exclusive multifamily offering exclusive multifamily offering

Transcription

EXCLUSIVE MULTIFAMILY OFFERING
$000,000,000 | | 83
000
UNITS
PRICE: $21,000,000
UNITS
BROKER NAME
555.555.5555
[email protected]
BROKER NAME
555.555.5555
[email protected]
KAROLINE
BROKER
NAME
SAULS
555.555.5555
310.470.8044
[email protected]
[email protected]
ROBIN D.NAME
BROKER
OSSENBECK
555.555.5555
818.905.3890
[email protected]
[email protected]
www.hendrickspartners.com
737 South Kingsley Drive | Wilshire Center, CA 90005
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Premier Location:
Address | City, ST
» Prime Wilshire Center location within walking distance of hip restaurants, nightlife, and shopping,
including the Aroma Wilshire Center, Koreatown Plaza Mall, and the Wiltern Theatre.
Highlights
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Extremely low vacancy of 2.4% and rent growth in excess of 10.5% over the past 12 months.
Highlights
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Over 600,000 square feet of retail and entertainment and 1,300 luxury high-rise condominium units
Highlights
currently under construction in Wilshire Center (over $1 billion).
Highlights
Class-A
Property:
» Renovated to condo quality unit specifications with granite and marble countertops, stainless-steel
Highlights
appliances, travertine and carpet flooring, and designer touches throughout.
Highlights
» Excellent amenity package with a state-of-the-art fitness center, leasing office, WiFi, private driving
range, pool and spa, and built-in BBQ area.
Highlights
» 1988 construction with no rent control. Complete renovation in 2007.
Highlights
Outstanding Economics:
Highlights
» Strong upside potential through the evaporation of a substantial loss to lease, and the proven ability
to charge rent premiums for additional upgrades.
Highlights
» Priced below replacement cost.
KINGSLEY DRIVE APARTMENT HOMES
TABLE OF CONTENTS
Disclaimer & Confidentiality Agreement
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PROPERTY
Property Summary
Area Description
Interior Amenities
Exterior Amenities
Property Description
Submarket Description
Regulatory Agreement Information
Location Map
Floor Plans
Site Plan
Aerial - North View
Aerial - West View
Kingsley Drive Upside
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17
18
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MARKET
Economic Profile - Wilshire Center, CA
Wilshire Center Development Map
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29
FINANCIALS
Executive Summary
Pro Forma Income & Expenses
EOY-1 Forecasted Operations
10-Year Discounted Cash Flow
Assumptions Summary
Yield Schedule
10-Year Debt Payment Schedule - Existing and Supplemental
Assumable 10-Year Debt Payment Schedule
Supplemental 10-Year Debt Payment Schedule
Investor Return Analysis
Yield Return Analysis
Loan Obligations Abstract
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COMPARABLES
Comparable
Comparable
Comparable
Comparable
Comparable
Comparable
Comparable
Comparable
Sale Properties Summary
Sale Properties Analysis
Sale Properties
Sale Properties Map
Rental Properties Summary
Rental Properties Analysis
Rental Properties
Rental Properties Map
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APPENDIX
Articles of Interest
Hendricks & Partners Apartment Update
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DISCLAIMER & CONFIDENTIALITY AGREEMENT
The material contained in this document is confidential,
furnished solely for the purpose of considering investment in
the property described therein and is not to be copied and/or
used for any purpose or made available to any other person
without the express written consent of Hendricks & Partners.
In accepting this, the recipient agrees to keep all material
contained herein confidential.
This information package has been prepared to provide
summary information to prospective purchasers and to establish
a preliminary level of interest in the property described herein.
It does not, however, purport to present all material information
regarding the subject property, and it is not a substitute for a
thorough due diligence investigation. In particular, Hendricks
& Partners and Seller have not made any investigation of the
actual property, the tenants, the operating history, financial
reports, leases, square footage, age or any other aspect of the
property, including but not limited to any potential environmental
problems that may exist and make no warranty or representation
whatsoever concerning these issues.
The information contained in this information package has
been obtained from sources we believe to be reliable; however,
Hendricks & Partners and Seller have not conducted any
investigation regarding these matters and make no warranty
or representation whatsoever regarding the accuracy or
completeness of the information provided. Any pro formas,
projections, opinions, assumptions or estimates used are for
example only and do not necessarily represent the current or
future performance of the property.
Hendricks & Partners and Seller strongly recommend that
prospective purchasers conduct an in-depth investigation of
every physical and financial aspect of the property to determine
if the property meets their needs and expectations. We also
recommend that prospective purchasers consult with their tax,
financial and legal advisors on any matter that may affect
their decision to purchase the property and the subsequent
consequences of ownership.
All parties are advised that in any property the presence of
certain kinds of molds, funguses, or other organisms may
adversely affect the property and the health of some individuals.
Hendricks & Partners recommends, if prospective buyers have
questions or concerns regarding this issue, that prospective
buyers conduct further inspections by a qualified professional.
The Seller retains the right to withdraw, modify or cancel this
offer to sell at any time and without any notice or obligation.
Any sale is subject to the sole and unrestricted approval of Seller,
and Seller shall be under no obligation to any party until such
time as Seller and any other necessary parties have executed a
contract of sale containing terms and conditions acceptable to
Seller and such obligations of Seller shall only be those in such
contract of sale.
For more information on these and
other Hendricks & Partners exclusive
listings, please call or visit our website at
www.hendrickspartners.com
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PROPERTY
PROPERTY SUMMARY
Number of Units
Year Constructed
Type of Buildings
83
1988 / 2007*
Wood Frame & Stucco,
Four-Story Building
115 On-Grade Parking Spaces
in a Parking Structure
Electric - Individual
Water - Master
Gas - Individual
Flat Tar / Gravel
Wood Frame / Stucco
0.62 / 26,998 SF
133.87 Units / Acre
Parking
Metering
Roofs
Exterior
Acreage of Site
Density
*Complete Renovation in 2007
WILSHIRE CENTER DEVELOPMENT MAP LEGEND
WILSHIRE CENTER DEVELOPMENT MAP
Kingsley Dr
16
8
S Vermont Ave
S Normandie St
S Western Ave
S Wilton Pl
18
W 3rd St
7 4&5 6
17
1
S Virgil Ave
Beverly Blvd
Wilshire Center
15
12
14
6th St
Wilshire Blvd
7th St
3
17 19
10 11
Kingsley Drive
Apartment Homes
2
13
W Olympic Blvd
*The full size development map with details on individual developments can be found
on pages 29-30.
1.
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16.
17.
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18.
19.
Aroma Wilshire Center
Megablock
The Mercury Los Angeles
Solair Wilshire Mixed-Use Project
Wilshire & Western Metro Rail Station
The Gardens at Wilshire
MaDang The Courtyardt
Equitable City Center
3670 Wilshire Project
Ceiland Coast
Vermont Station
Wilshire Towers
Ambassador Hotel
Circa on Wilshire
3223
Wilshire Palace
LKCH Development
Perino’s Apartments
Serrano Palace Tower
AREA DESCRIPTION
Kingsley Drive Apartment Homes provide life without
compromise. Set in the metropolitan area of Wilshire Center
and minutes away from hip restaurants, shops, and nightlife,
Kingsley Drive brings you sophisticated living. The area’s many
attractions include the Aroma Wilshire Center, Koreatown Plaza
Mall, Koreatown Galleria, and the Wiltern Theatre. Kingsley
Drive is also conveniently located near three Metrorail Stations.
Residents of Kingsley Drive enjoy a stylish home with great
amenities and the commute-free convenience of urban living.
They can swim in the sparkling pool or relax in the tranquil spa,
practice their golf swing on the driving range and putting green,
workout in the state-of-the-art fitness center, get together with
friends and family in the barbecue area, and stay connected
with the world with the WiFi system. The on-site professional
management team is committed to responsive service and
meticulous maintenance, assuring residents that they always
come home to the very best. The Kingsley Drive Apartment
Homes offer spacious floor plans designed for a variety of
lifestyles with granite and marble countertops, travertine floors,
stainless-steel appliances, two-tone paint, plush carpeting,
abundant closet space, fireplaces, and private balconies and
patios. Kingsley Drive has all the conveniences one would need
with the feel of home that every resident deserves.
Kingsley Drive Apartment Homes is uniquely situated in a
very desirable location within Wilshire Center. With over nine
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AREA DESCRIPTION CONTINUED
million square feet of office space and a high concentration of jobs in
the professional, scientific and technical industries, finance and insurance,
and legal industries, Wilshire Center has become a strong economic pulse
for Los Angeles. Some of the larger employers in the immediate area are
within walking distance of the property, including: Ceragem International
headquarters (distributor of medical/health products); UTLA headquarters
(United Teachers Los Angeles); several major banks, including Nara Bank,
California Bank & Trust, Wilshire State Bank, Center Bank, Hanmi Bank
and Mirae Bank. The Korean Embassy and the Superior Court are also
nearby. This area is commonly known as Wilshire Center and is dominated
by Korean small businesses.
In May 2005, the Korean government lifted its cap on foreign investment.
Because Wilshire Center is home to the largest population of Koreans
outside of Korea, Wilshire Center will likely be the beneficiary of a large
share of this increased foreign investment.
Job growth in the Wilshire Center area is among the highest in the County,
with an expected 4% job growth rate. Investor confidence in the area is
extremely high. Over the next three years, over $1 billion of residential,
commercial and retail projects are planned for Wilshire Center. The new
residential development will spur high-end retail and commercial investment,
and the growing residential population will spend more time and money in
the area, resulting in an even bigger boost to the local economy.
INTERIOR AMENITIES
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Granite & Marble Countertops
Travertine Flooring in Kitchens & Baths
Hardwood Floors in Select Units
Two-Tone Paint Schemes
Plush Carpeting & Base Moulding Throughout
Washer / Dryer Addition / Conversion Capable*, in
Select Units
Upgraded Chandeliers & Light Fixtures
New White Cabinet Faces
Whirlpool Stainless-Steel Appliance Packages
Wine Refrigerator
All New Brushed Nickel Hardware & Bathroom Fixtures
Mirrored Closet Doors
Direct TV, Property-Wide Contract
Central HVAC
Patios or Balconies, in Select Units
Fireplaces, in Select Units
Ample Closet Space
*After Laundry Contract Expires in 2008
More and more businesses are relocating to Wilshire Center as tenants
chase the relatively affordable rents as compared to the more expensive
LA markets. The area is now the tightest office market in the County, with a
midyear vacancy rate of 5%, compared to the County average of 9%.
Wilshire Center is the most densely populated district outside of Manhattan
in New York, with roughly 250,000 residents in a five square mile area
(as reported in the LA Business Journal from US Census Bureau 2000
figures). Wilshire Center is located at the center of LA’s biggest employment
EXTERIOR AMENITIES
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Newly Remodeled Leasing Office
Controlled Access Lobby with Designer Decor
Two Newly Remodeled Elevators with Faux Bamboo Walls
Hotel Quality Common Area Carpeting & Lighting
State-of-the-Art Fitness Center
Swimming / Lap Pool & Jacuzzi
Brand New Built-In Barbecue Center
WiFi System
Lush Landscaping
Driving Range & Putting Green
Assigned, Gated Parking
Professional On-Site Management & Maintenance
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centers. Residents have easy access to some of the area’s most prominent
business communities such as the Westside, Mid-Cities/Hollywood and
Downtown submarkets that hold over one million jobs. The abundance
of transportation choices (including three Metro Red/Purple Line stops, a
Dash line and a Rapid Bus Line) make commuting to these job centers
quite easy.
Located within walking distance to professional employment within the
Wilshire Center High Rise Corridor, the area offers new, hip and exciting
storefront retail and restaurants, newly built shopping centers, and new,
dynamic residential/retail development. Kingsley Drive is within walking
distance of the unique stretch of Olympic Boulevard which provides a wide
range of Korean owned businesses, shops and restaurants. The Wilshire
Corridor office market contains over 19.6 million square feet of office
space and is home to over 150,000 jobs. Stretching from Wilshire Center
to Westwood, the area offers an exciting mix of media, entertainment
and publishing employers like E! Networks, Spelling Productions, CBS
Radio and TV, the Screen Actors Guild of America, Los Angeles Business
Journal, Virgin Entertainment Group, Pacific Western Media, Edelman
Public Relations, Variety Magazine, William Morris Agency, Creative Artist
Agency, and Ticketmaster. From Wilshire Center to Miracle Mile alone,
there are over 300,000 jobs, all of which are within a five to ten minute
commute from the subject property.
The Metro Red Line at Western and Wilshire can take residents less
than five miles into nearby Hollywood in a matter of minutes, with its
2.1 million square feet of office space and abundance of entertainment
and entertainment-related jobs. Some of the largest names in music and
television have offices located in this submarket, including TV Guide,
Capitol Records, Paramount Pictures, AT&T, and Universal Studios. Kaiser
Permanente and Children’s Hospital of LA also have a large economic
presence. Residents of Kingsley Drive Apartment Homes can take the Red
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Line as far as North Hollywood, and they can transfer to the Orange Line
to access job centers in the San Fernando Valley, which boasts some 22.6
million square feet of office space and approximately 850,000 jobs.
The redline will soon expand to the Westside, providing access to the
beaches and everything the Westside offers, from jobs to shopping, highend restaurants and entertainment. Characterized by an incredibly diverse
business base, the Westside power centers of Century City, Beverly Hills,
and Santa Monica are home to a large number of firms in the professional,
scientific, technical, and entertainment services. Major employers in these
areas include UCLA, Macerich Co., Sony Pictures, 20th Century Fox, and
MGM. The Westside employs roughly 636,000 workers, or approximately
15% of the county’s total employment base. It is also the largest office
submarket in Los Angeles County, with over 42 million square feet of
Class-A and B office space.
Some very exciting developments are within walking distance of Kingsley
Drive, including The Mercury as well as Solair Wilshire, a new retail/condo
development above the Wilshire-Western Metrorail Station, providing an
exciting new 40,000-square-foot retail center reminiscent of “Times Square
New York” with a 22-story loft-style condo project above. In addition, there
is an exciting new retail/residential project in the final stages of lease-up
and completion atop the Wilshire-Vermont Metrorail Station, with a hip
vibe and modern architecture offering a total of 450 units and 35,000
square feet of new retail.
