harrisonheights om jll · floorplan number of units avg. unit size (sf) % of unit mix one bedroom 8...

OFFERING MEMORANDUM

HARRISONheights16 UnitsBuilt 1997Seattle, Washington

List price: $4,500,000

Investment

Don FlaniganVice President+1 206 971 [email protected]

Matt KemperVice President+1 206 607 [email protected]

Financing

Seth HeikkilaSenior Vice PresidentPhone: +1 206 607 [email protected]

Drew HeitstumanAssociatePhone: +1 206 971 [email protected]

2113 N 107th Street

Seattle, Washington 98133

contacts

HARRISONheights

contents

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24

14 20

34

08

28

ExecutiveSummary

FinancialAnalysis

SubmarketOverview

MarketOverview

TransactionGuidelines

PropertyDescription

Rent & Sales Comparables

HARRISONheights

ExecutiveSummary

Name Harrison Heights

Address 2113 North 107th Street, Seattle, Washington 98133

List Price $4,500,000 (Cap Rate: 4.63%)

Price Per Unit $282,346

Price Per SF $389

Submarket Northgate

Parcel Number 759320-0035

Lot Size 6,002 square feet / 0.14 acres

Built 1997

Buildings Single structure, wood frame, pitched roof

Number of Units 16 apartment homes

Floorplans One bedroom and two bedroom / one bath options

Average Unit Size 731 square feet

Residential Space 11,691 net rentable square feet

Parking 16 garage stalls

The Offering

Property Details

JLL is pleased to present the opportunity to acquire Harrison Heights, a 16-unit multifamily asset in Seattle, Washington. Built in 1997, the property’s three renovated units are achieving approximately $200 per month compared to its 13 classic units. The overall superior maintenance of Harrison Heights provides the option of continuing operations with current finish levels or extending the existing renovation program to the entire building to capture the remaining upside. New ownership can also capitalize on the property’s exceptional location in the Northgate submarket, which provides immediate access to employment, education, retail and transportation. This includes Northwest Hospital & Medical Center, North Seattle College and Northgate Mall, as well as Interstate 5 and the upcoming Northgate light rail station. Additional opportunities are minutes away within the core areas of the Seattle MSA.

5

OFFERING MEMORANDUM | HARRISON HEIGHTS

Investment HighlightsLEADING EMPLOYMENT MARKETSeattle’s strength as an investment market derives from unprecedented job gains and a local economy that continues to expand at a rapid pace. Unemployment within the MSA sits at an historic low of 3.7% while the total job count has reached a record high of almost 1.7 million. Robust compensation packages and nation-leading wage gains contribute to Seattle’s designation as the top city in the country for career-oriented professionals and most desired city for Millennials. It is also ranked as the nation’s top real estate investment market for 2018 by the Urban Land Institute. 10 Fortune 500 companies are headquartered here, further elevating Seattle’s status as a globally-recognized business center and the number one relocation destination in the U.S.

URBAN DESTINATIONNorthgate is one of six Urban Centers designated in the City of Seattle’s Comprehensive Plan, and one of 27 regional growth centers identified in Puget Sound Regional Council’s Vision 2040 regional growth management plan. The immediate area currently includes over 7,000 businesses and nearly 58,000 total employees. Northwest Hospital & Medical Center (an association of the University of Washington medical system) anchors Northgate’s medical hub, which features some of the region’s top medical groups including Kaiser Permanente, The Polyclinic, Pima Medical Institute, UW Medicine, Kindred Hospital and NW Asthma Association. Northgate also hosts approximately 14,000 students and 300 faculty members at North Seattle College.

TRANSIT EXPANSIONNorthgate is well connected to greater Seattle by Interstate 5, with points of ingress and egress just blocks from Harrison Heights. The University of Washington, Amazon, Facebook and Google are a quick 15- to 20-minute drive via Interstate 5. The nearby Northgate light rail station will open 2021, further linking the submarket to major employers of Seattle. Located within walking distance of the property and considered part of the Northgate Transit Center, Sound Transit estimates that average light rail usage in Northgate will reach 15,000 people per day in the immediate future. To-date, the Transit Center offers six bus bays and connections to 15 separate bus routes.

RETAIL REDEVELOPMENTThe Northgate Mall is the primary shopping destination of North Seattle and recognized as the first regional shopping mall in the country. Its current offerings include 130 stores such as Nordstrom and Macy’s and 12 full-service restaurants. Ownership filed an application for redevelopment in early 2018 to re-imagine the venue as a mixed-use property that includes 500,000 to 750,000 square feet of office space – room for up to 3,700 office workers. A new training facility for an anticipated NHL expansion team is also expected for the Northgate Mall’s 55-acre site. Next door is Thornton Place, an additional mixed-use lifestyle center with a 14-screen and IMAX movie theater, seven restaurants, medical offices and multiple shopping options. Additional big box shopping is to the north with tenants such as Target, Best Buy and Dick’s Sporting Goods.

