FOR SALE...years, including 4.1% growth over the past four quarters. Transaction volume and pricing generally remain on the lower end for the metro, and most deals are valued at under

FOR SALEA Multi-Family Investor/Developer Opportunity

OFFERING MEMORANDUMNORMA STREET APARTMENTS800 S. Norma Street, Ridgecrest, CA 93555

John Manion Executive Vice [email protected] DRE #01247695

Jeanene Stolrow Vice President949.468.2345 [email protected] DRE #02019674

Exclusively Marketed By:

Gary Kaufman South Coast Commercial, [email protected] DRE #01816761

NORMA STREET APARTMENTS | NAI CAPITAL | 2

03 The Offering

04 Aerial Image

05 Parcel Map

06 Property Photos

08 Zoning

09 Area Overview

14 Demographics

15 Valuation Analysis

TABLE OF CONTENTS

No warranty, express or implied, is made as to the accuracy of the information contained herein. This information is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and is subject to any special listing conditions imposed by our principals. Cooperating brokers, buyers, tenants and other parties who receive this document should not rely on it, but should use it as a starting point of analysis, and should independently confirm the accuracy of the information contained herein through a due diligence review of the books, records, files and documents that constitute reliable sources of the information described herein. Logos are for identification purposes only and may be trademarks of their respective companies. NAI Capital, Inc. Cal DRE Lic. #01990696.





PRICING: $5,200,000

NET OPERATING INCOME: $301,191

CAP RATE: $6.0%

PROPERTY TYPE: Multi Family

AVERAGE OCCUPANCY: 98%

UNITS: 66

UNIT TYPE: Studio, 1, 2 and 3-Bedroom / 1 and 2-Bath

A. PROPERTY OVERVIEW

THE OFFERING

RENTABLE AREA: 55,228 SF

LAND AREA: 5.44 Acres

YEAR BUILT: 1992

PARCEL NUMBER: 480-010-16-00

OWNERSHIP: Fee Simple (Land and Buildings)

B. PROPERTY SPECIFICATIONS

• Solid unit mix on a 1992 constructed asset

• New roofs on all buildings

• New asphalt parking lot

• Rental upside

• Includes two (2) acres stubbed and ready for development

C. INVESTMENT HIGHLIGHTS


AERIAL


PARCEL MAP

PARCEL

Parcel: 480-010-16-00Acres: 5.44SF: 55,228

IMPROVEMENTS

Built: 1992

ZONING

Use Code: R-3 ZoneProperty Type: Multi-family

ACCESS

Street: S. Norma StreetAccess Points: 2


PROPERTY PHOTOS


PROPERTY PHOTOS


The property’s zoning classification is Urban Residential (“RU”). The RU Use Regulations are intended to create and enhance areas where permanent family residential uses are permitted and institutional residential care uses are conditionally permitted and civic uses are permitted when they serve the needs of the residents.

PERMITTED USES:

(a) Residential Use Types

• Family Residential

• Group Residential

(b) Civic Use Types

• Essential Services

• Fire Protection Services

• Small Schools (with Minor Use Permit)

(b) Civic Use Types Allowed with Major Use Permit

• Administrative Services

• Ambulance Services

• Child Care Center

• Civic, Fraternal or Religious Assembly

• Clinic Services

• Community Recreation

• Group Care

• Major Impact Services and Utilities

ZONING OVERVIEW

ZONING


ABOUT THE CITY OF RIDGECRESTRidgecrest is located in the southern portion of the Indian Wells Valley and in the northeast corner of Kern County,

surrounded by four mountain ranges; the Sierra Nevada on the west, the Cosos on the north, the Argus Range on the

east, and the El Paso Mountains on the south. It is approximately an hour and quarter from the Lancaster/Palmdale

area and approximately two hours from both Bakersfield and San Bernardino.

