offering memorandum purchase price : $5,395,000 price ... · summit materials holdings llc 3,990...

OFFERING MEMORANDUMPURCHASE PRICE : $5,395,000

PRICE REDUCED: $4,500,000Sheridan Place Townhomes | 10-Unit Multifamily Community

1336 & 1340 Sheridan Boulevard, #102-110 | Denver, CO 80214

1225 17th St., Ste. 1800, Denver, CO 80202 | 303.328.2000 | www.marcusmillichap.com

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap andshould not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverifiedinformation to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough duediligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, thefuture projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's orasbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or anytenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable;however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these mattersand makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all ofthe information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or nameis not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, orcommercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

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

SHERIDAN PLACE TOWNHOMESDenver, COACT ID ZAA0050528

TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Offering Summary

Sheridan Station Light Rail

Regional Map

Local Map

Aerial Photo

Unit Descriptions

Property Photos

FINANCIAL ANALYSIS 02Rent Roll

Operating Statement

Pricing Detail

Acquisition Financing

MARKET OVERVIEW 03Market Analysis

Demographic Analysis

SHERIDAN PLACE TOWNHOMES


INVESTMENT

OVERVIEW


OFFERING SUMMARY

§ 10-Unit Class “A” Custom Townhome Development in Popular West Colfax Neighborhood

§ All Large 1,600+ SF, 3 Bedroom / 3.5 Bathroom with Two-Car Garages

§ Condo Grade, High End Finishes, Top-of-the-Line Appliances and Fixtures

§ Roof Top Patio with Amazing Views of Downtown and Mountains

§ Party Wall Agreement In-Place, All Utilities Individually Metered

§ Two Blocks from Sheridan Light Rail Station

§ Walking Distance to Restaurants, Shopping, Entertainment and Sloan's Lake

INVESTMENT HIGHLIGHTS

Completed in 2019, Sheridan Place Townhomes is a class "A" 10-unit townhome development located in Denver, just west of downtown and a few blockssouth of Sloan's Lake along the rapidly redeveloping West Colfax corridor. Each unit is just over 1,600 square feet, offering high end finishes, top of the lineappliances and fixtures, hard surface flooring, and numerous quality design features. No corners were cut and no expenses spared. The townhomes havetwo bedrooms on the third floor, and a third bedroom / office on the ground floor, perfect for a live/work lifestyle. The master bedroom has a private bathroomwith walk-in shower, custom tile work, double sink and walk-in closet. There is an additional full bathroom on the third floor and another full bath on theground floor with a fourth half bathroom located on the second floor. The second floor living space is a well thought-out open design with a fully-appointedkitchen with quartz countertops, custom cabinets, built-in microwave, high-end stainless steel appliances, an island with elevated countertop for additionalseating, and many other amenities that should be seen in person. On either side of the kitchen is a nice sized dining room and the living room which offers abuilt-in fireplace with remote start. The property is fully pre-wired for entertainment/speakers, ceiling fans, and home security. Each of the 10 townhomeshave their own private roof top deck that is conveniently engineered and wired for a hot tub as well as providing an individual gas line for a grill, all with anexcellent view of downtown Denver, Pikes Peak and the west mountains, including Longs Peak. Each unit also has an attached two-car garage, plenty ofadditional storage, a crawl space, and washer/dryer hook-ups. Each unit is individually metered for gas and electric, has central heat and air conditioningwith a Nest thermostat, as well as a separate metering system for water.

The property has a party wall agreement in place providing an investor the option to sell each unit separately as an additional exit strategy. Such up-and-coming location comparable townhomes are selling for as much as $650,000. It is less than a five-minute walk south to the Sheridan Light Rail Station whichputs you downtown in 10 to 15 minutes without having to drive or park. Sheridan Place Townhomes provides tenants with modern, contemporary housingand the convenience of numerous restaurant and entertainment options with easy commuting options throughout metropolitan Denver.

