• Great Unit Mix Property offers seven (7) one bedroom/ one bathroom units and four (4) two bedroom/ two

bathroom units. Select units also include private balconies

• On-Site Amenities Laundry and gated parking available for tenants

• No Seismic Retrofit Needed Not on the Soft-Story Retrofit list of West Hollywood

MAJOR EMPLOYERS

Employers Number of Employees

Disney 10,618

Walt Disney Company 6,376

Cedars-Sinai Medical Center 5,333

Ticketmaster Entertainment LLC 4,390

Mercury Insurance Service LLC 4,000

MTV Networks 3,646

SBE 3,002

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PROXIMITY TO AMENITIESShoppingSanta Monica Blvd Hollywood/Highland CenterBeverly Center

HospitalsCedar-Sinai Medical CenterKaiser Permanente

GroceriesTrader Joe’sRalph’sGelson’s

WHY BUY 7654 FOUNTAIN AVENUE?

HIGH-END DEMOGRAPHICS

Average HH income of $101,372 within a 3-mile radius

MAJOR EMPLOYERS IN THE IMMEDIATE AREA

DisneyWalt Disney CompanyCedar-Sinai Medical CenterMTV Networks

FitnessOrangetheoryRetrofit Gym

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PRIDE OF OWNERSHIPPROXIMITY TO SUNSET BLVDHigh End ShoppingUpscale RestaurantsGreat Entertainment

VALUE-ADD OPPORTUNITY

Increase rental income through renovation program

A+ West Hollywood Location

Page 10: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

PROPERTY OVERVIEW

THE OFFERINGProperty Address 7654 Fountain AvenueCity, State West Hollywood, CAPrice $3,825,000Assessors Parcel Number 5530-004-014Zoning WDR2

SITE DESCRIPTIONNumber of Units 11Number of Buildings 1Number of Stories 2Year Built/Renovated 1962Rentable Square Feet 10,458Lot Size 0.15 Acres / 6,600 SQ FTType of Ownership Fee SimpleParking 11 Covered Parking Spaces

UTILITIESWater Master MeteredElectric Individually Metered / Tenant Pays Gas Individually Metered / Tenant Pays

CONSTRUCTIONFoundation ConcreteFraming WoodExterior StuccoRoof Flat

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PLAT MAP

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PROPERTY PHOTOS

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SUBJECT PROPERTY

WHOLE FOODS

BRICK FITNESS

SUNSET STRIP

CAFE IF

ST. AMBROSECATHOLICCHURCH

US POST OFFICE

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T H E B I R D S T R E E T S

BRISTOL FARMSTHE GRIDDLE CAFE

RITE AID/PHARMACY

CHATEAU MARMONT

TRADER JOE’SSTARBUCKS

BODYFACTORYCVS

FOUNTAIN AVE

CHASE BANKZANKOU CHICKENBANK OF AMERICA

ARCO GAS

LAUGH FACTORY

AREA OVERVIEWMAJOR AMENITIES

US Postal Service 0.5 Miles

Whole Foods Market 0.6 Miles

Trader Joe’s 0.6 Miles

CVS Pharmacy 1.4 Miles

Hollywood/Highland Station 1.5 Miles

NEARBY HOSPITALS

Southern CA Hospital 1.9 Miles

Cedars Sinai Medical 2.6 Miles

NEARBY FITNESS CENTER

Retrofit Gym 0.3 Miles

24 Hour Fitness 1.7 Miles

Page 16: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

F INANCIAL ANALYSIS

UNIT NO UNIT TYPE CURRENT RENT MARKET RENT MOVE-IN DATES

1 1+1 $1,254 $2,200 3/1/20132 1+1 $1,470 $2,200 12/16/20133 2+2 $2,300 $2,750 4/14/20164 1+1 $1,905 $2,200 7/1/20185 2+2 $1,153 $2,750 9/1/20076 1+1 $1,417 $2,200 9/1/20147 1+1 $1,849 $2,200 1/1/20188 2+2 $2,253 $2,750 11/13/20159 1+1 $1,881 $2,200 5/1/201710 2+2 $1,890 $2,750 8/1/201411 1+1 $1,412 $2,200 3/1/2012

Total 11 $18,784 $26,400

RENT ROLL

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NO OF UNITS UNIT TYPE

7 1+14 2+211 Total Units

CURRENT RENTS MARKET RENTS

NO. OF UNITS BR/BA MO. RENT/UNIT MO. INCOME MO. RENT/UNIT MO. INCOME

7 1+1 $1,254 - $1,905 $11,188 $2,200 $15,4004 2+2 $1,153 - $2,300 $7,596 $2,750 $11,000

Total Scheduled Rent: $18,784 $26,400Laundry: $150 $150Other Income: Storage $400 $400Monthly Scheduled Gross Income: $19,334 $26,950Annual Scheduled Gross Income: $232,008 $323,400

SCHEDULED INCOME

UNIT MIX

1+1

2+2

Page 18: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

F INANCIAL ANALYSIS

PRICING PROPOSED FINANCING

Sales Price $3,825,000

Price/Unit $347,727

Price/SF $365.75

CAP Rate 3.76%

ProForma CAP Rate 6.08%

GRM 16.49

ProForma GRM 11.83

Loan Amount $2,103,750Term 5 YearsInterest Rate 3.65%Annual Payment $115,486

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Notes:This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Reference to square footage or age are approximate. Buyer must verify information and bears all risk for any inaccuracies. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc.

