Offering Memorandum - LoopNet

a Berkshire Hathaway and Jefferies Financial Group company

Berkadia.com

RICK L. VIDRIOManaging [email protected]

JASON KRUGManaging [email protected]

KEVIN P. DILLONSenior Managing [email protected]

RICK BRACESenior [email protected]

CHARLEY [email protected]

CARLY [email protected]

CORY [email protected]

INVESTMENT ADVISORS

Offering Memorandum

This text is here to lock in the rotation orientation. It has to be longer than the tab texts in order to register so I'm padding this not as much as possible

DAVID SIBBOLD | Managing Director | 248.208.0522 | [email protected]

TERENCE HALVERSON | Managing Director | 248.208.0521 | [email protected]

FINANCING

INVESTMENT ADVISORS

Prime Location

Excellent Apartment Amenities

Outstanding Historical Occupancy / Strong Rental MarketMetrics

Resident Paid Utilities

Upside Potential

New Financing Optionality

For Real-Time Property Information visit:

Petoskey76.BerkadiaREA.com

PROPERTY HIGHLIGHTS









High Occupancy History

100% Occupied with Wait List

Financial Analysis 20

Market Positioning 24

Location and Market Overview 34

The Opportunity 5

Glen Haven 8

Pinecrest 14

TABLE OF CONTENTS



THE OPPORTUNITY


Prime Location: The properties are in the luxury resort town of Petoskey, Michigan. Petoskey

serves as the county seat and is the economic hub of Emmett County. Located less than two

miles north of the properties is Petoskey’s largest employer, McLaren Northern Michigan. This202 bed hospital supports almost 1,000 healthcare jobs. Odowa Casino Resort, another large

employer, has been in operation since 2017 and is less than one mile away.

Excellent Apartment Amenities: Glen Haven and Pinecrest offer large two-bedroom, two-

bath units ranging from 1,000 to 1,120 square feet, averaging 1,018 square feet. Each

apartment home includes full-size washer / dryer, a balcony /patio and fully-equipped kitchens.

Glen Haven also includes a two-car attached garage and vaulted ceilings.

Outstanding Historical Occupancy: The property has averaged close to 100% occupancy

with a waiting list for the past 5 years.

Strong Rental Market Metrics: The market currently exceeds 96% occupancy with strong

annual rent growth.

Resident Paid Utilities: Residents are responsible for gas, electricity and water.

Upside Potential: The owners have been approved to develop an additional 10 units at the

Glen Haven property. There is also the opportunity to institute strategic upgrades to the unit

interiors.

New Financing Optionality: The property is offered free and clear. Low interest rates and

long-term debt with maximum leverage provides an opportunity to maximize cash flow and

generate double-digit cash-on-cash returns.

THE OPPORTUNITY

TH

E O

PPO

RTU

NIT

Y

PETO

SK

EY 7

6

6


LOCAL POINTS OF INTEREST AERIAL

1

TH

E O

PPO

RTU

NIT

Y

PETO

SK

EY 7

6 7Petoskey76.BerkadiaREA.com


GLEN HAVEN905 Glen Haven Circle / 50 Units / Built 2004


PROPERTY SUMMARY

Units: 50

Year Built: 2004

Metering: Individually Metered

Parking: 50 Attached Two-Car

Garages; 40 Surface

Spaces

Total SF: 50,840

Average Unit SF: 1,017

Site Acreage: 9.0

Density:

Parcel Number(s):

Type of Buildings:

HVAC:Hot Water:

Roofs:

5.5624-01-19-07-400-035,

036, 03713 Ranch Style Forced

AirIndividual

Pitched, Asphalt

Shingles

PROPERTY SUMMARY

Glen Haven is a beautiful 50-unit, ranch-style apartment community located in the wonderful resort city of Petoskey,Emmet County, Michigan. Built in phases from 2004 through 2008, the property's 13 buildings feature wood-frameconstruction with vinyl exteriors, and pitched roofs with asphalt shingles. Glen Haven consists of 50 two-bedroom unitsranging in size from 1,000 to 1,120 square feet, for an average of 1,017 square feet per unit. The property offers acondominium like setting. It is attractively landscaped with well-maintained grass areas, trimmed shrubs, and colorfulflowerbeds. Each apartment home is serviced by individual gas forced air furnaces with central air conditioning andwater heaters. Landlord provides water and sewer and trash removal. Residents are responsible for electric, gas andcable. The property has recently raised market rents and began charging a flat $45/month fee to cover the cost of waterand sewer usage. Unparalleled unit amenities include two-car attached garage, washer / dryer, individual entrances,fully equipped kitchens with dishwasher, disposal and built-in microwave, private patios, vaulted ceilings and pavedfitness trail. This property offers additonal land to build up to 10 units.

Glen Haven is located just south of Downtown Petoskey and is within walking distance of a variety of shopping, diningand entertainment venues. Situated near the shores of Lake Michigan, the residents of Glen Haven have the opportunityto partake in the abundance of outdoor recreation activities, including the 26-mile Little Traverse Wheelway, fishing,swimming, and boating as well as winter activities like, sledding, ice hockey, the and the Midwest's best downhill skiing.