With the City of Los Angeles’ recent support of vertical developments,
Wilshire Center is exploding with new construction. Residents can enjoy
amazing new restaurants, entertainment and employment opportunities as
well as easy access to downtown Los Angles, Hollywood and the Westside
by the two Metrorail Redline Stations within walking distance of the property
located at Wilshire and Western, and Wilshire and Vermont.
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PROPERTY DESCRIPTION
The property features a completely remodeled common area, professionally
designed with a modern Euro-Asian vibe. The frontage of the property
was completely redesigned, including a new multicolor paint scheme,
gorgeous lush landscaping, and a fabulous new entrance to the lobby/
rental office. The main attraction of the entrance is the new monument
sign with a modern slate waterfall with the property name in cool chrome
lettering. The entrance to the controlled access lobby features seamless
glass and chrome doors, entrance walkway of real river rock, with modern
lighting. There is a new modern arbor at the entrance, enhanced with
gorgeous flowering vines. The lobby was completely redesigned, and is
reminiscent of a small European/Asian hotel lobby. The flooring of the
lobby is oversized geometric multicolored ceramic tile, and the lobby is
furnished with modern couches, mirrors, light fixtures, and tables set with
orchids, evoking a comfortable lounge feel and offers a fully equipped
rental office and separate mail room. The two chrome high-speed elevators
were refinished with the same multicolored geometric flooring as the lobby,
and feature faux bamboo walls. The property is fully sprinklered in both the
common areas and in the unit interiors. The unit mix consists of 59 onebedroom/one-bathroom units and 24 two-bedroom/two-bathroom units
in varying floor plans.
All of the common area interiors feature hotel style modern carpet of the
highest quality, multicolor paint schemes, and modern chrome light fixtures,
the quality of which is unparalleled in a remodeled apartment community.
The amenities of the property feature a state-of-the-art fitness center with
a new flat screen TV, hardwood floors, a remodeled restroom with granite
countertops, and an extensive array of fitness and aerobic equipment.
Outside the fitness center there is a lap pool and spa, chrome patio and
lounge furniture, built-in barbecue, and a putting green and driving range,
a huge selling point for the market, and absolutely unprecedented!
The standard features of all of the units include individual gas hot water
heaters, fireplaces (select units), central HVAC, dishwashers and private
patios or balconies (on select units). The newly remodeled units have
kitchens with new cabinetry and a stainless-steel appliance package
including a wine refrigerator, granite countertops, and recessed lighting
with a chandelier. The kitchen and bathroom flooring is travertine, and
some of the units have hardwood floors as an upgrade.
SUBMARKET DESCRIPTION
The Wilshire Center submarket is comprised of approximately 43,000
apartment units and represents approximately 6% of the overall LA County
apartment market. The Wilshire Center submarket has experienced
impressive rent growth and low vacancy rates. Over the last five years,
vacancy averaged an extremely low annual rate of under 3%. Low vacancy
rates have led to strong rent growth. With rents in the submarket increasing
approximately 10% over the last year.
The market rents for remodeled units compete easily as the more affordable
alternative to new condos and new construction apartments in the market.
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SUBMARKET DESCRIPTION CONTINUED
The rents range from one-bedrooms on the first floor without a balcony
for $1,621 to two-bedroom/two-bath penthouse units facing Kingsley
(the premium view), with a balcony for $2,244. There is an associated
premium for each higher floor, whether or not the unit offers a balcony, if
finished with hardwood floors, and washer/dryers in-unit. All units on the
fourth floor are Penthouse units.
REGULATORY AGREEMENT INFORMATION
Twenty percent of the units are set aside as per a regulatory agreement
(found in our document center at www.hpapts.com), for individuals or
families whose income does not exceed 80% of the area median income
(“qualified tenants”), until February 1, 2019. The schedule of maximum
allowable rents can also be found on our website under the document
center for the property, and a utility schedule wherein the utilities are either
included in the rent or reduced by the amounts in the utility schedule.
The Regulatory Agreement is between the owner of the property and The
California Housing Finance Agency (CalHFA), and runs with the property
and future owner.
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LOCATION MAP
HOLLYWOOD
BEVERLY HILLS
MIRACLE MILE
KINGSLEY DRIVE
CULVER CITY
737 SOUTH KINGSLEY DRIVE
LOS ANGELES, CA 90005
Distance to Points of Interest
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Beverly Hills (6 miles) – Beverly Hills Hotel,
Rodeo Drive.
»
Century City (8 miles) – 10 million square feet
of office space, 20th Century Fox, Century City
Shopping Center.
»
Hollywood (5 miles) – Walk of Fame, Grauman’s
Chinese Theatre, Pantages Theatre, Kodak Theatre,
Hollywood Highland Center Red Line Stop.
»
KINGSLEY DRIVE
Miracle Mile (3 miles) – LA County Museum of
Art, La Brea Tar Pits, CBS Radio.
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FLOOR PLANS
1 BED / 1 BATH
LOTUS
1 BED / 1 BATH
JASMINE
1 BED / 1 BATH
LILAC
1 BED / 1 BATH
JADE
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2 BED / 2 BATH
IRIS
2 BED / 2 BATH
ORCHID
2 BED / 2 BATH
LILY
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SITE PLAN
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AERIAL - NORTH VIEW
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AERIAL - WEST VIEW
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KINGSLEY DRIVE UPSIDE
The Kingsley Drive Apartment Homes, although beautifully
renovated and already achieving strong rents, still contain a
tremendous amount of upside. Through the continuation and
implementation of the below items, the buyer can substantially
increase their cash flows and the capitalized value of the asset.
Wood Floors:
» Value-Add Proposal: Installing wood floors in the remaining
units (38-1+1’s and 16-2+2’s) and achieve a rental
premium of $125 for a 1+1 and $150 for a 2+2.
» Current Status: Management has added wood flooring to
9 – 1+1 units and 3 – 2+2 units.
» Quantifying the upside: Wood floors are commanding a
$125 premium for the 1+1’s and $150 for the 2+2’s. This
represents an annual income increase of $85,800, if all of
the market-rate units have wood floors installed.
Other Opportunities:
» Short Term Leases:
» Management has not marketed short term lease
opportunities to potential residents. Other properties in
the area, such as City Heights Apartments, are offering
3-6 month leases for a $100/month premium.
» Parking:
» There are currently 10 extra parking spaces at the
property. By charging $50/space, that represents an
annual income increase of $6,000.
» Unused Room:
» There is potential to increase the amenity package by
adding a business center.
Washer & Dryer in Unit:
» Value-Add Proposal: Add washer and dryers to all marketrate units.
» Current Status: Management has already proven the
feasibility by upgrading X units to include washer
and dryers.
» Quantifying the Upside: With the addition of a washer and
dryer in the unit, rents can be increased approximately $75,
which represents an annual income increase of $59,400, if
all of the market-rate units have washer and dryers installed.
The existing laundry lease has a non-competition clause, but
the lease expires in June, 2008.
Significant Loss to Lease:
» Value-Add Proposal: Increase all rents to market and
evaporate the sizeable loss to lease.
» Current Status: Due to the strength of the market,
management has increased market rents several times over
the last 12 months. The result is a significant loss to lease,
with the market rents already being achieved.
» Quantifying the Upside: Without making any changes to the
property and bring units to the current market rents, there is
a current loss to lease of $176,488/year.
RUBS Program:
» Value-Add Proposal: Fully implement the current
RUBS program.
» Current Status: The RUBS program is currently 53.1%
implemented. The current bill back rate for water/sewer/
trash is approximately $43 for a 1+1, and $50 for a 2+2.
» Quantifying the Upside: Upon full implementation of RUBS,
the annual income increase will be $19,000.
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MARKET
ECONOMIC PROFILE - WILSHIRE CENTER, CA
120,000
60,000
40,000
1990
2000
2006
2011*
20,000
0
*PROJECTED
HOUSING
Wilshire Center’s housing inventory contains an estimated
37,499 units, 98.4% of which were occupied in 2006. Of the
market’s occupied units, an astounding 85.7% were renter
occupied, amounting to 32,135 rental units.
The unique character and urban amenities of the Wilshire Center
area have made it increasingly popular among apartment
dwellers, paralleling the rise in demand for apartments in West
Los Angeles as a whole.
“Young L.A. residents priced out of areas such as the
Westside and Hollywood are looking for hip alternatives.”
– Los Angeles Times
As of the third quarter of 2007, the Wilshire Center submarket’s
characteristically low vacancy rate stood at 2.3%, down from
2.4% reported 12 months prior, and well below the overall West
Los Angeles apartment market (3.7%).
AVERAGE VACANCY RATE
WILSHIRE CENTER APARTMENT MARKET
3.0%
1.8%
1.0%
0.6%
0.5%
2.3%
1.5%
2.4%
2.5%
2.0%
POPULATION
Wilshire Center boasts the highest population density on the
West Coast and is home to a diverse group of residents. As
of 2006, Wilshire Center was home to an estimated 113,512
residents, with 33,349 residents per square mile. That figure
reflects an 8.3% increase over the 104,765 residents reported
120,050
80,000
113,512
100,000
1.9%
In addition, construction on at least half a dozen projects worth
nearly a half-billion dollars is well underway in Wilshire Center.
While the ventures will add to Wilshire Center’s existing retail,
they will also bring hundreds of new housing units, as well as
attract additional new businesses, shoppers and residents from
all over the city.
140,000
2.2%
In October of 2006, Los Angeles City Mayor, Antonio
Villaraigosa, announced that more than $300 million in foreign
investment was headed to the Wilshire Center neighborhood
of Los Angeles. The development projects include the Korean
Trade and Cultural Center, known as Superblock, CGV Madang
Theatre complex; 3670 Wilshire Project, and the opening
of a new Woori Bank branch. According to the Los Angeles
Community Redevelopment Agency (CRA), over the next five
years, $53.5 million will be allocated for projects including a
$7.7 million Affordable Housing initiative and $7.2 million for
public improvements and open space, in addition to the already
planned Korean Trade and Cultural Center.
HISTORIC POPULATION
WILSHIRE CENTER
105,447
The nucleus of the Korean-American community in Los Angeles
is Wilshire Center. Although there are no clearly marked physical
boundaries separating Wilshire Center from its surrounding
environment, the community of the Wilshire Center region of
Los Angeles is roughly bounded by Arlington Avenue/Wilton
Place on the west, Melrose Avenue on the north, Hoover Street
on the east, and Pico Boulevard on the south.
in 1990. With a projected annual growth rate of 1.1% the
population could reach 120,050 by 2011. The median age of
Wilshire Center residents is 31.2 years.
104,765
INTRODUCTION
The Wilshire Center neighborhood of Los Angeles is situated at
the heart of the city, near downtown L.A. and Hollywood. Wilshire
Center is bordered by Wilton Place on the west, Hoover Street
on the east, Third Street on the north, and Eighth Street on the
south. The neighborhood is known for its architectural splendor,
featuring many prime examples of Art Deco construction, and has
been called the “backbone of Los Angeles” by Adolfo Nodal of the
L.A. Department of Cultural Affairs. Wilshire Center’s architectural
style, proximity to Hollywood and downtown L.A., convenient
access to transportation, fiber optic network, and its comparatively
affordable office lease rates have attracted a diverse group of new
businesses to the area, as well as new residents, including actors,
producers, lawyers, executives, and technology workers.
0.0%
3Q '01
3Q '03
3Q '05
3Q '07
21
3Q '01
3Q '03
3Q '05
$1,396
$1,282
$1,265
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
$1,166
According to an article published in the Los Angeles Times in
February of 2007, “much of the area is rebounding, helped
by the expansion of the Metro Red Line, which has made
Wilshire Center more accessibly and spurred developments
above subway stations on Wilshire Boulevard.”
$1,177
AVERAGE RENT
WILSHIRE CENTER APARTMENT MARKET
$1,092
DEVELOPMENT/NEW CONSTRUCTION
Over the past two decades, Wilshire Center has enjoyed a
renaissance of sorts as local business owners, residents, and
developers worked to restore and renovate key buildings
in the area. Wilshire Center, in particular, is experiencing a
flourishing revitalization.
$1,003
The overall average rent in the Wilshire Center submarket stood
at $1,396 as of the third quarter of 2007, reflecting a strong
8.9% increase over the $1,282 reported the year prior. Over the
past seven years, average rent in this submarket has increased
by a healthy 38.8%.
3Q '07
According to REIS, more than three-fourths of the existing
apartment inventory in the submarket was built before 1990,
and the majority of that (two-thirds) was built prior to 1980.
Renters aspiring to live in this submarket had limited, dated
rental options, none of which offered large, well-managed
buildings with significant amenities.
In recent years, the downtown L.A. and Miracle Mile
neighborhoods have established themselves as lifestyle
destinations. A number of brand-new luxury apartment projects
exceeding 100 units were completed between 2004 and 2006
in local submarkets: Visconti, Piero, and Museum Gardens.
Additionally, in 2007, a 123-unit apartment community, Avalon
Wilshire, opened its doors in the Miracle Mile. Residential
development has been spurred by the success of these new
communities, and investor attention has refocused on Wilshire
Center as the surrounding areas are reinvented.
The community’s development goals include combining residential
units with ground-floor retail, as well as adding cafes, libraries,
cultural facilities, and other services to the area to encourage a
community bustling with activity 24 hours a day.
A few of many planned, upcoming, and completed development
projects include:
» Ceiland Coast – A two-tower, 242-unit luxury hotel, with
about 6,000 square feet of retail space, a 40,000 square
foot health club, 24,000 square feet of restaurant space and
18,000 square feet of office space.
» 3670 Wilshire Project – This planned, $250 million
development project is the result of a joint venture between
Archeon International Group and Shin Young. The 3670
Wilshire Project will be a 40-story, mixed-use development
located on Wilshire Boulevard and Hobart Street. The
building, which will contain 378 luxury units and 8,000
square feet of retail space, will be the tallest high-rise
condominium complex in Wilshire Center.
3670 WILSHIRE PROJECT
In the long-term pipeline for the West Central Los Angeles area,
there are roughly 18 residential rental projects in various stages
of planning and construction. In the immediate vicinity (within
a three-mile radius), approximately 10 projects totaling 2,311
rental units are in early planning stages or under construction,
attracting a high-income demographic, and likely to draw more
restaurants and retailers to the area.
The area is particularly supply constrained. Demand will ensure
that the units are quickly absorbed, even if a new project is
developed every year.
