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LIHTC Advisors
Farmhouse Apartments I, II, & III60 Units | 101 Jackrabbit Lane | Belgrade, MT 59714
EXCLUSIVE OFFERING
2 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
CONFIDENTIALITY & DISCLAIMER
The information contained in this package is confidential and is intended for review solely by the person receiving it directly from LIHTC Advisors. It should not be copied, distributed, nor made available to any person without the written consent from LIHTC Advisors. The information in this package has been obtained from sources we believe reliable. However, LIHTC Advisors has not verified and will not verify, any of the information contained herein and makes no guarantee, warranty, or representation about it. It is the sole responsibility of any interested parties to independently confirm the accuracy and completeness of the information provided herein. All prospective clients must conduct their own due diligence and take appropriate measures to verify all information.
12639 W. Explorer DriveSuite 200Boise, ID 83713
John Nicolas800.840.3021 (phone)208.891.8901 (direct)888.506.2771 (fax)john@lihtcadvisors.com
Jeff Irish800.840.3021 (phone)208.286.5013 (direct)888.506.2771 (fax)jeff@lihtcadvisors.com
Jordan Skyles800.840.3021 (phone)208.631.4981 (direct)888.506.2771 (fax)jordan@lihtcadvisors.com
www.lihtcadvisors.com
LIHTC Advisors
3 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Farmhouse I, II, & III60 Units
101 Jackrabbit LaneBelgrade, MT 59714
Table of Contents
PROPERTY OVERVIEW
DescriptionArea Highlights
SummaryPhotos
Area Maps
FINANCIAL ANALYSIS
Income & ExpensesCash Flow Summary
Unit MixIncome & Rent Limits
Historical AMI, MAX Rent, & FMR
DEMOGRAPHIC ANALYSIS
Demographic Analysis
4 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Property Overview
• Existing Three Phase LIHTC Property with Placed in Service Dates of 1996, 1997, & 2000
• Current Rents are Well Below Max Net Rents
• Located 8 Miles From Bozeman and 2 Miles From the Bozeman Yellowstone International Airport
• Minimal Deferred Maintenance
HIGHLIGHTS
5 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Property Description
Farmhouse Apartments is a 60-unit affordable housing community located in Belgrade, MT. The property was built and placed in service in 1996, 1997, & 2000 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. The property is located within minutes to retail, schools, restaurants, and Bozeman Yellowstone International Airport.
Recent improvements include re-sealed & re-striped parking lots, painted curbs & speed bumps, repaired & replaced chipped sidewalks, new property sign, replaced common area carpets in select buildings, painted entrance decks & stairs, and landscape work.
Farmhouse I was built and placed in service in 1996 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 60% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.
Farmhouse II was built and placed into service in 1997 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 60% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.
Farmhouse III was built and placed into service in 2000 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 50% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.
The property is out of its initial 15-year tax credit compliance period. Please see the Property Summary page for further details. A qualified purchaser can be a non-profit or for-profit entity that agrees to maintain the affordability restrictions.
Farmhouse Apartment community offers one and two bedroom apartment homes featuring full appliance package, open floor plan, on-site leasing office, on-site laundry facility, and playground.
COMMUNITY AMENITIES
• On-Site Leasing Office• On-Site Laundry Facility• Playground
UNIT AMENITIES
• Full Appliance Package• Open Floor Plan
6 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Area Highlights
Belgrade is a city in Gallatin County, Montana and has a population of 8,254 as of July 2016, up 10.7% since 2010. It is the largest city in Montana that is not a county seat. Belgrade is part of the Bozeman, MT Micropolitan Statistical Area.
The Gallatin Speedway is located on the outskirts of Belgrade northeast of Bozeman Yellowstone International Airport on Tubb Road and hosts stock car racing events from May to September.
