la promesa apartments - loopnet · la promesa apartments offers an investor a unique opportunity to...

La Promesa Apartments 2485 N. Alvernon Way

Tucson, AZ 85712

Allan Mendelsberg, Principal

Multifamily & Investment Sales

Daniel Leibsohn


2Cushman & Wakefield | PICOR

Property Highlights

• Attractive Unit Mix of Large Two Bedroom/One Bath and Three

Bedroom/Two Bath Units

• Below Market Rents

• 1990’s construction

• Individually Metered

• Washer/Dryers in all the Units

• Central Location

• Value Add Opportunity

• Call for Offers: February 28th, 2018


Property Overview

La Promesa Apartments offers an investor a unique opportunity to acquire 40 units built in

1997. The properties attractive unit mix of 20-Two Bedroom/One Bath units at 850 SF and

20- Three Bedroom/Two Bath units at 1,030 SF is the reason why this property has

historically high occupancy. Each unit is equipped with a washer/dryer in the unit that is a

rare find in the submarket. Rents are considerably under market due to the property

previously being operated for a non-profit. The low income housing provision on the

property expired end of 2017 making this primed for an investor to come in and raise rents

significantly.

Please call the listing agents to schedule tours and the call for offers date is February 28th,

2018.


Pricing Analysis

INCOME STATEMENTMARKETING

PROFORMA

PROFORMA

PER UNIT

PROFORMA

PSF

JULY 2016-

JUNE 2017

RENTAL INCOME

Gross Market Rent $295,200 $7,380 $7.85

Vacancy Loss ($19,188) -6.50% ($0.51)

Gross Rent $276,012 $6,900 $7.34 $260,832

Concessions & Bad Debt ($4,140) -1.50% ($0.11)

Net Rental Income $271,872 $6,797 $7.23

Other Income $6,250 $156 $0.17 $6,212

TOTAL INCOME $278,122 $6,953 $7.40 $267,044

OPERATING EXPENSES

Payroll $28,000 $700 $0.74 $67,622

Repairs, Maintenance & Supplies $20,000 $500 $0.53 $12,131

Contract Services

(Landscaping & Turnover)$5,850 $146 $0.16 $15,888

General & Admin & Legal $3,000 $75 $0.08 $11,066

Utilities $44,000 $1,100 $1.17 $43,721

TOTAL VARIABLE $100,850 $2,521 $2.68 $150,428

Property Taxes $27,654 $691 $0.74 $0

Property Insurance $4,000 $100 $0.11 $1,286

Management Fee $12,515 4.50% $0.33 $11,178

Reserves $10,000 $250 $0.27

TOTAL EXPENSES $155,019 $3,875 $4.12 $162,892

NET OPERATING INCOME $123,103 $3.27 $104,152

STABILIZED MARKET

VALUATION

Value $1,800,000

Per Unit $45,000

Per Sq. Ft. $47.87

Cap Rate

Mktg Proforma 6.80%

TYPE # OF UNITS SQ. FT. TOTAL S.F. RENT PER S.F.TOTAL MONTHLY

RENT

STABILIZED

RENT

2 BD/1 BA 20 850 17,000 $0.66 $11,300 $565

3 BD/2 BA 20 1,030 20,600 $0.65 $13,300 $665

TOTAL/AVG. 40 940 37,600 $0.65 $24,600 $615

PARCEL ID TAX YEAR FCV LPV RATIO RATE TAXES

111-18-184B 2018 $742,288 $742,288 10% 0.164468 $12,208.29

111-18-1850 2018 $371,144 $196,823 10% 0.164468 $3,237.06

111-18-1860 2018 $742,288 $742,288 10% 0.164468 $12,208.29

TOTAL $27,654.00


Underwriting Assumptions

Revenue

Current Rents – Based on a blend of current and proposed rents

Vacancy - Used 6.5 % reflecting submarket average

Bad Debt and Concessions - Used 1.5% - Industry standard for a property of this size in this particular submarket

Other Income – In-line with current other income collected

Total Income - Actuals numbers with market vacancy and bad debt assumptions.

Operating Expenses

Payroll-Actuals includes non-profit staff that traditional owner will not include

Repairs and Maintenance - Market Standard of $536 per unit

Contract Services-Market standard of $146 per units

General & Admin & Legal – Modeled $75 per unit which is industry standard for a building this size

Utilities – Increased utilities slightly to account for increase in occupancy

Management Fee - Inserted a 4.5% fee which is industry standard for a building this size

Property Taxes – 2018 property taxes were derived by applying the 16.4468% tax rate to the assessed evaluation $168,140

Insurance – Inserted $2,500 which is in-line with market standards

Replacement Reserves - $250 Per unit, typical amount used in most underwritings.