22
» The Gardens at Wilshire – This planned, six-story,
159-unit mixed-use project will be located at 635 South
Hobart Boulevard in the heart of Wilshire Center. The
contemporary-style building will offer studio, one- and
two-bedroom apartments, as well as 7,500 square feet of
ground-level retail space. Construction is underway (August
of 2007) and the completion date has been pushed back
to sometime in 2008.
AROMA WILSHIRE CENTER
GARDENS ON WILSHIRE
» The Mercury Los Angeles – In 2004, the former Getty Oil
Company headquarters underwent a $52 million conversion
into 238 luxury residential units. The condominium units are
priced from the $400s to over $1 million. Additionally, the
23-story building will house The Coffee Bean & Tea Leaf,
Jamba Juice, a dry cleaner, a bank branch, gourmet deli,
and more. Units were available for occupancy in the spring
of 2007.
» The Ambassador Hotel Site – In 2005, a crew began
demolishing this historic structure, making way for a new
LAUSD campus. The $270 million campus will feature a high
school, middle school, and elementary school, serving a
total of 4,200 students upon completion, which is scheduled
for the third quarter of 2009. A public park is being planned
as part of the development.
MERCURY LOS ANGELES
» Equitable City Center – 160,000 square foot retail and
restaurant complex, anchored by a high-end market and
department store, with 340 underground parking spaces
and a passageway to the tower.
» Solair Wilshire – This mixed-use development going up
at the northwest corner of Wilshire Boulevard and Western
Avenue will ultimately occupy the entire 2.6-acre block.
Plans call for 22 stories that will encompass 186 luxury
residences and approximately 40,000 square feet of retail
and restaurant space as well as underground parking for
about 700 vehicles. The condos will be priced at $700,000
up to $2 million for a penthouse. Developer KOAR Wilshire
Western expects to deliver the retail space in April of 2008.
» Aroma Wilshire Center – 336,000 square feet of fitness,
spa, retail, and restaurant space.
» CGV MaDang Theatre Project – Construction of this
four-story, 100,000-square-foot retail/entertainment center,
23
otherwise known as The Courtyard MaDang, began in early
2006 and is scheduled for completion in the fall of 2007. This
major development project is one example of the increasing
Foreign Direct Investment from South Korean companies into
Los Angeles. The project will include a nine-level parking
structure, a gourmet Korean restaurant and a three-screen
bilingual theater, which recently opened its doors. The project
is located across the street from the Western/Wilshire Metro
station and the historic Wiltern Theater.
» Wilshire & Vermont – Urban Partners built 450 housing
units on a seven-acre property atop the Wilshire/Vermont
Metro Red Line subway station. Twenty percent of the units are
designated as affordable housing. This project also includes
35,000 square feet of commercial space. Construction was
completed in the spring of 2007. Also planned for the site
is a new school to be developed by the Los Angeles Unified
School District. This portion of the project is considered
Phase I. Additional phases will add another 726 residential
units to the area.
CGV MADANG THEATRE PROJECT
» Wilshire Towers – 405 condo units plus 27,000 square feet
of retail and 14,000 square feet of restaurant space, to be
completed in 2009. The developer is Gerding Edlen.
» Circle on Wilshire – 190 unit condo project in 18 stories,
5,330 square feet of retail, to be completed in 2009. The
developer is Mount Auburn Partners.
» Serrano Palace Tower – This structure sits on one-third of an
acre and will have 33 units served by 77 parking spaces.
» LKCH Development – 28 condominium units planned for
completion in 2007.
WILTERN THEATRE COMPLEX
» Perino’s Apartments – The former site of Perino’s restaurant
was recently redeveloped into a 47-unit apartment complex.
The residential community is located on a 1.5-acre lot
located at 4101 Wilshire Boulevard. The Carey & Kutay
Development company purchased the lot for $4 million
and spent an additional $20 million building out the
60,000-square-foot project. Apartments were available for
lease in early 2007.
» 3223 – Office to condo adaptive re-use, for 82 live-work
units and 23,000 square feet of commercial space, currently
under construction.
» Megablock – This area is bounded by Wilshire Boulevard,
Vermont and New Hampshire avenues, and 6th Street. The
development will include new Korean Consulate offices, a
Korean Cultural Center, a Korean American Museum, offices
for a Korean Trade Investment Promotion Agency and muchneeded green space. According to Mayor Villaraigosa,
“This ‘Superblock’ will provide for a focal point where L.A.’s
residents and visitors can come and experience the richness
of Korean culture.”
» Mid-City Police Station – This new, 54,000-square-foot
precinct station will be located on Vermont Avenue north of
Pico Boulevard at 12th Street and adjacent to Wilshire Center.
The purchase, design, and construction will take about four
years until the facility is actually open and operating. The
boundaries for this station/division are Beverly, Hoover, 10
Freeway, and Wilton/Arlington. The division is expected to
open in early 2008.
» Hollywood & Highland – Just five miles from the property,
Hollywood & Highland Center is a 387,000-square-foot
24
retail and entertainment center in the heart of Hollywood.
The Kodak Theatre, dozens of top retailers, nine of L.A.’s
finest restaurants, Grauman’s Chinese 6 Theatres, and two
popular nightclubs are just some of its features, and the
center attracts 15 million visitors a year.
» Larchmont Village – Larchmont Village, situated in the
heart of nearby Hancock Park, is one of L.A.’s most attractive
neighborhoods. Located on Larchmont Avenue between
Beverly Boulevard and 3rd Street, this avenue is home to
neighborhood stores, a yogurt shop, and upscale restaurants
and boutiques.
Residents also commute to jobs at the L.A. County Superior
Court; the majority of the court’s employees work in downtown
L.A., commuting from various parts of the city, including
Wilshire Center. The main offices of the Los Angeles Unified
School District are also with a few miles of the neighborhood.
LAUSD is the nation’s second-largest district, with a K-12 student
enrollment of more than 746,800 and employs over 80,000
staff members, 36,434 of them in non-teaching positions.
The services industry accounts for more than 50% of jobs held
by Wilshire Center residents, followed by manufacturing (14.1%)
and retail trade (9.9%).
» The Farmers Market & The Grove – The Farmers Market
attracts over 3 million visitors per year and features more
than 110 stalls and 20 counter-order restaurants. In 2002,
The Grove, a 575,000-square-foot open-air shopping/
dining center featuring 50 upscale shops, restaurants, movie
theaters, and offices, opened next to the historic Farmers
Market. Both are located three miles northwest of the
property at 3rd Street and Fairfax.
EMPLOYMENT BY INDUSTRY
WILSHIRE CENTER
» Sunset Plaza – Home to some of the most renowned
boutiques on this coast, Sunset Plaza is located roughly
eight miles northwest. Frequented by residents of Bel-Air and
Beverly Hills, the plaza is a collection of trendy stores, cafes,
and bars.
ECONOMY & EMPLOYMENT
Wilshire Center benefits from the diverse, ever-expanding,
strong economy of the Los Angeles Metro Area. In particular,
Wilshire Center is home to a variety of small- to medium-sized
businesses, retail shops and restaurants, and companies in
the entertainment industry. Internet and new media firms have
particularly been drawn to Wilshire Center, because it offers
comparative affordability and availability of office space, in
addition to an advanced fiber optic network, all within close
proximity of downtown L.A. and other business hubs. This trend
has earned the area the nickname “Internet Alley.”
6.2%
4.8%
4.2%
10.5%
» Beverly Hills –Beverly Hills is located just six miles west.
Beverly Hills features Rodeo Drive, showcasing famous
retailers like Versace, Armani, Chanel, Fendi, Gucci, and
Hermes, and over 300 specialty shops in the area.
» Beverly Center – The nearby 900,000-square-foot Beverly
Center is home to more than 160 specialty boutiques and
restaurants. Macy’s, Bloomingdale’s, Macy’s Men Store,
and a 13-screen Cineplex are all major tenants.
9.9%
14.1%
50.4%
Services
Manufacturing
Retail Trade
Construction
F.I.R.E.
Trans./Utilities
Other
Over the one-year period ended in September of 2007, a total
of 39,300 non-farm jobs were gained in the Los Angeles Metro
Area, equating to a 0.7% increase in employment.
As of August of 2007, the labor force in the city of Los Angeles
was comprised of 1,945,296 workers. Of those workers,
111,615 were unemployed, resulting in a 5.7% jobless rate, up
slightly from the 5.6% recorded the prior year.
AUGUST UNEMPLOYMENT RATES
CITY OF LOS ANGELES
2007
5.7%
5.6%
5.6%
2005
7.3%
2003
2001
7.0%
6.5%
7.0%
1999
1997
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.3%
7.8%
8.0%
8.0%
8.0%
9.0%
25
EDUCATION
More than 54% of Wilshire Center residents age 25 and
over have graduated from high school, with 17.0% of those
residents earning bachelor’s or graduate degrees. Wilshire
Center is home to several private and public schools that serve
younger residents, and the Los Angeles Unified School District
is working with community leaders to build additional schools
in the neighborhood.
The Southwestern University School of Law, a private, nonprofit law school, is located in Wilshire Center. The school
renovated the historic Bullocks Wilshire building into an
extensive law library, preserving the rich architectural history of
the area while enhancing its academic reputation by creating
the second-largest law library in the state. The school offers
a variety of flexible programs to accommodate the diverse
needs of its 850 students.
centers and entertainment venues in the San Fernando Valley.
Metro Rail connects residents to downtown Long Beach and Los
Angeles International Airport, as well. The Metro Rapid bus and
DASH shuttle systems also serve the area.
The first light-rail line to L.A.’s Westside broke ground in
September of 2006. The 8.6-mile, $680 million Exposition line
from downtown Los Angeles to the Westside is scheduled for
completion in the summer of 2010. The Expo Light Rail Transit
line will run from downtown L.A. to the heart of Culver City.
Just south of downtown, the line will run west on the Metroowned Exposition Boulevard right-of-way, which parallels the
heavily congested I-10 Freeway. From there, it will make its
way to the terminus at Washington/National in Culver City.
The line will extend to Santa Monica by 2010 with a stop at
Venice/Robertson.
Wilshire Center is also home to students of The Fashion Institute
of Design and Merchandising (FIDM), whose L.A. campus is
located within minutes of the neighborhood. The school boasts
an annual enrollment of more than 3,000 students and offers
associate degrees that lead to careers in fashion, interior design,
costuming, and visual communications.
The Wilshire Center area draws students of the Southern
California Institute of Architecture (SCIA), located just a few miles
away, as well. SCIA offers undergraduate and graduate degrees
in architecture, and has an enrollment of roughly 500 students.
Additionally, Wilshire Center attracts students attending
the University of California at Los Angeles (UCLA;
enrollment–36,000) and University of Southern California (USC;
enrollment–28,000). Residents also have access to numerous
other higher education institutions throughout the L.A. Metro
Area, including the California Institute of Technology (Caltech),
California Institute of the Arts, and the American Film Institute.
TRANSPORTATION
Residents of the Wilshire Center community benefit from the
many transportation options available to them.
Metro Rail – The convenience of nearby transportation can take
residents almost anywhere. Residents can reach downtown L.A.
in only six minutes and Union Station in 10 minutes by taking
the Metro Red or Purple Line from the nearby metro station.
Trains also leave five or six times per hour for Hollywood, North
Hollywood, and Universal City. From North Hollywood, riders
can connect to the Metro Orange Line to travel to the job
Access Streets/Freeways – The property is conveniently located
near Wilshire Boulevard, a major east/west thoroughfare that
takes residents westbound through Beverly Hills and Westwood
to I-405, a major north/south transportation corridor through
Los Angeles and Orange counties. Wilshire Boulevard also
runs eastbound into downtown L.A., where residents can easily
access the 110 Freeway, which connects to the 10 and 101
freeways, making virtually the entire county accessible.
Air – As the fifth-busiest airport in the world, Los Angeles
International Airport (LAX) offers flights to over 200 destinations
throughout the world on over 100 carriers, and is located 19
miles southwest of the subject property. Additionally, as an
alternative to LAX, the Bob Hope airport in Burbank is just 18
miles to the north.
TOURISM & RECREATION
Wilshire Center residents enjoy California’s moderate climate,
26
which allows for a variety of outdoor activities. Moreover,
residents are close to Southern California’s numerous attractions
and entertainment venues, including Disneyland and Universal
Studios, as well as numerous television and film studios,
museums, art galleries, and retail centers. The $400 million,
20,000-seat Staples Center, home to the Los Angeles Lakers,
Clippers, and Kings, is located just three miles from the heart of
Wilshire Center. Residents can enjoy baseball games and other
events at the 56,000-seat Dodger Stadium, located just four
miles from Wilshire Center.
Also nearby the subject property is The Grove, which was
developed by Caruso Affiliated, and is Los Angeles’ coolest
“hot spot”, with scores of celebrities per square foot. The Grove
has always distinguished itself in the competitive L.A. market
by bringing new retailers to the area and attracting signature
flagship stores as well as one-of-a-kind boutiques. A wellestablished icon in the L.A. vocabulary, The Grove drew more
than 18 million visitors last year.
In addition, Wilshire Center boasts the most historic landmarks
of any neighborhood in Los Angeles, including residential,
retail, and entertainment venues, complete with their famous
neon signs, from the 1920s and 1930s. One of the area’s
historic sites is the former Ambassador Hotel, once home to the
Academy Awards.
The restored Wiltern Theatre, a prime example of Art Decostyle, hosts a variety of performing artists year round. Wilshire
Center’s historic Atlas Supper Club is as well known for its
vintage interior décor as it is for its food and live music.
The Wilshire Galleria boasts several retail shops and Palm Tree
L.A., a club featuring dining, billiards, and a glow-in-the-dark
cosmic-bowling alley. The Chapman Market features retail and
restaurants in a courtyard setting, while the Aroma Wilshire
Center offers both sports and shopping. Numerous other retail
stores are located in the area, selling everything from clothing
to books, sporting goods, home décor, and more.
Many world-class cultural venues are located nearby, as well
as in Hollywood, West Hollywood, and downtown Los Angeles.
» The Wiltern – considered among the city’s best venues for
any type of music
Renowned performance halls are just three miles east of the
property, in Los Angeles. The Los Angeles Philharmonic at the
Walt Disney Concert Hall, the Dorothy Chandler Pavilion, and
the Ahmanson Theatre and the Mark Taper Forum host concerts,
ballets, and theatrical performances, respectively.