NEIGHBORHOOD AMENITIES
• Domino’s (0.1 miles)• Belgrade Middle School (0.3 miles)• Belgrade High School (0.5 miles)• Belgrade Community Library
(0.6 miles)• Albertson’s (0.7 miles)• Bozeman Yellowstone International
Airport (2.2 miles)
LOCATION HIGHLIGHTS
• Population: 8,254• Belgrade is one of the fastest
growing communities in Montana with a population increase of 10.7% since 2010
• Located 8 miles west of Bozeman
BELGRADE TOP EMPLOYMENT INDUSTRIES
• Education, Health Care, & Social Services
• Construction• Retail• Manufacturing
Belgrade as been one of the fastest growing communities in Montana for the last 10 years. Its “open arms” policy to business, as well as access to transportation and excellent school system, has attracted everything from manufacturing to bio tech businesses.
Belgrade is located 8 miles west of Bozeman and is in the hub of the Gallatin Valley. It boasts many outdoor activities including access to Bridger Bowl and Big Sky Ski areas, In addition to spectacular skiing options, the Gallatin River, located nearby, provides the opportunity for world class fishing.
7 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
NAME & LOCATIONProperty Name Farmhouse Apartments I, II, & IIIProperty Address 101 Jackrabbit Lane
Belgrade, MT 59714
SECTION 42 LIHTC RESTRICTIONSPlaced in Service Phase I: 1996; Phase II: 1997; Phase III: 2000End of Initial Compliance Period Phase I: 12/31/2010; Phase II: 12/31/2011; Phase III: 12/31/2014End of Extended Use Period Phase I: 12/31/2025; Phase II: 12/31/2026; Phase III: 12/31/2030
SITE INFORMATIONAssessor’s Parcel Number RFF14714 & RFF44525Number of Units 60Number of Buildings 7Number of Stories 2Rentable Square Feet 43,880Year Built Phase I: 1996; Phase II: 1997; Phase III: 2000Lot Size 5.49 AcresDensity 10.93 Units/AcreType of Ownership Fee SimpleLandscaping Mature Trees, Shrubs & GrassTopography Relatively Flat
UTILITIESWater City of BelgradeElectric/Gas North Western Energy
CONSTRUCTIONExterior Vinyl SidingRoof Composite Shingle
# OF UNITS
RENTABLESF
PLACED IN SERVICE
LOT SIZE
60 43,880 Phase I: 1996Phase II: 1997Phase III: 2000
5.49 acres
Property Summary
8 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Aerial Map
Farmhouse I, II, & III60 Units
101 Jackrabbit LaneBelgrade, MT 59714
9 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Local Map
Farmhouse
Domino’s (0.1 miles)
Belgrade Middle School (0.3 miles)
Belgrade High School (0.5 miles)
Belgrade Community Library, US Post Office (0.6 miles)
Starbucks, Burger King, McDonald’s, Subway, DQ, Albertson’s (0.7 miles)
Heck/Quaw Elementary School (0.8 miles)
Bozeman Yellowstone International Airport (2.2 miles)
A
B
C
D
E
F
G
A
B
F
E
G
D
C
10 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Local Map
FARMHOUSEBelgrade High
School
Belgrade Middle School
Heck/Quaw Elementary School
Belgrade Community Library
Q
11 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Regional Map
• Bozeman, MT (11 miles)
• Helena, MT (88 miles)
12 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Financial Analysis
13 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Income & Expenses
OPERATIONAL ANALYSIS PROFORMA PER UNIT
INCOME
Gross Potential Rent $448,169 $0.85POTENTIAL RENTAL INCOME $448,169 $7,469 (1)
Economic LossVacancy Loss 4.00% ($17,927) ($299) (2)Bad Debt 0.00% $0 $0Concessions 0.00% $0 $0
Total Economic Loss 4.00% ($17,927) ($299)
NET RENTAL INCOME $430,242 $7,171
Other IncomePet Rent $7,458 $124Late Charges, Rent $3,960 $66Misc. Other Income $9,927 $165
Total Other Income $21,345 $356