MULTIFAMILY STRENGTHNorthgate is a supply-constrained from a multifamily perspective with only 3,043 market rate apartments and no new inventory since 2009. Its vacancy rate sits at an impressive 3.7% and has remained below 4.0% since 2012. Despite the average Northgate household earning $102,288 per year, homeownership remains elusive for many. Home values have risen by 24.1% since 2017, resulting in strong demand for apartment rentals. High demand, coupled with high incomes, has resulted in a strong rent growth of 4.4%. A significant runway remains with in-place rents at Harrison Heights $846 below the maximum rent qualification of the typical Northgate household. Additional value can be achieved through a thoughtful renovation program that brings a consistent and fresh aesthetic to all 16 apartment homes at Harrison Heights.

6

EXECUTIVE SUMMARY

HARRISONheights

5

5

5

Future Light Rail Station

Future pedestrian bridgeNorthgate

Transit Center

NE Northgate Way

NE 103rd St

NE 100th St

5th Ave NE

3rd Ave NE

Northgate Mall

Northgate North

Thornton Place

7


PropertyDescription

Floorplan Number of Units Avg. Unit Size (SF) % of Unit Mix

One Bedroom 8 590 50%

Two Bedroom / One Bath 8 872 50%

Total / Average 16 11,691 / 731 100%

UNIT MIXHarrison Heights was constructed in 1997 with a total of 16 apartment homes that encompass 11,691 square feet of net rentable space. 16 parking spaces are on-site within a secured garage, equating to a parking ratio of one space per unit.

The residences at Harrison Heights average 731 square feet in size. 50% are one-bedroom units while the remaining half include two bedrooms and one bath. Its floorplans feature large bedrooms and living areas, in-unit washer/dryers and private decks. Ceiling heights are eight feet throughout.


Renovated

Renovated

Renovated

Unrenovated Unrenovated

The Asset

VALUE-ADD POTENTIALThree of the property’s apartment homes have been refreshed with modern improvements, earning monthly premiums of approximately $200. Further upside can be captured by extending renovations to the remaining classic units. The current renovation package includes:

• Quartz counters • Undermount sinks • Stainless appliances • New cabinetry and

hardware

• Vinyl plank flooring • Modern light fixtures • New doors, bases and

casings

9

Representative Floorplans

ONE BEDROOM1 Bd / 1 Ba

586 SF (+209 SF deck)

ONE BEDROOM1 Bd / 1 Ba

611 SF (+69 SF deck)

W/D

Entry

Deck

Living11' 0" x 10' 10"

Living17' 10" x 14' 6"

Closet

2113 North 107th Street | Seattle, WA 98133

1 Bedroom | 1 Bath | 611 SqFt + 69 SqFt Deck

(206) 643 - 6604 | [email protected]

Units:204304404

W/D

Living15' 10 x 13' 11"

Bedroom13' 4" x 9' 11"

Entry

Deck


1 Bedroom | 1Bath | 586 SqFt + 209 SqFt Deck

(206) 643 - 6604 | [email protected]

Units:201301401

PROPERTY DESCRIPTION

10

TWO BEDROOM2 Bd / 1 Ba

819 SF (+69 SF deck)

TWO BEDROOM2 Bd / 1 Ba

924 SF (+209 SF deck)

Representative Floorplans

W/D

Entry

Deck

Bedroom9' 9" x 9' 7"


Living22' 3" x 14' 3"


2 Bedroom | 1 Bath | 819 SqFt + 69 SqFt Deck

(206) 643 - 6604 | [email protected]

Units:103203303403

W/D

Entry

Deck

Living24' 2" x 14' 4"

Bedroom13' 9" x 9' 7"



2 Bedroom | 1 Bath | 924 SqFt + 209 SqFt Deck(102 has no deck)

(206) 643 - 6604 | [email protected]

Unit:102202302402


11

Stacking Plan

PROPERTY DESCRIPTION

W/D

W/D

W/D W/D

102

101

103

104

SPRINKLERROOM

ELEVATOR

LOBBY

Harrison Heights - First Floor


W/DW/D

W/D W/D

203303403

202302402

201301401

204304404

ELEVATOR

Harrison Heights - Second, Third & Fourth Floors


1ST FLOOR

2ND, 3RD, AND 4TH FLOORS

Lake Washington

12


Puget SoundLake Washington

HARRISONheights

Fremont

5

5

Seattle CBD

AppleSouth Lake Union

FacebookMicrosoftGoogle

Amazon

Google


Fremont

Greenwood

Seattle CBDSouth Lake

Union

University District

Northgate

Thornton Place

Northgate Transit Center

Future pedestrian bridge

13

SubmarketOverview

GROWTH POTENTIAL • Northgate is one of the 27 regional growth centers designated

in Puget Sound Regional Council’s Vision 2040 regional growth management plan. It is also listed as a City of Seattle Urban Center with proposed upzoning to encourage greater density, more development capacity and taller buildings. The area is a targeted destination for enhanced transit, amenities, residential growth and commercial activity.

