BOLTON ROAD APARTMENTS · 2018-09-06 · PAGE 7 SALE PRICE $1,125,000 LOCATION INFORMATION Building...

2336 BOLTON RD, ATLANTA, GA30318

BOLTON ROADAPARTMENTS

ADRIAN PROVOST66778.958.9577.7.7653653adrian.pradrian.proovvost@[email protected]

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ADRIAN PROVOSTAssociateNational Multi Housing GroupTelephone: (678) 808-2788Fax: (678) [email protected]: GA 341770, FL BK3376045

DAN MCBURNEYAssociateNational Multi Housing GroupTelephone: (678) 808-2793Fax: (678) [email protected]: GA 368233, FL SL3098262

PRESENTED BY:

2336 BOL2336 BOLTTON RD , AON RD , ATLANTTLANTA, GA 30318A, GA 30318

P A G E 3P A G E 3

4PROPERTY INFORMATION

13LOCATION INFORMATION

20FINANCIAL ANALYSIS

27SALE COMPARABLES

32RENT COMPARABLES

37DEMOGRAPHICS

51ADVISOR BIOS

CCONTENTONTENTSS CCONFIDENTIALITY & DISCLAIMERONFIDENTIALITY & DISCLAIMER

All materials and information received or derived from Marcus & Millichap its directors, officers, agents, advisors, affiliates and/or any third party sourcesare provided without representation or warranty as to completeness , veracity, or accuracy, condition of the property, compliance or lack of compliance withapplicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the propertyfor any party’s intended use or any and all other matters.

Neither Marcus & Millichap its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy orcompleteness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, thatmay 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 significance tosuch party. Marcus & Millichap 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 andinvestigations 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 appropriateindependent professionals. Marcus & Millichap makes no warranties and/or representations regarding the veracity, completeness, or relevance of anyfinancial data or assumptions. Marcus & Millichap does not serve as a financial advisor to any party regarding any proposed transaction. All data andassumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Anyestimates 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 tothat level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions,vacancy factors and other issues inorder 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 taxattorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether theproperty complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, otherconsultants and governmental agencies. All properties and services are marketed by Marcus & Millichap in compliance with all applicable fair housing andequal opportunity laws.

TABLE OF CONTENTS


PROPERTYINFORMATIONS E C T I O N 1S E C T I O N 1

P A G E 5P A G E 5

OFFERING SUMMARY

Sale Price: $1,125,000Number Of Units: 12Cap Rate: 6.03%NOI: $67,879Lot Size: 0.5 AcresYear Built: 1965Building Size: 8,150Renovated: 2017Zoning: C1Market: AtlantaSubmarket: Upper Westside - West

MidtownTraffic Count: 21,654Price / SF: $138.04

Bolton Road Apartments is an attractive and proven value-add opportunity positioned slightly North of West Midtown in theburgeoning Upper Westside Atlanta neighborhood.

Bolton Road Apartments represents a distinct opportunity to acquire an outstanding community with phenomenal proximityto transportation, employment, and entertainment with a remarkable amount of upside potential.

PROPERTY OVERVIEW

PROPERTY HIGHLIGHTS• STAINLESS STEEL APPLIANCE PACKAGE IN SOME UNITS.

• BLACK APPLIANCE PACKAGE IN SOME UNITS.

• HARDWOOD FLOORS.

• SOLID SURFACE COUNTERTOPS.

• PAINTED BRICK EXTERIOR.

• 4/12 UNITS COMPLETELY GUT-RENOVATED IN 2017.

• 6/12 UNITS WERE PARTIALLY RENOVATED/UPGRADED IN 2017.

• 2/12 UNITS HAVE ORIGINAL INTERIORS WITH LIMITED UPDATES.

EXECUTIVE SUMMARY


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Bolton Road Apartments is an attractive and proven value-add opportunity positioned slightly North of WestMidtown in the burgeoning Upper Westside Atlanta neighborhood.

Bolton Road Apartments represents a distinct opportunity to acquire an outstanding community withphenomenal proximity to transportation, employment, and entertainment with a remarkable amount ofupside potential.

PROPERTY OVERVIEW

Bolton Road Apartments is located just West of Buckhead and slightly South of Vinings at the NorthwestCorner of Bolton Road and Marietta Road. Situated between I-75 and I-285, approximately 1000 feet south ofChattahoochee River, the community is perfectly positioned in one of the fastest-growing areas in Atlanta.

6 miles from Midtown, 6 miles from Downtown Atlanta, 4 miles from Buckhead.