EFFECTIVE GROSS INCOME $451,587 $7,526
EXPENSES
FIXED OPERATIONAL EXPENSETotal Real Estate Property Taxes 9% $41,678 $695 (3)Total Property Insurance Expense 4% $16,500 $275Total Property Utility Expense 11% $48,410 $807
TOTAL FIXED OPERATIONAL EXP 24% $106,588 $1,776
VARIABLE OPERATIONAL EXPENSETotal Maint. Contract Services 3% $13,091 $218Total Repairs & Maintenance 9% $39,000 $650Total Administrative Expenses 4% $16,925 $282Total Leasing & Marketing 0% $426 $7Total Payroll and Salary Expenses 14% $61,949 $1,032Property Management Fee 5.00% $22,579 $376Miscellaneous Expense 0.16% $700 $12
TOTAL VARIABLE OPERATIONAL EXP 34% $154,671 $2,578
TOTAL FIXED & VARIABLE EXPENSES 58% $261,259 $4,354
Reserves & Replacements $15,000 $250
TOTAL OPERATING EXPENSES 61% $276,259 $4,604
NET OPERATING INCOME $175,328 $2,922
14 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Comments to Income & Expenses
(1)
(2)
(3)
REAL ESTATE TAX ANALYSIS
Parcel #: RFF14714 and RFF44525
2016 2017Land $446,204 $344,002Improvements $2,924,296 $3,505,698Total Market Value $3,370,500 $3,849,700Exemptions $0 $0Value after Exemptions $3,370,500 $3,849,700Assessment Ratio 1.35% 1.35%Assessed Value $45,502 $51,971
Tax Rate 80.196% 80.196%Ad Valorem Taxes $36,490 $41,678Sales Tax Credit $0 $0Total Taxes Due $36,490 $41,678
Notes
NOTES TO PROFORMA
Potential Rental Income: Analysis assumes Unit Mix Proforma Rents (see page 16) annualized.
Vacancy: Based on the rent roll from 8/22/17, occupancy is 97%. Analysis uses a 4% vacancy factor going forward.
Real Estate Taxes: See notes below.
Per the County Assessor's office, properties are appraised every 2 years and 2017 is the reappraisal year. Taxable value is 1.35% of market (appraised) value.
Analysis estimats taxes by applying 2016 Tax Rate with 2017 Assessed Value.
15 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
PROPERTY CASH FLOW ANALYSIS - ASSUMPTIONS
YEAR 1 OPERATIONS BASED ON Proforma
Gross Potential Rent Growth NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Other Income Growth NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Loss to Lease 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Vacancy 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%Bad Debt 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Concessions 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Property Taxes NA 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%Insurance NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Utilities NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Property Management Fee 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%Other Expenses NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Replacement Reserves NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
CASH FLOW SUMMARY Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
INCOMEGross Potential Rent $448,169 $459,373 $470,857 $482,629 $494,694 $507,062 $519,738 $532,732 $546,050 $559,701
Gain (Loss) to Lease $0 $0 $0 $0 $0 $0 $0 $0 $0 $0POTENTIAL RENTAL INCOME $448,169 $459,373 $470,857 $482,629 $494,694 $507,062 $519,738 $532,732 $546,050 $559,701
Economic Operational LossVacancy Loss ($17,927) ($18,375) ($18,834) ($19,305) ($19,788) ($20,282) ($20,790) ($21,309) ($21,842) ($22,388)Bad Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Operational Loss ($17,927) ($18,375) ($18,834) ($19,305) ($19,788) ($20,282) ($20,790) ($21,309) ($21,842) ($22,388)
NET RENTAL INCOME $430,242 $440,998 $452,023 $463,324 $474,907 $486,779 $498,949 $511,423 $524,208 $537,313