INVESTMENT OVERVIEW


OFFERING SUMMARYSHERIDAN STATION – RTD LIGHT RAIL

The West Rail Line (“W” Line) opened in April 2013, the first completed portion of the RTD FasTracksProject. It is a 12.1-mile light rail that runs between Denver Union Station and the Jefferson CountyGovernment Center (Golden Station). Stops include the Pepsi Center / Elitch Gardens, Sports AuthorityField at Mile High, the Denver Federal Center and Red Rocks Community College. It encompasses 11stations, six Park-n-Rides and three Call-n-Rides. The Sheridan Station straddles the border of thecities of Denver and Lakewood. Service runs every 7.5 to 15 minutes depending upon the time of day.The Sheridan Station includes an 800-car parking garage to the south of the station as well as bicycleracks and lockers for commuters. Commuters traveling east reach downtown Denver within 10 to 15minutes.

REGIONAL MAP


LOCAL MAP


SHERIDAN STATION

AERIAL MAP


SHERIDAN STATION PARKING

SHERIDAN BLVD.

SLOAN’S LAKE

DOWNTOWN DENVER

COLFAX AVENUE

MOUNTAIRPARK

SLOAN’S LAKE PARK

LAKEWOOD /

DRY GULCH PARK

30,000 AADT

36,000 AADT

** AADT - 2018

29,000 AADT



UNIT SPECIFICATIONSSHERIDAN PLACE TOWNHOMES - UNIT DESCRIPTIONSEnd Units (#102 & #110 Each Building)

ROOM TYPE DIMENSIONS LEVEL DESCRIPTIONBATHROOM (FULL) Upper Master Bath, Walk-in Shower, Private Water Closet, Custom TileBATHROOM (FULL) Upper Third Floor Bath with Soaking Tub, Custom Tile, Quartz CountertopsBEDROOM 10’ X 10’9” UpperLAUNDRY Upper Third Floor – Accommodates Full-Size Stackable Washer and DryerMASTER BEDROOM 11’ X 16’10” Upper Master Bedroom Suite w/ Walk-In Closet, Attached Four-Piece Custom Bath, Private Water ClosetUTILITY/MECH Upper With Additional StorageBATHROOM (1/2) Main Powder RoomKITCHEN 10’ X 14’ Main Open Concept – Open to Living Room and Dining Room, Additional Pantry and Large Island

Electric Induction Range with Double Ovens, AquaLift Self-Cleaning Technology, Counter DepthRefrigerator, Dishwasher, Drawer Microwave, Hood, Disposal. All appliances stainless steel.

DINING ROOM 10’ X 14’ Main Open Concept – Open to the Kitchen and Living RoomLIVING ROOM 14’ X 14’ Main Open Concept – Open to the Kitchen and Dining Room, Gas FireplaceBATHROOM (3/4) Lower Custom TileBEDROOM / OFFICE Lower

Middle UnitsBATHROOM (FULL) Upper Master Bath, Walk-in Shower, Private Water Closet, Custom TileBATHROOM (FULL) Upper Third Floor Bath with Soaking Tub, Custom Tile, Quartz CountertopsBEDROOM 10’ X 10’9” UpperLAUNDRY Upper Third Floor – Accommodates Full-Size Stackable Washer and DryerMASTER BEDROOM 11’ X 16’10” Upper Master Bedroom Suite w/ Walk-In Closet, Attached Four-Piece Custom Bath, Private Water Closet,

Sitting AreaUTILITY/MECH Upper With Additional StorageBATHROOM (1/2) Main Powder RoomKITCHEN 10’ X 14’ Main Open Concept – Open to Living Room and Dining Room, Additional Pantry and Large Island

Electric Induction Range with Double Ovens, AquaLift Self-Cleaning Technology, Counter DepthRefrigerator, Dishwasher, Drawer Microwave, Hood, Disposal. All appliances stainless steel.

DINING ROOM 10’ X 10’11” Main Open Concept – Open to the Kitchen and Living RoomLIVING ROOM 14’ X 14’ Main Open Concept – Open to the Kitchen and Dining Room, Gas FireplaceBATHROOM (3/4) Lower Custom TileBEDROOM / OFFICE Lower

INTERIOR FEATURES Double-Pane Windows, Prewired for Home Automation and Speakers, Nest ThermostatsEXTERIOR FEATURES Heating Gutters, Lighting, Sprinkler System for Irrigation of Professional Landscaping, Natural Gas

Outlet, Prewired Auto/Video on 450 SF Rooftop Deck (#102 Has Additional 120SF Deck Off KitchenGARAGE (ATTACHED) 17’9” X 17’10” Two-Cars; Alley Entry onto Private Driveway

All Units

PROPERTY PHOTOS

Clayton Primm | [email protected]

Open Concept Kitchens – Open to Living Room and Dining Room, Additional Pantry and Large Bar Height Island for Entertaining. High-EndStainless Steel Appliances Include Electric Induction Range with Double Ovens, AquaLift Self-Cleaning Technology, Counter Depth Refrigerator,Dishwasher, Drawer Microwave, Hood, Disposal. Quartz Countertops.