OFFICE, MEDICAL AND RETAIL • The Northgate office submarket totals 607,438 square feet of Class

A and B assets. It is the second tightest submarket in the Northend and currently has a vacancy rate of 2.4%. The submarket is heavily driven by the health services sector and retail trade.

• Northgate is an established regional medical hub highlighted by the award-winning Northwest Hospital & Medical Center. The Hospital & Medical center employs 2,416 within its 44-acre campus. Additional medical providers have clustered nearby include Kaiser Permanente, The Polyclinic, Pima Medical Institute, UW Medicine, Kindred Hospital, NW Asthma Association and more.

• The Northgate Mall is North Seattle’s leading retail center, complemented by the adjacent mixed-use lifestyle center – Thornton Place. Scheduled for re-development, the Northgate Mall is expected to offer up to 750,000 square feet of office space for up to 3,700 employees. This location is also expected to host a new training facility for a potential expansion team of the National Hockey League. The $70 million, three-rink, 180,000 square foot facility will also host amateur hockey games, figure staking opportunities and community events.

• Northgate North offers additional shopping within its 300,000 square foot venue. Anchored by a multi-level Target, other large occupants include Best Buy, Dick’s Sporting Goods, Petco and Ross Dress for Less.


The Submarket

Future Northgate ice arena

Northwest Hospital & Medical Center Future Northgate ice arena

15

1. Taqueria La Pasadita2. Starbucks3. Saffron Grill4. Good Guys Pizza5. Oak Tree Teriyaki6. IHOP7. HT Market8. Wingstop9. China Dragon10. Emerald City Smoothie11. Burgermaster12. El Patio

13. Thai Thai14. Lantern Brewing15. Fu Shen16. Jade Restaurant & Lounge17. Kona Kitchen18. Cloud City Coffee19. Snappy Dragon20. The Maple21. Blue Saucer Cafe22. Ban Hua Sai23. The Bistro24. Watershed Pub & Kitchen

25. Tengu Sushi Japanese26. Kizuki Ramen & Izakaya27. Five Guys28. Patty’s Eggnest29. QFC30. Taco Del Mar31. Gyro Hut32. Jimmy John’s33. Poke Cafe34. Engimono Ramen & Izakaya

Restaurants | Bars | Grocery

1. Advance Medical Therapies2. Neighborcare Health at

Meridian3. Northwest Outpatient

Medical Center4. Northwest Hospital &

Medical Center

5. CorePower Yoga6. The Little Gym7. Seattle Athletic Club8. Prima Medical Institute9. Kaiser Permanente10. UW Neighborhood

Northgate Clinic

11. NW Kendo12. Kindred Hospital13. MKG Martial Arts14. Koh Orthodontics15. Northgate Smiles

Health | Fitness

1. 7-Eleven2. Northgate Garden Florist3. The Home Depot4. Fuzzy Buddy’s Dog Daycare5. Underwater Sports6. O’Reilly Auto Parts7. Little Amazon Fish & Pet8. Seattle Cycle Center9. Futon Factory10. Greenwood Animal Hospital11. AMC Loews Oak Tree 612. Game Gurus13. George’s Transmission

14. Aqua Dive Services15. Dunn Lumber16. ProSki Seattle17. Aurora Veterinary Hospital18. Math ‘n Stuff19. Maple Leaf Hardware20. 7-Eleven21. Beadworld22. Regal Cinemas23. Northgate Branch - Seattle

Public Library24. Spirit Halloween25. Victoria’s Secret

26. FedEx Office Print & Ship27. Walgreens28. Discount Tire29. Big 5 Sporting Goods30. TJ Maxx31. Rockler Woodworking &

Hardware32. Men’s Wearhouse33. Ross34. Best Buy35. Dick’s Sporting Goods36. Petco Animal Supplies37. Target

Shopping | Services

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30313334

2829

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4

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232425 26277

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1110

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912

1617

1819

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34 333536

37

2726

2832

3129 30

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14 15

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6

NE Northgate Way

N 107th St

NE 92nd St

N 90th St

N Northgate Way

Meridian Ave N

5th Ave NE

Roosevelt Way N

E

Aurora Ave N

Neighborhood Amenities

SUBMARKET OVERVIEW

5

5

HARRISONheights99

99


MineralSprings Park

LictonSprings Park

16


EDUCATION • Within Northgate, 14,000 students enroll each year at North Seattle College, which is supported by a

staff of 300. The school was established as a two-year public institution, but now additionally offers three Bachelor of Applied Science degrees. Its primary mission is to provide 21st Century education, training and services to elevate residents’ competitiveness in the job market and aid Seattle’s economic vitality.

• Nearby University of Washington serves 46,000 undergraduate, graduate and professional students. The University of Washington is a thriving institution with a well-deserved reputation as an international research powerhouse and estimated annual economic impact of $12.5 billion. It is the city’s largest public employer and is expected to expand with over three million square feet of new development.

TRANSPORTATION • Northgate is well served by Interstate 5, offering direct access to Downtown Seattle and key

employers such as Amazon, Facebook and Google. Amazon’s current workforce is estimated at 45,000 but is expected to reach over 85,000 as it grows to more than 14 million square feet by 2022. Within the next year, Facebook will employ 5,600 locally with the completion of Arbor Blocks. Google’s new campus will also deliver, providing space for 4,400 employees.