LOCATION OVERVIEW

PROPERTY DESCRIPTION


P A G E 7P A G E 7

SALE PRICE $1,125,000

LOCATION INFORMATION

Building Name Bolton Road ApartmentsStreet Address 2336 Bolton RdCity, State, Zip Atlanta, GA 30318County/Township FultonMarket AtlantaSubmarket Upper Westside - West MidtownCross Streets Bolton Rd and Marietta RdNearest Highway I-75, I-285Nearest Airport Hartsfield-Jackson Atlanta International Airport

BUILDING INFORMATION

Building Size 8,150 SFOccupancy % 100.0Number Of Floors 2Year Built 1965Last Renovated 2017Load Factor Yes

PROPERTY DETAILS

Property Type MultifamilyProperty Subtype Low-Rise/GardenZoning C1Lot Size 0.5 AcresAPN# 17-0244-0001-075-1Submarket Upper Westside - West MidtownTraffic Count 21,654Traffic Count Street Marietta Blvd NW and Bolton Rd SE

PROPERTY DETAILS


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SALE HIGHLIGHTS• STAINLESS STEEL APPLIANCE PACKAGE IN SOME UNITS.• BLACK APPLIANCE PACKAGE IN SOME UNITS.• HARDWOOD FLOORS.• SOLID SURFACE COUNTERTOPS.• PAINTED BRICK EXTERIOR.• 4/12 UNITS COMPLETELY GUT-RENOVATED IN 2017.• 6/12 UNITS WERE PARTIALLY RENOVATED/UPGRADED IN 2017.• 2/12 UNITS HAVE ORIGINAL INTERIORS WITH LIMITED UPDATES.

COMPLETE HIGHLIGHTS


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BUILDING 1


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BUILDING 2


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INTERIOR 1


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INTERIOR 2


LOCATIONINFORMATIONS E C T I O N 2S E C T I O N 2

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Bolton Road Apartments

REGIONAL MAP


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LOCATION MAPS


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Bolton Road Apartments

AERIAL MAP


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RETAILER MAP


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DEVELOPMENT MAP


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THE WORKS

Selig's new 80-acre development, The Works, creates aninterconnected environment that gives way to niche work andlive spaces, distinctive retail and dining, imaginativeexperiences and inspired gathering areas.

MOORES MILL VILLAGE

The overall 70,000 square foot retail center will include a45,600 Publix Supermarket and assorted smaller spaces for afew restaurants and other shops. The redevelopmentrepresents a $95 million investment in the community,

WESTSIDE RESERVOIR PARK

At the shuttered Bellwood Quarry, Atlanta's biggest park couldwelcome bicyclists and joggers who've traveled there via theBeltline. At 350 acres, the Beltline's Westside Reservoir Parkcould make Piedmont Park look like a manicured backyard,but it's a monster project.

WATERWORKS PARK

Friends of Atlanta Waterworks have prepared a conceptualdesign for proposed park improvements along the edges ofthe City’s reservoir. The Plan also provides connections to theBeltLine and to retail and residential experiences.

THE QUARTER - UPPER WEST SIDE

The Quarter-Upper West Side, a planned mixed-use projectthat will consist of more than 800 residential units, including a386-unit apartment complex at 2108 Bolton Dr, just north ofCrest Lawn Memorial Park, and a collection of townhouses,flats and city homes.

WESTSIDE VILLAGE

A $25 million dollar mixed-use development across from thePublix Shopping Center currently under construction. It willinclude a mix of restaurants, shops, and 19 townhomes. FoxBros. BBQ has been identified as a proposed tenant.

SIGNIFICANT DEVELOPMENTS


FINANCIALANALYSISS E C T I O N 3S E C T I O N 3

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Possible seller bridge / 2nd mortgage available: to be held at a below-market interest rate for a short term of 24 – 36 months to allow for increased cash-on-cash return.

Depending on strength of buyer, the seller will allow total LtV to be as much as 80% of purchase price – thus allowing for the buyer to acquire property with as little as 20% down payment.

INVESTMENT OVERVIEW CURRENT PROFORMA

Price $1,125,000 $1,125,000Price per Unit $93,750 $93,750GRM 10.2 7.9CAP Rate 6.0% 8.1%Cash-on-Cash Return (yr 1) 6.03 % 8.12 %Total Return (yr 1) $67,879 $91,346Debt Coverage Ratio - -

OPERATING DATA CURRENT PROFORMA

Gross Scheduled Income $110,400 $141,840Other Income - -Total Scheduled Income $110,400 $141,840Vacancy Cost $5,520 $7,092Gross Income $104,880 $134,748Operating Expenses $37,001 $43,402Net Operating Income $67,879 $91,346Pre-Tax Cash Flow $67,879 $91,346

FINANCING DATA CURRENT PROFORMA

Down Payment $1,125,000 $1,125,000Loan Amount - -Debt Service - -

FINANCIAL SUMMARY


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Possible seller bridge / 2nd mortgage available: to be held at a below-market interest rate for a short term of 24 – 36 months to allow for increased cash-on-cash return.

Depending on strength of buyer, the seller will allow total LtV to be as much as 80% of purchase price – thus allowing for the buyer to acquire property with as little as 20% down payment.