1

GLE

N H

AVEN

PETO

SK

EY 7



PROPERTY BOUNDARY AERIAL

GLE

N H

AVEN

PETO

SK

EY 7

6

10


Air Conditioning

High-Speed Internet Access

Cable-Ready

Spacious Walk-In Wardrobe Closet

Fully-Equipped Modern Kitchen with Dishwasher, Disposal, and

Built-In Microwave

Full-Size Washer and Dryer

Attached 2-Car Garage

Balcony / Patio

Private Deck and Covered Porch

Vaulted Ceiling

Ceiling Fan

COMMUNITY AMENITIES

Paved Fitness Trail

Convenient Curbside Trash Pickup

Complimentary Lawn Maintenance and Landscaping

Snow Removal

Disability Access

UNIT AMENITIES

1

GLE

N H

AVEN

PETO

SK

EY 7



TWO BED / TWO BATH

1,345 SF

TWO BED / TWO BATH

1,122 SF

FLOOR PLANS

GLE

N H

AVEN

PETO

SK

EY 7

6

12


905 GLEN HAVEN CIRCLE

PETOSKEY, MI 49770

1

GLE

N H

AVEN

PETO

SK

EY 7

6 13


PINECREST1297 La Chaumiere / 26 Units / Built 2003


PROPERTY SUMMARY

Units: 26

Year Built: 2003

Metering: Individually Metered

Parking: 28, One-Car Garages

Total SF: 26,520

Average Unit SF: 1,020

Site Acreage: 6.5

Density: 4.0

Parcel Number(s): 24-01-19-07-150-003

Type of Buildings: 3, Two-Story Garden

HVAC: Forced Air

Hot Water: Individual

Roofs: Pitched, Asphalt

Shingles

Exterior: Stone and Vinyl

PROPERTY SUMMARYPinecrest is an immaculate 26-unit, garden-style apartment community located on the south side of the desirable resort city ofPetoskey, Michigan. Built in 2003, the property's three buildings feature wood-frame construction with vinyl exteriors and stoneaccents as well as pitched roofs with asphalt shingles. Pinecrest consists of two-bedroom units measuring 1,020 square feeteach. The property is attractively landscaped with well-maintained grass areas, trimmed shrubs, mature shade trees, andcolorful flower beds. Each apartment home is serviced by individual gas forced air furnaces with central air conditioning andwater heaters. Landlord currently provides water and sewer and trash removal. Residents are responsible for electric, gas andcable. The property has recently raised market rents and began charging a flat $45/month fee to cover the cost of water andsewer usage. Stellar unit amenities include, full-size washer / dryer, modern kitchen with dishwasher, disposal, maple finishingand vanity cabinets, patio / balcony with storage, private deck, intercom with electric lock guest entry door, spacious walk-inwardrobe closet in each bedroom, cable-ready in the living area and in each bedroom and one-car garage with electronicopener.

Pinecrest is located just south of Downtown Petoskey and is within walking distance of a variety of shopping, dining andentertainment venues. Situated near the shores of Lake Michigan, the residents of Glen Haven have the opportunity to partakein the abundance of outdoor recreation activities, including the 26-mile Little Traverse Wheelway, fishing, swimming, andboating as well as winter activities like, sledding, ice hockey, the and the Midwest's best downhill skiing.

1

PINECREST

PETO

SK

EY 7



PROPERTY BOUNDARY AERIAL

PINECREST

PETO

SK

EY 7

6

16


Air Conditioning

Full-Size Washer and Dryer

Modern Kitchen with Dishwasher, Disposal, Maple Finishing and

Vanity Cabinets

Gas Furnace and Private Water Heater

Intercom with Electric Lock Guest Entry Door

Spacious Walk-In Wardrobe Closet in Each Bedroom

Balcony / Patio

Private Deck

Cable-Ready Throughout

One Car Garage with Electronic Opener

COMMUNITY AMENITIES

Complimentary Lawn Maintenance, Landscaping

Snow Removal

Controlled-Entry Community

UNIT AMENITIES

1

PINECREST

PETO

SK

EY 7



2 BED / 2 BATH

1,020 SF

FLOOR PLANS

PINECREST

PETO

SK

EY 7

6

18


1297 LACHAUMIERE

PETOSKEY, MI 49770

1

PINECREST

PETO

SK

EY 7

6 19


FINANCIAL ANALYSIS


IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Berkadia® and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Berkadia® employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions.

