exclusively presented by: kitty wallace west covina

COLLIERS INTERNATIONAL P. 1TUSCANY VILLAS | OFFERING MEMORANDUM

West CovinaTuscany Villas

1935-1945 East Garvey Avenue North West Covina, California 91791

KITTY WALLACEExecutive Vice PresidentLicense No. [email protected]

EXCLUSIVELY PRESENTED BY:


Table of Contents

> INVESTMENT SUMMARY

Investment Highlights .............................................................. 4

Property Photographs ............................................................. 5

> PROPERTY INFORMATION

Physical Description ................................................................ 8

Physical Description & Improvements ................................... 9

> MARKET OVERVIEW

San Gabriel Valley Market Highlights ...................................... 11

Submarket Overview ............................................................... 12

Area & Plat Maps ..................................................................... 14

> FINANCIAL OVERVIEW

Investment Information ........................................................... 16

Financial Assumptions ............................................................ 18

Sale Comparables .................................................................... 19

Rent Comparables .................................................................... 21

Tuscany VillasOffering MemorandumFor Sale | Investment Opportunity

COLLIERS INTERNATIONAL

> Investment Summary


INVESTMENT SUMMARY

Investment HighlightsBEAUTIFULLY LANDSCAPED 165-UNIT APARTMENT COMMUNITY IN THE SAN GABRIEL VALLEY: Tuscany Villas is a non-rent control, low-densi-ty multifamily investment situated on more than 3 acres in West Covina, Cali-fornia. This two-building property has 85,242 net rentable square feet with less than 50 units per acre and an actual CAP rate of 5.46% with a Proforma CAP rate of 6.91%. Over $1 million has been invested in recent capital expen-ditures on both the unit interiors and the property’s exterior including new landscaping, pools and barbeque areas and an updated leasing office.

WELL AMENITIZED COMMUNITY SITUATED BETWEEN WEST COVINA’S TWO LARGEST SHOPPING MALLS, PLAZA WEST COVINA AND EAST-LAND SHOPPING CENTER: Located one block east of Azusa Avenue, one of the area’s major thoroughfares, Tuscany Villas is close to many nearby conve-niences including Stater Bros., LA Fitness, 7-11, and West Covina’s two largest retail centers: Plaza West Covina and Eastland Shopping Center. The commu-nity features several additional on-site amenities including two swimming pools, picnic and barbecue areas, a fitness center, laundry facilities, and bicycle storage.

EASILY ACCESSIBLE LOCATION WITH TRANSIT NEARBY: Tuscany Villas is situated within 1 block of the 10 freeway, providing easy access to the sur-rounding areas and employment opportunities throughout the City. The prop-erty is within 9 blocks of the 190/194 Metro Local Line, offering residents transit to El Monte, Baldwin Park, Pomona, and the City of Industry. The San Gabriel Valley is serviced by three east-west (210, 10, 60) and three north-south (57, 605, 710) freeways.

CONSISTENTLY STRONG MULTIFAMILY FUNDAMENTALS: The East LA/ San Gabriel Valley submarket has had 0% change in inventory year-to-date, with only 220 new apartment units added in this submarket since the first quarter of 2009. As a result, the Tuscany Villas offer a rare investment oppor-tunity in a market with a current average asking rent of $1,816 and 13% rent growth since the first quarter of 2011.


INVESTMENT SUMMARY

Property Photographs


INVESTMENT SUMMARY




> Property Information


PROPERTY INFORMATION

Tuscany Villas is a 165-unit low-density, garden-style apartment community situated on approxi-mately 3.32 acres in suburban West Covina, a primarily residential and commercial community in the heart of the San Gabriel Valley. The area is centrally located to an abundance of conveniences in the immediate area including West Covina’s two largest and most well-known shopping centers, Eastland Shopping Center and Plaza West Covina. Tuscany Villas is directly north of the 10 freeway, offering easy access to the surrounding areas including the 605 and 57 freeways 6 miles west and 9 miles east, respectively.

Tuscany Villas is comprised of 2 two-story buildings, one built in 1962 and the other built in 1966. The property boasts 286 feet of frontage on Garvey Avenue North at Azusa Avenue with a center-court-yard providing ample open space with a variety of onsite amenities. This immaculately landscaped gated community experienced two renovations and provides residents access to two swimming pools, barbecue grills and picnic areas, bike storage, fitness center and two laundry facilities. There are 171 parking spaces disbursed throughout paved surface lots within the complex.