TRAVELA favorable characteristic of the City is its proximity to two major highways, the 395 and 14. Air travel in and out of

the city is provided through the Inyokern Airport. These attributes make Ridgecrest, a central location for shopping

and business for the Eastern Kern County area. Ridgecrest is also easily accessible to the rest of southern California

making it an ideal location for industry.

AREA OVERVIEW


NAVYRidgecrest evolved into a growing and dynamic city during the 1950’s and

1960’s as a support community, vital to the mission of the Navy, by providing

housing and services for Federal employees and contractors. Ridgecrest

incorporated in 1963 and now provides shopping for over 40,000 people

throughout the Indian Wells Valley.

COMMUNITYThe friendly community of Ridgecrest was incorporated as a city in 1963.

Ridgecrest is surrounded by four mountain ranges; the Sierra Nevada on the

west, the Cosos on the North, the Argus Range on the east, and the El Paso

Mountains to the South. Ridgecrest is the only incorporated community in the

Indian Wells Valley and is located in the Mojave Desert, west of Death Valley

National Park.

Ridgecrest is known for its beautiful sunsets and its warm, sunny days. Many

of the residents enjoy these things about their home town. In 2000, the

population was 24,927.

VISIT RIDGECRESTRidgecrest is situated in the Indian Wells Valley between the high country of

the Sierra Nevada range and the deep desert of Death Valley. Within an hour’s

drive through some of the West’s most beautiful country-are great:

• Fishing• Hiking• Hunting• Sailing• Skiing• Every Other Outdoor Pastime

AREA OVERVIEW


Outlying San Bernardino Submarket

AREA OVERVIEW

Most apartment inventory in the Outlying San Bernardino Submarket can be found in Victor Valley. Detached single-family housing is prevalent here, with only a

few apartment communities and around 12,300 units. The vacancy rate has compressed from 9.7% at the end of 2012 to 4.5% —both an indication of how much

fundamentals have improved and how unwilling developers have been to produce market-rate apartments. Rent growth has averaged 5.3% over the past five

years, including 4.1% growth over the past four quarters.

Transaction volume and pricing generally remain on the lower end for the metro, and most deals are valued at under $5 million. There have been a few exceptions

recently, such as the 75-unit Quail Springs Village, which traded in September 2019, and the 100-unit Park View Apartments, which traded in November 2018.

© 2019 CoStar Realty Information Inc.


AREA OVERVIEW

VACANCYThe Outlying San Bernardino County Submarket serves as a bedroom community for many workers employed in San Bernardino, Ontario, Rancho Cucamonga,

Riverside and even Los Angeles. For that reason, outside forces often drive demand here. When rents are high in these cities, people often flee to Outlying San

Bernardino for a discount.

The apartment vacancy rate stands at roughly half what it was prior to the recession (roughly 8% from 2002–05). Competition for multifamily communities

exists on several fronts. The rental market in Outlying San Bernardino consists of apartments, single-family homes (40% of single-family housing stock is renter-

occupied), affordable housing and mobile homes. However, many single-family rentals purchased during the downturn are being sold to owner-occupants.

The submarket was among the most devastated by the housing crash. Consequentially, housing starts still sit below prerecession levels, and new apartment

supply in recent years has been infrequent.



AREA OVERVIEW

RENTRents in Outlying San Bernardino County are one of the lowest in the metro. Despite a lack of development and relatively steady demand, rents grew by 4.1%

over the past four quarters—inline with the Inland Empire average. The strongest gains continue to come from communities with 100 to 250 units, where rent

growth outpaced the submarket average by over 100 basis points over the past four quarter. Meanwhile, communities with less than 50 units have the slowest

rent gains—with four-quarter rent growth approximately 200 basis points below the submarket average.

With little in the pipeline for near-term supply additions, the near-term rent growth outlook appears favorable. Although median household incomes are among the

lowest in the metro, asking rents remain affordable. Asking rents in the submarket commanded about 20% of median household incomes, an average rate and

below the commonly accepted 30% rate per household that indicates a “cost burden.”