INVESTMENT OVERVIEW CURRENT PROFORMADebt Service Monthly - -Principal Reduction (yr 1) - -

FINANCIAL SUMMARY


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UNITNUMBER

UNITBED

UNITBATH

UNITSIZE (SF)

CURRENTRENT

CURRENTRENT (PER SF)

MARKETRENT

MARKETRENT/SF

SECURITYDEPOSIT

1 2 1 800 $850 $1.06 $980 $1.23 $0

2 2 1 800 $750 $0.94 $980 $1.23 $0

3 2 1 800 $850 $1.06 $980 $1.23 $0

4 2 1 800 $850 $1.06 $980 $1.23 $0

5* 2 1 800 $450 $0.56 $980 $1.23 $0

6 2 1 800 $800 $1.00 $980 $1.23 $0

7 2 1 800 $750 $0.94 $980 $1.23 $0

8 2 1 800 $800 $1.00 $980 $1.23 $0

9 2 1 800 $800 $1.00 $995 $1.24 $0

10 2 1 800 $750 $0.94 $995 $1.24 $0

11 2 1 800 $750 $0.94 $995 $1.24 $0

12 2 1 800 $800 $1.00 $995 $1.24 $0

Totals/Averages 9,600 $9,200 $0.96 $11,820 $1.23 $0

RENT ROLL


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INCOME SUMMARY PROFORMA PER SF CURRENT PER SF

Gross Income $134,748 $16.53 $104,880 $12.87

EXPENSE SUMMARY PROFORMA PER SF CURRENT PER SF

Real Estate Taxes $11,526 $1.41 $6,024 $0.74Insurance $3,600 $0.44 $3,026 $0.37Utilities - Electric $600 $0.07 $549 $0.07Utilities - Water & Sewer $0 $0.00 $8,013 $0.98Trash Removal $1,020 $0.13 $1,020 $0.13Repairs & Maintenance $3,500 $0.43 $1,500 $0.18Landscaping $1,200 $0.15 $1,200 $0.15Payroll $0 $0.00 $2,500 $0.31Alarm Monitoring/Inspection $0 $0.00 $1,000 $0.12General & Administrative $3,000 $0.37 $3,000 $0.37Operating Reserves $6,145 $0.75 $5,094 $0.63Management Fee $9,831 $1.21 $4,075 $0.50Misc. Expenses $2,980 $0.37 - -Gross Expenses $43,402 $5.33 $37,001 $4.54

Net Operating Income $91,346 $11.21 $67,879 $8.33

INCOME & EXPENSES


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UNIT TYPE COUNT % TOTAL SIZE (SF) RENT RENT/SF MARKET RENT MARKET RENT/SF

2/1 A (SS) 4 33.3 800 $837 $1.05 $960 $1.20

2/1 B (BLK) 6 50.0 800 $775 $0.97 $910 $1.14

2/1 C (ORG) 2 16.7 800 $600 $0.75 $910 $1.14

Totals/Averages 12 100% 9,600 $9,200 $0.96 $11,120 $1.16

UNIT MIX SUMMARY


CAPABILITIESMARCUS & MILLICHAP CAPITAL CORPORATION WH Y MMC C ?

Optimum financing solutions to enhance value

MMCC—our fully integrated, dedicated financing arm—is committed to providing superiorcapital market expertise, precisely managed execution and unparalleled access to capitalsources providing the most competitive rates and terms.

We leverage our prominent capital market relationships with commercial banks, lifeinsurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Macand HUD to provide our clients with the greatest range of financing options.

Our dedicated, knowledgeable experts understand the challenges of financing and worktirelessly to resolve all potential issues to the benefit of our clients.

Our ability to enhance buyer pool by expandingfinance options

Our ability to enhance seller control.

- Through buyer qualification support.- Our ability to manage buyers finance expectations.- Ability to monitor and manage buyer/lender progress, insuringtimely, predictable closings.- By relying on a world class set of debt/equity sources andpresenting a tightly underwritten credit file.

Closed 1,707 debt andequity financing in 2017

National platform operating

within the firm’s brokerage offices

$5.63 billion totalnational volume in

2017

Access to more capital sources than any other

firm in the industry

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ACQUISITION FINANCING


SALECOMPARABLESS E C T I O N 4S E C T I O N 4

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SUBJECT PROPERTY

2336 Bolton Rd | Atlanta, GA 30318$1,125,000Sale Price: 0.5 ACLot Size:

1965Year Built: 8,150 SFBuilding SF:

$138.04Price PSF: 12No. Units:

$93,750Price / Unit: 10.19GRM:

6.03%Cap: $67,879NOI:

1

DEFOOR OAK APARTMENTS

2030 Defoor Ave NW | Atlanta, GA 30318$2,100,000Sale Price: 0 AcresLot Size:

1940Year Built: SFBuilding SF:

18No. Units: $116,666Price / Unit:

7.62%CAP:

1

2

WESTSIDE COURT

2113 Defoors Ferry Rd NW | Atlanta, GA 30318$4,800,000Sale Price: 0 AcresLot Size:



7.93%CAP:

2

SALE COMPS


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3

BLOOM AT BUCKHEAD

112 Ardmore Pl NW | Atlanta, GA 30309$1,103,725Sale Price: 0 AcresLot Size:



6.5%CAP:

3

4

PEACHTREE & CLUB

3766 Peachtree Rd NE | Atlanta, GA 30319$2,004,400Sale Price: 0 AcresLot Size:

1960Year Built: 11,514 SFBuilding SF:

$174.08Price PSF: 8No. Units:

$250,550Price / Unit: 03/29/2017Closed:

4

SALE COMPS


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SUBJECT PROPERTY PRICE BLDG SF PRICE/SF PRICE/UNIT CAP GRM # OF UNITS

Bolton Road Apartments2336 Bolton RdAtlanta, GA 30318

$1,125,000 8,150 SF $138.04 $93,750 6.03% 10.19 12

SALE COMPS PRICE BLDG SF PRICE/SF PRICE/UNIT CAP GRM # OF UNITS CLOSE

Defoor Oak Apartments2030 Defoor Ave NWAtlanta, GA 30318

$2,100,000 - - $116,666 7.62% - 18 -

Westside Court2113 Defoors Ferry Rd NWAtlanta, GA 30318

$4,800,000 - - $100,000 7.93% - 48 -

Bloom at Buckhead112 Ardmore Pl NWAtlanta, GA 30309

$1,103,725 - - $78,837 6.5% - 14 -

Peachtree & Club3766 Peachtree Rd NEAtlanta, GA 30319

$2,004,400 11,514 SF $174.08 $250,550 - - 8 03/29/2017

PRICE BLDG SF PRICE/SF PRICE/UNIT CAP GRM # OF UNITS CLOSETotals/Averages $2,502,031 11,514 SF $217.30 $113,728 7.35% - 22

1

2

3

4

SALE COMPS SUMMARY


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2336 Bolton Rd | Atlanta, GA 30318SUBJECT PROPERTY

1 2030 Defoor Ave NWAtlanta, GA 30318

DEFOOR OAK APARTMENTS 2 2113 Defoors Ferry Rd NWAtlanta, GA 30318

WESTSIDE COURT 3 112 Ardmore Pl NWAtlanta, GA 30309

BLOOM AT BUCKHEAD 4 3766 Peachtree Rd NEAtlanta, GA 30319

PEACHTREE & CLUB

SALE COMPS MAP


RENTCOMPARABLESS E C T I O N 5S E C T I O N 5

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SUBJECT PROPERTY

2336 Bolton Rd | Atlanta, GA 303181965Year Built: 0.5 ACLot Size:12No. Units: $0.96Avg. Rent/SF:800 SFAvg. Size: $766Avg. Rent:

1

THE ENCLAVE - II2145 Bolton Rd NW | Atlanta, GA 30318

0 SFBldg Size: 0 ACLot Size:41No. Units: 779 SFAvg. Size:$1.12Avg. Rent/SF: $875Avg. Rent:

1

2

MOORES MILL VILLAGE2453 Coronet Way NW | Atlanta, GA 30318


2

RENT COMPS


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3

WESTSIDE CROSSING2265 Perry Blvd NW | Atlanta, GA 30318


3

4

DEFOOR OAK APARTMENTS2030 Defoor Ave NW | Atlanta, GA 30318

0 SFBldg Size: 0 ACLot Size:18No. Units: 794 SFAvg. Size:$1.41Avg. Rent/SF: $1,122Avg. Rent:

4

5

WESTHAMPTON COURT2125 Defoors Ferry Rd NW, Atlanta, GA, 30318 | Atlanta, GA 30318


5

RENT COMPS


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SUBJECT PROPERTY RENT/SF AVAILABLE SF BLDG SF # OF UNITS OCCUPANCY %

Bolton Road Apartments2336 Bolton RdAtlanta, GA 30318

$0.96 0 SF 8,150 SF 12 100.0%

RENT COMPS RENT/SF AVAILABLE SF BLDG SF # OF UNITS OCCUPANCY %

THE ENCLAVE - II2145 Bolton Rd NWAtlanta, GA 30318

$1.12 31,940 SF 0 SF 41 -

MOORES MILL VILLAGE2453 Coronet Way NWAtlanta, GA 30318

$1.04 157,568 SF 0 SF 172 -

WESTSIDE CROSSING2265 Perry Blvd NWAtlanta, GA 30318

$1.39 73,170 SF 0 SF 112 -

Defoor Oak Apartments2030 Defoor Ave NWAtlanta, GA 30318

$1.41 14,298 SF 0 SF 18 -

Westhampton Court2125 Defoors Ferry Rd NW, Atlanta,GA, 30318Atlanta, GA 30318

$1.14 38,000 SF 0 SF 52 -

RENT/SF AVAILABLE SF BLDG SF # OF UNITS OCCUPANCY %Totals/Averages $1.22 62,995 SF 0 SF 79 0%