Each Unit Features Three Full Baths and One Half-Bath: Includes Walk-In Showers with Custom Tile and High-End Fixtures; Quartz Countertops

Third Floor Features Master Bedroom and Bath with Walk-In Closets and Separate Laundry with Space for Full-Size Stackable Washer/Dryer

PROPERTY PHOTOS

Clayton Primm | [email protected]

Amenities – Each Unit Features a Gas Fireplace, Customized Color/Paint Scheme for Each Unit, Two-Car Attached Garage with Crawl Space

Each Unit Individually Metered for Electric, Gas and Water; Double Pane Windows; Central Air and Heat; Natural Gas Line on Deck for Grill


FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS


RENT ROLLAs of October 2019

PROJECTED YEAR 1# OF AVERAGE AVERAGE AVERAGE MONTHLY AVERAGE AVERAGE MONTHLY

UNIT TYPE UNITS SF RENT RENT / SF INCOME RENT RENT / SF INCOME3 Bed / 3.5 Bath 6 1,633 $2,500 $1.53 $15,000 $2,900 $1.78 $17,4003 Bed / 3.5 Bath End Unit 4 1,677 $2,600 $1.55 $10,400 $2,900 $1.73 $11,600TOTALS / WEIGHTED AVGS 10 1,651 $2,540 $1.54 $25,400 $2,900 $1.76 $29,000

GROSS ANNUALIZED RENTS $304,800 $348,000

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles2018 Estimate Pop 25,287 178,277 469,0472010 Census Pop 22,127 157,946 413,1522018 Estimate HH 9,747 73,688 212,5582010 Census HH 8,454 64,526 184,114Median HH Income $39,132 $49,975 $54,191Per Capita Income $22,070 $30,023 $35,597Average HH Income $56,013 $71,822 $77,821

MAJOR EMPLOYERS

EMPLOYER # OF EMPLOYEES

Colorado Department Human Services 5,033Dept Revenue - Enforcement Division 5,031Summit Materials Holdings LLC 3,990Omaha Holdings LLC 3,074Power Company of Wyoming LLC 2,740Lutheran Medical Center 2,410Exempla St. Joseph’s Hospital 2,400St Joseph Hospital Inc. 2,387Sisters of Charity of Leavenworth 2,045Mac Holding LLC 2,000Saint Joseph Hospital 2,000DirecTV Support Net Rocky MTS LLC 1,912

FINANCIAL ANALYSIS


OPERATING STATEMENT

INCOME PROJECTED YEAR 1 NOTES PER UNIT PER SFGROSS PROJECTED RENT $304,800 $348,000 [1] $34,800 $21.08

TOTAL PHYSICAL VACANCY ($12,192) 4.0% ($13,920) 4.0% ($1,392) ($1)

EFFECTIVE RENTAL INCOME $292,608 $334,080 $33,408 $20.24 Utility Bill-Back 5,700 5,700 [3] 570 0.35 All Other Income 1,500 1,500 [4] 150 0.09

TOTAL OTHER INCOME $7,200 $7,200 $720 $0.44

EFFECTIVE GROSS INCOME $299,808 $341,280 $34,128 $20.68

EXPENSES CURRENT POTENTIAL PER UNIT PER SFReal Estate Taxes 20,889 20,889 [5] 2,089 1.27 Insurance 12,000 12,000 [6] 1,200 0.73 Utilities - Water & Sewer 6,000 6,000 [7] 600 0.36 Utilities - Gas & Electric (Vacant) 400 400 [8] 40 0.02 Repairs & Maintenance 5,000 5,000 [9] 500 0.30 Landscaping & Snow Removal 750 750 [10] 75 0.05 Office, Administrative & Advertising 1,500 1,500 [11] 150 0.09 Management Fee 14,990 5.0% 17,064 5.0% [12] 1,706 1.03