Terrific museums are nearby on Wilshire’s Museum Row,
including The Los Angeles County Museum of Art, The George
C. Page Museum at the La Brea Tar Pits, and The Petersen
Automotive Museum.
Spectator Venues – Los Angeles’ three professional sports
teams call the Staples Center, a 900,000-square-foot venue,
home. The arena is also a major concert and entertainment
venue. Just north of downtown is the Dodger Stadium, as well.
Universal Studios Hollywood & CityWalk – A number of
rides, tours, and other attractions comprise the Universal Studios
Hollywood tour, and the Universal CityWalk boasts dozens of
restaurants and shops.
Griffith Park – The largest municipal park in the country, Griffith
Park features the Hollywood Sign, Greek Theatre, Griffith
Observatory, and the Autry Museum of Western Heritage.
Golf – The Westside features some of the finest golf courses and
country clubs anywhere. Residents of the subject property are
roughly eight miles east of Rancho Park Golf Course, a popular
facility featuring a two-tier driving range, an executive course, a
top-notch restaurant and bar, and a legendary 18th hole.
Live Music/Nightlife – The Los Angeles Orchestra, the
American Ballet Theatre, Sting, Bruce Springsteen, Bob Dylan,
and other pop artists have all performed at the nearby, art-deco
Wiltern Theatre, and the El Rey Theatre dance club is to the
west. The House of Blues, The Roxy, The Viper Room, Laugh
Factor, and Comedy Store are all on the under-10-miles-away
Sunset Strip.
SOURCES
Theatre/Performance Halls – Five miles away, in Hollywood,
are some of the world’s greatest theaters, including:
» The Pantages Theatre – featuring Broadway shows
» The Hollywood Kodak Theatre – host of the Oscars
» Grauman’s Chinese Theatre – the site of countless
movie premieres
Hendricks & Partners Research Services; DemographicsNow (stats for ZIP Codes
90005, 90006, and 90010); Bureau of Labor Statistics; U.S. Census; CACI; Real
Facts; Wilshire Center Business Improvement Corporation; L.A. Downtown News;
Wilshire Center Chamber of Commerce; L.A. Business Journal; Southwestern
University School of Law; The Fashion Institute of Design & Merchandising;
MapQuest.com; University of California at Los Angeles; University of Southern
27
California; Los Angeles Center Studios; Los Angeles Superior Court; Los Angeles
Unified School District; Staples Center; The Historic Core; Los Angeles Dodgers;
WilshireCenter.com; Gruen Associates; dqnews.com; CaliforniaConnected.org;
CourtyardMaDang.com; Koreatown Neighborhood Association; REIS
28
WILSHIRE CENTER DEVELOPMENT MAP
Kingsley Dr
16
8
S Vermont Ave
W 3rd St
7 4&5 6
17
1
S Normandie St
S Western Ave
18
S Wilton Pl
Wilshire Center
S Virgil Ave
Beverly Blvd
15
12
14
6th St
Wilshire Blvd
7th St
3
17 19
10 11
Kingsley Drive
Apartment Homes
2
13
W Olympic Blvd
Number of Major Commercial & Residential Developments
Square Feet of Major Commercial & Residential Developments
Number of Hotel Rooms
Number of Estimated Future Jobs
1,039
58,782,415
12,000
7,000
29
WILSHIRE CENTER DEVELOPMENT MAP LEGEND
Development
Description
1. Aroma Wilshire Center
336,000 SF of fitness, spa, retail, and restaurant space.
2.
Megablock
Korean Trade & Cultural Center with office space for Korean Trade Organizations, a Korean American Museum,
and possibly a hotel. JV between the Korean Government & LACRA.
3.
The Mercury Los Angeles
In 2004, the former Getty Oil Company headquarters underwent a $52 million conversion into 238 luxury
residential units. The condominium units are priced from the $400’s to over $1 million.
4. Solair Wilshire Mixed-Use Project
186 residential condominium units, 40,000 square feet of retail space and a 578-space parking garage. It will
also include a library, business center and 20,000 square foot garden.
5. Wilshire & Western Metro Rail Station
This is where the Metro Purple Line subway begins; it shares six stations with the Red Line Downtown and
continues to the Mid-Wilshire area.
6. The Gardens at Wilshire
A planned, six-story, 159-unit mixed-use project offering studio, one- and two-bedroom apartments, as well as
7,500 square feet of ground-level retail space.
7. MaDang The Courtyard
A four-story, 100,000-square-foot retail and entertainment center includes a nine-level parking structure, gourmet
Korean restaurant, and a three screen bilingual theater.
8.
Equitable City Center
160,000 square foot retail and restaurant complex, anchored by a high-end market & department store, with
340 underground parking spaces and a passageway to the tower.
10. 3670 Wilshire Project
This planned, $250 million development project will be a 40-story, mixed-use development which will contain
378 luxury condos and 8,000 square feet of retail space.
11. Ceiland Coast
Two-tower, 242-unit luxury hotel, about 6,000 square feet of retail space, a 40,000 square foot health club,
24,000square foot of restaurant space and 18,000 square feet of office space.
12. Vermont Station
449 housing units on a seven acre property atop the Wilshire/Vermont Metro Red Line subway station to
include 35,000 square feet of commercial space; expected completion in 2007.
13. Wilshire Towers
405 condo units plus 27,000 square feet of retail and 14,000 square feet of restaurant space, to be completed
in 2009. The developer is Gerding Edlen.
14. Ambassador Hotel
To be a new $270 million LAUSD campus, featuring a high school, middle school, and elementary school,
serving a total of 4,200 students; completion scheduled for the third quarter of 2009.
15. Circa on Wilshire
190-unit condo project in 18 stories, 5,330 square feet of retail, to be completed in 2009. The developer is Mount
Auburn Partners.
16. 3223
Office to condo adaptive re-use, for 82 live-work units and 23,000 square feet of commercial space,
currently under construction.
17. Wilshire Palace
Completed in 2006 with 14 larger condo units with at least two bedrooms. A 1,518 SF two-bedroom was
selling for $629,000, and a 2,000 SF three-bedroom was available for $789,000 (approx. $400/SF).
17. LKCH Development
28 condominium units planned for completion in 2007.
18. Perino’s Apartments
The former site of Perino’s restaurant is currently being redeveloped into a 47-unit apartment complex located
on a 1.5-acre lot.
19. Serrano Palace Tower
This structure sits on one-third of an acre and will have 33 units served by 77 parking spaces.
30
FINANCIALS
EXECUTIVE SUMMARY
Property Information
Number of Units
Rentable Square Feet
Average Square Feet per Unit
Vacancy
Year Built
Average Market Rent
Unit
UnitMix
MixSummary
Summary
83
62,700
755
4.00%
1988 / 2007*
$1,658
1 Bed / 1 Bath
3.6% 6.0%
19.3%
1 Bed / 1 Bath
(Wood Floors)
1 Bed / 1 Bath
(Affordable*)
2 Bed / 2 Bath
45.8%
14.5% 10.8%
2 Bed / 2 Bath
(Wood Floors)
2 Bed / 2 Bath
(Affordable*)
* Complete Renovation in 2007
Purchase Summary
Residual Property Value
35,000,000
$28,383,740
$27,149,920
$25,965,100
$23,739,520
10,000,000
$21,692,300
15,000,000
$22,694,840
20,000,000
$24,829,280
25,000,000
$29,669,500
30,000,000
$20,442,800
$21,000,000
$253,012
12.72
5.56%
9.26%
12.05%
$19,256,020
Offering Price
Price Per Unit
GRM
Capitalization Rate
All Cash 10-Year IRR
Leveraged 10-Year IRR
5,000,000
0
EOY 1 EOY 2 EOY 3 EOY 4 EOY 5 EOY 6 EOY 7 EOY 8 EOY 9
EOY
10
Year One Forecasted Operations Summary
$1,737,773
$1,662,214
$1,589,722
$1,520,178
$1,453,464
$1,389,468
$1,328,084
$1,168,259
Net Operating Income
$1,251,623
Net Operating Income (NOI)
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
$1,178,923
$1,720,237
$535,378
$16,600
$1,168,259
Effective Gross Income
Operating Expenses
Capital Reserves
EOY 1 EOY 2 EOY 3 EOY 4 EOY 5 EOY 6 EOY 7 EOY 8 EOY 9 EOY 10
IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered
an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Hendricks & Partners and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Hendricks & Partners. CAUTION: Security codes have been
included into this file and unauthorized use may render this file useless. Hendricks & Partners Employees, affiliates, and contractors are instructed to hard-code this model for reproduction
and distribution. COPYRIGHT 2006, All Rights Reserved. Hendricks & Partners.
33
PRO FORMA INCOME & EXPENSES
Units
Type
38
9
12
16
3
5
83
1 Bed / 1 Bath
1 Bed / 1 Bath (Wood Floors)
1 Bed / 1 Bath (Affordable*)
2 Bed / 2 Bath
2 Bed / 2 Bath (Wood Floors)
2 Bed / 2 Bath (Affordable*)
Unit
SF
Total
SF
Current
Market Rent
Monthly
Market Rent
Annual
Market Rent
Rent/SF
660
660
660
990
990
990
755
25,080
5,940
7,920
15,840
2,970
4,950
62,700
$1,621
$1,746
$1,141
$2,094
$2,244
$1,278
$1,658
$61,587
$15,710
$13,697
$33,507
$6,733
$6,392
$137,627
$739,044
$188,526
$164,366
$402,088
$80,792
$76,709
$1,651,524
$2.46
$2.64
$1.73
$2.12
$2.27
$1.29
$2.20
* 20% of the units are set aside for tenants who make 80% or less than the area median income.
H&P
Pro Forma
Rent Roll
10/2007
Income
Scheduled Market Rent
Less: Loss to Lease
Less: Vacancy
Less: Non-Revenue, Prepaid Rent, Bad Debt
Net Rental Income
1
Plus: Laundry Income
2
Plus: In-unit Washer/Dryer
3
Plus: Wood Flooring Premium
Plus: RUBS Income ($35/unit/mo on 67 units)
0.50%
4.00%
0.50%
Plus: Other Income4
Total Operating Income (EGI)
Expenses
$1,651,524
($8,258)
($66,061)
($8,258)
$1,568,947
$0
$59,400
$32,400
$28,140
$31,350
$1,720,237
$1,651,524
($176,488)
$12,450
$8,300
$91,300
$29,050
$43,006
$59,923
$23,000
$247,599
$20,750
$16,600
$551,978
$12,450
$6,225
$91,300
$29,050
$37,484
$59,923
$23,000
$247,599
$20,750
$16,600
$544,382
$6,650
$8.80
$6,559
$8.68
$1,168,259
$978,736
($8,250)
$1,466,786
$8,338
$0
$0
$16,644
$31,350
$1,523,118
Per Unit
Administrative
Advertising & Promotion
Payroll
Repairs & Maintenance
Management Fee
Utilities
Contracted Services
5
Real Estate Taxes
Insurance
6
Replacement Reserve
Total Expenses
$150
$100
$1,100
$350
$518
$722
$277
$2,983
$250
$200
2.50%
1.179045%
Per Unit:
Per SF:
Less: Debt Service
Projected Net Cash Flow
Total Economic Loss
($678,800)
$489,459
5.0%
$0
$978,736
11.2%
4.88%
1.72
9.75%
Cash-on-Cash Return (Based on Ask Price)
Debt Service Coverage
Note 1: No proforma laundry income due to in-unit washer/dryers
Note 2: Rent upcharge of $75/ unit for in-unit washer/dryers. Proforma assumes all market-rate units will receive washer/dryer upgrades.
Note 3: Rent upcharge for wood flooring of $125 (1+1) and $150 (2+2). Currently 12 units are achieving have received wood floors and are achieving the premium. Proforma
assumes an additional 20 units will receive wood flooring.
Note 4: Other income includes fee income, deposit forfeit, cable/satellite income, telephone income and other monthly income. No laundry income due to in-unit washer/dryers
Note 5: Real Estate Taxes are updated to reflect buyers tax basis.
Note 6: Replacement Reserves normalized for purpose of comparison.
Note 7: Existing 1st Trust Deed of $7 million with the potential of an additional $4 million 2nd Trust Deed at market rates and terms.
Cap Rate Analysis
Asking Price
Price
$/Unit
Cap Rate
GRM
Cap Rate
GRM
$21,000,000
$253,012
5.56%
12.72
4.66%
12.72
LTV
52%
Mo. Payment
($56,567)
Payment
($35,233)
Orig. Date
July-06
Fees
Current Date
November-07
Total Loan Amount7 Down Payment
$11,000,000
$10,040,000
All Financing
Existing Loan (Must be Assumed)
Original Amount
$7,000,000
Current Balance
$7,000,000
Interest Rate
6.04%
Amort.
Interest Only
Assumption Fee
1.00%
Note is interest-only until July 2008, the amortizing on a 30-Yr schedule; 10-Year term.
New Supplemental Financing (to be originated at purchase)
Amount
$4,000,000
Interest Rate
6.40%
Amortization
Interest Only
Payment
($21,333)
1.00%
Seller anticipates that $4M of debt is available at stabilization at 150bp over the 10-Yr Treasury Yield.