1

2

3

4

5

RENT COMPS SUMMARY


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1 2145 Bolton Rd NWAtlanta, GA 30318

THE ENCLAVE - II 2 2453 Coronet Way NWAtlanta, GA 30318

MOORES MILL VILLAGE 3 2265 Perry Blvd NWAtlanta, GA 30318

WESTSIDE CROSSING 4 2030 Defoor Ave NWAtlanta, GA 30318

DEFOOR OAK APARTMENTS

5 2125 Defoors Ferry Rd NW, Atlanta, GA, 30318Atlanta, GA 30318

WESTHAMPTON COURT

2336 Bolton Rd | Atlanta, GA 30318SUBJECT PROPERTY

RENT COMPS MAP


DEMOGRAPHICSS E C T I O N 6S E C T I O N 6

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1 MILE 3 MILES 5 MILES

Total population 5,787 54,379 185,156Median age 32.4 33.1 33.9Median age (Male) 31.8 32.1 33.6Median age (Female) 32.8 33.8 34.3

Total households 2,389 23,862 79,617Total persons per HH 2.4 2.3 2.3Average HH income $96,129 $95,162 $94,602Average house value $286,764 $368,881 $373,558* Demographic data derived from 2010 US Census

DEMOGRAPHICS REPORT


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POPULATION 1 MILE 3 MILES 5 MILES

Total population 5,787 54,379 185,156

Median age 32.4 33.1 33.9

Median age (Male) 31.8 32.1 33.6

Median age (Female) 32.8 33.8 34.3

HOUSEHOLDS & INCOME 1 MILE 3 MILES 5 MILES

Total households 2,389 23,862 79,617

# of persons per HH 2.4 2.3 2.3

Average HH income $96,129 $95,162 $94,602

Average house value $286,764 $368,881 $373,558

* Demographic data derived from 2010 US Census

DEMOGRAPHICS MAP


MARKETSYNOPSISS E C T I O N 7S E C T I O N 7

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7% 21% 7% 28% 26% 11%0-4 YEARS 5-19 YEARS 20-24 YEARS 25-44 YEARS 45-64 YEARS 65+ YEARS

• The local population is projected to exceed 6.3 million people during the next five years, after adding roughly 512,000 residents.

• Nearly 231,000 households will be created by the end of 2022, generating the need for additional housing options.

• A skilled workforce includes nearly 36 percent of residents age 25 and older with a bachelor’s degree, which places the metro above thenational level.

20182018POPULATIONPOPULATION

5.8M5.8M2018 Growth 2017-2022:

8.8%

2.1M2.1M20182018

HOUSEHOLDSHOUSEHOLDS

10.9%2018 Growth 2017-2022: U.S. Median:

20182018MEDIAN AGEMEDIAN AGE

36.136.137.8

2018 MEDIAN2018 MEDIANHOUSEHOLDHOUSEHOLD

INCOMEINCOME

U.S. Median:

$59,400$59,400$56,300

ATLANTA OVERVIEW


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The Atlanta metro encompasses 29 counties in northwestern Georgia. With few natural barriers to limit development, tremendous population growth over the past decade expanded the metro’sborders and the region now has a population of roughly 5.7 million people. Over the next five years, the region is expected to add nearly 500,000 residents. Meanwhile, new redevelopmentprojects in the downtown and midtown sections of Atlanta present a vast array of housing, entertainment and retail opportunities that are enticing residents back into the city and providingoptions for people moving to the metro.

HEAVY CONCENTRATION OF CORPORATE HEADQUARTERS:Atlanta ranks fifth in the nation in the number of Fortune 500 headquarters with 17 companies, including UPS, Delta Airlines, and Coca-Cola.

STRONG EMPLOYMENT GAINS:The metro ranks among the highest in the nation for job growth. Nearly 400,000 jobs were added in the last four years.

LOW COST OF LIVING AND DOING BUSINESS ATTRACTS EMPLOYERS:A pro-business environment and affordability helped Atlanta rise to second in the nation in job creation last year.

MAJOR AREA EMPLOYERS• Delta Airlines• The Home Depot• AT&T• WellStar Health Systems• UPS• Northside Hospital• Piedmont Healthcare• Children's Healthcare of Atlanta• Cox Enterprise• Bank of America

ECONOMY• Gross metropolitan product (GMP) and retail sales progress above

national levels.

• The area serves as a financial hub for the Southeast. The FederalReserve Bank of Atlanta and SunTrust Bank are housed locally.

• Many companies favor Atlanta for low corporate taxes, its pro-businessclimate and access to national and global markets. Among the manycorporate headquarters are Home Depot, Aflac and Turner BroadcastCo. Other major firms include NCR, Mercedes Benz, Porsche and StateFarm.