• Ample bus access is provided at the Northgate Transit Center with 15 bus routes providing access to the greater Seattle MSA.

• Future light right is coming to Northgate with an elevated station located on the east side of Interstate 5. Standing approximately 25 to 45 feet above ground, the new station will provide access to the Northgate Mall, Northgate Transit Center, North Seattle Community College and nearby homes and businesses. It will additionally connect residents and businesses with the University of Washington, Downtown Seattle, Sea-Tac Airport and soon, light rail will extend over Lake Washington to the Eastside.

• The Northgate station is scheduled to open in 2021, along with a new pedestrian/bicycle bridge to be built across Interstate 5. Projected Northgate ridership is expected to reach to 15,000 people per day by 2030.

The Submarket

Kingsgate/Totem Lake

NE 85th

Brickyard

Canyon Park

Woodinville

NE 44th

South RentonBurien

Kirkland

LakeForest

Park

Kenmore Bothell

& King StreetInternational District/Chinatown

SeaTac/Airport

Angle Lake

University ofWashington

Capitol Hill

MountBaker

Columbia City

Rainier Beach

Othello

Tukwila/International

Blvd

BeaconHill

Westlake

Pioneer SquareUniversity Street

Stadium

SODO

Roosevelt

Shoreline North/185th

Shoreline South/145th

NE 130th

Northgate

U District

Bellevue Downtown

Midtown

MountlakeTerrace

SE Redmond

Downtown Redmond

Spring District/120th

Overlake Village

S Graham St

S Boeing Access Rd

Lakemont

Redmond Technology Center

S 272nd

Kent/DesMoines

Federal Way

SouthFederal Way

Ballard

Interbay

Smith CoveSeattle CenterSouth Lake Union

Mariner

SW EverettIndustrial Center

SR 99/Airport Rd

West Alderwood

LynnwoodCity Center

MercerIsland

JudkinsPark

AlaskaJunction

Avalon

Delridg

e

Denny

East Main

Wilburton

SouthBellevue

Bel-Red/130th

Eastgate

Richards Rd

SR 526/Evergreen

SouthKirkland

Ash Way

Issaquah

EverettEverett

BellevueSeattle

Future Light Rail StationExisting Light Rail StationFuture Bus Rapid Transit

HARRISONheights

17

The Submarket

SUBMARKET OVERVIEW

MULTIFAMILY • Northgate offers a limited supply of 3,043 market rate apartments. Its inventory has remained stagnant since 2009 and vacancy has stayed below 4.0% since 2012. Current

market vacancy is 3.7%.

• Because of its proximity to major employers in the core and the future connection of the light rail, Northgate is on the rise. Average market rents are $1,577, with a three-year average rent growth of 4.4%. However, based on the average household income of $102,288, the average Northgate resident can afford up to $2,419 in monthly rent. Maximum rent qualifications are generally determined by a one-to-three rent-to-income ratio.

• Within Northgate, the average home value is $434,500. This is a 24.1% increase from 2017 and yields a mortgage payment of $2,546 (based on a 10% down payment). The high cost of homeownership contributes to the ongoing strength of multifamily assets.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Average Market Rent Average Mortgage Payment

Northgate - Rent vs. Own

$969 difference

18


Lake Washington

HARRISONheights

5

5

520


NE Northgate Way

Bellevue

Bellevue

UniversityDistrict

Northgate

Thornton Place

Northgate Transit Center

Facebook

Microsoft

Amazon

Future pedestrian bridge

19

MarketOverview

The Puget Sound Region is one of the most economically vibrant metropolitan areas in the world and boasts a diversified economy with strong office employment drivers. Known as the Silicon Valley of the Northwest, the metro area’s strategic location and thriving economy have made it the commercial, cultural and advanced technology hub of the Pacific Northwest and a major port city for trans-Pacific trade.

Nestled between bodies of water and mountain ranges, the Puget Sound Region offers an urban city environment surrounded by breathtaking scenery with the Cascade Range to the east and the Olympic Mountains to the west. On top of its unmatched natural beauty, the region is also home to an impressive list of companies including Amazon, Microsoft, Boeing, Nordstrom, Starbucks, Costco, T-Mobile, Expedia, Tableau, F5 Networks, the Bill & Melinda Gates Foundation, Fred Hutchinson Cancer Research Center, Weyerhaeuser and many more. In addition, many Bay Area companies are expanding in the region including Google, Facebook, Apple, Twitter and Salesforce. Of the 35 Fortune 500 companies headquartered in the Bay Area, 10 now offer a significant presence in Seattle.

RANKINGS• Bloomberg’s 2016 U.S. Innovation Index ranked Seattle as the

8th most innovative city among top U.S. metro areas. Seattle’s rich tech sector continues to anchor the economy and Seattle is three times more high-tech concentrated than the U.S. average, ranking it #2 in the nation. Tech employment has grown by 77.7% since 2001, the fourth highest growth rate in the country.