34
EOY-1 FORECASTED OPERATIONS
Income
Less: Loss to Lease
0.50%
Less: Vacancy
4.00%
Net Rental Income
Plus: Laundry Income1
Plus: In-unit Washer/Dryer2
Plus: Wood Flooring Premium3
Plus: Other Income4
ANNUAL
MONTHLY
$1,651,524
$137,627
($8,258)
($66,061)
$1,568,947
($688)
($5,505)
$130,746
$0
$59,400
$32,400
$28,140
$31,350
$1,720,237
$0
$4,950
$2,700
$2,345
$2,613
$143,353
ANNUAL AMOUNTS
/Unit
% of EGI
/SF
Expenses
Administrative
Payroll
Management Fee
Utilities
Contracted Services
Real Estate Taxes5
Insurance
Replacement Reserve6
Total Expenses
NET OPERATING INCOME
Less: Debt Service
Projected Net Cash Flow
Cash on Cash Return (Based on Ask Price)
Debt Service Coverage
$12,450
$8,300
$91,300
$29,050
$43,006
$59,923
$23,000
$247,599
$20,750
$16,600
$551,978
$1,038
$692
$7,608
$2,421
$3,584
$4,994
$1,917
$20,633
$1,729
$1,383
$45,998
$150
$100
$1,100
$350
$518
$722
$277
$2,983
$250
$200
$6,650
0.72%
0.48%
5.31%
1.69%
2.50%
3.48%
1.34%
14.39%
1.21%
0.96%
32.09%
$0.20
$0.13
$1.46
$0.46
$0.69
$0.96
$0.37
$3.95
$0.33
$0.26
$8.80
$1,168,259
$97,355
$14,075
67.91%
$18.63
($678,800)
($56,567)
$489,459
4.88%
1.72
$40,788
0.41%
0.14
35
($10,040,000)
$11,000,000
($40,000)
(85,321)
(676,464)
417,139
5.61%
4.15%
4.29%
0
(678,800)
489,459
5.56%
4.88%
-2.74%
1,178,923
1,178,923
(12,761)
(8,508)
(93,583)
(29,776)
(43,563)
(61,421)
(23,575)
(252,551)
(21,269)
(16,600)
(563,607)
0
61,182
33,372
28,984
32,291
1,742,530
$1,734,100
(52,023)
(86,705)
(8,671)
1,586,702
EOY 2
5.96%
4.88%
6.73%
(90,619)
(671,165)
489,839
1,251,623
1,251,623
(13,080)
(8,720)
(95,922)
(30,521)
(45,718)
(62,957)
(24,164)
(257,602)
(21,800)
(16,600)
(577,085)
0
63,017
34,373
29,854
33,259
1,828,708
1,803,464
(36,069)
(90,173)
(9,017)
1,668,204
EOY 3
6.32%
5.64%
7.64%
(96,247)
(665,538)
566,299
1,328,084
1,328,084
(13,407)
(8,938)
(98,320)
(31,284)
(47,975)
(64,531)
(24,768)
(262,755)
(22,345)
(16,600)
(590,923)
0
64,908
35,404
30,749
34,257
1,919,007
$1,875,603
(18,756)
(93,780)
(9,378)
1,753,689
EOY 4
6.62%
6.25%
8.19%
(102,224)
(659,561)
627,684
1,389,468
1,389,468
(13,742)
(9,162)
(100,778)
(32,066)
(49,853)
(66,144)
(25,388)
(268,010)
(22,904)
(16,600)
(604,646)
0
66,855
36,466
31,672
35,285
1,994,114
1,950,627
(19,506)
(97,531)
(9,753)
1,823,836
EOY 5
6.92%
6.89%
8.55%
(108,572)
(653,213)
691,679
1,453,464
1,453,464
(14,086)
(9,391)
(103,298)
(32,867)
(51,804)
(67,797)
(26,022)
(273,370)
(23,477)
(16,600)
(618,712)
0
68,861
37,560
32,622
36,343
2,072,176
$2,028,652
(20,287)
(101,433)
(10,143)
1,896,790
EOY 6
7.24%
7.55%
8.81%
(115,314)
(646,470)
758,393
1,520,178
1,520,178
(14,438)
(9,625)
(105,880)
(33,689)
(53,833)
(69,492)
(26,673)
(278,837)
(24,064)
(16,600)
(633,132)
0
70,927
38,687
33,601
37,434
2,153,309
2,109,798
(21,098)
(105,490)
(10,549)
1,972,661
EOY 7
7.57%
8.25%
9.00%
(122,476)
(639,309)
827,938
1,589,722
1,589,722
(14,799)
(9,866)
(108,527)
(34,531)
(55,941)
(71,230)
(27,340)
(284,414)
(24,665)
(16,600)
(647,913)
0
73,055
39,848
34,609
38,557
2,237,635
$2,194,190
(21,942)
(109,710)
(10,971)
2,051,568
EOY 8
7.92%
8.97%
9.14%
(130,081)
(631,703)
900,429
1,662,214
1,662,214
(15,169)
(10,113)
(111,240)
(35,395)
(58,132)
(73,010)
(28,023)
(290,102)
(25,282)
(16,600)
(663,066)
0
75,246
41,043
35,647
39,713
2,325,280
2,281,958
(22,820)
(114,098)
(11,410)
2,133,630
EOY 9
8.28%
11.10%
9.26%
(138,159)
(623,625)
20,634,941
(10,010,986)
29,669,938
31,407,712
1,737,773
(15,548)
(10,366)
(114,021)
(36,279)
(60,409)
(74,836)
(28,724)
(295,904)
(25,914)
(16,600)
(678,602)
0
77,504
42,275
36,716
40,905
2,416,375
$2,373,236
(23,732)
(118,662)
(11,866)
2,218,976
EOY 10
1,816,527
(15,937)
(10,625)
(116,872)
(37,186)
(62,776)
(76,707)
(29,442)
(301,822)
(26,562)
(16,600)
(694,529)
0
79,829
43,543
37,818
42,132
2,511,056
2,468,165
(24,682)
(123,408)
(12,341)
2,307,735
EOY 11
IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and
are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Hendricks & Partners and their clients. This file may not be reproduced physically or in electronic format
without the expressed written consent of Hendricks & Partners. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Hendricks & Partners Employees, affiliates, and contractors
are instructed to hard-code this model for reproduction and distribution. COPYRIGHT 2006, All Rights Reserved. Hendricks & Partners.
Capitalization Rate
Leveraged Cash-on-Cash Return
All Cash IRR - By Year of Sale
Mortgages
Mortgage Origination Fees
Principal
Interest
Cash Flow After Debt Service
1,168,259
($21,000,000)
Purchase Price
Capital Improvements
Reversion Proceeds
Cash Flow Before Debt
($21,000,000)
1,168,259
Net Operating Income (NOI)
2.50%
(12,450)
(8,300)
(91,300)
(29,050)
(43,006)
(59,923)
(23,000)
(247,599)
(20,750)
(16,600)
(551,978)
0
59,400
32,400
28,140
31,350
1,720,237
Plus: Laundry Income1
Plus: In-unit Washer/Dryer2
Plus: Wood Flooring Premium3
Plus: Other Income4
Operating Expenses
Administrative
Payroll
Management Fee
Utilities
Contracted Services
Real Estate Taxes5
Insurance
Replacement Reserve6
Total Expenses
1,651,524
(8,258)
(66,061)
(8,258)
1,568,947
EOY 1
Income
Less: Loss to Lease
Less: Vacancy
Less: Non-Revenue, Prepaid Rent, Bad Debt
Net Rental Income
Acquisition
10-YEAR DISCOUNTED CASH FLOW
36
ASSUMPTIONS SUMMARY
10-Year Discounted Cash Flow Growth Assumptions
6.00%
5.00%
Rent Bumps / Escalation
4.00%
Escalation for Expenses (usually CPI)
3.00%
Taxes on Property (Increases)
2.00%
Other Income Growth Rate (U&L)
1.00%
0.00%
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Y11
10-Year Discounted Cash Flow Loss Assumptions
6.00%
5.00%
Loss to Lease After EOY 1:
4.00%
Vacancy Rate:
3.00%
2.00%
Concessions After EOY 1:
1.00%
0.00%
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Y11
37
EOY 2
EOY 3
EOY 4
EOY 5
EOY 6
EOY 7
EOY 8
EOY 9
EOY 10
9,945,260
417,139
417,139
417,139
417,139
417,139
417,139
417,139
417,139
417,139
489,459
1,178,923
1,168,259
8,745,479
489,459
489,459
489,459
489,459
489,459
489,459
489,459
489,459
489,459
21,621,723
1,178,923
1,178,923
1,178,923
1,178,923
1,178,923
1,178,923
1,178,923
1,178,923
EOY 2
$251,325
6.2%
20,424,279
1,168,259
1,168,259
1,168,259
1,168,259
1,168,259
1,168,259
1,168,259
1,168,259
1,168,259
EOY 1
$236,735
-6.4%
489,839
11,358,079
489,839
489,839
489,839
489,839
489,839
489,839
489,839
1,251,623
22,943,923
1,251,623
1,251,623
1,251,623
1,251,623
1,251,623
1,251,623
1,251,623
EOY 3
$266,687
6.1%
566,299
12,533,326
566,299
566,299
566,299
566,299
566,299
566,299
1,328,084
24,022,924
1,328,084
1,328,084
1,328,084
1,328,084
1,328,084
1,328,084
EOY 4
$279,012
4.6%
627,684
13,741,615
627,684
627,684
627,684
627,684
627,684
1,389,468
25,128,988
1,389,468
1,389,468
1,389,468
1,389,468
1,389,468
EOY 5
$291,855
4.6%
691,679
15,003,942
691,679
691,679
691,679
691,679
1,453,464
26,282,744
1,453,464
1,453,464
1,453,464
1,453,464
EOY 6
$305,253
4.6%
758,393
16,321,791
758,393
758,393
758,393
1,520,178
27,485,278
1,520,178
1,520,178
1,520,178
EOY 7
$319,217
4.6%
827,938
17,698,631
827,938
827,938
1,589,722
28,739,642
1,589,722
1,589,722
EOY 8
$333,783
4.6%
900,429
19,135,024
900,429
1,662,214
30,045,954
1,662,214
EOY 9
$348,952
4.5%
21,396,287
21,396,287
31,407,273
31,407,273
EOY 10
$364,759
4.5%
$1,168,259
$1,178,923
$1,251,623
$1,328,084
$1,389,468
$1,453,464
$1,520,178
$1,589,722
$1,662,214
$1,737,773
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
$19,649,000 $20,860,000 $22,135,000 $23,158,000 $24,224,000 $25,336,000 $26,495,000 $27,704,000 $28,963,000 $30,275,000
(392,980)
(417,200)
(442,700)
(463,160)
(484,480)
(506,720)
(529,900)
(554,080)
(579,260)
(605,500)
19,256,020
20,442,800
21,692,300
22,694,840
23,739,520
24,829,280
25,965,100
27,149,920
28,383,740
29,669,500
(11,000,000) (10,914,679) (10,824,060) (10,727,813) (10,625,589) (10,517,017) (10,401,702) (10,279,227) (10,149,145) (10,010,986)
$8,256,020
$9,528,121 $10,868,240 $11,967,027 $13,113,931 $14,312,263 $15,563,398 $16,870,693 $18,234,595 $19,658,514
EOY 1
12.05%
IRR
-12.89%
1.99%
7.20%
9.05%
10.09%
10.72%
11.13%
11.41%
11.59%
12.05%
9.26%
IRR
-2.74%
4.29%
6.73%
7.64%
8.19%
8.55%
8.81%
9.00%
9.14%
9.26%
$1,816,527
EOY 11
Initial
Holding Period
Year 1
(10,040,000)
Year 2
(10,040,000)
Year 3
(10,040,000)
Year 4
(10,040,000)
Year 5
(10,040,000)
Year 6
(10,040,000)
Year 7
(10,040,000)
Year 8
(10,040,000)
Year 9
(10,040,000)
Year 10
(10,040,000)
Peak Return Period and Cash Flows:
10 Years
(10,040,000)
Leveraged Yields
Holding Period
Initial
Year 1
(21,000,000)
Year 2
(21,000,000)
Year 3
(21,000,000)
Year 4
(21,000,000)
Year 5
(21,000,000)
Year 6
(21,000,000)
Year 7
(21,000,000)
Year 8
(21,000,000)
Year 9
(21,000,000)
Year 10
(21,000,000)
Peak Return Period and Cash Flows:
10 Years
(21,000,000)
Cash Yields
Gross Residual Price/Unit
Annual Residual Appreciation
Cap Rate
Residual Value
(Selling Expense)
Net Residual
(Outstanding Debt)
Net Capital Proceeds
Residual Calculations
YIELD SCHEDULE
38
($631,703)
($130,081)
($623,625)
($138,159)
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10 Balance:
Interest:
Principal:
($6,545,848)
($989,014)
$10,010,986
$10,149,145
($52,284)
($11,198)
$10,279,227
($52,939)
($10,543)
$10,401,702
($53,555)
($9,927)
$10,517,017
($54,136)
($9,346)
$10,625,589
($54,682)
($8,800)
$10,727,813
($55,197)
($8,285)
$10,824,060
($55,681)
($7,801)
$10,914,679
($56,137)
($7,345)
$11,000,000
($56,567)
($6,915)
$11,000,000
($56,567)
$0
Month 1
$10,137,947
($52,228)
($11,254)
$10,268,683
($52,886)
($10,596)
$10,391,775
($53,505)
($9,977)
$10,507,670
($54,089)
($9,393)
$10,616,789
($54,638)
($8,844)
$10,719,527
($55,155)
($8,327)
$10,816,259
($55,642)
($7,840)
$10,907,334
($56,100)
($7,382)
$10,993,085
($56,532)
($6,950)
$11,000,000
($56,567)
$0
Month 2
$10,126,693
($52,171)
($11,311)
$10,258,087
($52,832)
($10,650)
$10,381,799
($53,455)
($10,027)
$10,498,277
($54,041)
($9,441)
$10,607,945
($54,593)
($8,889)
$10,711,200
($55,113)
($8,369)
$10,808,418
($55,602)
($7,880)
$10,899,952
($56,063)
($7,419)
$10,986,134
($56,497)
($6,985)
$11,000,000
($56,567)
$0
Month 3
$10,115,382
($52,114)
($11,368)
$10,247,437
($52,779)
($10,703)
$10,371,772
($53,405)
($10,077)
$10,488,836
($53,994)
($9,488)
$10,599,056
($54,549)
($8,933)
$10,702,831
($55,071)
($8,411)
$10,800,539
($55,563)
($7,919)
$10,892,533
($56,026)
($7,456)
$10,979,149
($56,462)
($7,020)
$11,000,000
($56,567)
$0
Month 4
$10,104,014
($52,057)
($11,425)
$10,236,734
($52,725)
($10,757)
$10,361,694
($53,354)
($10,128)
$10,479,348
($53,946)
($9,536)
$10,590,122
($54,504)
($8,978)
$10,694,420
($55,029)
($8,453)
$10,792,619
($55,523)
($7,959)
$10,885,077
