ullor asset management, ll • p.o. ox 14763 lenexa, ks...
TRANSCRIPT
![Page 1: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/1.jpg)
Cullor Asset Management, LLC • P.O. Box 14763 Lenexa, KS 66285
Phone: 913.324.5900 • Fax: 866.629.4703
Sun Gate Apartments
Investment Highlights
Exclusive Partners, Exceptional Properties, and Dynamic Investments
![Page 2: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/2.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 2
Sun Gate Apartments ................................................... 3
Investment Summary .................................................................... 3
Executive Summary ....................................................................... 4
Property Description .................................................... 5
Investment Plan ............................................................................. 7
Investment Highlights ................................................................... 8
Marketing Plan .............................................................................. 8
Capital Improvement Plan ............................................................. 9
Success Factors ............................................................................. 10
Location Overview ........................................................................ 11
Pictures ......................................................................................... 13
Unit Mix ........................................................................................ 16
Floor Plan ...................................................................................... 16
Competitive Occupancy and Rent Study ...................................... 17
Property Tax Comparison ............................................................. 19
Financial Overview ...................................................... 20
Overview, Acquisition Costs, Financing ........................................ 20
Year 1 Budget ............................................................................... 20
Budget vs. Current Expenses ........................................................ 21
Investor Summary ........................................................................ 21
Gladstone Demographics/Economic Overview ............ 23
Table of Contents
![Page 3: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/3.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 3
Sun Gate Apartments Investment Summary
Cullor Asset Management, LLC, (CAM) the managing member of
ApartmentVestors Fund 1, LLC (“The Fund”) is arranging for the acquisition of
Sun Gate apartments in Gladstone, MO, for the Fund. Sun Gate will be the
only property included in the Fund. An investment in Sun Gate apartments
will provide the investor with preferred returns on their investment as well as
profit sharing on additional returns.
Sun Gate is a 72-unit apartment complex located in a very solid area of
Grandview, MO, a suburb of Kansas City. Sun Gate has exceptional drive-by
visibility, easy access to 3 major highways, and large and desirable floor plans.
Sun Gate Apartments is a 3 story apartment complex constructed in 1970 with
an exterior of stucco and siding. All foundations are concrete slab and block.
Sun Gate consists of a leasing center and six residential buildings that contain
seventy-two two bedroom, one and half bathrooms each with over 1,000
square feet of living area. Each unit is equipped with a dishwasher, central air,
private deck or patio, spacious kitchen, as well as an individual heat pump and
hot water heater. Each unit includes an extra storage closet. Units are all-
electric and individually metered and are the responsibility of the residents.
The owner pays trash and common area lighting and water. Sun Gate also
provides tenants with an on-site pool, laundry facility, playground, and
resident clubhouse.
The property is being purchased by the Fund for $2,500,000 and Cullor Asset
Management is applying approximately $747,000 in Fund equity to complete
the acquisition, reserves, and additional capital items. The purchase price
includes a $200,000 repair credit from the seller to provide for immediate
repairs and upgrades to the property.
This package contains available information received from the current owner
relating to the property location, description, rent roll, budget, and
investment strategies. Please refer to the ApartmentVestors Fund 1
Operating Agreement and Private Placement Memorandum for risk factors
and other information. In addition, an independent inspection and report are
being completed. Thorough information has been secured form sources that
appear to be reliable; however, no representation by CAM, either expressed
or implied, is made as to the accuracy of any information on this property. All
information contained herein is further subject to correction, modification or
Sun Gate Apartments Overview
Sun Gate is an opportunity
for an investor to purchase a
quality multifamily property at a
very attractive purchase price
with great existing cash flow and
significant upside potential.”
“
Stock Photo
![Page 4: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/4.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 4
withdrawal without further notice.
Funds applied as an investment in this transaction will be applied and used for
the acquisition of this property, corresponding expenses, acquisition costs,
and property improvements, if any, as shown on the Pro-forma Acquisition
Expense table in this package.
Executive Summary
The acquisition of Sun Gate apartments provides ApartmentVestors Fund 1,
LLC, the opportunity to acquire a high-quality multifamily property, at a very
attractive purchase price, with value enhancement opportunities, with great
visibility, in the solid submarket of Kansas City, Gladstone, MO.