• Seattle has been a top-ten favorite in ULI and PWC’s Emerging Trends in Real Estate and this year is no different. Seattle was ranked the #1 overall market in the U.S. for 2018. This is the first time the city has captured the top ranking since 2009.

Seattle ranked #1 in the country for real estate investment in 2018

Puget Sound Region

• The Seattle-Tacoma-Bellevue MSA is the 15th largest in the nation, with 3.8 million people calling the area home. Seattle’s growth represents the largest concentration of population north of San Francisco and west of Chicago. By 2040, the population is expected to increase by 38%. In 2017, Washington State saw the largest net migration of Millennials, adding 39,590 more Millennials than were lost. Of all cities in the state, Seattle saw the largest share of net Millennial migration.

• Historically, for every nine jobs added in the Seattle metro area, one apartment unit was absorbed. After the recession, this number decreased to only seven new jobs needed to absorb one unit. Currently, there is impressively high demand with only five new jobs needed to absorb one apartment unit. As a result, annual absorption has increased by 75% since the post-recession time period. This is due in part to a high number of new jobs, surging population and changing living preferences of renters.

• Home prices have also been surging for the past six years. According to the Seattle Times, single-family home prices have grown faster here than anywhere else in the country and surpassed the housing bubble of the last decade. The Case-Shiller Home Price Index shows Seattle home prices climbing by 85% since 2012, resulting in sale price appreciation that is number one in the country. Year-over-year, Seattle home values have grown by 12.7%.

Population & Housing


21

Seattle ranked #1 on the Robert Half Career City Index, due to its attractive career opportunities and relatively low cost of living. Seattle’s tech sector continues to anchor the economy as home-grown companies like Expedia and Tableau, as well as Bay Area tech giants like Google and Facebook expand and attract more talent to the area. The Seattle metro area experienced 12% and 7.6% growth over the last two years in tech and STEM jobs.

LIFE SCIENCE / TECHNOLOGY• Known as one of the nation’s premier life sciences markets, Seattle

has some of the world’s largest philanthropic organizations, including the Bill & Melinda Gates Foundation. The Seattle metro continually ranks in the top ten nationally in VC and NIH funding, as well as patents issued.

AEROSPACE• According to the Seattle Trade Alliance, the Greater Seattle area

is home to over 1,350 aerospace-related companies, which are responsible for 95% of the nation’s commercial airplane production. Washington state ranked #1 as the best location in the U.S. for aerospace manufacturing, according to an Aerospace Competitive Economics Study that was conducted by the Teal Group.

INTERNATIONAL TRADE• Long a leader in international trade, Seattle’s naturally deep water

port is one shipping day closer to major Asian Pacific Rim ports and handles over 25% of all Pacific Rim imports into the United States. Nearly 75% of Washington’s trade traffic passes through the Ports of Seattle and Tacoma. Washington’s exports to FTA markets have grown by 24% since 2007 to $18.5 billion in 2017.

Employment Transportation• Total passenger traffic at Seattle-Tacoma International Airport increased 2.6% in 2017 to 46.9 million

passengers, making Sea-Tac the 9th busiest airport in the U.S. By 2034, the Port of Seattle projects Sea-Tac will reach 66 million annual passengers and 540,000 annual aircraft operations of landings and departures (up from 416,000 in 2017).

• Sound Transit 3 is a $54 billion master plan, adopted in 2016, that will add light rail as well as bus and heavy rail in the tri-county metro area. This supplements the voter-approved Sound Transit 2 ballot measure, passed in 2008, that allocated funds for North, East and South Corridor projects. Aside from increasing connectivity, the master plan initiatives of Sound Transit will serve as catalysts, spurring further employment and population growth throughout the Puget Sound Region.

Fastest growing major U.S. city and top national relocation destination

MARKET OVERVIEW

22

520

REDMOND

RENTON

DOWNTOWN BELLEVUE

ISSAQUAH

I-90 CORRIDOR

DOWNTOWN SEATTLE/SOUTH LAKE UNION

FREMONT KIRKLAND

U DISTRICT

520 CORRIDOR5

LakeWashington

520

99

99

5

90

90

405

405

Bellevue

Seattle

Kirkland

Redmond

Issaquah

Eastgate

RentonSeatac

PugetSound

MercerIsland

CapitolHill

Central District

SouthLake

Union

QueenAnne

Fremont

RainierBeach

Fauntleroy

Rainier Golf andCountry Club

Cougar MountainRegional Wildland Park

Lake SammamishState Park

SahaleeCountry Club

Boeing Field

Amazon

Apple

Facebook Microsoft

Google

Google

T-Mobile

Microsoft

Facebook

Amazon

Microsoft

Microsoft

Google

Facebook

HARRISONheights

FinancialAnalysis

PRO FORMA RENTSMARKET RATE TYPE UNITS AVG. UNIT SF TOTAL SF AVG. RENT RENT/SF ANNUAL INCOMEOne Bedroom 8 590 4,719 $1,500 $2.54 $144,000Two Bedroom / One Bath 8 872 6,972 $1,775 $2.04 $170,400Total / Average 16 731 11,691 $1,638 $2.24 $314,400