MANUFACTURINGMANUFACTURING6%

22%TRADE, TRANSPORTATION, & UTILITESTRADE, TRANSPORTATION, & UTILITES

19%PROFESSIONAL & BUSINESS SERVICESPROFESSIONAL & BUSINESS SERVICES

4%CONSTRUCTIONCONSTRUCTION EDUCATION & HEALTH SERVICESEDUCATION & HEALTH SERVICES

13%GOVERNMENTGOVERNMENT12%

4%INFORMATIONINFORMATION

11%LEISURE & HOSPITALITYLEISURE & HOSPITALITY

6%FINANCIAL ACTIVITIESFINANCIAL ACTIVITIES

OTHER SERVICESOTHER SERVICES4%

MARKET OUTLOOK


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The Atlanta metro features a surging business environment and modern infrastructure whileproviding entertainment and attractions. Affordable housing in the outer perimeters lowers theaverage cost of living. The metro has several acclaimed cultural institutions, including ZooAtlanta and the High Museum of Art. More than 30 institutions of higher learning call Atlantahome, including Emory University, Georgia Institute of Technology, Georgia State University, andSpelman College, and Morehouse College. Outdoor and sports enthusiasts will find plenty toenjoy. Mild weather year-round beckons residents to hike, paddle and bike on the many trailsin and around Atlanta. Atlanta is home to professional sports franchises in the NFL, MLB, NBA,MLS, and WNBA.

Atlanta’s apartment assets attract a diverse pool of buyers. Investors from a variety of marketsin California, Texas, New York and New Jersey are competing with local investors for areaproperties. The growing number of households and healthy job creation underpin rentaldemand, motivating many buyers.

Institutional investors remain active in Buckhead and Midtown, where cap rates in the mid-4 tolow-5 percent range can be found. Few listings in these areas are pushing some to considerwell-located assets in the Cumberland/Galleria area and Sandy Springs, where cap ratesaverage in the mid-5 percent band.

Buyers in the $1 million to $10 million price tranche have increased interest in southwesternsuburbs of Atlanta. Many of these areas have posted large vacancy declines during the past 12months and are typically home to working-class people.

QUALITY OF LIFE INVESTMENT TRENDS

ARTS & ENTERTAINMENTSPORTS EDUCATION

ECONOMIC DRIVERS


Roughly 11,100 positions werecreated during the first quarter,contributing to the 44,700 jobscreated during the past 12months. Hiring cut theunemployment rate 50 basispoints to 4.3 percent duringthis time.

The trade, transportation andutilities sector led job gainswith the creation of 17,300jobs. Education and healthservices followed with theaddition of 14,700 employees.

Demand kept pace with supplyadditions, holding vacancy at5.9 percent in the first quarter.The prior year, vacancy tickedup 10 basis points.

While metrowide vacancy hasheld steady, Class C unitsposted a 100-basis-pointdecrease in the rate during theprevious four quarters, to 5.5percent. The average effectiverent for these jumped 6.2percent during this time.

Construction picked up fromthe 10,400 apartmentscompleted in the prior 12-month period. Midtownreceived nearly 2,400 units,the most among submarkets.

One of the largest projectsunderway is Post CentennialPark, in Downtown Atlanta.The project will compriseroughly 440 rentals and isscheduled for completion inearly 2019.

Building on a 6.3 percentincrease during the previous12-month period, the averageeffective rent climbed to $1,143per month in March.

Above-average rent growth wasrecorded in many suburbanlocations, including those in theFar West Atlanta Suburbssubmarket. Here, rent growthclimbed 8.7 percent to $975 permonth.

1.6% 12,000 5.0%0increase in totalemployment Y-O-Y units completed Y-O-Y

basis point decreasein vacancy Y-O-Y

increase in effectiverents Y-O-Y

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1Q18 - 12-MONTH PERIOD


Several bustling industries including financial services, technology, telecommunications and filmpropel Atlanta’s job growth rate above the national pace. As a result, numerous individuals arerelocating to the metro in search of employment, keeping the pace of household formation strong.Elevated demand in 2018 supports net absorption topping 10,000 units for a second consecutive year,though heightened deliveries will outstrip overall apartment demand and place upward pressure onvacancy. Softening vacancy remains localized to areas with elevated completions, from Midtown up toSandy Springs, and further additions in 2018 will likely keep the rate elevated. Despite higher vacancy,rents in Midtown and Buckhead remain the highest in the market, pushing some residents into moreaffordable areas. As a result, more than $1 billion in development has been announced west of theChattahoochee River, and demand for apartments here rises as units are delivered.