TOTAL EXPENSES $61,529 $63,603 $6,360 $3.85 EXPENSES AS % OF EGI 20.5% 18.6%NET OPERATING INCOME $238,279 $277,677 $27,768 $16.82

NOTES[1] Gross Rent: Projected Rent is based on initial asking rent and Year 1 is based on a rent increase to market[2] Vacancy is based on a market average[3] Utility Reimbursement: $50 per month flat fee for Water, Sewer and Trash reimbursement[4] Additional Income: estimated at $150 per unit per year[5] Estimated Property Tax based on 2019 assessed value[6] Estimated market average expense

FINANCIAL ANALYSIS


PRICING DETAIL

OPERATING DATA

INCOME CURRENT POTENTIALGROSS SCHEDULED RENT $304,800 $348,000Less: Vacancy/Deductions 4.0% $12,192 4.0% $13,920Total Effective Rental Income $292,608 $334,080Other Income $7,200 $7,200Effective Gross Income $299,808 $341,280Less: Expenses 20.5% $61,529 18.6% $63,603NET OPERATING INCOME $238,279 $277,677Cash Flow $238,279 $277,677Debt Service $185,953 $185,953Net Cash Flow After Debt Service 3.88% $52,325 6.79% $91,724Principal Reduction $53,105 $55,406TOTAL RETURN 7.81% $105,430 10.90% $147,130

EXPENSES CURRENT POTENTIALReal Estate Taxes $20,889 $20,889Insurance $12,000 $12,000Utilities - Water & Sewer $6,000 $6,000Utilities - Vacant Gas & Electric $400 $400Repairs & Maintenance $5,000 $5,000Landscaping & Snow Removal $750 $750Office, Administrative & Advertising $1,500 $1,500Management Fee $14,990 $17,064TOTAL EXPENSES $61,529 $63,603

EXPENSES / UNIT $6,153 $6,360EXPENSES / SF $3.73 $3.85

SUMMARYPRICE $4,500,000Down Payment $1,350,000 30%Number of Units 10Price Per Unit $450,000Price Per SF $272.63Rentable SF 16,506Lot Size 0.24 AcresApprox. Year Built 2019

RETURNS PROJECTED YEAR 1CAP RATE 5.30% 6.17%GRM 14.76 12.93Cash-on-Cash 3.88% 6.79%Debt Coverage Ratio 1.28 1.49

FINANCING FIRST LOANLoan Amount $3,150,000Loan Type NewInterest Rate 4.25%Amortization 30 YearsYear Due 2029

# OF UNITS UNIT TYPE SF / UNIT SCHEDULED RENTS MARKET RENTS10 3 Bedroom/ 3.5 Bath 1,651 $2,540 $2,900

MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIESMMCC—our fully integrated, dedicated financing arm—is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms.

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

Our dedicated, knowledgeable experts understand the challenges of financingand work tirelessly to resolve all potential issues to the benefit of our clients.

National platform operating

within the firm’s brokerage offices

6.24 billion billion total

national volume in 2018

Access to more capital sources than any other

firm in the industry

Optimum financing solutions to enhance value

Our ability to enhance buyer pool by expanding finance options

Our ability to enhance seller control

• Through buyer qualification support

• Our ability to manage buyers finance expectations

• Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings

• By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file

WHY MMCC?

Closed 1,678 debt and equity

financings in 2018

ACQUISITION FINANCING



MARKET

OVERVIEW

MARKET OVERVIEW

DENVEROVERVIEW

The Denver-Aurora-Lakewood metro is at the center of Colorado’sFront Range, nestled at the convergence of the Great Plains and themajestic Rocky Mountains. The market consists of 10 counties:Broomfield, Arapahoe, Denver, Adams, Douglas, Jefferson, ClearCreek, Elbert, Gilpin and Park counties. Denver, which is both a countyand a city, is the largest of each, with approximately 713,000 residents.Denver also houses the state capitol. The eastern and northern reachesof the metro are expected to receive the majority of future development,as land in these areas is relatively flat and more affordable. Denver’selevation of 5,280 feet above sea level provides it with the nickname“Mile-High City.”

MARKET OVERVIEW

METRO HIGHLIGHTS

MAJOR TRANSPORTATION CENTERDenver serves as the vital transportation gateway to the West, with a well-developed infrastructure. The region is accessed by three interstates and two freight rail lines.