Total Other Income $21,345 $21,878 $22,425 $22,986 $23,560 $24,149 $24,753 $25,372 $26,006 $26,656
EFFECTIVE GROSS INCOME $451,587 $462,876 $474,448 $486,309 $498,467 $510,929 $523,702 $536,795 $550,214 $563,970
OPERATIONAL EXPENSESFIXED OPERATIONAL EXPENSE
Total Real Estate Property Taxes $41,678 $42,929 $44,217 $45,543 $46,910 $48,317 $49,766 $51,259 $52,797 $54,381Total Property Insurance Expense $16,500 $16,913 $17,335 $17,769 $18,213 $18,668 $19,135 $19,613 $20,104 $20,606Total Property Utility Expense $48,410 $49,620 $50,860 $52,132 $53,435 $54,771 $56,140 $57,544 $58,983 $60,457
TOTAL FIXED OPERATIONAL EXP $106,588 $109,461 $112,412 $115,444 $118,558 $121,756 $125,042 $128,417 $131,883 $135,444
VARIABLE OPERATIONAL EXPENSETotal Maint. Contract Services $13,091 $13,419 $13,754 $14,098 $14,450 $14,812 $15,182 $15,561 $15,950 $16,349Total Repairs & Maintenance $39,000 $39,975 $40,974 $41,999 $43,049 $44,125 $45,228 $46,359 $47,518 $48,706Total Administrative Expenses $16,925 $17,348 $17,782 $18,226 $18,682 $19,149 $19,628 $20,118 $20,621 $21,137Total Leasing & Marketing $426 $437 $448 $459 $471 $482 $494 $507 $520 $533Total Payroll and Salary Expenses $61,949 $63,498 $65,085 $66,712 $68,380 $70,090 $71,842 $73,638 $75,479 $77,366Property Management Fee $22,579 $23,144 $23,722 $24,315 $24,923 $25,546 $26,185 $26,840 $27,511 $28,198Miscellaneous Expense $700 $700 $700 $700 $700 $700 $700 $700 $700 $700
TOTAL VARIABLE OPERATIONAL EXP $154,671 $158,520 $162,466 $166,510 $170,655 $174,904 $179,259 $183,723 $188,299 $192,988
TOTAL FIXED & VARIABLE EXPENSE $261,259 $267,981 $274,878 $281,954 $289,213 $296,660 $304,301 $312,140 $320,182 $328,433
Replacement Reserves $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
TOTAL OPERATING EXPENSES $276,259 $282,981 $289,878 $296,954 $304,213 $311,660 $319,301 $327,140 $335,182 $343,433
PROPERTY NET OPERATING INCOME $175,328 $179,895 $184,570 $189,356 $194,254 $199,269 $204,401 $209,655 $215,033 $220,537
1ST MTG DEBT SERVICE EXPENSESFirst Mortgage Interest $87,553 $86,101 $84,581 $82,992 $81,330 $79,592 $77,773 $75,871 $73,882 $71,801First Mortgage Principal $31,619 $33,072 $34,591 $36,180 $37,842 $39,581 $41,399 $43,301 $45,290 $47,371
TOTAL 1ST MTG DEBT SERVICE $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172
CASH FLOW AFTER DEBT SERVICE $56,155 $60,722 $65,398 $70,183 $75,082 $80,096 $85,229 $90,483 $95,860 $101,365
DEBT SERVICE COVERAGE RATIO 1.47 1.51 1.55 1.59 1.63 1.67 1.72 1.76 1.80 1.85INDICATED CAPITALIZATION RATE 7.16% 7.34% 7.53% 7.73% 7.93% 8.13% 8.34% 8.56% 8.78% 9.00%
Concessions
Cash Flow
16 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
UNIT TYPE SET-ASIDE # OF UNITS
UNIT SIZE
CURRENT AVG. RENT
RENT PER SF
PROFORMARENT
PROFORMA RENT
PER SF
MAXTC RENT
CURRENT UA
MAXNET RENT
1 BD 1 BTH (Phase I) 60% 8 610 $583 $0.95 $600 $0.98 $810 $80 $730 1 BD 1 BTH (Phase III) 50% 12 550 $535 $0.97 $551 $1.00 $675 $104 $571 1 BD UNIT TOTAL 20 11,480 $11,080 $11,412 $14,580 $12,6921 BD UNIT AVG 574 $554 $0.97 $571 $0.99 $729 $635
2 BD 1 BTH (Phase II) 60% 16 810 $632 $0.78 $665 $0.82 $972 $107 $865 2 BD 1 BTH (Phase I) 60% 22 810 $638 $0.79 $665 $0.82 $972 $107 $865 2 BD 1 BTH (Ph. I Office) 60% 1 810 $0 $0.00 $0 $0.00 $972 $107 $865 2 BD 1 BTH (Ph. I Res. Asst.) 60% 1 810 $0 $0.00 $665 $0.82 $972 $107 $865 2 BD UNIT TOTAL 40 32,400 $24,145 $25,935 $38,880 $34,6002 BD UNIT AVG 810 $604 $0.75 $648 $0.80 $972 $865
TOTAL 60 43,880 $35,225 $37,347 $53,460 $47,292AVERAGE 731 $587 $0.80 $622 $0.85 $891 $788* Unit mix above based on 8/22/17 rent roll.