CURRENT OCCUPANCY, IN-PLACE RENTSMARKET RATE TYPE UNITS AVG. UNIT SF TOTAL SF AVG. RENT RENT/SF ANNUAL INCOMEOne Bedroom 7 587 4,108 $1,455 $2.48 $122,220Two Bedroom / One Bath 8 872 6,972 $1,676 $1.92 $160,860Total / Average 15 739 11,080 $1,573 $2.13 $283,080


Apartment Income

25

FINANCIAL ANALYSIS

T1 INCOME | PRO FORMA EXPENSES

PRO FORMA YEAR 1

PERUNIT %

OPERATING REVENUEPotential Market Rate Rent $299,280 $314,400 $19,650(Loss to Lease) / Gain to Lease $0 $0 $0 0.00%Gross Potential Rent $299,916 $314,400 $19,650

Vacancy ($14,964) ($15,720) -$983 -5.00%Concessions $0 $0 $0 0.00%Non-Revenue Units $0 $0 $0 0.00%Collection Loss / Bad Debt $0 ($786) -$49 -0.25%Total Economic Loss ($14,964) ($16,506) -$1,032 -5.25%

Net Rental Income $284,952 $297,894 $18,618

Parking $7,080 $9,600 $600Pet Rent $1,600 $1,440 $90Utility Reimbursement $19,971 $14,280 $893Miscellaneous Income $6,564 $6,800 $425Total Other Income $35,215 $32,120 $2,008

Effective Gross Income $320,167 $330,014 $20,626

T1 INCOME | PRO FORMA EXPENSES

PRO FORMA YEAR 1

PER UNIT %

OPERATING EXPENSESPayroll & Benefits $0 $0 $0Utilities $16,800 $16,800 $1,050Repairs & Maintenance $10,400 $10,400 $650Turnover $2,400 $2,400 $150Leasing & Marketing $1,200 $1,200 $75Landscaping & Contract Services $9,600 $9,600 $600Administrative $2,800 $2,800 $175Management Fee $16,501 $16,501 $1,031 5.00%Insurance $7,510 $7,510 $469Real Estate Taxes $40,457 $40,457 $2,529Total Operating Expenses $107,668 $107,668 $6,729

Replacement Reserves $4,000 $4,000 $250

Net Operating Income $208,499 $218,346

Expenses and Reserves Per Unit $6,979Expense Ratio 32.63%

Operating Statement

26

FIN

ANCI

AL A

NAL

YSIS

APARTMENT INCOME • Pro Forma Rents: The Pro Forma assumes average rents of $1,638 ($2.24 per square foot)

across the 16 units at Harrison Heights. Our Pro Forma rents are assumed to grow by 4.0% in year 2, 3.5% in year 3, and by 3.0% in year 4, and annually throughout the remainder of the holding period.

• Loss / Gain to Lease: The Pro Forma assumes no loss to lease.

• Vacancy: The Pro Forma assumes vacancy losses equal to 5.0% of gross potential rent, this is based on current vacancy at the property and comparable properties in the submarket.

• Concessions: The Pro Forma assumes no concessions.

• Non-Revenue Units: The Pro Forma assumes no model or employee units.

• Collection Loss / Bad Debt: The Pro Forma assumes bad debt losses equal to 0.25% of gross potential rent, which is in-line with comparable properties in the market.

ADDITIONAL INCOME • Parking: The property contains 19 garage stalls. The Pro Forma assumes that

approximately 84% of parking stalls will be leased at a rate of $50 per stall, per month. This results in total parking income of $9,600 ($600 per unit).

• Pet Rent: The Pro Forma assumes that 15.0% of units at the property have at least one pet at a rate of $50 per pet, per month. Overall, this equates to total pet rent income of $1,440 ($90 per unit).

• Utility Reimbursement: The Pro Forma assumes utility reimbursement of $14,280 ($893 per unit). This assumes that management bills back tenants for approximately 85.0% of total utility bills, which is in line with comparable properties of this size and vintage.

• Miscellaneous Income: The Pro Forma assumes miscellaneous income of $6,800 ($425 per unit), which is in line with comparable properties of this size and income level in the market.

OPERATING EXPENSES • Utilities: The Pro Forma assumes utility expense of $16,800 ($1,050 per unit), which is in

line with historical operations as well as comparable properties in the market of this size and vintage.

• Repairs & Maintenance: The Pro Forma assumes repairs and maintenance expense of $10,400 ($650 per unit), which is in line with comparable properties in the market of this size and vintage.

• Turnover: The Pro Forma assumes turnover expense of $2,400 ($150 per unit), which is in line with comparable properties in the market of this size and vintage.

• Marketing & Leasing: The Pro Forma assumes marketing and leasing expense of $1,200 ($75 per unit), which is in line with comparable properties in the market of this size and income level.