EMPHASIS ON SKILLED JOBSDenver’s highly educated labor force attracts tech employers. Roughly 41 percent of residents age 25 and older hold at least a bachelor’s degree.

GROWING ALTERNATIVE-ENERGY SECTORThe National Renewable Energy Laboratory located in Golden helps lure energy-related businesses to the region.


MARKET OVERVIEW

ECONOMY§ Key drivers of the region’s economy include aerospace, bioscience, energy, financial

services, healthcare, aviation, information technology and telecommunications.§ Denver’s economy is expanding, with the annual change in gross metropolitan product

(GMP) expected to reach 2.7 percent this year.§ Many of Denver’s largest employers are in population-serving businesses such as retail and

healthcare, and their expansion will track population and income growth.§ There are 10 Fortune 500 companies located in the metro, including Newmont Mining, DISH

Network, DaVita Healthcare, Molson-Coors Brewing and Liberty Media.

SHARE OF 2018 TOTAL EMPLOYMENT

MAJOR AREA PRIVATE EMPLOYERS

HealthONE Corp.

CenturyLink

Children’s Hospital Colorado

Charles Schwab

Lockheed Martin Corp.

Comcast Corp.

Frontier Airlines

Wells Fargo

United Airlines Inc.

University of Colorado Health* Forecast

MANUFACTURING5%

GOVERNMENT

HEALTH SERVICESEDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

18%AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

3%INFORMATION

18%

6%

13% 11% 7%

13%


MARKET OVERVIEW

DEMOGRAPHICS§ Rapid employment growth fuels in-migration. The metro is expected to add roughly

172,000 new residents during the next five years.§ Gains in higher-paying employment sectors will raise the median household income

approximately 10 percent through 2023, well above the national median.§ Elevated incomes have allowed nearly 63 percent of households to own their homes,

slightly below the national rate, maintaining rental demand.

The Denver metro area offers residents urban and rural surroundings, in addition to excitingnightlife and outdoor fun. Five professional sports teams play in venues within a short walkor drive of downtown Denver. The local arts community is vibrant and the city’s large parksystem provides relaxing opportunities to enjoy the outdoors. The allure of the RockyMountains keeps residents active. Rocky Mountain National Park is less than two hours fromthe metro and offers numerous campsites and hiking trails. Avid skiers and snowboardersare close to world-class ski resorts, such as Vail, Beaver Creek and Copper Mountain. TheDenver metro will continue to grow as the area’s high quality of life attracts new residents.

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau

QUALITY OF LIFE

ARTS & ENTERTAINMENT


2018 Population by Age

0-4 YEARS

6%5-19 YEARS

19%20-24 YEARS

6%25-44 YEARS

31%45-64 YEARS

26%65+ YEARS

12%

36.52018

MEDIAN AGE:

U.S. Median:

38.0

$72,200 2018 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:

$58,800

2.9M2018

POPULATION:

Growth2018-2023*:6.0%

1.1M2018

HOUSEHOLDS:

7.4%Growth

2018-2023*:

MARKET OVERVIEW

Multifamily demand remains strong despite tightened mortgage rates. TheDenver metro has one of the nation’s 10 largest affordability gaps between renting andowning, persuading many to choose apartment living rather than homeownership.There is an $880 difference between the average effective rental payment and themonthly mortgage payment on a median-priced home including insurance and taxes inthe Denver metro. Employment growth has remained strong, though it has slowed inrecent quarters, and it is still supporting strong in-migration to the metro. The tightunemployment rate has enabled the formation of new households as more peoplehave jobs and are financially able to live independently. The increased demand hastightened apartment vacancy in nearly all of the metro’s submarkets.

Deliveries will increase during second half of the year. Denver’s apartmentpipeline has nearly 4,500 units scheduled to come online by the end of the year. Threeprojects with more than 350 units each will finalize later this year, with the largestproject, the 397-unit Forum Fitzsimons in North Aurora, set to be completed in August.In Downtown Denver, Luxe at Mile High will increase inventory with 382 new rentalunits once opened in October. This area has been a core focus for metro apartmentdevelopers, who have delivered more than 10,000 units since 2009. Littleton, whileoften overlooked by developers, will receive 352 apartments with the opening of AMLILittleton Village, bolstering the submarket to its second largest annual deposit onrecord.