Physical Description

> PRICING $25,000,000

> PROPERTY ADDRESS 1935-1945 E Garvey Avenue N West Covina, CA 91791

> GROSS LOT AREA 144,410 sf / 3.32 ac

> NET RENTABLE SF Approx. 85,242 sf

> YEAR BUILT 1962 & 1966

> NO. OF UNITS 165

> NO. OF FLOORS Two

> PARKING 171 spaces

> ZONING R3

> APN 8454-019-0208454-019-022

> OCCUPANCY 95%

> BUILDING EXTERIOR Stucco

> WINDOWS Aluminum single pane

> ROOF Flat composition

> PLUMBINGMixture of copper and galvanized

> METERINGIndividually metered


PROPERTY INFORMATION

Physical Description & ImprovementsTuscany Villas features 85,242 net rentable square feet with a unit mix featuring 14 (fourteen) studios, 149 (one hundred forty nine) one-bedroom units, and 2 (two) two-bedroom units. The property is newly renovated with over $1 million invested into capital expenditures since 2011. Exterior improvements include new signage, an updated leasing office, brand new landscaping, and resurfacing of the parking lot.

The apartments are unique and feature an assortment of finishing’s and fixtures, though many of the units have been renovated over the years. The unit interiors were completely upgraded with all new kitchens and bathrooms including new flooring, cabinetry, stainless steel appliances, granite countertops, bathroom vanities, modernized closet doors, fixtures and paint. With two significant renovations made over the years, 98% of the units have had partial turn and more modest upgrades whilst 5% of the units have been recently turned, leaving 95% of the units room for more extensive upgrades and additional capital improvements. Enhancements have also been made to the exterior from brand new landscaping to resurfacing the parking lot providing this property with a brand new facade. The property currently consists of upscale amenities including a new fitness center, pool area, bbq/picnic area and credit card operated laundry facilities.

Current ownership has done an excellent job maintaining the property, but there are opportunities for improvement by new ownership. The unturned unit interiors would benefit from upgrades and enhancements with additional opportunities to provide value to the common areas with upgraded amenities and covered parking.



> Market Overview


MARKET OVERVIEW

• The San Gabriel Valley has a current population of nearly 2 million, which is projected to increase by 0.4% this year and next.

• In 2012, retail sales in the San Gabriel Valley reached $15.2 billion and by 2014 will climb to $16.5 billion, surpassing their prereces-sion peak.

• The average asking rent in the San Gabriel Valley has increased 13% since Q1 2011, with an additional 8% growth forecasted by 2018.

• Vacancy rates in the San Gabriel Valley have remained stable, with an average vacancy rate of 4% from 2011 to the current year.

• In 2012, employment in the San Gabriel Valley increased over the year by an estimated 1.0% to 605,400 workers with 10 of the 14 industries adding jobs throughout the year.

San Gabriel Valley Market Highlights

SOURCE: COSTAR REALTY INFORMATION, INC., CLARITAS


MARKET OVERVIEW

Centrally located between Los Ange-les and the Inland Empire, The SAN GABRIEL VALLEY is home to nearly 2 million people and more than 600,000 jobs. If it were a city, the San Gabriel Valley would be one of the largest metropolitan areas in the United States, according to census data. Within the San Gabriel Valley’s 400 square miles and 31 cities is an abundance of small businesses, with additional medium-sized businesses that form the basis of the Valley’s business community. Numerous com-panies have their headquarters here including: Avery Dennison, Edison

International, East West Bank, OneW-est Bank, Trader Joe’s and Parsons Corporation among others. In 2012, the Los Angeles County Economic Development Corporation (LAEDC) estimates retail sales reached $15.2 billion and by 2014 will climb to $16.5 billion, surpassing their prerecession peak. The San Gabriel Valley regional economy will continue on track at a modest pace of growth in 2014.

Within the heart of the San Gabriel Valley, Tuscany Villas is located in WEST COVINA in a neighborhood that is comprised of a mix of residen-

tial and retail properties. The complex is close to transportation, shopping, schools, and parks, and it is ideally located one block from the 10 freeway allowing for easy access from down-town Los Angeles to Ontario.