• Landscaping / Contract Services: The Pro Forma assumes landscaping and contract services expense of $9,600 ($600 per unit), which is in line with comparable properties in the market of this size.

• Administrative: The Pro Forma assumes administrative expense of $2,800 ($175 per unit), which is in line with comparable properties in the market of this size and income level.

• Management Fee: The Pro Forma assumes a management fee equal to 5.0% of effective gross income. This level is in line with what a competitive third-party manager would charge to manage a property of this size and income level.

• Insurance: The Pro Forma assumes insurance expense of $7,510 ($469 per unit), which is in line with historical insurance expense at the property as well as comparable properties of this size, income level, and vintage in the submarket.

• Real Estate Taxes: The Pro Forma assumes real estate taxes of $40,457 ($2,529 per unit). Our Pro For a tax value is based on Harrison Heights’ 2019 assessed value, and the 2018 millage rate and fees. The Pro Forma assumes that taxes will increase by 3.0% annually throughout the remainder of the holding period.

• Replacement Reserves: The Pro Forma assumes replacement reserves of $4,000 ($250 per unit), which is in line with comparable properties in the market of this size and vintage.

• Debt: Please contact Seth Heikkila or Drew Heitstuman with the JLL Seattle Finance Team to discuss potential financing options.

Notes to Pro Forma


27

Rent & SalesComparables

HARRISON HEIGHTS2113 N 107th StreetSeattle, WA 98133

Built ............................................ 1997

# of Units ........................................16

Avg. SF ......................................... 727

SPENCER HOUSE10541 Stone Avenue NSeattle, WA 98133

Built ............................................1984

# of Units ........................................21

Avg. SF ......................................... 651

MERIDIAN PLACE10711 Meridian Avenue NSeattle, WA 98133

Built ............................................ 1987

# of Units ......................................175

Avg. SF ..........................................876

LEILANI 2 APARTMENTS124 N 103rd StreetSeattle, WA 98133

Built ............................................1990

# of Units ........................................47

Avg. SF ......................................... 706

NORTH COURT2237 North 106th StreetSeattle, WA 98133

Built ............................................ 1986

# of Units ........................................96

Avg. SF ......................................... 750

GALLERIA10500 Meridian Avenue NSeattle, WA 98133

Built ............................................1968

# of Units ..................................... 208

Avg. SF ......................................... 872

LUXE AT MERIDIAN 10306 Meridian Avenue NSeattle, WA 98133

Built ............................................ 1970

# of Units ......................................145

Avg. SF ......................................... 639

THORNTON CREEK512 NE 103rd StreetSeattle, WA 98125

Built ............................................ 1989

# of Units ........................................59

Avg. SF ......................................... 661

Rent Comparables


29

99

99

5

5

MERIDIAN PLACE

NORTH COURT

GALLERIA

THORNTON CREEK

SPENCER HOUSE

LUXE AT MERIDIAN

LEILANI 2 APARTMENTS

Rent Comparables Map

Northgate

Bitter Lake

Greenwood Maple Leaf

RENT & SALES COMPARABLES

HARRISONheights

NE Northgate Way

N 107th St

N 105th St

5th Ave NE

Roosevelt Way N

E

Aurora Ave N

CarkeekPark

30

Traditional One Bedroom

NAME Avg. SF Rent Rent/SF

Leilani 2 Apartments 666 $1,600 $2.40

The Galleria 775 $1,533 $1.98

Harrison Heights (Market) 590 $1,500 $2.54

Luxe at Meridian 565 $1,458 $2.58

Harrison Heights (In-Place) 587 $1,455 $2.48

Meridian Place 735 $1,449 $1.97

North Court 652 $1,325 $2.03

Thornton Creek 691 $1,295 $1.87

Spencer House 650 $1,295 $1.99

Two Bedroom / One Bath

NAME Avg. SF Rent Rent/SF

Luxe at Meridian (2x2) 861 $1,943 $2.26

Leilani 2 Apartments 850 $1,905 $2.24

Meridian Place (2x2) 1,004 $1,840 $1.83

Harrison Heights (Market) 872 $1,775 $2.04

Galleria (2x1.5) 1,000 $1,735 $1.74

Harrison Heights (In-Place) 872 $1,676 $1.92

North Court 852 $1,645 $1.93

Thornton Creek 811 $1,595 $1.97

Spencer House 860 $1,491 $1.73

Leilani 2 Apartments

The GalleriaHarrison Heights (Market)

Luxe at Meridian Harrison Heights (In-Place) Meridian Place

North CourtThornton CreekSpencer House

$1,250

$1,300

$1,350

$1,400

$1,450

$1,500

$1,550

$1,600

550 575 600 625 650 675 700 725 750 775 800

Rent

Square Feet

Luxe at Meridian (2x2)Leilani 2 Apartments

Meridian Place (2x2)

Harrison Heights (Market)Galleria (2x1.5)

Harrison Heights (In-Place)North CourtThornton Creek

Spencer House

$1,400

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$1,750

$1,800

$1,850

$1,900

$1,950

775 825 875 925 975 1,025

Rent

Square Feet

Leilani 2 Apartments

The GalleriaHarrison Heights (Market)