Population 1 Mile 3 Mile 5 Mile

Estimated Population (2019) 8,843 30,932 32,909

Projected Population (2024) 9,019 31,804 33,836

Population Growth (2019-2024) 2.0% 2.8% 2.8%

Average Age (2019) 36 36 36

Housing 1 Mile 3 Mile 5 Mile

Median Home Value $160,397 $202,481 $204,516

Median Year Built 1980 1979 1979

Households 1 Mile 3 Mile 5 Mile

Estimated Households (2019) 3,447 12,154 12,791

Projected Households (2024) 3,520 12,477 13,130

Household Growth (2019-2024) 2.1% 2.7% 2.7%

Median Household Income $57,340 $60,061 $59,880

Average Household Size 2.6 2.5 2.6

Average HH Vehicles 2 2 2

DEMOGRAPHICS


VALUATION ANALYSIS

# UNITS ADDRESS CITY ZIPCODE MAP CODE

66800 S. Norma

StreetRidgecrest 93555

GRM CAP RATE

PRICE CURRENT MARKET CURRENT MARKET $/UNIT

$5,200,000 10.0 9.3 5.8% 6.5% $78,788

$/SQUARE FOOT(Approx.)

GROSSSQ. FT.

(Approx.)

PARCEL SIZE(Approx.)

YEAR BUILT(Approx.)

$94.16 55,228 5.4 AC 1992

INCOME DETAIL

# UNITS TYPE RENT TOTAL

16 1Br/1Ba $498 $7,968

24 2Br/1Ba $678 $16,272

8 0Br/1Ba $419 $3,352

8 2Br/2Ba $759 $6,072

10 3Br/3Ba $908 $9,080

Laundry Income $460

Total Monthly

Income $43,204

INCOME DETAIL

# UNITS TYPE RENT TOTAL

16 1Br/1Ba $498 $7,968

24 2Br/1Ba $678 $16,272

8 0Br/1Ba $419 $3,352

8 2Br/2Ba $759 $6,072

10 3Br/3Ba $908 $9,080

Laundry Income $460

Total Monthly

Income $43,204

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ESTIMATED ANNUAL OPERATING EXPENSES

Advertising $0Management (On & off Site)

$36,291

Elevator $0 Licenses & Fees $1,000

Utilities $32,700 Miscellaneous $8,700

Water & Sewer $0 Payroll $12,000

Landscaping $3,600 Pool $2,400

Trash Removal $0 Insurance $18,473

Pest Control $0 Taxes $56,540

Maintenance $30,000

Total Annual Operating Expenses (estimated $201,704

Expenses Per: Unit $3,056

% of Actual GSI

ESTIMATED ANNUAL OPERATING PROFORMA

ACTUAL MARKET

Gross Scheduled Income

$518,448 $558,720

Less: Vacancy Factor

3% $15,553 $16,762

Gross Operating Income

$502,895 $541,958

Less: Expenses 39% $201,704 $201,704

Net Operating Income

$301,191 $340,254

Less: 1st TD Payments

($196,458) ($196,458)

Pre-Tax Cash Flow $104,732 $143,796

Cash On Cash Return

6.0% 8.2%

Principal Reduction $0 $0

Total Potential Return (End of Year One) 8.2%

FINANCING SUMMARY

Downpayment $1,750,000

34%

Interest Rate 3.950%

Amortized over 30 Year

Proposed Loan Amount

$3,450,000

Debt Coverage Ratio

Current 1.53

Market 1.73

NORMA STREET APARTMENTS800 S. Norma Street, Ridgecrest, CA 93555



Exclusively Marketed By:


FOR SALEA Multi-Family Investor/Developer Opportunity

Documents

FOR SALE...years, including 4.1% growth over the past four quarters. Transaction volume and pricing generally remain on the lower end for the metro, and most deals are valued at under