AREA ATTRACTIONSAdding great vitality to the subject location, Tuscany Villas is proximate to neighboring retail and entertain-ment centers, including the 1,200,000 square foot Plaza West Covina and the 24,000 square foot Eastland Shopping Center. These two shopping centers alone offer residents access

to hundreds of retailers, restaurants, and conveniences. BESIDES THE AFOREMENTIONED, WEST COVINA AND THE SUR-ROUNDING AREA OFFERS THE FOLLOWING ATTRACTIONS:• Puente Hills Mall• Industry Hills Expo Center• Cortez Park• South Hills Country Club• West Covina Equestrian Center• Carbon Canyon Regional Park• Santa Anita Park

Submarket Overview


MARKET OVERVIEW

MARKET OVERVIEW, continued from page 14

EDUCATIONSan Gabriel Valley’s educational system from grade school through college ranks amongst the finest in the Western United States. Tuscany Villas is located in the award winning West Covina Unified School District. The district received such awards as “The National Blue Ribbon Award” and “Distinguished Schools in California.” The subject property is within one and a half miles of two elementary schools with an 8 rating on GreatSchools.org, Rowland Avenue and Vine Elementary.

The San Gabriel Valley has numerous institutions catering to higher education including:

TRANSPORTATIONWest Covina is a key metropolis within the San Gabriel Valley. With ample access to six major freeways, the City serves as a housing community for major employment hubs throughout Los Angeles and the Inland Empire. Tuscany Villas is in close proximity to many forms of transportation. Three east-west (210, 10, 60) and three north-south (57, 605, 710) freeways serve the 400 square miles of the San Gabriel Valley as well as West Covina. Three major freight lines cross the San Gabriel Valley, providing direct linkage from

the ports of Los Angeles and Long Beach. Numerous airports are within 35 miles of West Covina including Los Angeles International Airport, Ontario International Airport and Burbank Airport.

EMPLOYMENTThe city of West Covina is substantially built out with few major vacant development sites remaining. The City is a residential and commercial center with limited industry. Retail merchandising is the principal business activity and many large corporations have been attracted to the San Gabriel Valley due to accessible freeways, available skilled labor pool, affordable housing, strong clientele base and competitive land prices and rental rates.

This suburban city is located within easy reach of numerous employment opportunities throughout the San Gabriel Valley and neighboring Downtown Los Angeles. Some of West Covina’s top employers include:

CALIFORNIA STATE POLYTECHNIC UNIVERSITY, POMONA

COVINA-VALLEY UNIFIED SCHOOL DISTRICT

COLLEGES & UNIVERSITIES # OF STUDENTSMount San Antonio College 37,994Cal State Polytechnic, Pomona 22,156Citrus College 12,113Azusa Pacific University 10,184Whittier College 1,670

ONTARIO INTERNATIONAL AIRPORT

TOP EMPLOYERS # OF EMPLOYEESQueen of the Valley Campus 1,484WC Unified School District 1,194Target 437City of West Covina 397Walmart 301Macy’s 299Interspace/Concorde Battery 252SGV Newspaper Group 225East Valley Comm. Health Ctr 200


MARKET OVERVIEW

EAST GARVEY AVE NORTH EAST GARVEY AVE NORTH

NORT

H BA

YMAR

AVE

EAST WORKMAN AVE EAST WORKMAN AVE

EAST GARVEY AVE SOUTH

EAST GARVEY AVE SOUTH

SECTION A DETAIL: › The subject property has 286 feet of frontage on Garvey Avenue

NORTH

Plaza West Covina

(2.0 mi)

Brunswick West Covina Lanes

(2.2 mi)

EastlandShopping Center

(0.9 mi)

AZUS

A AV

ENUE

AZUS

A AV

ENUE

AZUS

A AV

ENUE

Covina High School

(0.6 mi)

Traweek Middle School

(0.6 mi)

Tuscany VillasWest Covina, CA

Cortez Park(0.8 mi)

South HillsCountry Club

(1.3 mi)

Vine Elementary School(1.5 mi)

Rowland Ave Elementary School

(1.5 mi)

MARKET OVERVIEW, continued from page 15



> Financial Overview


FINANCIAL INFORMATION

Investment InfoProperty SummaryProperty Tuscany VillasProperty Address 1935-1945 E Garvey Ave NProperty City, State ZIP West Covina, CA 91791APN(s) 8454-019-020 & 8454-019-022Units 165 UnitsYear Built 1962 & 1966Building Size 85,242 SFLot Size 3.32 AC 144,410 SFNo. of Parking Spaces 171