Pricing Analysis

PROPERTY

NAMEADDRESS

# of

UNITSRENT

SIZE

(SF)RENT/SF

YEAR

BUILTOCCUPANCY

ELECTRIC

METERING

La Promesa 2485 N. Alvernon Way 20 $565 850 $0.67 1997 100% Individual

Broadmoor 725 S. Tucson Blvd 16 $760 707 $1.08 1987 96% Individual

Country

Gardens3202 N. Country Club Rd 12 $725 906 $0.80 1979 87% Individual

Desert Palms 3125 N. Alvernon Way 16 $669 754 $1.13 1983 94% Individual

Desert Sage 3950 E. Blacklidge Dr 16 $650 754 $0.86 1982 98% Individual

Plum Tree 4201 E. Monte Vista Dr 44 $685 950 $0.72 1976 96% Individual

AVERAGE 21 $675 820 $0.88 1984 95%

Two Bedroom/One Bath RENT COMPARABLES


Sale Comparables

21

Country Gardens Apartments

3202 N. Country Club Road

Units 76

Year Built 1979

Sale Date 1/23/2018

Average Unit Size 771 SF

Price $3,400,000

Price Per Unit $44,737

Price per SF $58.04

Unit Type

Studio 24

1 Bed | 1 Bath 40

2 Bed | 1 Bath 12

Total 76

2

Coronado Vista

4424 E. Bellevue Street

Units 21

Year Built 1978

Sale Date 6/30/2017


Price $1,025,000

Price per Unit $48,000

Price per SF $51.66

Unit Type

1 Bed | 1 Bath 9

2 Bed | 1 Bath 12

Total 21

S

Total 40

La Promesa Apartments

2485 N. Alvernon Way

Units 40

Year Built 1997

Sale Date TBD


Price $1,800,000

Price per Unit $45,000

Price per SF $47.87

Unit Type

2 Bed | 1 Bath 20

3 Bed | 2 Bath 20

3

Bellevue Street Apartments

4117-4125 E Bellevue St

Units 27

Year Built 1987

Sale Date 11/17/2017


Price $1,320,000


Price per SF $44.90

Unit Type

2 Bed | 1 Bath 27

Total 27


Sales Comparables

Bellevue Apartments

3414 E Bellevue St

Units 20

Year Built 1955

Sale Date 4/5/2017


Price $965,000


Price per SF $81.07

Unit Type

Studio 4

1 Bed | 1 Bath 16

4

Total 20

5

Desert Palms Apartments

3125 N Alvernon Way

Units 68

Year Built 1983

Sale Date 11/13/2017


Price $3,100,000


Price per SF $82.27

Unit Type

1 Bed | 1 Bath 52

2 Bed | 1 Bath 16

Total 68

Wildflower Apartments

2850 N Alvernon Way

Units 28

Year Built 1977

Sale Date 9/20/2017


Price $1,250,000


Price per SF $75.81

Unit Type

1 Bed | 1 Bath 20

2 Bed | 1 Bath 8

Total 28

6


1

23

S

4

5

Map

S 2485 N. Alvernon Way

1 3202 N. Country Club Road

2 4424 E. Bellevue Street



5 3125 N. Alvernon Way

6 2850 N. Alvernon Way

6

AerialAerial

No

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rno

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ay

East Grant Road East Grant Road

No

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SUBJECT


Location Overview

La Promesa is located just north of the main intersection of east Grant Road and north

Alvernon Way. This property is in a prime location in the heart of Tucson, which will be an

attractive investment for years to come. Just east of the complex is Northgate Plaza which

is anchored by Neighborhood Market Walmart and contains Dollar tree, and other small

retailers that are most commonly used by the average Tucson resident. Tucson Botanical

Gardens is a five minute walk south of La Promesa and is a five and a half acre collection

of some of the most beautiful gardens in the state. Another upside of this complex is that it

lies exactly one mile west of Doolen Middle School and The Boys and Girls Club of

Tucson. Catalina High School is also less than a half a mile south from La Promesa.

Nearby schools makes this property perfect for any family that has children going through

K-12 schooling. Along east Grant Road there are lots of high quality restaurants including

Culinary Dropout and Kingfisher that are located within a two miles west of La Promesa.

This complex is located exactly three miles away from the Tucson’s main economic driver,

The University of Arizona. This is a total of over 44,000 students that attended this world

renowned research institution. With this property located near some of the main economic

anchors of Tucson makes La Promesa Apartments an ideal property to acquire.


Population and Demographics

Tucson is the second-largest city in Arizona

with a population of 653,359. It is the largest

city in Pima County, which totals 1.205 million

residents. Located 60 miles from the U.S.-

Mexico border, Tucson is expected to grow to

727,392 residents by 2020 (1.335 million in

Pima County).

• Median age is 32.5 years (2016)

• Median household income is $45,600

(2015)

• Median household income projection is

$51,600 (2020)

The natural beauty of the Sonoran Desert

makes Tucson a desirable location for

residents and businesses alike. Downtown

Tucson is a diverse submarket with a rich

cultural heritage that contains a blend of

Native American, Spanish, Mexican and

Anglo-American influences. Tucson ranks

high nationally in various categories including:

Top 10 city for export assistance in global

trade; Top Southwest city for millennials; Top

5 city for entrepreneurs; and second best city

in America to find a job.