Both out-of-state and in-state buyers in search of apartment properties priced between $1 million and$10 million are primarily targeting complexes in suburban locations. South Fulton County, ClaytonCounty and Cumberland draw attention from these investors and initial yields average in the high-6percent to low-7 percent span. Institutional capital remains focused on the area inside Interstate 285,where thousands of units will come online this year. In the downtown area, units are anticipated to fillquickly amid the resurgence of the area, led primarily by off-campus students and faculty for GeorgiaState University, offering new opportunities for these institutional buyers. As the metro’s price per unitnormalizes, existing Class A buildings typically trade at first-year returns in the mid-5 percent range,with initial yields closer to 5 percent for newly developed assets.

Economic growth and positive demographics support apartment demand

Diverse buyer pool targets Atlanta apartment assets.

Elevated completions raise vacancy, lowering Atlanta one spot in this year’s ranking.

Job growth remains above the national pace this year as 57,000 workers are added to payrolls.

Deliveries stay heightened in 2018, with the majority of units slated to come online inside theperimeter, where more than 9,000 units will be added to inventory.

The vacancy rate rises from last year to 6.5 percent in 2018 as completions remain at their highestlevel since the early 2000s.

The average effective rent will increase again this year, albeit at the slowest pace since 2012. Theaverage reaches $1,197 per month in 2018.

Vinings, Cumberland and Downtown Atlanta are areas of revitalization, and investors will take a keenlook for both new assets and value-add opportunities.

FORECAST

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MARKET TRENDS


Transaction velocity rose roughly 9 percent during the previous four quarters. Householdformation above the national average and strong rent growth helped buoy investor interest.

Rising sales of lower-priced Class C assets declined the average price marginally to $95,000 perapartment in the first quarter.

Declining vacancy and strong rent growth t\at Class C assets will sustain interest in theseproperties moving forward. Cap rates for these properties average in the high-6 percent area.

Healthy Demographics Keep Investors Active In Atlanta’s Apartment Properties

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SALES TRENDS


Demand for Class C Space Drives Vacancy Improvement, Boosts Rents Class C units drive apartment demand. An elevated pace of apartment construction during the past four years has weighed on overall vacancy.More than 38,000 units have been completed during this time frame, the majority of which were top-tier units that lifted Class A vacancy roughly 150basis points. As a result, many of these properties have implemented concessions to fill space, causing annual rent growth for Class A space to slownotably compared to other asset classes. On average, Class A monthly rent is between $440 and $700 higher than Class B/C space. These higherrents are keeping many in Class C apartments, resulting in demand slashing this tier’s vacancy nearly 300 basis points over the past three years.Tightening vacancy in this segment sparked rent growth above the metro average during the previous 12 months.

Construction concentrated in select areas. The pace of deliveries moderates this year, aligning closer to the number of completions in 2015 and2016. More than half of all deliveries will be located in Buckhead, Midtown and Sandy Springs, with the remainder spread throughout the metro. Thistrend will continue through 2019, with these three areas receiving a combined total of 4,800 apartments.

Investment Trends

Georgia’s pro-business environment has continued job growth in Atlanta, fosteringhousehold formation and keeping investor attention in the metro. Out-of-state buyers areincreasingly competing with local investors, while international capital has also takeninterest. The Hartsfield-Jackson Atlanta International Airport is one of the busiest in theworld, allowing many investors direct flights to conduct business.

Construction: 9,300 units will be presented. Deliveries slow from the 12,100 units completed in 2017. Buckhead, Midtown and Sandy Springs will each receive more than 1,500 apartments.

Vacancy: 30 basis point increase in vacancy. Net absorption of nearly 7,300 units does not outpace completions, placing slight upward pressure on vacancy. The rate reaches 6.3 percent in 2018.

Rents: 4.6% increase in effective rents. The average effective rent climbs 4.6 percent in 2018 to $1,201 per month. Last year, a rise of 5.5 percent occurred.

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ATLANTA APARTMENTS OVERVIEW


Demand Outlook Sturdy as Pace of Construction Begins to Retreat Investors wary of apartment construction. The wave of apartment completions entering the market in recent years has permeated the investor psyche,raising concerns of overdevelopment and escalating vacancy rates, but numerous demand drivers have held this risk in check. Steady job creation, positivedemographics, above-trend household formation and elevated single-family home prices have converged to counterbalance the addition of 1.37 millionapartments over the last five years, at least on a macro level. Though a small number of markets have faced oversupply risk, the affected areas tend to beconcentrated pockets, with upper-echelon units facing the greatest competition. For traditional workforce housing, Class B and C apartments, the risksstemming from overdevelopment have been nominal, and in most metros, even the Class A tranche has demonstrated sturdy performance. In the comingyear, rising development costs, tighter construction financing and mounting caution levels will curb the pace of additions from the 380,000 units delivered in2017 to approximately 335,000 apartments. However, the list of markets facing risk from new completions will stretch beyond the dozen metros that buildershave concentrated on thus far. This will heighten competition, requiring investors to maintain an increasingly tactical perspective integrating vigilant marketscrutiny and strong property management.