Unit Mix
17 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Tax Credit Property Income LimitsINCOME 50% 60%1 Person $25,200 $30,2402 Person $28,800 $34,5603 Person $32,400 $38,8804 Person $36,000 $43,2005 Person $38,900 $46,6806 Person $41,800 $50,1607 Person $44,650 $53,580
Farmhouse I, II, & III is a Section 42 LIHTC property which means that federal tax credits were given to help finance the property. The property currently is required to hold the maximum rent charged at or below a level considered appropriate for the households that have incomes at or below 50% and 60% of the local Area Median Income (AMI) for the county.
Gallatin CountyEffective Year: 2017
Area Median Income: $71,000
Tax Credit Maximum Allowable RentsSet Aside Unit
Type # of
UnitsMax Rent
Current UA
Max Net Rent
50% 1 BD 12 $675 $104 $57160% 1 BD 8 $810 $80 $73060% 2 BD 40 $972 $107 $865
33%
67%
Unit Breakdown By Unit Type
1 BD 2 BD
$554$604$635
$865
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1 BD 2 BD
Asking Rents to Net Max Tax Credit Rents
Asking Rent Net Max Rent
18 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Max Allowable LIHTC Rent Growth- 2BD/ 60%
Year Rent % Change
2012 $913 -2013 $921 0.88%2014 $960 4.23%2015 $960 0.00%2016 $972 1.25%2017 $972 0.00%
3 Yr Avg 0.42%5 Yr Avg 1.27%
$64,000
$66,000
$68,000
$70,000
$72,000
$74,000
$76,000
2012 2013 2014 2015 2016 2017
AMI Growth RateYear AMI % Change
2012 $67,600 -2013 $68,200 0.89%2014 $71,100 4.25%2015 $68,600 (3.52%)2016 $74,200 8.16%2017 $71,000 (4.31%)
3 Yr Avg 0.11%5 Yr Avg 1.09%
$880
$890
$900
$910
$920
$930
$940
$950
$960
$970
$980
2012 2013 2014 2015 2016 2017
SOURCE: novoco.com
*The high watermark year was 2016 at $74,200
19 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Fair Market RentsYear 1 BD 2 BD
2012 $555 $7222013 $594 $7452014 $596 $7472015 $615 $7712016 $639 $7882017 $672 $848
$630
$650
$670
$690
$710
$730
$750
2012 2013 2014 2015 2016 2017
FMR AveragesYear FMR Avg. % Change
2012 $639 -2013 $670 4.86%2014 $672 0.30%2015 $693 3.20%2016 $714 2.96%2017 $760 6.52%
3 Yr Avg 4.23%5 Yr Avg 3.57%
SOURCE: novoco.com
20 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
Demographics
BELGRADEMEDIAN HOME COST
BELGRADEMEDIAN RENT
BELGRADEUNEMPLOYMENT RATE
BELGRADEJOB GROWTH
$305,500 $1,372 3.9%(7/2017)
0.4%(since 1/2017)
SOURCE: zillow.com, homefacts.com
21 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS
0
500
1,000
1,500
2,000
2,500
Under $25,000 $25,000- $50,000 $50,000- $75,000 $75,000- $100,000 $100,000- $125,000 $125,000- $150,000 $150,000- $200,000 $200,000+
Demographic Analysis
POPULATION 1 MILE 3 MILES 5 MILES
2017 Estimated Population 6,961 17,430 22,410Population Growth 2010-2017 9.02% 12.49% 15.77%
HOUSEHOLDS
2017 Estimated Households 2,805 6,658 8,616Household Growth 2010-2017 10.00% 13.62% 17.11%
INCOME
2017 Household Income: Average $57,764 $71,558 $76,931 2017 Household Income: Median $47,468 $59,467 $62,017
HOUSEHOLD INCOME LEVELS BY POPULATION
OWNER73%
RENTER27%
OCCUPIED96% VACANT
4%
SOURCE: CoStar
www.lihtcadvisors.com
LIHTC Advisors
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