Absorption Totals Outpace Construction;Tight Labor Market Supports Workforce Housing

DENVER METRO AREA

* Cap rate trailing 12-month average through 2QSources: CoStar Group, Inc.; Real Capital Analytics


Investment Trends

Multifamily 2019 Outlook

8,400 units will be completed

4.0% increase in effective rents

30 basis point decrease in vacancy

Construction:

Rents:

Vacancy:

Deliveries in 2018 totaled 10,400 units. Thisyear’s total will be approximately 20 percentless, though it will still be above the 10-yearaverage of 5,500 rentals.

Denver’s average effective rent will advanceto $1,525 per month in 2019. The averagerent increased 4.6 percent last year.

Vacancy will compress to 4.8 percent thisyear. In 2018, vacancy fell 50 basis pointsfrom 5.6 percent.

• Trading velocity in the greater Denver area has remained relatively strongover the past year, with a moderate decline of 5 percent in transactions yearover year. While trading overall slowed, Class A sales increased on an annualbasis during the period.

• Investors focused their interest in the Downtown Denver and Aurorasubmarkets during the recent yearlong period ending in June. Tradingincreased in these areas by approximately 11 percent year over year. Afterheavy trading in the previous period, activity in the Lakewood and GlendaleUniversity areas slowed by nearly 40 percent.

• The market’s average cap rate remained level over the past 12 months,staying in the mid-5 percent band. Relatively small price appreciation andsteady investor interest have helped maintain balanced market conditions.Initial yields on Class A properties are ranging in the high-4 to low-5 percentzone.

MARKET OVERVIEW

EMPLOYMENT

• The Denver pipeline delivered 2,600 fewer apartments during the past 12 months than were delivered the previous year. Approximately 6,500 units were added to suburban areas.

• Northeast Denver received the largest portion of new apartments during the period as builders finalized nearly 1,700 units. The submarket with the second-largest deposit was the South Denver/Englewood area with 1,200 openings.

CONSTRUCTION

• Vacancy in the yearlong period ending in June fell to 4.5 percent. The decline marks the eighth consecutive quarter with a year-over-year decline in the vacancy rate.

• Demand for Denver’s upper-tier apartments compressed the Class A vacancy 70 basis points over the past year. Workforce housing also posted vacancy changes with a 60-basis-point drop in Class B and a 30-basis-point drop in Class C rates.

VACANCY

• Denver’s average effective rent advanced to $1,522 per month. The percent growth seen over the past 12 months was approximately double the rate of increase in the previous yearlong period.

• All three property classes in the metro posted average effective rate advances, with Class A rents rising 5.5 percent, Class B lifting 4.0 percent and Class C gaining 5.3 percent year over year.

RENTS

DENVER METRO AREA

increase in effective rents Y-O-Y5.0%basis point decrease

in vacancy Y-O-Y60units completed Y-O-Y8,600increase in total

employment Y-O-Y1.4%

* Forecast


2Q19 – 12-Month Period

• Job growth in the metro had slowed its annual pace as of the end of the second quarter. Additions during the recent annual period totaled 21,200 positions, approximately 19,000 fewer jobs than the previous year.

• Sector performance was headlined by the professional and business services sector, which added 13,400 roles on an annual basis as of the end of June.

MARKET OVERVIEW

Private and Institutional Capital Remain Active;Denver Rental Demand Boosts Investor Interest

Outlook: Denver’s demand drivers willbolster rental performance, drawingcontinued interest from both in-state andcoastal investors looking to capitalize onthe market’s strong fundamentals.

VacancyRate

Y-O-YBasisPoint

ChangeSubmarket

EffectiveRent

Y-O-Y %Change

Northeast Denver 4.1% -90 $1,501 3.7%

Southwest Aurora 4.1% -100 $1,277 3.8%

North Aurora 4.2% -40 $1,247 1.2%

South Lakewood 4.2% -80 $1,473 2.6%

South Denver/Englewood 4.3% -30 $1,565 9.6%

Tech Center 4.4% -90 $1,634 1.6%

Southeast Denver 4.5% -40 $1,380 4.5%

Five Points/Capitol Hill/Cherry Creek 5.1% -60 $1,847 8.6%

Downtown/Highlands/Lincoln Park 5.5% -60 $2,015 5.1%

Overall Metro 4.5% -60 $1,522 5.0%

Submarket Trends

Lowest Vacancy Rates 2Q19**

Sales Trends

• The Denver metro continues to attract both in-state and out-of-state investors.California buyers as well as institutional capital from Illinois and New York maintain theirpresence in the market, accounting for approximately one-third of the metro’s trades.