Pricing SummaryList Price $25,000,000Price / Unit $151,515Price / SF $293.28Occupancy (at time of analysis) 87.27%CAP Rate 5.46%GRM 10.80Pro Forma Cap Rate 6.91%Pro Forma GRM 9.16

Financing SummaryRequired Equity $10,653,337Asssume 1st Loan Amount $13,117,517Assumed 2nd Loan Balance $1,229,1461st Loan Interest Rate 4.74%2nd Loan Interest Rate 4.70%Loan to Value 57% LTVDebt Coverage Ratio 1.47 DCR

Rent Roll Summary# of Units Type Actual Min / Max Actual Avg Pro Forma Avg

14 Studio $900/$1,150 $991 $1,150149 1 Bedroom $903/$1,350 $1,142 $1,350

2 2 Bedroom- Employee $770/$1,400 $1,085 $1,600165 Total Units Weighted Avg $1,128.83 $1,336.06

Last Updated: 7/9/2015The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness.

Investment InformationINVESMENT HIGHLIGHTS:• 165-unit low-density apart-ment community situated on more than 3 acres

• Excellently landscaped grounds with ample on-site amenities

• Prime location within walking distance to many convenienc-es in the immediate area

• Centrally located between West Covina’s two largest and most popular shopping centers

• 13% submarket rent growth over the past three years with an additional 2% growth forecasted in 2014

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Estimated Operating Data

Annually $ / Unit $ / SF % Annually $ / Unit $ / SF %

Gross Rental Income $2,235,084 $13,546 $26.22 $2,645,400 $16,033 $31.03

Other IncomeAnnual RUBS/Utilities Income $46,625 $48,024Annual Parking Income $7,535 $7,761Annual Other Income $26,475 $27,269

Total Other Income $80,635 $83,054

Potential Gross Income $2,315,719 $14,035 $27.17 $2,728,454 $16,536 $32.01

Less Vacancy/Collection Loss ($111,754) ($677) ($1.31) 5.0% ($132,270) ($802) ($1.55) 5.0%

Effective Gross Income $2,203,965 $13,357 $25.86 $2,596,184 $15,734 $30.46

ExpensesTaxes $336,192 $2,038 $3.94 14.5% $342,916 $2,078 $4.02 12.6%Insurance $29,835 $181 $0.35 1.3% $30,730 $186 $0.36 1.1%Payroll $120,480 $730 $1.41 5.2% $124,094 $752 $1.46 4.5%Offsite Management $69,472 $421 $0.81 3.0% $81,854 $496 $0.96 3.0%Utilities & Rubbish $84,764 $514 $0.99 3.7% $87,307 $529 $1.02 3.2%General & Administrative $32,065 $194 $0.38 1.4% $33,027 $200 $0.39 1.2%Leasing & Marketing $15,404 $93 $0.18 0.7% $15,866 $96 $0.19 0.6%Professional & Legal Fees $16,983 $103 $0.20 0.7% $17,492 $106 $0.21 0.6%Pool $7,767 $47 $0.09 0.3% $8,000 $48 $0.09 0.3%Landscape & Pest Control $10,162 $62 $0.12 0.4% $10,467 $63 $0.12 0.4%Maintenance & Repair $81,735 $495 $0.96 3.5% $84,187 $510 $0.99 3.1%Misc. & Reserves $33,000 $200 $0.39 1.4% $33,990 $206 $0.40 1.2%

Less Total Expenses ($837,858) $5,078 $9.83 36.2% ($869,930) $5,272 $10.21 31.9%

Net Operating Income: $1,366,106 $8,279 $16.03 $1,726,254 $10,462 $20.25

Debt ServicePrincipal Reduction ($295,770) ($295,770)Interest Paid ($634,237) ($634,237)

Less Debt Service ($930,008) ($930,008)

After Debt Service Cash Flow $436,099 $796,246

Leveraged Cash on Cash 4.09% 7.47%Return on Investment 6.87% 10.25%

CAP Rate 5.46% 6.91%GRM 10.80 9.16

Last Updated: 7/9/2015

Actual Pro Forma

The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness.