Sun Gate offers revenue enhancing opportunities including:
“Leasing up” to Market Occupancy
Bringing Rents up to Current Market Rental Rates
Management efficiencies including tighter expense control
Additional Revenue Enhancement Opportunities
Overview
Sun Gate is a multifamily property built in 1970 with 72-unit garden-style,
market-rate community located right on the highly trafficked 68th and
Broadway (over 15,000 cars daily) in Gladstone, Missouri. Sun Gate is right
across the street from Kindred Hospital and just minutes from shopping,
dining, employment, and minutes from 5 major highways (US 169, Interstate
29, Interstate 435, Interstate 35, and US 71).
Gladstone is a suburb of Kansas City. Gladstone’s population is 26,365 and is
considered part of Kansas City’s metro population of over 2.1 million people
(2010 Census). Gladstone is just minutes from downtown Kansas City.
Because of the unique nature of Gladstone’s local economy, Sun Gate offers
investors numerous promising features to be capitalized upon.
» First, it is located within close proximity to Kansas City, shopping, entertainment, jobs, and major highways.
» Located right in our own “backyard” will allow us to give it significant attention.
Sun Gate Apartments Overview
![Page 5: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/5.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 5
» The property's size allows for efficient use of staff.
» There is a clear opportunity to improve “the face of the property” both in marketing, curb appeal, and in on-site management presentation.
» $200,000 repair and upgrade credit from Seller to provide for strategic capital upgrades and asset protection.
» The property cash flow’s strongly at current rental rates way below market1.
» There is a clear opportunity to raise rents to market levels of $75-$160 per month per unit more than current rental rates.
» Purchased from long-term (15 years) out of town owners, giving us many opportunities to improve marketing, operations, and value.
» Leasing-up the property to market occupancy rates (approximately 94%)
» Utilizing "revenue enhancement" pricing to include additional revenue for water, trash, and covered parking.
Property Description
Sun Gate consists of all two bedroom units with one and a half bathrooms.
The complex location provides great drive-by visibility, easy access to all the
area attractions, entertainment, and employment. There is a pool, clubhouse,
playground, and a laundry facility on site. Each unit has a large kitchen with a
dishwasher and extra hallway storage.
Property & Unit Amenities:
» Swimming Pool & Playground
» Water, sewer, and trash included
» Huge floor plans with spacious kitchens complete with dishwashers
» Private Covered Balconies or Porches
» On-Site Laundry Facility
» Close to KC’s Attractions, Entertainment, Highways, and Employment Centers
» On-Site Management
» Quiet Setting with scenic views
» “All-Electric” utilities that tenants pay
» Half bathroom in master suite
» Extra storage closets with each unit, covered parking options
Sun Gate Property Description
1 It is anticipated that depreciation
expense (which is a non-cash deduction)
may offset current taxable income such
that the current distributions received
will be equivalent to an after-tax yield.
If one were to invest in an alternative
investment that did not have
depreciation expense shielding current
taxable income, to achieve a similar
after-tax yield of approximately 10%,
assuming a 35% tax rate, the pre-tax
yield would need to be approximately
15%.
![Page 6: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/6.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 6
Property Overview
Year Built 1970 Foundation Concrete Slab
No. of Stories 3 No. of Parking
Spaces
144
Building SF 72,575 # of Buildings 7
$ per SF $34.45 $ per Unit $34,722
Leasing Office Yes Pool Yes
HVAC Central Washer/Dryer On-Ste Facility
Roofs Pitched, Composite Fire Protection Smoke Detectors
Location Overview
Sun Gate is an attractive, well-designed and appointed community located on
the busy 68th and Broadway traffic way with great drive-by visibility. It is
located directly across the street from Kindred Hospital. Sun Gate is just
minutes from downtown Kansas City and numerous shopping, dining,
entertaining, and employment opportunities. Sun Gate has great access to 5
major highways that go throughout Kansas City.
Gladstone, MO is considered part of the 25th largest metropolitan market in
the country, Kansas City. Gladstone has over 26,000 full-time residents and
the Kansas City metro area is over 2.5 million.
Gladstone’s unemployment rate in August 2012 was 6.8% in comparison to
the National unemployment rate of 7.8%. Gladstone, MO boasts a very strong
rental market with a 5.8% rental vacancy rate (US Census).