($55,988)
($7,494)
$10,972,129
($56,426)
($7,056)
$11,000,000
($56,567)
$0
Month 5
$10,092,589
($51,999)
($11,483)
$10,225,977
($52,671)
($10,811)
$10,351,566
($53,303)
($10,179)
$10,469,812
($53,898)
($9,584)
$10,581,144
($54,458)
($9,024)
$10,685,967
($54,986)
($8,496)
$10,784,660
($55,483)
($7,999)
$10,877,583
($55,951)
($7,532)
$10,965,073
($56,391)
($7,091)
$11,000,000
($56,567)
$0
Month 6
$10,081,106
($51,942)
($11,540)
$10,215,166
($52,616)
($10,866)
$10,341,387
($53,252)
($10,230)
$10,460,228
($53,850)
($9,632)
$10,572,120
($54,413)
($9,069)
$10,677,471
($54,943)
($8,539)
$10,776,661
($55,443)
($8,040)
$10,870,052
($55,913)
($7,569)
$10,957,982
($56,355)
($7,127)
$11,000,000
($56,567)
$0
Month 7
$10,069,566
($51,883)
($11,599)
$10,204,300
($52,562)
($10,920)
$10,331,156
($53,200)
($10,282)
$10,450,596
($53,801)
($9,681)
$10,563,051
($54,367)
($9,115)
$10,668,932
($54,900)
($8,582)
$10,768,621
($55,402)
($8,080)
$10,862,482
($55,874)
($7,608)
$10,950,855
($56,319)
($7,163)
$11,000,000
($56,567)
$0
Month 8
$10,057,967
($51,825)
($11,657)
$10,193,380
($52,507)
($10,975)
$10,320,875
($53,148)
($10,334)
$10,440,915
($53,753)
($9,729)
$10,553,937
($54,321)
($9,161)
$10,660,350
($54,857)
($8,625)
$10,760,541
($55,361)
($8,121)
$10,854,875
($55,836)
($7,646)
$10,943,692
($56,283)
($7,199)
$11,000,000
($56,567)
$0
Month 9
$10,046,310
($51,766)
($11,716)
$10,182,404
($52,451)
($11,031)
$10,310,541
($53,096)
($10,386)
$10,431,185
($53,704)
($9,778)
$10,544,776
($54,275)
($9,207)
$10,651,725
($54,814)
($8,668)
$10,752,421
($55,321)
($8,162)
$10,847,229
($55,798)
($7,684)
$10,936,494
($56,247)
($7,235)
$11,000,000
($56,567)
$0
Month 10
$10,034,595
($51,707)
($11,775)
$10,171,374
($52,396)
($11,086)
$10,300,155
($53,044)
($10,438)
$10,421,407
($53,654)
($9,828)
$10,535,569
($54,229)
($9,253)
$10,643,057
($54,770)
($8,712)
$10,744,259
($55,279)
($8,203)
$10,839,545
($55,759)
($7,723)
$10,929,259
($56,211)
($7,271)
$11,000,000
($56,567)
$0
Month 11
$10,022,820
($51,648)
($11,834)
$10,160,287
($52,340)
($11,142)
$10,289,717
($52,992)
($10,490)
$10,411,579
($53,605)
($9,877)
$10,526,316
($54,182)
($9,300)
$10,634,345
($54,726)
($8,756)
$10,736,057
($55,238)
($8,244)
$10,831,822
($55,720)
($7,762)
$10,921,987
($56,174)
($7,308)
$11,000,000
($56,567)
$0
Month 12
Total Interest:
Total Principal:
Loan Balance:
($639,309)
($122,476)
($646,470)
($115,314)
($653,213)
($108,572)
($659,561)
($102,224)
($665,538)
($96,247)
($671,165)
($90,619)
($676,464)
($85,321)
Balance:
Interest:
Principal:
Year 2
($678,800)
$0
Balance:
Interest:
Principal:
Year 1
EOY
10-YEAR DEBT PAYMENT SCHEDULE - EXISTING AND SUPPLEMENTAL
39
($375,703)
($130,081)
($367,625)
($138,159)
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10 Balance:
Interest:
Principal:
($3,985,848)
($989,014)
$6,010,986
$6,149,145
($30,951)
($11,198)
$6,279,227
($31,605)
($10,543)
$6,401,702
($32,222)
($9,927)
$6,517,017
($32,802)
($9,346)
$6,625,589
($33,349)
($8,800)
$6,727,813
($33,863)
($8,285)
$6,824,060
($34,348)
($7,801)
$6,914,679
($34,804)
($7,345)
$7,000,000
($35,233)
($6,915)
$7,000,000
($35,233)
$0
Month 1
$6,137,947
($30,894)
($11,254)
$6,268,683
($31,552)
($10,596)
$6,391,775
($32,172)
($9,977)
$6,507,670
($32,755)
($9,393)
$6,616,789
($33,305)
($8,844)
$6,719,527
($33,822)
($8,327)
$6,816,259
($34,309)
($7,840)
$6,907,334
($34,767)
($7,382)
$6,993,085
($35,199)
($6,950)
$7,000,000
($35,233)
$0
Month 2
$6,126,693
($30,838)
($11,311)
$6,258,087
($31,499)
($10,650)
$6,381,799
($32,122)
($10,027)
$6,498,277
($32,708)
($9,441)
$6,607,945
($33,260)
($8,889)
$6,711,200
($33,780)
($8,369)
$6,808,418
($34,269)
($7,880)
$6,899,952
($34,730)
($7,419)
$6,986,134
($35,164)
($6,985)
$7,000,000
($35,233)
$0
Month 3
$6,115,382
($30,781)
($11,368)
$6,247,437
($31,445)
($10,703)
$6,371,772
($32,071)
($10,077)
$6,488,836
($32,660)
($9,488)
$6,599,056
($33,215)
($8,933)
$6,702,831
($33,738)
($8,411)
$6,800,539
($34,229)
($7,919)
$6,892,533
($34,692)
($7,456)
$6,979,149
($35,128)
($7,020)
$7,000,000
($35,233)
$0
Month 4
$6,104,014
($30,724)
($11,425)
$6,236,734
($31,392)
($10,757)
$6,361,694
($32,021)
($10,128)
$6,479,348
($32,613)
($9,536)
$6,590,122
($33,170)
($8,978)
$6,694,420
($33,695)
($8,453)
$6,792,619
($34,190)
($7,959)
$6,885,077
($34,655)
($7,494)
$6,972,129
($35,093)
($7,056)
$7,000,000
($35,233)
$0
Month 5
$6,092,589
($30,666)
($11,483)
$6,225,977
($31,337)
($10,811)
$6,351,566
($31,970)
($10,179)
$6,469,812
($32,565)
($9,584)
$6,581,144
($33,125)
($9,024)
$6,685,967
($33,653)
($8,496)
$6,784,660
($34,149)
($7,999)
$6,877,583
($34,617)
($7,532)
$6,965,073
($35,058)
($7,091)
$7,000,000
($35,233)
$0
Month 6
$6,081,106
($30,608)
($11,540)
$6,215,166
($31,283)
($10,866)
$6,341,387
($31,918)
($10,230)
$6,460,228
($32,516)
($9,632)
$6,572,120
($33,080)
($9,069)
$6,677,471
($33,610)
($8,539)
$6,776,661
($34,109)
($8,040)
$6,870,052
($34,579)
($7,569)
$6,957,982
($35,022)
($7,127)
$7,000,000
($35,233)
$0
Month 7
$6,069,566
($30,550)
($11,599)
$6,204,300
($31,228)
($10,920)
$6,331,156
($31,867)
($10,282)
$6,450,596
($32,468)
($9,681)
$6,563,051
($33,034)
($9,115)
$6,668,932
($33,567)
($8,582)
$6,768,621
($34,069)
($8,080)
$6,862,482
($34,541)
($7,608)
$6,950,855
($34,986)
($7,163)
$7,000,000
($35,233)
$0
Month 8
$6,057,967
($30,492)
($11,657)
$6,193,380
($31,173)
($10,975)
$6,320,875
($31,815)
($10,334)
$6,440,915
($32,419)
($9,729)
$6,553,937
($32,988)
($9,161)
$6,660,350
($33,524)
($8,625)
$6,760,541
($34,028)
($8,121)
$6,854,875
($34,503)
($7,646)
$6,943,692
($34,950)
($7,199)
$7,000,000
($35,233)
$0
Month 9
$6,046,310
($30,433)
($11,716)
$6,182,404
($31,118)
($11,031)
$6,310,541
($31,763)
($10,386)
$6,431,185
($32,370)
($9,778)
$6,544,776
($32,942)
($9,207)
$6,651,725
($33,480)
($8,668)
$6,752,421
($33,987)
($8,162)
$6,847,229
($34,464)
($7,684)
$6,936,494
($34,914)
($7,235)
$7,000,000
($35,233)
$0
Month 10
$6,034,595
($30,374)
($11,775)
$6,171,374
($31,063)
($11,086)
$6,300,155
($31,711)
($10,438)
$6,421,407
($32,321)
($9,828)
$6,535,569
($32,896)
($9,253)
$6,643,057
($33,437)
($8,712)
$6,744,259
($33,946)
($8,203)
$6,839,545
($34,426)
($7,723)
$6,929,259
($34,877)
($7,271)
$7,000,000
($35,233)
$0
Month 11
$6,022,820
($30,315)
($11,834)
$6,160,287
($31,007)
($11,142)
$6,289,717
($31,658)
($10,490)
$6,411,579
($32,272)
($9,877)
$6,526,316
($32,849)
($9,300)
$6,634,345
($33,393)
($8,756)
$6,736,057
($33,905)
($8,244)
$6,831,822
($34,387)
($7,762)
$6,921,987
($34,841)
($7,308)
$7,000,000
($35,233)
$0
Month 12
Total Interest:
Total Principal:
Loan Balance:
($383,309)
($122,476)
($390,470)
($115,314)
($397,213)
($108,572)
($403,561)
($102,224)
($409,538)
($96,247)
($415,165)
($90,619)
($420,464)
($85,321)
Balance:
Interest:
Principal:
Year 2
($422,800)
$0
Balance:
Interest:
Principal:
Year 1
EOY
ASSUMABLE 10-YEAR DEBT PAYMENT SCHEDULE
40
($256,000)
$0
($256,000)
$0
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Balance:
Interest:
Principal:
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10 Balance:
Interest:
Principal:
($2,560,000)
$0
$4,000,000
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 1
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 2
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 3
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 4
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 5
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 6
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 7
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 8
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 9
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 10
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 11
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
$4,000,000
($21,333)
$0
Month 12
Total Interest:
Total Principal:
Loan Balance:
($256,000)
$0
($256,000)
$0
($256,000)
$0
($256,000)
$0
($256,000)
$0
($256,000)
$0
($256,000)
$0
Balance:
Interest:
Principal:
Year 2
($256,000)
$0
Balance:
Interest:
Principal:
Year 1
EOY
SUPPLEMENTAL 10-YEAR DEBT PAYMENT SCHEDULE
41
INVESTOR RETURN ANALYSIS
Net Operating Income (NOI) Excluding Disposition Profit
2,000,000
$1,589,722
$1,453,464
EOY 2
$1,389,468
EOY 1
$1,737,773
600,000
$1,328,084
800,000
$1,178,923
1,000,000
$1,168,259
1,200,000
$1,251,623
1,400,000
$1,520,178
1,600,000
$1,662,214
1,800,000
EOY 9
EOY 10
400,000
200,000
0
EOY 3
EOY 4
EOY 5
EOY 6
EOY 7
EOY 8
Residual Property Value (Net of Selling Expenses)
35,000,000
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
EOY 6
EOY 7
$29,669,500
$25,965,100
$24,829,280
#
#
#
#
$28,383,740
10,000,000
$23,739,520
Vacancy
Loss Percentage
15,000,000
Concessions Loss Percentage
Model & Office Units Loss Percentage
Loss to Lease Loss Percentage
$22,694,840
$20,442,800
$19,256,020
20,000,000
$21,692,300
25,000,000
$27,149,920
30,000,000
EOY 9
EOY 10
#
#
#
#
5,000,000
0
EOY 1
EOY 2
EOY 3
EOY 4
EOY 5
EOY 8
42
YIELD RETURN ANALYSIS
Cash Yields (IRR)
10.00%
3.00%
8.81%
8.55%
9.26%
4.00%
Year 8
Year 9
Year 10
4.29%
5.00%
9.14%
6.00%
9.00%
6.73%
7.00%
7.64%
8.00%
8.19%
9.00%
2.00%
1.00%
0.00%
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Leveraged Yields (IRR)
Year 7
11.59%
10.09%
Year 6
11.41%
6.00%
11.13%
7.20%
8.00%
9.05%
10.00%
10.72%
12.00%
Year 8
Year 9
12.05%
14.00%
2.00%
0.00%
1.99%
4.00%
Year 2
Year 3
Year 4
Year 5
Year 10
43
LOAN OBLIGATIONS ABSTRACT
Kingsley Drive Towers
737 South Kingsley Drive
Los Angeles, California 90005
("PROPERTY")
THIS IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED IN THE FINANCING DOCUMENTS. ALTHOUGH IT IS INTENDED TO FACILITATE AN
UNDERSTANDING OF THE DOCUMENTS, THE FOLLOWING IS NOT A SUBSTITUTE FOR THE DOCUMENTS AND REFERENCE SHOULD BE MADE TO SUCH
DOCUMENTS THEMSELVES TO ENSURE A PROPER LEVEL OF DETAIL AND ACCURACY.
Paragraph
References
1.
DATE OF LOAN
June 29, 2006
Note Recital
2.
LENDER
ARCS Commercial Mortgage Co., L.P., a California limited
partnership
Note Recital
3.
LOAN AMOUNT
$7,000,000
Note ¶ 1
INTEREST RATE
6.04%
Note ¶ 1
FIXED/VARIABLE
Fixed
Note ¶ 1
MATURITY DATE
July 1, 2016
Note ¶ 1
EXTENSIONS
None
N/A
PREPAYMENT
LOCKOUT
Until March 31, 2016 (Loan can be defeased after month 24)
Note Sch. B
PREPAYMENT PERIOD
April 1, 2016 through June 30, 2016
Note Sch. B
EXIT FEE
None if paid within Prepayment Period
Note Sch. A
MONTHLY PAYMENTS
Interest Only for 24 months; thereafter, “Amortizing Period”
Note ¶ 1
START DATE
From Date of Loan until August 1, 2006, the monthly payments
are interest only. From August 1, 2008 until the Maturity Date,
the monthly payments are principal and interest (the “Amortization
Period”).
Note ¶ 3(c)
4.
5.