EXPENSES ANNUAL PER SF PER UNIT

Real Estate 1.156% $44,224 $4.23 $4,021

Insurance $4,183 $0.40 $380

Utilities $9,000 $0.86 $818

Maintenance & Repairs $9,002 $0.86 $818

Trash $1,483 $0.14 $135

Reserves $2,750 $0.26 $250

Landscape $1,080 $0.10 $98

Off-Site Management $9,002 $0.86 $818

Pest $466 $0.05 $43

Total $81,190 $7.76 $7,381

INCOME & EXPENSE % CURRENT RENTS % MARKET RENTS

Scheduled Gross Income: $232,008 $323,400Vacancy/ Bad Debt: 3% $6,960 3% $9,702

Gross Operating Income: $225,048 $313,698Less Expenses: 35% $81,190 25% $81,190

Net Operating Income: $143,857 $232,508Less Loan Payments: $115,486 $115,486

Debt Coverage Ratio: 1.25 2.01

Pre-Tax Cash Flow: 1.65% $28,372 6.80% $117,022

Plus Principal Reduction Yr 1: $39,353 $39,353

Total Return Before Taxes: 3.93% $67,724 9.08% $156,375

ANNUALIZED OPERATING DATA

Page 20: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

SALES COMPARABLES

SUBJECT PROPERTY

ADDRESS 7654 FOUNTAIN AVE.

Price $3,825,000Price/Unit $347,727Price/SF $365.75CAP Rate 3.76%GRM 16.49No. of Units 11Year Built 1962

1

3 564

2

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ADDRESS ADDRESS

ADDRESS ADDRESS

ADDRESS 1036 N GENESEE AVE.

Close of Escrow 4/9/2019Sales Price $3,185,000Price/Unit $318,500Price/SF $388.89CAP Rate 3.22%GRM 18.32No. of Units 10Year Built 1960

ADDRESS 7972 NORTON AVE.

Close of Escrow 11/1/2019Sales Price $2,990,000Price/Unit $332,222Price/SF $399.52CAP Rate 3.65%GRM 17.15No. of Units 9Year Built 1958

ADDRESS 1416 N MARTEL AVE.

Close of Escrow 6/26/2019Sales Price $2,150,000Price/Unit $358,333Price/SF $350.39CAP Rate 3.40%GRM 18.08No. of Units 6Year Built 1962

ADDRESS 1205 N HAYWORTH AVE.

Close of Escrow 9/20/2019Sales Price $3,925,000Price/Unit $392,500Price/SF $404.14CAP Rate 4.18%GRM 16.01No. of Units 10Year Built 1954

1 2

3 4

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ADDRESS ADDRESS

ADDRESS 7631 NORTON AVE.

Close of Escrow 3/15/2019Sales Price $3,695,000Price/Unit $369,500Price/SF $430.50CAP Rate 4.14%GRM 15.73No. of Units 10Year Built 1961

ADDRESS 8208 NORTON AVE.

Close of Escrow 3/29/2019Sales Price $3,245,000Price/Unit $360,556Price/SF $407.05CAP Rate N/AGRM 19.55No. of Units 9Year Built 1957

5 6

SALES COMPARABLES22

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CAP RATE

PRICE PER SF

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

AVG. 3.72%

7654 FOUNTAIN

AVE

1036 N GENESEE AVE

1416 N MARTEL AVE

7972 NORTON

AVE

1205 N HAYWORTH

AVE

7631 NORTON AVE

8208 NORTON AVE

AVG. $396.75

$500.00

$450.00

$400.00

$350.00

$300.00

$250.00

$200.00

$150.00

$100.00

$50.00

$0.00

7654 FOUNTAIN

AVE

1036 N GENESEE AVE

1416 N MARTEL AVE

7972 NORTON

AVE

1205 N HAYWORTH

AVE

7631 NORTON AVE

8208 NORTON AVE

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GRM

PRICE PER UNIT

AVG. 17.47

21.00

18.90

16.80

14.70

12.60

10.50

8.40

6.30

4.20

2.10

0.00 7654

FOUNTAIN AVE

1036 N GENESEE AVE

1416 N MARTEL AVE

7972 NORTON

AVE

1205 N HAYWORTH

AVE

7631 NORTON AVE

8208 NORTON AVE

AVG. $355,269$400,000

$360,000

$320,000

$280,000

$240,000

$200,000

$160,000

$120,000

$80,000

$40,000

$0

1643 N MARTEL AVE

1320 N MARTEL AVE

7467 HOLLYWOOD

BLVD

1837 N LA BREA AVE

7605-7607 LEXINGTON

AVE

1132 N FORMOSA

AVE

1233 N ORANGE

GROVE AVE

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RENT COMPARABLES

SUBJECT PROPERTY

1

2

UNIT TYPE UNITS RENT

1+1 7 $11,1882+2 4 $7,596

Total 11Year Built 1962

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ADDRESS - 1236 N GENESEE AVE.