Operating Data

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Actual Pro FormaEstimated at market rent, deducted in Vacany/Collection

March T12 + 3%March T12 + 3%March T12 + 3%

Actual Pro Forma1 Taxes Actual Tax Rate and Direct Assessment + 2%2 Insurance Estimated at $0.35 / SF + 3%3 Payroll March T12 at $120,480 / Year + 3%4 Offsite Management Estimated at 3.00% 3.00% of PGI5 Utilities & Rubbish March T12 at $514 / unit + 3%6 General & Administrative Estimated at $194 / unit + 3%7 Leasing & Marketing March T12 at $1,284 / month + 3%8 Professional & Legal Fees March T12 at $1,415 / month + 3%9 Pool March T12 at $647 / month + 3%

10 Landscape & Pest Control March T12 at $847 / month + 3%11 Maintenance & Repair March T12 at $495 / unit + 3%12 Misc. & Reserves Estimated at $200 / unit Estimated at $200 / unit

* Estimations based on BOMA guidelines, industry experience, and prevailing market conditions.

Income

Expenses*

Vacant UnitsAnnual RUBS/Utilities IncomeAnnual Parking IncomeAnnual Other Income

Financial Assumptions



Sale ComparablesSales Comps

CapRate

1) Lafayette Parc Apartments 259 $51,750,000 235,093 $199,807 12.32 5.60% 1964 475 11/10/2014600-656 S Glendora AveWest Covina, CA 91790

2) Sunset Square Apartments 140 $21,500,000 133,900 $153,571 13.14 5.25% 1964 218 11/17/2014745 N Sunset AveWest Covina, CA 91790

3) Torrey Pines 251 $53,775,000 231,637 $214,243 13.14 5.25% 1980 519 3/12/2015851 S Sunset AveWest Covina, CA 91790

4) South Hills 85 $21,800,000 105,936 $256,471 10.08 5.45% 1966 188 6/30/20142900 E Virginia Ave * *West Covina, CA 91791

184 $37,206,250 176,642 $206,023 12.17 5.39% 1969 350 11/09/14Tuscany Villas 165 $25,000,000 85,242 $151,515 10.80 5.46% 1962 & 1966 1711935-1945 E Garvey Ave N 9.16 6.91%West Covina, CA 91791

* Estimated using 5% Vacancy and 40% Expenses

Averages

$ / UNIT# Units Price Building SF

Proforma

GRM Year Built Parking COEProperty Address




Sale Comparables Map

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NORTH

1

3

SUBJECT PROPERTY 4



Rent ComparablesRent Comps

1) Atrium 1962 139 1 Bed + 1 Bath $1,3711829 E Workman Ave 2 Bed + 2 Bath $1,550West Covina, CA 91791

2) South Hills 1966 85 1 Bed + 1 Bath $1,6332900 E Virginia Ave 2 Bed + 1.5 Bath $1,732West Covina, CA 91791

3) Lafayette Parc Apartments 1964 259 Studio $1,245600-656 S Glendora Ave 1 Bed + 1 Bath $1,320West Covina, CA 91790 2 Bed + 2 Bath $1,590

4) Sunset Plaza Apartments 1962 183 Studio $1,1201234 W Cameron Ave 1 Bed + 1 Bath $1,464West Covina, CA 91790 2 Bed + 2 Bath $1,508

1964 167 $1,453Tuscany Villas 1962 & 1966 171 Studio $9911935-1945 E Garvey Ave N 1 Bedroom $1,142West Covina, CA 91791 2 Bedroom- Employee $1,085

Property Address

Averages

# UnitsYear Built RentType




Rent Comparables Map

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NORTH

1

3

SUBJECT PROPERTY

4

CONFIDENTIALITY & DISCLAIMER STATEMENT

This Offering Memorandum contains select information pertaining to the business and affairs of the Property at 1935 E Garvey Avenue in West Covina, CA. It has been prepared by Colliers International. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Colliers International. The material is based in part upon information supplied by the Seller and in part upon financial information obtained by Colliers International from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completeness or this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence.

By acknowledging your receipt of this Offering Memorandum from Colliers International, you agree:

1) The Offering Memorandum and its contents are confidential;

2) You will hold it and treat it in the strictest of confidence; and

3) You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Seller.

Owner and Colliers International expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered.

If you wish not to pursue negotiations leading to the acquisition of 1935 E Garvey Avenue, West Covina, CA or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum.

A prospective purchaser’s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Colliers International or any of their affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property.

This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum.

exclusively presented by: kitty wallace west covina

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