Note ¶ 3(c)(1)
AMOUNT
Interest Only Period, based on ACTUAL/360:
28-day month=$32,884.44/per month
Note ¶ 3(c)(2)
44
Paragraph
References
Amortization Period:
$42,148.72/per month
6.
RESERVES
IMMEDIATE REPAIRS
N/A
REPLACEMENT
RESERVES
$2,075.00 from August 1, 2006 through the Maturity Date to be
used for Replacements (as defined below).
Disbursements: requests for disbursements for Replacements must
be in writing and accompanied by invoices after completion of the
replacement project; Borrower must certify the price of materials
and labor, and that the project has been performed according to
applicable laws.
Replacements exceeding $50,000 may have
periodic payments made to the contractor if approved by Lender at
its discretion.
“Replacements” : Concrete Parking restripe; pool liner; spa liner;
pool heater; pool filter; pool pump; Unit Exterior painting; roof
replacement; Common Area carpet; HVAC; Interior carpet, vinyl
flooring, refrigerators, ranges and dishwashers.
CAPITAL
EXPENDITURES
7.
RRSA, Exhibit A
Deed, ¶ 7(a)
N/A
LEASING
COMMISSIONS
N/A
TENANT
IMPROVEMENTS
N/A
TAXES AND
INSURANCE
Replacement and
Reserve Security
Agmt, ¶ 1(c)(3)
RRSA, ¶ 4(b)-(d)
Monthly on Payment Date, Borrowers shall deposit with Lender
the amounts sufficient to pay taxes, insurance, water and sewer
charges, and any other impositions (“Impositions”) The Loan
Documents do not specify the amounts required to be deposited.
Borrower shall pay all deficiencies within 15 days after notice
from Lender.
Lender shall pay Impositions from the Imposition Deposit upon
receipt of the bill from the appropriate insurance company or
governmental entity.
HOLDBACKS
CAPITAL
IMPROVEMENTS
N/A
INTEREST RESERVE
N/A
COLLATERAL
ACCOUNT
Initial deposit of $707,468 established as “Collateral Account”.
Achievement
45
The Collateral Account may be released by Lender to Borrower
prior to repayment of the Loan if, on each anniversary date of the
Note, or within ten days of Borrower’s submission to Lender of
Borrower’s annual financial statements for Borrower’s most recent
fiscal year: Borrower provides all diligence materials (rent roll,
financial statement, monthly income and expense statements)
showing that for any six consecutive month period the DSCR =
1:20 to 1:00. Financial Statements prepared for the purpose of
releasing the Collateral Account must be audited by an
independent CPA, and delivered within 120 days after the end of
the Statement Period (not defined; assume the period covered by
the financial statement).
8.
CONSTRUCTION
DOCUMENTS
Paragraph
References
Agreement ¶ 1-2
Achievement
Agreement ¶ 5
N/A
(IF APPLICABLE)
9.
TAXES
10.
DEFAULT/MATERIAL
ADVERSE CONDITION/
LITIGATION OR
VIOLATION
11.
BOOKS AND RECORDS;
FINANCIAL
REPORTING
Subject to the monthly deposit of amounts for the payment of
taxes and Lender’s payment of the same to the extent Borrower
has deposited sufficient amounts therefor, Borrower shall pay all
taxes.
No self-reporting requirements for Default and Material Adverse
Condition. For list of Defaults, See below, Addendum A.
Borrower shall give to notice to Lender of any action or
proceeding purporting to affect the Property, Lender’s security, or
Lender’s rights under the Deed.
The following items must be delivered certified, and may be
required to be audited by a CPA; provided, however, that,
pursuant to a June 27, 2006 letter from ARCS, ARCS does not
require audits unless a default has occurred:
Deed ¶ 15(a)
Deed ¶ 17
Deed ¶ 14(b)1-7
1) Within 120 days after the end of each fiscal year, a statement of
income and expenses for Borrower’s operation of the Property for
that fiscal year, a statement of changes in financial position for
Borrower relating to the Property for that year, and, if requested
by Lender, a balance sheet showing all assets and liabilities.
2) Within 120 days after the end of each fiscal year, a rent roll.
3) within 120 days an accounting of all security deposits,
including where such deposits are held.
46
Paragraph
References
4) within 120 days after the end of each fiscal year, a statement
that identifies the Borrower’s owners (i.e. Members), and the
interests held by each, and all managers who are not members. (If
Borrower ever appoints officers or directors, these must also be
named.)
5) upon Lender’s request, a monthly property management report,
showing the number of inquiries made and rental applications
received from tenants and deposits received from tenants.
6) upon Lender’s request, a balance sheet, a statement of income
and expenses for Borrower, and a statement of changes in
financial position of Borrower for Borrower’s most recent fiscal
year.
7) if required by Lender, a statement of income and expense for
the Property for the prior month or quarter.
REPORTING
REQUIREMENTS OF
KEY PRINCIPAL
12.
INSURANCE
N/A. Key Principal shall notify Lender of any change of his
address.
Borrower shall obtain insurance against loss by fire and allied
perils, general boiler and machinery coverage, and business
income coverage, and, if required by Lender, sinkhole, mine
subsidence, and earthquake insurance, and, if the Property does
not conform to applicable zoning, building ordinance insurance.
Borrower shall maintain Commercial General Liability Insurance,
worker’s compensation insurance, and such other errors and
omissions and liability insurance as Lender may require.
13.
Deed ¶19(a)
Deed ¶19(c)
All premiums shall be paid in the manner set forth in section 7
(i.e., the premiums shall be paid by Lender from the Taxes and
Insurance Reserve).
Deed ¶ 19(b)
Borrower shall notify Lender of claims.
Deed ¶ 19(f)
MINIMUM RATING
None set forth: per Lender requirements
N/A
MINIMUM COVERAGE
None set forth: per Lender requirements
Deed ¶ 52
ADDITIONAL
INSURANCE
In the event that Borrower obtains any additional insurance not
required by Lender, Borrower shall nevertheless name Lender as
an additional named insured, and insurance proceeds from such
policy, if any, shall secure the Loan.
MANAGEMENT OF
PROPERTY
Borrower shall hire a professional management company to
manage, and, if such management company is changed (or if one
is added) Lender shall have the right to approve the management
company and the management company contract.
Deed ¶17
47
Paragraph
References
14.
LEASES
Leases must be on approved lease form. Lease terms must be for
at least 6 months and not more than 2 years. No lease may have an
option to purchase.
Deed ¶21(b)3
Deed ¶4(b)(e)
Unless an Event of Default occurs, Lender’s approval of leases
that meet the foregoing requirements is not required..
15.
16.
PROHIBITION AGAINST
INCURRING
INDEBTEDNESS
Borrower may not incur any other debt, other than a second deed
of trust, if approved by Lender and the mezzanine loan from
Lender..
Deed ¶16
SECOND TRUST DEED
Allowed if permitted by Lender. Requires a $3,000.00 review fee.
Deed ¶21(c)
MEZZANINE DEBT
See attached summary of mezzanine debt.
NOTICES TO LENDER
All notices, demands and other communications shall be in
writing and shall be addressed to Lender at:
Deed ¶ 31
ARCS Commercial Mortgage Co.
26901 Agoura Road, Suite 200
Calabasas Hills, CA 91301
Notices may be by US Mail (Certified, Return Receipt Requested),
by overnight delivery service, or by any other means which results
in actual delivery to Lender (i.e., Messenger). There is no
provision for fax notices.
17.
CASH MANAGEMENT
(IF APPLICABLE)
RESTRICTED
ACCOUNT
INFORMATION
18.
Upon Property Manager’s receipt of notice of Event of Default,
Property Manager will not accept any payments and shall forward
all cash received to Lender.
Assignment of
Management
Agreement Ex.
A ¶ 10(d)(e)
None.
OTHER
MAINTENANCE OF
PARKING
N/A
ESTOPPEL
CERTIFICATE
N/A
BORROWER
STRUCTURE
Borrower (a) shall not acquire any real or personal property other
than the Property and personal property related to the operation of
the Property; (b) shall not operate any business other than the
management and operation of the Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify.
48
Addendum A
“Events of Default” include
(1) violations of Section 21(a) prohibiting transfers (other than permitted leases)
of interests in the Property, or 51% or more of Borrower;
(2) violations of Section 22, including:
(a) failure to make payments
(b) failure to maintain insurance coverage as required
(c) failure to comply with Section 33 (requiring that Borrower remain a
single purpose entity)
(d) fraud or material misrepresentation by Borrower
(e) the commencement of a forfeiture action or proceeding
(f) action against the property by any other holder of any instrument
secured by the property
(g) any other failure by Borrower to perform any of its obligations which
continues for a thirty day period after notice from Lender.
49
COMPARABLES
COMPARABLE SALE PROPERTIES SUMMARY
PROPERTY SPECS
SALE DATA
Unit
Mix
Sale
Date
Price
Price /
Unit
Cap
Rate
GRM
1990
16 - 0/1
40 - 1/1
24 - 2/2
October-07
$21,700,000
$271,250
5.01%
12.67
104
1989
36 - 1/1
68 - 2/2
August-07
$23,350,000
$224,519
3.85%
14.44
3. Clinton
5015 Clinton Street
Los Angeles, CA
50
1990
50 - 2/2
January-07
$14,750,000
$295,000
4.50%
12.50
4. Hawthorn Regency Luxury
7076 Hawthorn Avenue
Los Angeles, CA
50
2005
10 - 2/1.5
40 - 2/2
January-07
$18,425,000
$368,500
5.32%
12.57
5. Renaissance
630 South Masselin Avenue
Los Angeles, CA
168
1990
29 - 0/1
48 - 1/1
91 - 2/2
August-06
$46,300,000
$275,595
5.01%
13.00
6. Rossmore
585 North Rossmore Avenue
Los Angeles, CA
45
1990
N/A
March-06
$12,400,000
$275,556
4.34%
14.36
7. Wilshire Vermont Station
3183 Wilshire Boulevard
Los Angeles, CA
449
2007
121 - 0/1
252 - 1/1
On Market
$168,000,000
$374,165
4.79%
Ground Lease
20% Affordable
$297,798
4.69%
13.26
$253,012
5.56%
12.72
Units
Built
1. The Tower at Hollywood Hills
1800 North Normandie Avenue
Los Angeles, CA
80
2. Alexandria Avenue
345 South Alexandria Avenue
Los Angeles, CA
Totals / Averages
Kingsley Drive Apartment Homes
Los Angeles, CA
83
1988 / 2007*
59 - 1/1
24 - 2/2
$21,000,000
51
COMPARABLE SALE PROPERTIES ANALYSIS
PRICE / UNIT
$400,000
$368,500
$374,165
Hawthorn Regency
Luxury
Wilshire Vermont
Station
$350,000
$300,000
$295,000
$297,798
$271,250
$275,556
$275,595
The Tower at
Hollywood Hills
Rossmore
Renaissance
$253,012
$250,000
$224,519
$200,000
$150,000
$100,000
$50,000
$0
Alexandria Avenue
Kingsley Drive
Clinton
CAP RATE
6.00%
5.56%
5.32%
4.79%
5.00%
4.69%
4.00%
5.01%
5.01%
The Tower at
Hollywood Hills
Renaissance
4.50%
4.34%
3.85%
3.00%
2.00%
1.00%
0.00%
Alexandria Avenue
Rossmore
Clinton
Wilshire Vermont
Station
Hawthorn Regency
Luxury
Kingsley Drive
Subject is not included in the average.
52
GRM
16.00
14.00
13.26
12.67
12.50
12.72
13.00
Kingsley Drive
Renaissance
14.36
14.44
Rossmore
Alexandria Avenue
12.57
12.00
10.00
8.00
6.00
4.00
2.00
0.00
Clinton
Hawthorn Regency Luxury The Tower at Hollywood
Hills
53
COMPARABLE SALE PROPERTIES
S. Kingsley Drive Apartment Homes
Los Angeles, CA
1. The Tower at Hollywood Hills
Los Angeles, CA
Built:
Units:
Price / Unit:
Price:
Cap Rate:
GRM:
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
1988 / 2007*
83
$253,012
$21,000,000
5.56%
12.72
1990
80
$271,250
$21,700,000
10/07
5.01%
12.67
2. Alexandria Avenue
Los Angeles, CA
3. Clinton
5015 Clinton Street
Los Angeles, CA
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
1989
104
$224,519
$23,350,000
08/07
3.85%
14.44
1990
50
$295,000
$14,750,000
01/07
4.50%
12.50
4. Hawthorn Regency Luxury
Los Angeles, CA
5. Renaissance
Los Angeles, CA
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
2005
50
$368,500
$18,425,000
01/07
5.32%
12.57
1990
168
$275,595
$46,300,000
08/06
5.01%
13.00
6. Rossmore
Los Angeles, CA
Los Angeles, CA
Built:
Units:
Price / Unit:
Sold for:
Closed:
Cap Rate:
GRM:
Built:
2007
Units:
449
Price / Unit:
$374,165
Sold for:
$168,000,000
Closed:
On Market
Cap Rate:
4.79%
GRM:
Ground Lease, 20% Affordable
1990
45
$275,556
$12,400,000
03/06
4.34%
14.36
54
COMPARABLE SALE PROPERTIES MAP
THE TOWER AT HOLLYWOOD HILLS
HAWTHORNE REGENCY LUXURY
CLINTON
ROSSMORE
ALEXANDRIA AVENUE
RENAISSANCE
KINGSLEY DRIVE
WILSHIRE VERMONT STATION
LEGEND
S.
1.
2.
3.
4.
5.
6.
7.