UNIT TYPE UNITS RENT

1+1 1 $2,150

Total 1Year Built 1924

1ADDRESS - 1160 N OGDEN DR.

UNIT TYPE UNITS RENT

2+2 1 $2,600

Total 1Year Built 1956

2

ADDRESS - 7705 HAMPTON AVE.

UNIT TYPE UNITS RENT

2+2 1 $2,595

Total 1Year Built 1963

3

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RENT COMPARABLES

ONE BEDROOM

$3,000

$2,700

$2,400

$2,100

$1,800

$1,500

$1,200

$900

$600

$300

$0

7654 FOUNTAIN AVE

AVG. $2,150

1236 N GENESEE

AVE

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TWO BEDROOM

7654 FOUNTAIN AVE

AVG. $2,598

7705 HAMPTON

AVE

$3,000

$2,700

$2,400

$2,100

$1,800

$1,500

$1,200

$900

$600

$300

$0

1160 N OGDEN DR

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Sunset Boulevard is famous, but the best known portion of the boulevard is the mile and a half stretch of Sunset between Hollywood and Beverly Hills that has been dubbed “The Sunset Strip.” The 22-mile-long road stretches from glittery Hollywood to beachy Malibu, connecting two of the highlights of Los Angeles while winding past Beverly Hills, Bel Air, UCLA and Brentwood. It’s the perfect travel snapshot of Southern California life.

Running between Crescent Heights Boulevard (on the east) & Doheny Drive (on the west), the Sunset Strip embraces a premier collection of rock clubs, restaurants, boutiques, and Hollywood nightspots that are on the cutting edge of the entertainment business.

In the evening, the Strip is a vibrant slash of gaudy neon, a virtual traffic jam of young cruisers on weekends, and celebrity wannabes. The 1.6-mile strip of Sunset Boulevard is situated in the lively city of West Hollywood and upholds the city’s reputation as a nightlife hotspot.

From the heights of swank hotel rooftops like the Mondrian’s SkyBar and the Tower Bar at Sunset Tower Hotel, to the rock clubs like The Viper Room and Whisky a Go Go, there’s a setting to suit your style and mood. In addition to venues that showcase artists ranging from indie singer/songwriters to major-label headliners, there are iconic comedy clubs such as The Laugh Factory and the Comedy Store. Or head to The Roxy—where Rocky Horror Picture Show premiered in 1974—for live music in an intimate, 500-capacity venue.

Spend the afternoon shopping at Sunset Plaza, which contains more than 20 stores, like Armani Exchange and H&M. Book lovers, don’t miss the iconic Book Soup, L.A.’s largest independent bookstore, with floor-to-ceiling shelves that contain more than 60,000 titles, many of which are limited edition. The store hosts frequent author readings, so check its calendar to meet your favorite novelist!

There are also plenty of hotels on the Strip like Andaz West Hollywood, Sunset Tower Hotel or The Standard Hollywood, so you could make this bustling area your home base to explore.

AREA OVERVIEW

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POINTS OF INTEREST

HOLLYWOOD BOWL

HOLLYWOOD BLVD/ WALK OF FAME

PACIFIC DESIGN CENTER

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DEMOGRAPHICS 1 MILE 3 MILES 5 MILES

Population:

2024 Projection 54,988 314,393 872,558

2019 Estimate 54,202 307,594 860,438

2010 Census 51,727 280,991 822,998

Growth 2019-2024 1.45% 2.21% 1.41%

Households:

2024 Projection 32,166 158,372 380,013

2019 Estimate 31,867 155,231 375,128

Owner Occupied 5,229 37,646 93,427

Renter Occupied 26,638 117,585 281,701

2019 Households by Household Inc:

2019 Avg Household Income $90,808 $101,372 $91,359

2019 Med Household Income $63,212 $68,562 $59,126

<$25,000 7,245 33,815 88,722

$25,000 - $50,000 5,867 26,062 76,408

$50,000 - $75,000 4,834 23,325 57,074

$75,000 - $100,000 4,338 17,737 40,322

$100,000 - $125,000 2,450 12,792 28,923

$125,000 - $150,000 1,999 8,165 17,243

$150,000 - $200,000 1,814 11,589 22,826

$200,000+ 3,320 21,745 43,610

DEMOGRAPHICS

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Page 33: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one
Page 34: 7654 FOUNTAIN AVE. · 2020-03-27 · Marcus & Millichap is proud to exclusively present 7654 Fountain Avenue, an 11-unit apartment building located in West Hollywood, which is one

SAM LIBEROWFirst Vice President InvestmentsDirector, National Multi Housing Group

16830 Ventura Blvd. Suite 100Encino, CA 91436(818) 212-2795 Direct (818) 698-6464 Fax [email protected] License: CA 01933858

EXCLUSIVELY LISTED BY:

THE LIBEROW GROUP