Gladstone is located within Clay County, Missouri. The city of Gladstone was
awarded the national designation of “All-America City” on June 6th, 2008.
Gladstone was one of only 10 communities nationwide to receive this coveted
award in 2008. The All-America City Awards recognize communities for
collaboration, inclusiveness, and successful innovation. All-America Cities
demonstrate community-wide civic accomplishments, cross-sector
cooperation, grassroots participation, and creative approaches to issues facing
communities.
Property Description & Overview
![Page 7: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/7.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 7
Investment Plan
Sun Gate apartments offers a unique opportunity to buy a quality multifamily
property that is very well located, has great potential curb appeal, good
amenities, and with a repair credit for immediate capital improvements and
upgrades. Sun Gate is being purchased at a very attractive price point and
strong cash flow at current operation levels with multiple value-add
opportunities to significantly increase the value and cash flow of the
investment. The most significant opportunity is to bring Sun Gate up to
market rental rates (currently $75-160 per unit per month under market
rents), however Sun Gate already produces strong cash flow and the success
of our investment plan does not rely on achieving market rental rates. Other
value-add opportunities include replacing poor management, leasing up to
market occupancy, and adding additional revenue.
Cullor Asset Management plans on immediately deploying capital
improvements aimed at asset protection, increasing curb appeal, interior
renovations to bring current rents up to market rent levels, and to control
future expenses. These capital improvements are essential and will allow us to
significantly improve the property and its financial performance which will
enhance investor returns.
An aggressive marketing and rebranding strategy will be implemented on the
property to enhance its appeal to potential renters. This includes an aggressive
lease-up strategy complete with a new web site, marketing materials,
aggressive on-line marketing, resident referrals, an improved exterior and
interior, and preferred employer programs.
We plan on holding Sun Gate for 3-7 years and then either selling the property
at a maximized value or refinancing (returning the investors initial investment)
and holding for long term. During the hold period investors will benefit from
any cash flow, appreciation, loan principal pay down and the tax benefits such
as depreciation.
Investment Plan
Sun Gate already produces
strong cash flow and the
success of our investment
plan does not rely on
achieving market rental
rates.”
“
![Page 8: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/8.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 8
Investment Highlights
Purchase Price
$2,500,000 or $34,722 per unit and $33.07 per square foot (SF), which includes
$200,000 in capital improvements and strategic upgrades to the property that are
being funded by the Seller at closing. Therefore, investors will be investing in a
property that will be significantly improved shortly after acquisition.
ApartmentVestors Fund 1, LLC Equity
$747,000 (estimated) total equity including all closing costs, fees, reserves, and
capital upgrades.
Mortgage Financing
To be determined, but preliminary conversations with major local and regional
lending institutions indicate that the property will qualify for financing consisting
of 75% loan to value and a 5 to 10 year fixed term with 25 year amortization and
interest rates that are currently under 5.00%. We will lock rates after the due
diligence is completed to satisfaction. Current financing is very favorable for
quality multifamily properties such as Sun Gate.
Marketing Plan
Sun Gate apartments have great drive by traffic (over 15,000 daily2) and street
visibility. Because of that visibility, the first focus will be improving the curb
appeal. Exterior paint, additional lighting, new landscaping, signage, adding flags,
and adding shutters will dramatically improve the exterior looks and perception
from potential tenants. Once we make the noticeable upgrades to the outside of
the property and clean up the current clutter, the building itself will be our main
marketing tool.
In addition to the curb appeal, we plan on using our proven online and off-line
marketing program for lead generation. The online focus will be to create a new
website for the property focused on lead generation in addition to utilizing free
online advertising and resources. Offline we will be creating all new marketing
materials for the property including updated signage, new brochures, and
implementing a resident referral program will bring in highly qualified potential
residents to Sun Gate.
Investment Highlights
Stock Photo
2 Please see traffic counts in
Demographic overview starting on Page
22.
![Page 9: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/9.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 9
Capital Improvement Plan
Overall, the property is in average condition for the area, but could really benefit
from strategic capital improvements in order to force appreciation. These
strategic capital improvements will allow us to improve the tenant profile, capture
market rental rates, provide asset protection, and potentially increase the
property’s value significantly. The roof’s were completely replaced 3 years ago
and are in great condition.