• The average sales price increased approximately 6 percent year over year, bringing theaverage price per unit above $190,000.

* Trailing 12 months through 2Q19 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics


DENVER METRO AREA

** Includes submarkets with more than 14,000 units of inventory

*Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2019-2024 v Annualized Rate

MARKET OVERVIEW


DENVER METRO AREA

• Fed takes action to sustain economic momentum. The combination of trade disputesbetween the U.S. and China together with slowing European growth converged to weigh on theglobal economic outlook, sparking action by the Federal Reserve. To combat the restraints ongrowth, largely driven by uncertainty surrounding international trade, the Federal Reserve cut itsovernight rate by 25 basis points and halted its balance sheet reductions, known as quantitativetightening. Though this action runs the risk of lifting inflation pressure, the Fed has communicatedits willingness to let the economy “run hot.” Many believed the Fed action would offer a boost todomestic markets until the trade war was escalated immediately after the Fed announcement.This new bout of uncertainty pushed the 10-year Treasury yield below 2 percent for the first timesince 2016. Though domestic growth has moderated, the nation’s economic foundation remainssolid, headlined by the tight labor market and muted inflationary pressure. Fed officials willcontinue to focus on economic risks spilling over from the trade war with China, potentially callingfor additional rate reductions this year.

• Abundant liquidity balances conservative underwriting. Debt financing for apartment assetsremains strong, supported by a variety of lenders. However, Fannie Mae and Freddie Mac, twomainstay apartment capital sources, will step to the sidelines in the second half of the year asthey reach their lending caps on market rate assets. The Government Sponsored Enterprises willremain active lenders for “uncapped business,” including environmentally sustainable andaffordable housing properties. A wide range of local, regional and national banks; pension funds;insurance companies and CMBS sources will remain active. All have responded to the fallinginterest rate climate by reducing mortgage rates, but lender spreads have widened as the 10-year Treasury rate has fallen. Given the downward pressure on interest rates, lender caution hasrisen, particularly for construction loans. Though lending is still available for these types ofprojects, investors may need to blend mezzanine debt with other capital sources until they proveout their concepts and substantially fill units. For stabilized existing assets in most major markets,financing remains plentiful.

* Trailing 12 months through 2Q19Includes sales $2.5 million and greaterSources: CoStar Group, Inc.; Real Capital Analytics

Capital Markets

PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2018 Experian

POPULATION 1 Miles 3 Miles 5 Miles§ 2023 Projection

Total Population 25,131 178,889 473,313§ 2018 Estimate

Total Population 25,287 178,277 469,047§ 2010 Census

Total Population 22,127 157,946 413,152§ 2000 Census

Total Population 23,335 162,959 414,982§ Daytime Population

2018 Estimate 19,436 206,131 646,812HOUSEHOLDS 1 Miles 3 Miles 5 Miles§ 2023 Projection

Total Households 9,953 75,835 219,839§ 2018 Estimate

Total Households 9,747 73,688 212,558Average (Mean) Household Size 2.48 2.36 2.15

§ 2010 CensusTotal Households 8,454 64,526 184,114

§ 2000 CensusTotal Households 8,403 62,747 174,900

Growth 2015-2020 2.11% 2.91% 3.43%HOUSING UNITS 1 Miles 3 Miles 5 Miles§ Occupied Units

2023 Projection 9,953 75,835 219,8392018 Estimate 10,040 75,998 218,601Owner Occupied 3,086 33,980 97,493Renter Occupied 6,662 39,709 115,065Vacant 293 2,310 6,043

§ Persons In Units2018 Estimate Total Occupied Units 9,747 73,688 212,5581 Person Units 38.21% 36.54% 42.09%2 Person Units 25.23% 30.51% 30.84%3 Person Units 12.99% 13.16% 11.49%4 Person Units 10.38% 9.51% 7.92%5 Person Units 6.45% 5.19% 4.00%6+ Person Units 6.74% 5.09% 3.65%