The Tower at Hollywood Hills
Alexandria Avenue
Clinton
Hawthorn Regency Luxury
Renaissance
Rossmore
Wilshire Vermont Station
5015 Clinton Street
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
55
COMPARABLE RENTAL PROPERTIES SUMMARY
STUDIO
Built
Total Units Units
SF
Rent
1 BEDROOM
Rent /
SF
2 BEDROOM
Units
SF
Rent
Rent /
SF
4
36
534
665
$1,593
$1,668
252
850
50
Rent
Rent /
SF Occupancy
Units
SF
$2.98
$2.51
20
28
2
920
945
1,046
$2,153 $2.34
$2,218 $2.35
$2,393 $2.29
$2,214
$2.60
76
1,000
$2,765 $2.77 Lease-Up
710
$1,460
$2.06
77
1
925
1,045
$1,775 $1.92
$1,790 $1.71
96%
1. Park Catalina Street
682-694 South Catalina Street
Los Angeles, CA
2002
90
Los Angeles, CA
2007
449
3. Catalina Gardens
Los Angeles, CA
1987
128
4. Hampshire Place
501 South New Hampshire Avenue
Los Angeles, CA
1989
259
63
455
$1,288
$2.83
112
589
$1,570
$2.67
84
897
$1,850 $2.06
96%
5. Emerald Terrace
136 & 160 South Virgil Avenue
Los Angeles, CA
1972
302
107
445
$1,235
$2.78
150
665
$1,535
$2.31
45
961
$1,985 $2.07
97%
291
483
$1,419
$2.94
604
731
$1,827
$2.50
333
942
$2,112 $2.24
96%
38
9**
12***
660
660
660
$1,621
$1,746
$1,141
$2.46
$2.64
$1.73
16
3**
5***
990
990
990
$2,094 $2.12
$2,244 $2.27
$1,278 $1.29
96%
59
660
$1,542
$2.34
24
990
$1,943 $1.96
Totals / Averages
Kingsley Drive Apartment Homes 1988 / 2007*
83
Los Angeles, CA
Totals / Averages
121
530
$1,651
$3.12
**Wood Floor Units
***Low Income Units
56
N/A
COMPARABLE RENTAL PROPERTIES ANALYSIS
ONE BEDROOMS
$2,400
$2,214
$2,000
$1,827
$1,600
$1,535
$1,542
$1,570
Emerald Terrace
Kingsley Drive
Hampshire Place
$1,631
$1,460
$1,200
$800
$400
$0
Catalina Gardens
Park Catalina Street
TWO BEDROOMS
$3,000
$2,765
$2,500
$2,255
$2,112
$2,000
$1,783
$1,943
$1,985
Kingsley Drive
Emerald Terrace
$1,850
$1,500
$1,000
$500
$0
Catalina Gardens
Hampshire Place
57
RENT / SF
$3.00
$2.73
$2.37
$2.42
$2.43
Emerald Terrace
Hampshire Place
$2.50
$2.35
$2.20
$1.96
$2.00
$1.50
$1.00
$0.50
$0.00
Catalina Gardens
Kingsley Drive
OCCUPANCY
100%
98%
97%
96%
96%
96%
96%
96%
Hampshire Place
Catalina Gardens
Kingsley Drive
94%
92%
90%
88%
Emerald Terrace
58
COMPARABLE RENTAL PROPERTIES
S. Kingsley Drive Apartment Homes
737 South Kingsley Drive, Los Angeles, CA
Built: 1988 / 2007*
Units Type
38
1/1
9** 1 / 1
12*** 1 / 1
16
2/2
3** 2 / 2
5*** 2 / 2
83 Averages
SF
660
660
660
990
990
990
755
Rent
$1,621
$1,746
$1,141
$2,094
$2,244
$1,278
$1,658
Rent
/ SF
$2.46
$2.64
$1.73
$2.12
$2.27
$1.29
$2.20
**Wood Floor Units
***Low Income Units
1. Park Catalina Street
682-694 South Catalina Street, Los Angeles, CA
Built: 2002
Units Type
4
1/1
36
1/1
20
2/2
28
2/2
2
2/2
90 Averages
SF
534
665
920
945
1,046
811
Rent
$1,593
$1,668
$2,153
$2,218
$2,393
$1,960
Rent
/ SF
$2.98
$2.51
$2.34
$2.35
$2.29
$2.42
3. Catalina Gardens
323-333 South Catalina Street, Los Angeles, CA
Built: 1987
Units Type
50
1/1
77
2/1
1
2/2
128 Averages
SF
710
925
1,045
842
Rent
Rent
/ SF
$1,460 $2.06
$1,775 $1.92
$1,790 $1.71
$1,652 $1.96
3183 Wilshire Boulevard, Los Angeles, CA
Built: 2007
Units Type
121 0 / 1
252 1 / 1
76
2/2
449 Averages
SF
530
850
1,000
789
Rent
Rent
/ SF
$1,651 $3.12
$2,214 $2.60
$2,765 $2.77
$2,156 $2.73
4. Hampshire Place
501 South New Hampshire Avenue, Los Angeles, CA
Built: 1989
Units Type
63
0/1
112 1 / 1
84
2/2
259 Averages
SF
455
589
897
656
Rent
Rent
/ SF
$1,288 $2.83
$1,570 $2.67
$1,850 $2.06
$1,592 $2.43
5. Emerald Terrace
136 & 160 South Virgil Avenue, Los Angeles, CA
Built: 1972
Units Type
107 0 / 1
150 1 / 1
45
2/2
302 Averages
SF
445
665
961
631
Rent
Rent
/ SF
$1,235 $2.78
$1,535 $2.31
$1,985 $2.07
$1,496 $2.37
59
COMPARABLE RENTAL PROPERTIES MAP
EMERALD TERRACE
CATALINA GARDENS
HAMPSHIRE PLACE
PARK CATALINA STREET
WILSHIRE VERMONT STATION
KINGSLEY DRIVE
LEGEND
S.
1.
2.
3.
4.
5.
Catalina Gardens
Hampshire Place
Emerald Terrace
501 South New Hampshire Avenue
136 & 160 South Virgil Avenue
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
Los Angeles, CA
60
APPENDIX
ARTICLES OF INTEREST
63
The State; A taller L.A.? He's making it happen; Christopher Pak's vision for the city has been preached by
others. His knowledge of the area has helped him succeed.
[HOME EDITION]
Los Angeles Times - Los Angeles, Calif.
Author:
K. Connie Kang
Date:
Aug 23, 2007
Start Page:
A.1
Section:
Main News; Part A; Metro Desk
Text Word Count:
1824
Document Text
It's difficult these days to drive through Koreatown and Mid- Wilshire without noticing the mark of Christopher Pak.
At 7th Street and Serrano Avenue, there's a seven-story luxury condo tower that Pak has just completed. It's around the corner from the Aroma Sporex
complex, Pak's gleaming five-story sports, health and retail facility that when completed a few years ago was the first large building to rise on that stretch of
Wilshire Boulevard in a quarter of a century.
Just down Wilshire at Western Avenue, construction has begun on a 22-story condominium tower and upscale retail center rising above the Purple Line
subway station.
Then there is Pak's biggest Koreatown project: a 40-story mixed- use tower that is the centerpiece of a Korean trade and cultural center. Pak stood with Los
Angeles Mayor Antonio Villaraigosa in Seoul last fall when the mayor -- on his Asian trade mission -- announced the project and the more than $250 million
in foreign investment that had been earmarked for it.
Pak, a 45-year-old architect, developer and political insider, is turning Koreatown into a testing ground for a vision of a dense, taller L.A. -- pushing the
boundaries of what residents will bear when it comes to high-rise construction.
It's a style of building -- and living -- that he brings from projects he has designed in Asian cities such as Jakarta, Indonesia and Ho Chi Minh City, Vietnam.
"We need to be embracing that density, that mix of residences, services and workplaces, libraries and schools in one area," said Pak, chief executive of
Archeon International Group.
Others over the years have preached a similar vision of Los Angeles to a skeptical public, but Pak is succeeding where they have failed partly because he's
an insider -- he was raised in Koreatown and has been part of the City Hall establishment since his early 30s. He is building his projects in a community of
immigrants, particularly those from South Korea who are used to high-rise living.
Another factor working in Pak's favor is that his key projects are within the Wilshire Center/Koreatown Redevelopment Project, an area targeted for
revitalization by the city in the wake of the 1992 riots. With that designation, the city is saying that the benefits of redevelopment outweigh the negative
environment consequences, according to an analysis on file with the city Planning Department.
Pak has also gained a big ally in Villaraigosa, who has spoken often about the importance of a more vertical Los Angeles with higher-density buildings that
mix housing, commercial and retail along major transportation corridors.
An enthusiastic Villaraigosa was on hand for the 2006 groundbreaking of the Solair Wilshire -- Pak and developer Bruce Rothman's joint venture with the
Metropolitan Transportation Authority above the Purple Line subway station.
"Chris is an innovative, creative architect who has his pulse on the community and the wherewithal to make things happen," Villaraigosa said.
But Pak and his denser vision of L.A. have their share of detractors. Neighborhood activists, leery of development encroachment near residential areas
abutting major boulevards, such as Olympic, complain that projects like his will change the historic character of neighborhoods, and they worry about the
effect of density on the quality of life that residents of these areas have long enjoyed.
Critics question whether the new projects will get people out of their cars or simply bring more residents -- and commuters -- to the area's already clogged
streets. An environmental impact study says the Solair project is expected to create 1,700 new daily trips. Critics are also leery of some of Pak's other ideas.
He would like to see zoning rules changed so that a developer could offer less parking and instead provide more open space for residents.
Pak believes it would get people out of their cars and encourage other modes of transportation, but critics say this is a recipe for a street parking nightmare.
"The city's general plan is a good plan that strikes a balance between homeowners and developers," said Elizabeth Morehead, a former president of the
Wilshire Park Assn. "I find his total and unmitigated dismissal of the general plan quite scary, given his considerable political clout."
Residents were up in arms when Pak and other developers sought to construct an eight-story, 30-unit luxury condo building at Olympic Boulevard and
Gramercy Place.
Led by Arlin J. Low, president of the Country Club Heights Neighborhood Assn., numerous residents signed a petition urging the city not to grant a zoning
variance.
They won. But Pak then went to work, spending months meeting with community groups. What resulted was a compromise that reduced the size of the
project from eight stories to six and made other changes residents wanted. Many community leaders backed the new plan, though some residents still felt it
was far too big.
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"He is a pragmatist, not a dreamer," Rothman said of his business partner. "He is politically savvy. He has a track record. When he goes and works, there is
a certain trust that translates into results."
As a player in the city, Pak contributes to politicians at the local, state and national levels and across party lines.
Records show that Pak and his firm have donated to former Mayors Richard Riordan and James K. Hahn, and to Villaraigosa, mostly in the $1,000 range.
Pak grew up in Koreatown, the second son of two dentists who until their recent retirement practiced in the district. He attended Fairfax High School and Cal
Poly Pomona, graduating with a degree in architecture. In the early 1990s, he quickly became a rising star around City Hall. At 31, Pak was starting his
architecture business and volunteering at a Korean American community organization when he met Riordan during his campaign for mayor.
After Riordan was elected in 1993, Pak applied to serve on a city board, assuming that he didn't have much of a chance. But to his surprise, Riordan's office
appointed him to the board of the Metropolitan Water District of Southern California. He was the first Asian to join the board.
Few people outside Los Angeles' Korean American community had even heard of him. In fact, he was so green to city politics that he didn't even know what
the agency did. But Pak was a quick study, reading everything he could about the agency.
"I learned that it was the lifeblood of Southern California," he said.
But the early to mid-1990s was a tough time for his business. Koreatown and the Mid-Wilshire area struggled to recover from the 1992 riots. And, as a
young architect starting out, he did not have good prospects of landing architectural commissions in Los Angeles.
So he looked to Asia, where the economy was booming. He quickly made connections in Hong Kong that led to luxury residential and office projects in
Vietnam, China, Indonesia, Myanmar and South Korea. Pak continues to commute to Asia.
He made a name for himself with his first project in Asia: developing Vietnam's first modern high-rise, the 22-story Citibank Tower in Ho Chi Minh City. Now
he is working on two $400-million mixed-use projects -- one of them 56-stories -- in Shenyang and Tianjin, China.
In Hong Kong, financier Bernard Chan, a member of Hong Kong's Legislative Council, said in a telephone interview that he was amazed at how well Pak -then in his early 30s -- networked. Pak often operates out of the tony Hyatt hotel in Hong Kong, and Chan said he is treated like a VIP.
"I am a member of the Cabinet, but not necessarily everyone knows me by name" at the Hyatt, Chan said. "But Chris Pak -- everybody knows him. He gets
better discounts than I do. Chris is amazing."
Chan experienced Pak's entree into power in Los Angeles when he came here with a delegation from Hong Kong. Pak arranged for Chan's group to visit
with Mayor Riordan at City Hall.
"They were so impressed," Chan said. "They thought I knew the mayor of Los Angeles!"
The economic recovery of Koreatown in the late 1990s prompted Pak to refocus on developments there and in Mid-Wilshire -- and friends say the political
connections he cultivated during the Riordan administration have paid off nicely.
In the 2005 mayoral race, Pak backed former Assembly Speaker Robert Hertzberg who, like Villaraigosa, expressed the need for a denser Los Angeles. But
when Villaraigosa was elected, he immediately put Pak on his transition team.
A year later, Pak traveled with the mayor on the Asian trade mission, during which news of the Korean center turned out to be the biggest development out
of the trip. Pak's firm is designing a sprawling complex -- called "Superblock" -- that will include a new office for the South Korean Consulate and a cultural
center, theater complex, condos, stores and a Korean bank. (A South Korean firm is the developer).
Villaraigosa touted both the scale of the project and the more than $250 million in capital from Korean investors. Much of the economic boom that has swept
Koreatown in recent years has come from Asian investment, particularly wealthy South Koreans who buy property and businesses because they see them
as secure assets.
While most of Pak's projects use private financing, the 22-story tower at Wilshire and Western is a partnership with the MTA, which owns the land. Pak
created the concept for housing above the Purple Line station and negotiated the deal. In exchange for an exclusive ground lease agreement, Metro is
expected to receive $350,000 annually and periodic rent adjustments.
Pak sees these projects as bringing L.A. a step closer to the dense urban spaces of European cities and of the Asian metropolises where he is building
similar developments (the only part of L.A. to truly embrace high-rise living is a stretch of Wilshire Boulevard between Beverly Hills and Westwood, although
most of those towers are far more upscale than the ones rising in Koreatown).
Koreatown and Mid-Wilshire are "ideal" for this kind of development, he said, because the area is already a fairly dense mix of commercial space, shops and
residences.
His developments would help create "a true metropolis where people can live, work, shop, entertain, eat and do all of it without having to get in your car," he
said. (Pak lives in Playa del Rey with his wife and two sons.)
Pak believes residents need to think about their city in a profoundly different way. Denser, mixed-use developments would mark a departure from the quaint
Los Angeles of the past -- but it is crucial that the city make the break, he said.
"L.A. was zoned for vehicles in the early 1900s, not for pedestrians and public transportation," he said.
65

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