Upon purchase, we plan on instituting a capital improvement plan to increase the
property’s curb appeal, asset protection, and to increase the investments value by
eliminating major expenses. The capital improvements are being funded at closing
by the Seller leaving a repair and upgrade credit for the property of $200,000. We
believe by improving the exterior curb appeal we will attract a higher-quality
tenant and be able to raise apartment rent significantly. Also, by eliminating some
major future expenses we will be better able to control costs and increase the
investment’s value. Below is a summary of the anticipated capital improvements.
Capital Improvement Area Estimated Cost
Exterior
- Landscaping Upgrades
- Sidewalk replacement
- Signage Upgrades
- Pool Improvements
- Clubhouse Improvements
- Parking Lot Reseal & Stripe
- Parking Garages Repair
- Paint & Adding Shutters
- Playground Equipment
- Lighting Improvements
- Misc. Repairs
$100,000
Interior
- Flooring Replacement
- HVAC Replacements
- Hallway Improvements
- Half Bath Vanity Upgrades
- Appliance Replacement
- Adding Two-tone paint
- Upgraded lighting
- Chair rail in dining area
$100,000
Total $200,000
Capital Improvement Plan
![Page 10: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/10.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 10
Why is Sun Gate’s Current Performance Lacking?
We believe that Sun Gate has suffered recently from an absentee owner who left
the KC area after his divorce and moved 6 hours away about 3 years ago. He has
owned the property for 15 years and is ready to move on. He comes up one day a
week to run the property and has not been able to give it the attention it deserves.
The property is currently being almost exclusively managed by the maintenance
man with little oversight. Before the divorce, Sun Gate was being managed by the
owner’s wife who kept the property full and on top of maintenance issues. There is
no investment real estate asset class that suffers more from a lack of good
management than multifamily apartments and Sun Gate is no exception. Because
of the current owners lack of interest in the property, he has not kept rental rates or
maintenance up to the standards it should be and is renting exclusively on price and
as little effort as possible.
Why will we be successful?
We believe we will be very successful with Sun Gate due to our experience,
proximity to the asset, knowledge of the market, and ability to manage, market, and
lease multifamily properties efficiently. We see no reason why Sun Gate cannot be
one of the most desirable apartment complexes in the area once the capital
upgrades are completed.
At our purchase price, based on current operations, Sun Gate already provides great
cash flow which can meet investor returns. However, we believe we can greatly
improve those returns with efficient and effective management and strategic
upgrades to the physical property. We feel Sun Gate offers a great opportunity in
its current state, which will only be enhanced with our operational, marketing,
construction, and management expertise.
We feel strongly that by rebranding the marketing, applying aggressive online and
local marketing efforts we can lease the property to market occupancy levels
quickly and start to raise rental rates. Our tenant outreach programs will also help
keep our current tenants and reduce turnover.
Property Description & Overview
![Page 11: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/11.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 11
Property Location
Sun Gate Apartments
6829 North Broadway Avenue
Gladstone, Missouri 64118
» Gladstone, Missouri is part of the North Kansas City Metro area.
» Gadstone is within 30 minutes of almost anywhere in the Kansas City Metro area.
Property Location
![Page 12: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/12.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 12
Notable Employment, Shopping, and Entertainment is just a short drive away.
5 Minute Drive Time 10 Minute Drive Time 15 Minute Drive Time
1. Sun Gate
Apartments
2. Briarcliff Village –
High end shopping
center
3. Kindred Hospital
4. Creekwood
Commons
- Hyvee, Gordmans,
24 Hour Fitness,
Starbucks, Chipotle,
Panera, etc.
5. Vivian Oaks Center
- Office Max, Lowes,
Home Depot, Sams
Club, Price Chopper,
Car Dealerships, etc.
6. Down Town KC
Airport
7. Down Town KC
- KC Power and Light
District, Sprint
Center, H&R Block,
KC Convention
Center, Nelson
Performing Arts
Center, Crown
Center, etc.