Competitive nuances increasingly granular. Although the pace of apartment completions will moderate in 2018, additions will still likely outpace absorption.This imbalance will most substantively affect areas where development has been focused, such as the urban core where vacancy rates have risen abovesuburban rates for the first time on record. Nationally, Class A vacancy rates have advanced to 6.3 percent in 2017 and will continue their climb to the 6.8percent range over the next year. Vacancy rates for Class B and C assets will rise less significantly in 2018, pushing to 5.0 percent and 4.7 percent,respectively. Although vacancy levels are rising, three-fourths of the major metros have rates below their 15-year average. Still, the magnitude of newcompletions coming to market and the high asking rents these new units command will spark increased competition for tenants, generating a more liberal useof concessions in 2018 as landlords attempt to entice move-up tenants.

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U.S. APARTMENT OVERVIEW


Fed raises benchmark interest rate, plots path for additional increases. The Federal Reserve increased the federal funds rate by 25 basis points, liftingthe overnight lending rate to 1.5 percent. While the Fed noted that the inflation outlook had moderated in recent months, an upgraded economicforecast factoring in recent tax cuts and a rollback in regulation strengthened growth projections for the next two years. As a result, the Fed has guidedtoward two additional rate hikes this year, while setting the stage for as many as four increases in 2019.

Lending costs rise alongside Fed rate increase. As the Federal Reserve lifts interest rates, lenders will face a rising cost of capital, which may lead tohigher lending rates for investors. However, in an effort to compete for loan demand, lenders may also choose to absorb a portion of the costincreases. While higher borrowing costs may prompt buyers to seek higher cap rates, the positive economic outlook should provide rent growth thatoutpaces inflation over the coming year. As a result, sellers remain committed to higher asking prices, which has begun to widen an expectation gapas property performance and demand trends remain positive.

The capital markets environment continues to be highly competitive. Government agencies continue to consume the largest share, just slightly over 50percent, of the apartment lending market. National and regional banks control approximately a quarter of the market. Global markets and foreigncentral banks are keeping pressure down on long-term interest rates. Pricing resides in the 4 percent realm with a maximum leverage of 75 percent.Portfolio lenders will typically require loan-to-value ratios closer to 70 percent with interest rates in the high-3 to mid-4 percent range. The passage oftax reform and rising fiscal stimulus will keep the U.S. economy growing strongly and rental demand will remain high with the national apartmentvacancy rate at 5 percent at the end of 2017.

Atlanta Metro Area

Include sales $2.5 million and greater Sources: CoStar Group, Inc.; Real Capital Analytics

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CAPITAL MARKETS


Growth Cycle Invigorated by Confidence; Tax Laws Could Transform Housing Tight labor market restrains hiring as confidence surges. The steady economic tailwind benefiting apartment performance is poised to carrythrough 2018 as a range of positive factors align to support growth. Consumer confidence recently reached its highest point since 2000 while small-business sentiment attained a 31-year record level, both reinforcing indications that consumption and hiring will be strong. The total number of jobopenings has hovered in the low-6 million range through much of 2017, illustrating that companies have considerable staffing needs, but withunemployment entrenched near 4 percent, companies will continue to face challenges in filling available positions. These tight labor conditions shouldplace additional upward pressure on wages, potentially boosting inflationary pressure in the coming year. The strong employment market, risingwages and elevated confidence levels could unlock accelerated household formation, particularly by young adults. Last year, the number of youngadults living with their parents ticked lower for the first time since the recession, signaling that these late bloomers may finally be considering a moreindependent lifestyle.

Housing preferences may change under new tax laws. The new tax laws could play a significant role in shaping both the economy and housingdemand in 2018. Reduced taxes will be a windfall for corporations, potentially sparking invigorated investment into infrastructure. The rise in CEOconfidence over the last year already boosted companies’ investment by more than 6 percent, accelerating economic growth. However, the taxincentive-based stimulus will likely offer only a modest bump to GDP in 2018 because corporate investment comprises just 12 percent of economicoutput. One factor that could weigh on economic expansion under the new tax laws is the housing sector, which added just 3 percent to the economylast year, about two-thirds of normal levels. The increased standard deduction and restrictions on housing-related deductions will reduce some of theeconomic incentive to purchase a home, further sapping the strength of the housing sector. Nonetheless, the increased standard deduction couldbenefit apartment investors, encouraging renters to stay in apartments longer and reducing the loss of tenants to homeownership.

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U.S. ECONOMY


MULTIFAMILYADVISORSS E C T I O N 7S E C T I O N 7

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ADRIAN PROVOSTAssociateNational Multi Housing GroupTelephone: (678) 808-2788Fax: (678) [email protected]: GA 341770, FL BK3376045

DAN MCBURNEYAssociateNational Multi Housing GroupTelephone: (678) 808-2793Fax: (678) [email protected]: GA 368233, FL SL3098262

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BOLTON ROAD APARTMENTS · 2018-09-06 · PAGE 7 SALE PRICE $1,125,000 LOCATION INFORMATION Building...

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