Luxe at Meridian Harrison Heights (In-Place) Meridian Place

North CourtThornton CreekSpencer House

$1,250

$1,300

$1,350

$1,400

$1,450

$1,500

$1,550

$1,600

550 575 600 625 650 675 700 725 750 775 800

Rent

Square Feet

Luxe at Meridian (2x2)Leilani 2 Apartments

Meridian Place (2x2)

Harrison Heights (Market)Galleria (2x1.5)

Harrison Heights (In-Place)North CourtThornton Creek

Spencer House

$1,400

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$1,750

$1,800

$1,850

$1,900

$1,950

775 825 875 925 975 1,025

Rent

Square Feet

TRADITIONAL ONE BEDROOM COMPARABLES

TWO BEDROOM / ONE BATH COMPARABLES


Rental Analysis

31

Northgate Apartments 514 NE 112th Street

Seattle, WA 98125

Built ............................................1975

# of Units ........................................ 11

Avg SF .........................................920

Sale Date .............................Sept-17

Sale Price ................... $3,750,000

Price / Unit ....................$340,909

Price / SF ..................................$371

Oaklake Apartments9527 Interlake Avenue

Seattle, WA 98103

Built ........................................... 1996

# of Units .......................................18

Avg SF ......................................... 760

Sale Date ............................. Sep-18

Sale Price ...................$4,650,000

Price / Unit .................... $258,333

Price / SF ................................ $340

Greenlake Terrace7415 Fifth Avenue NE

Seattle, WA, 98115

Built ........................................... 1986

# of Units ......................................48

Avg SF .......................................... 831

Sale Date ................................Jul-18

Sale Price ................. $15,400,000

Price / Unit .................... $320,833

Price / SF ................................ $386

9500 Fremont Ave9500 Fremont Avenue

Seattle, WA 98103

Built ............................................1992

# of Units .......................................10

Avg SF ........................................1,136

Sale Date ...............................Oct-17

Sale Price ...................$3,000,000

Price / Unit ................... $300,000

Price / SF ................................ $264

Ashley Manor8221 Fifth Avenue NE

Seattle, WA 98115

Built ........................................... 1998

# of Units ....................................... 14

Avg SF ......................................... 823

Sale Date ............................. Aug-18

Sale Price ...................$4,900,000

Price / Unit ..................... $319,866

Price / SF ................................ $389

Roosevelt Place Apartments12527 Roosevelt Way NE

Seattle, WA 98125

Built ........................................... 1986

# of Units ......................................23

Avg SF ..........................................847

Sale Date .............................. Jan-18

Sale Price .................... $6,710,000

Price / Unit ......................$291,739

Price / SF .................................$344

9050 15th Ave 9050 15th Avenue NW

Seattle, WA 98117

Built ........................................... 1988

# of Units ........................................ 8

Avg SF .........................................660

Sale Date .............................May-18

Sale Price .....................$2,145,000

Price / Unit ......................$268,125

Price / SF ................................$406

RENT & SALES COMPARABLES

Sales Comparables

32


Sales Comparables Map

99

99

5

5

NORTHGATE APARTMENTS

GREENLAKE TERRACE

OAKLAKEAPARTMENTS

ASHLEYMANOR

ROOSEVELT PLACE APARTMENTS

905015TH AVE

9500FREMONT AVE

Northgate

Bitter Lake

Greenwood

Maple Leaf

Green Lake

HARRISONheights

NE Northgate Way

N 105th St

N 130th St

5th Ave NE

8th Ave NW

Roosevelt Way N

EGreenw

ood Ave N

Aurora Ave N

CarkeekPark

PugetSound

Green Lake

33

TransactionGuidelines

The offering of Harrison Heights is being conducted exclusively by JLL. All questions and inquiries should be addressed to the JLL representatives listed herein.

The JLL team will be available to assist prospective investors with their review of the offering. This includes on-site inspections of the property and tours of the market area.

Investors will receive advanced notification of the bid deadline via email. Offers should include, at a minimum, the following:

• The purchase price and closing date

• The source of capital, both equity and debt, for the transaction

• The amount of earnest money deposit

• A detailed schedule of the due diligence and requisite approval process

• A description of assumptions utilized for the offer

Copyright Jones Lang LaSalle IP, Inc. 2018. This publication is the sole property of Jones Lang LaSalle (JLL) and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of JLL. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. JLL does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. Jones Lang LaSalle Americas, Inc. License #01223413.

Offering Procedure

Terms & Conditions


35

Investment

Don FlaniganVice President+1 206 971 [email protected]

Matt KemperVice President+1 206 607 [email protected]

Financing

Seth HeikkilaSenior Vice PresidentPhone: +1 206 607 [email protected]

Drew HeitstumanAssociatePhone: +1 206 971 [email protected]

2113 N 107th Street

Seattle, Washington 98133

contacts

HARRISONheights

harrisonheights om jll · floorplan number of units avg. unit size (sf) % of unit mix one bedroom 8...

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