8. Truman Sports
Complex
- KC Royals Stadium
- KC Chiefs Stadium
9. The Plaza
5, 10, & 15 Minute Drive Time
![Page 13: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/13.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 13
Exterior Pictures
Sun Gate Pictures
![Page 14: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/14.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 14
Sun Gate Pictures
![Page 15: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/15.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 15
Apartment Interiors
Sun Gate Pictures
![Page 16: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/16.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 16
Unit Mix & Rent Schedule
Unit Mix Units Sq Ft
(SF)
Rent/
Month
Rent/ SF Total SF GPRI* GPRI/
Month
2 Bed
1.5 Bath
72 1000 $495 $0.49 72,000 $432,000 $36,000
Total/Avg. 72 1000 $495 $0.49 72,000 $432,000 $36,000
*GPRI – Gross Potential Rental Income
Sun Gate is unique in that it has all 2 bedrooms, 1 and a half bath apartments that
are all considered “big” for the market. It also has plenty of additional storage for
tenants which are also highly desirable. We prefer this unit type in this submarket
as it is highly desirable (especially the extra half bath) and attracts a longer-term,
more stable tenant and tenant base.
Additional Revenue Opportunities
Sun Gate has several additional revenue opportunities that are not currently being
optimized. There are 14 garages that can be better utilized and rented for extra
revenue. They could be rented for $25 per month to tenants. We also believe
there are opportunities to increase the revenue by adding premium pricing for
ground floor units or those with a great view in addition to adding a small monthly
charge for water and trash on top of the base rent.
Floor Plan
Rent Schedule & Revenue Opportunities
![Page 17: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/17.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 17
Rent Comparables – Competitive Summary*
Property Type
BR/BA
Square
Feet
(SF)
Monthly
Rent
Monthly
Rent/SF
Location Property
Condition
1. Sun Gate 2/1.5 1000 $495 $.49
2. Willow Glen 2/1.5 864 $647 .75 Worse Better
3. Gladstone
Village
2/1 850 $550** .65 Worse Worse
4. French Riviera 2/1.5 835 $595
$.71
Worse Worse
5. Tanglewood 2/1
2/2
900 1116
$630 $660
$.70 $.59
Same Better
6. Broadway
Village
2/1 900 $515 .57 Worse Worse
7. Regency North 2/1 957 $610 .64 Same Worse
8. Vivian Oaks 2/1.5 1000 1300
$675 $825
.68
.63 Better Equal
Average Market
Rent
984 $645 .66
Sun Gate @
Current Market
Rent
2/1.5 1000 $660 .66
*Current Rental Rates, Square Footage, and Terms were verified by phone on 10/24/2012 and are
subject to change.
Rent Comparables Summary
Sun Gate currently offers rental rates that are very low (30%+ below market)
compared to competing properties. It has very big unit sizes with above average
square footage, plenty of extra storage and an extra half bath in the master
bedroom. This unit type and size is very desirable in the market. During our
rental survey phone interviews to competing properties, it was almost
impossible to find a two bedroom apartment available without having to wait at
least a month or more. It was unusual to find a two bedroom available with
Rent Comparables – Competitive Summary
* The rent survey was conducted by
Cullor Asset Management through
phone interviews during the week
of October 26th, 2012 with the
respective property managers. All
numbers were self-reported by the
respective properties.
**Residents also have to pay shared
gas on top of base rent which
ranges from 50-100 per month in
addition to normal electric bill.
![Page 18: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/18.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 18
more than 1 bathroom.
Current rental rates at Sun Gate average approximately $495 per unit, per
month. During our rental survey, it was very hard to find a two bedroom unit
below $600 a month. The ones that did offer a rental rate below $600 were
either very poorly maintained, poorly located, or had long waiting lists indicating
either lazy management or rental rates that are too low for the market. Our
rental survey indicated the market rental rate was $.66 per square foot. Since
the unit size at Sun Gate is bigger, we believe it might bring down the per square
foot rate a little, however we believe the current rental rate is somewhere
between $.60 and $.66 per square foot, which would bring rents up to $600 to
$.660 per month. This would be an increase of $100 to $160 per month or up to
33%. We believe to achieve these rental rates, we will have to improve the curb
appeal and interiors of the apartments (see the Capital Improvements plan). We
believe we will be able to achieve much higher rental rates and occupancy once
the capital improvement plan has been implemented.
We will immediately upgrade vacant units and lease them at higher rates while
raising current tenant’s rental rates more gradually over time. Our experience
has shown that current tenants will accept gradual increases, but will be
resistant to bigger ones. We will have to “turn” and replace a lot of the current
tenants over the first two years leading to a higher initial turnover rate.