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles§ 2018 Estimate

$200,000 or More 2.51% 4.00% 4.85%$150,000 - $199,000 1.53% 4.75% 5.09%$100,000 - $149,000 6.66% 11.80% 12.87%$75,000 - $99,999 10.72% 11.50% 12.12%$50,000 - $74,999 17.45% 17.91% 18.64%$35,000 - $49,999 15.54% 13.64% 13.28%$25,000 - $34,999 11.49% 9.94% 9.47%$15,000 - $24,999 13.74% 11.54% 10.09%Under $15,000 20.35% 14.91% 13.58%

Average Household Income $56,013 $71,822 $77,821Median Household Income $39,132 $49,975 $54,191Per Capita Income $22,070 $30,023 $35,597POPULATION PROFILE 1 Miles 3 Miles 5 Miles§ Population By Age

2018 Estimate Total Population 25,287 178,277 469,047Under 20 26.67% 24.14% 20.54%20 to 34 Years 27.49% 27.61% 29.98%35 to 39 Years 8.16% 8.74% 8.56%40 to 49 Years 12.12% 12.64% 12.59%50 to 64 Years 14.45% 15.37% 16.22%Age 65+ 11.11% 11.50% 12.11%Median Age 32.90 34.14 34.75

§ Population 25+ by Education Level2018 Estimate Population Age 25+ 16,793 123,581 341,139Elementary (0-8) 9.46% 7.48% 5.70%Some High School (9-11) 14.44% 11.57% 8.84%High School Graduate (12) 29.17% 23.50% 21.40%Some College (13-15) 19.07% 17.87% 18.54%Associate Degree Only 4.95% 5.15% 5.51%Bachelors Degree Only 13.89% 21.20% 24.79%Graduate Degree 6.80% 11.39% 13.68%

§ Population by Gender2018 Estimate Total Population 25,287 178,277 469,047Male Population 50.90% 49.84% 50.77%Female Population 49.10% 50.16% 49.23%

INCOMEIn 2018, the median household income for your selected geography is$39,132, compare this to the US average which is currently $58,754.The median household income for your area has changed by 22.76%since 2000. It is estimated that the median household income in yourarea will be $42,663 five years from now, which represents a changeof 9.02% from the current year.

The current year per capita income in your area is $22,070, comparethis to the US average, which is $32,356. The current year averagehousehold income in your area is $56,013, compare this to the USaverage which is $84,609.

POPULATIONIn 2018, the population in your selected geography is 25,287. Thepopulation has changed by 8.37% since 2000. It is estimated that thepopulation in your area will be 25,131.00 five years from now, whichrepresents a change of -0.62% from the current year. The currentpopulation is 50.90% male and 49.10% female. The median age of thepopulation in your area is 32.90, compare this to the US averagewhich is 37.95. The population density in your area is 8,037.73 peopleper square mile.

HOUSEHOLDSThere are currently 9,747 households in your selected geography. Thenumber of households has changed by 15.99% since 2000. It isestimated that the number of households in your area will be 9,953five years from now, which represents a change of 2.11% from thecurrent year. The average household size in your area is 2.48persons.

EMPLOYMENTIn 2018, there are 5,612 employees in your selected area, this is alsoknown as the daytime population. The 2000 Census revealed that41.05% of employees are employed in white-collar occupations in thisgeography, and 59.56% are employed in blue-collar occupations. In2018, unemployment in this area is 3.73%. In 2000, the average timetraveled to work was 30.00 minutes.

RACE AND ETHNICITYThe current year racial makeup of your selected area is as follows:64.95% White, 3.15% Black, 0.08% Native American and 1.40%Asian/Pacific Islander. Compare these to US averages which are:70.20% White, 12.89% Black, 0.19% Native American and 5.59%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.

People of Hispanic origin make up 58.83% of the current yearpopulation in your selected area. Compare this to the US average of18.01%.

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MARKETING TEAM


HOUSINGThe median housing value in your area was $205,219 in 2018,compare this to the US average of $201,842. In 2000, there were3,188 owner occupied housing units in your area and there were 5,215renter occupied housing units in your area. The median rent at thetime was $536.

Source: © 2018 Experian

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