The University of Arizona is vital to Tucson

and Southern Arizona, having garnered

national and international attention. It has the

largest optics program among U.S.

institutions, is second in funding for the

physical sciences, and is ranked 16th for the

employability of its graduates. UA brings in

more than $580 million in research investment

each year. UA’s enrollment is 42,236, with

numerous branch campuses and learning

centers throughout Southern Arizona. Pima

Community College is a two-year school

serving Metro Tucson at six locations

throughout the county. Tucson Unified School

District is one of the largest in the state,

encompassing 229.5 square miles. It serves

more than 52,000 students in grades pre-K

through 12 at more than 90 schools.

Employment

Employers will find a diverse, educated and

enthusiastic workforce in Tucson. More than

half of Pima County’s population is in the

prime working range of 18 to 54. The civilian

labor pool totals more than 452,000; 1,200-

high tech businesses employ 50,000 people.

The University of Arizona is the top employer

with a work force of 11,047 followed by

Raytheon Missile Systems, 9,933; State of

Arizona, 9,439; Davis-Monthan Air Force

Base, 8,251 (both civilian and military

personnel); Pima County, 7,328; Tucson

Unified School District, 6,525; and

Banner/University Medicine, 6,329. Tucson’s

unemployment rate is 5.4%; its job growth

rate is about 1.9% per year.

Davis-Monthan is home to the 355th Fighter

Wing, part of the Air Combat Command. The

base is best known as the location of the Air

Force Materiel Command’s 309th Aerospace

Maintenance and Regeneration Group, the

aircraft boneyard for all excess military and

government aircraft. Banner Health and the

University of Arizona Health Network merged

to create a platform of academic medicine,

research, instruction and patient care at three

academic medical centers.

Tucson blends natural beauty

with a culture of innovation to

create a distinctive lifestyle that

attracts a diversity of people and

commerce.

“

”

Location & Market Summary - Tucson


Economic Development

Innovation is a key word when it comes to Tucson economic

development. Forbes has called it one of America’s Most Innovative

Cities. Tucson has the highest concentration of startups of any U.S. city

its size and is ranked as a Top Five City for Entrepreneurs by

Entrepreneur Magazine. Metro Tucson is a hub for optics and science.

Biotech and other science clusters flourish in the UA Tech Park,

BioPark and Innovation Park. Tourism is a key economic driver as well.

Tucson is known for its world-class health spas, more than 20 golf

courses, and numerous natural attractions, museums, missions and

cultural history.

Interstate 10, the major East-West highway in the Sun Belt, runs east

from California, enters Arizona near Ehrenberg and continues through

Phoenix and Tucson. It exits at the border with New Mexico. Interstate

19 travels from Nogales to Tucson, and ends at I-10. While the highway

is short (63 miles), it is a key corridor, serving as a fast route from

Tucson and Phoenix (via I-10) to the Mexican border. The highway is a

portion of the U.S. section of the CANAMEX Corridor, a trade route that

stretches north from Mexico across the U.S. to the Canadian province

of Alberta.

The Port of Tucson is a full service inland port, rail yard and intermodal

facility southeast of the city and 70 miles north of the Mexico border at

Nogales. The facility is located adjacent to the Union Pacific Railroad

Mainline and I-10, linking California and Texas. In 2014, Tucson

launched Sun Link, a fixed electric rail system that operates eight

vehicles between Downtown Tucson and the UA campus. Each

streetcar vehicle holds 150 passengers. There are 24 stops along the

3.9-mile route.

Location & Market Summary - Tucson (Continued)

COMPANY # OF EMPLOYEES

University of Arizona 12,053

Raytheon Missile Systems 11,370

Davis-Monthan Air Force Base 10,869

Pima County 7,100

U.S. Border Patrol 6,800

Tucson Unified School District 6,467

University of Arizona Health Network 6,462

Freeport-McMoran Copper & Gold Inc. 5,819

U.S. Army | Fort Huachuca 5,096

State of Arizona 4,986

Wal-Mart 4,360

City of Tucson 4,348

Carondelet Health Network 3,594

Fry’s Food Stores 3,109

Tucson Medical Center (TMC Healthcare) 2,977

Ventana Medical Systems/Roche 1,150

Jim Click Automotive 916

Source: tucsonaz.gov, insidetucsonbusiness.com

Tucson’s Largest Employers

Daniel Leibsohn


+1 520 546 2740

[email protected]

Allan Mendelsberg, Principal


+1 520 546 2721

[email protected]

Cushman & Wakefield | PICOR

5151 E. Broadway Blvd, Suite 115

Tucson, Arizona 85711

Office +1 520 748 7100

Fax +1 520 546 2799

picor.com

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