However, we feel the turnover rate will be greatly reduced after the initial
increases. We have a plan in place to replace those tenants with those of a
higher tenant profile and at a higher rental rate.
Another very desirable feature is that this is an “all electric” apartment complex
and tenants do not have to deal with gas service as they have to with several
competing properties. This is definitely an advantage.
Sun Gate’s location is also very good and has very high drive-by traffic and very
good “walk-in” rental traffic. This will lower our marketing costs and allow us to
keep the property at market occupancy levels. According to the US Census the
market occupancy for rental units in Gladstone is approximately 94% across all
properties, making it a very solid rental market.
There are no new multifamily properties being planned or built in Gladstone
currently, however there is at least one major renovation of a current property
taking place.
Rent Comparables – Competitive Summary
![Page 19: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/19.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 19
Property Taxes
Property Taxes Land Improvements Total Assessed
Value
Estimated
Property
Taxes
Current $489,600 $924,200 $1,413,800* 268,620 $18,934
Residential Properties in Clay County, Missouri are assessed at 19% of value
At Sale Price
$2,500,000 $475,000 **$24,398
Property taxes in Clay County, Missouri are re-assessed every two years during
odd number years based on the value on January 1st. They are scheduled to be re-
assessed on January 1st, 2013. We plan on delaying the closing until right after the
start of the year so that the property should not be re-assessed at the sale price
until January 1st, 2015, allowing us to save money in property taxes over the next
two years. However, this cannot be guaranteed. Residential property taxes are
assessed at 19% of the market value and Mill rates change every year.
Property Taxes
* Valuation was based on sale price
15 years ago.
**This is only estimated based on
current Clay County current mill
rates and subject to change.
![Page 20: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/20.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 20
Financial Overview
![Page 21: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/21.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 21
Financial Overview
Expense Comparison – Current vs Year 1 Budget
Summary of Projected Cash flow Returns
3 It is anticipated that depreciation
expense (which is a non-cash deduction)
may offset current taxable income such
that the current distributions received
will be equivalent to an after-tax yield.
If one were to invest in an alternative
investment that did not have
depreciation expense shielding current
taxable income, to achieve a similar
after-tax yield of approximately 10%,
assuming a 35% tax rate, the pre-tax
yield would need to be approximately
15%.
![Page 22: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/22.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 22
Financial Overview
Year 1 Budget Additional Details:
» Gross Potential income reflects a $500 average rent per unit, which is conservative.
» Occupancy levels reflect 92% average occupancy.
» Property taxes were kept level as they were recently reduced and because we are closing after January 1st, they should not be re-assessed until January 2015 according to Clay County, MO.
» Administrative expenses were increased to more reasonable levels.
» Standard management fees were added to pay for professional property management.
» The current owners treated capital expenses, capital replacements, and repairs and maintenance expenses as repair items. We have taken out the capital replacements and put them in their own category to represent standard multifamily accounting practices.
» Marketing was increased for online advertising, printing of materials, etc.
» Utility expenses reflect current operation levels.
» Contract Services were increased to budget for snow removal and more thorough lawn care.
» Payroll was increased to account for a full-time maintenance person and part-time leasing agent.
» Capital Replacement Reserves will be funded in order of $350 per unit per year to account for aging HVAC, appliances, carpet, and other capital replacements that are being anticipated.
![Page 23: ullor Asset Management, LL • P.O. ox 14763 Lenexa, KS ...apartmentvestors.com/blog/wp-content/uploads/2015/... · visibility, easy access to 3 major highways, and large and desirable](https://reader036.vdocuments.site/reader036/viewer/2022063006/5fb5d05b9ae0c748842e3853/html5/thumbnails/23.jpg)
THIS IS NOT AN OFFER TO SELL SECURITIES. This document does not provide the detailed information in the Private Placement Memorandum, which investors must read prior to investing. To receive a Private
Placement Memorandum all parties must complete the Offeree Questionnaire, be qualified to invest, and have a substantive pre-existing relationship. All the information in this document is believed to be accurate but
is not guaranteed, nor indicative of future results.
Page | 23
Gladstone, MO Demographic Information
For demographic information, traffic counts, and additional information, please
refer to the members area of ApartmentVestors.com