© 2018 Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc.Berkadia® and Berkadia Commercial Mortgage® are trademarks of Berkadia Commercial Mortgage LLC. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. In California, Berkadia Real Estate Advisors Inc. conducts business under CA Real Estate Broker Lic. #01931050, Berkadia Commercial Mortgage LLC under CA Finance Lender & Broker Lic. #998-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx

All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

Units Type Unit SF Total SF

Market

Rent

Monthly

Mkt Rent

Annual

Mkt Rent Rent/SF40 1,000 40,000 $1,150 $46,000 $552,000 $1.156 1,060 6,360 $1,150 $6,900 $82,800 $1.084 1,120 4,480 $1,150 $4,600 $55,200 $1.0326

2 Bed / 2 Bath - G/H2 Bed / 2 Bath - G/H2 Bed / 2 Bath - G/H

2 Bed / 2 Bath - Pinecrest 1,020 26,520 $990 $25,740 $308,880 $0.9776 1,018 77,360 $1,095 $83,240 $998,880 $1.08

IncomeBerkadia

ProForma

July 2018

Trailing -12

Actuals

2017

Actuals

2016

Actuals

2015

Actuals

$1,095 $1,095 $1,047 $1,047 $1,047SMR Per UnitScheduled Market Rent $998,880 $998,880 $954,600 $954,600 $954,600

5.54% ($55,380) ($96,155) ($25,542) ($81,721) ($75,551)

5.00% ($49,944) $0 $0 $0 $0 Less: Loss-to-Lease Less: Vacancy Plus: Year-One Rent Growth $55 5.00% $49,944 $0 $0 $0 $0

Net Rental Income $943,500 $902,725 $929,058 $872,879 $879,049

Plus: RUBS Income ($45 month Water/Sewer Utility Charge) $41,040 $0 $0 $0 $0$0 $19,400 $2,408 $23,103 $0 Plus: Other Income

Total Operating Income (EGI) $984,540 $922,125 $931,466 $895,982 $879,049

Expenses Per Unit

$199 $15,100 $12,452 $24,341 $26,917 $12,396$18 $1,400 $383 $383 $360 $542

$500 $38,000 $0 $0 $0 $0$800 $60,800 $88,016 $95,223 $110,691 $113,535

4.00% $518 $39,382 $52,000 $34,000 $34,000 $30,000$699 $53,100 $54,500 $52,714 $53,461 $61,337$114 $8,700 $8,598 $8,580 $10,080 $3,660

$1,698 $129,069 $112,735 $120,987 $107,040 $90,027$325 $24,700 $31,198 $32,763 $25,400 $20,509

AdministrativeAdvertising & PromotionPayrollRepairs & Maintenance/TurnoverManagement FeeUtilitiesContracted ServicesReal Estate Taxes (Increase from TV to SEV)InsuranceReplacement Reserve $250 $19,000 $19,000 $19,000 $19,000 $19,000

Total Expenses $389,251 $378,882 $387,991 $386,949 $351,006

Per Unit: $5,122 $4,985 $5,105 $5,091 $4,618Per SF: $5.03 $4.90 $5.02 $5.00 $4.54

Net Operating Income $595,289 $543,243 $543,475 $509,033 $528,043

1

FIN

AN

CIA

L AN

ALY

SIS

PETO

SK

EY 7

6

FINANCIAL ANALYSIS

21


Introduction – The following tables and narrative summarize the assumptions for projecting Cash Flow Detail for the Petoskey 76 apartments. The assumptions are supported by Historical Financials and Berkadia market research of competing properties.

Underwriting Pro Forma: Based on actual historical Operating Statements for Year End 2015 through Trailing-12 Month July 2018, Rent Growth Projections, Value-Add Opportunities, and Berkadia Assumptions.

Additional Value-Add Opportunity: Built in phases from 2003 through 2008, Petoskey 76 has had consistent high Occupancy. Even though the properties are well maintained with longterm residents and low turnover, strategic unit upgrade will provide a wide range of finishes and the prospect of higher then current Market Rents. The prospect of investing an additional $2,500 to $7,000 in per unit cost upgrades, $75 - $250 per unit rent increases yielding an estimated annual ROI of 20% to 25%.

Notes to Pro Forma: Notes to the Berkadia Pro Forma provide supplementary details regarding the financial modeling Income and Expense Assumptions for the Petoskey 76 apartments.

INCOME Scheduled Market Rent: The Current Market Rents used in the Pro Forma were established on September 1, 2018 and have included a Loss-to-Lease based upon these Market Rents. Loss to Lease / Vacancy: Due to the accounting process of current net rental income collected, it is assumed that the historic Loss-to-Lease shown includes any Vacancy figures unaccounted. Currently there are no vacant units at either phase of this property. The overall Market Occupancy for comparable properties are between 95-97%; therefore, the Berkadia Pro Forma reflects a required vacancy figure of 5% for underwriting standards. Concessions / Bad Debt / Non-Revenue Units: These items are not applicable due to the stable nature of the tenancy. Berkadia did not include them in its Pro Forma. RUBs (Utility) Income: RUBs (Utility) Income was recently implemented to require both renewing and new residents pay a $45 per month fee to help cover the cost of water and sewer. The projected income from this source is expected to be $41,040 for the second year of operation. Fee and Other Income: Historic figures for Other Income is based upon income derived through other properties and investments previously owned by the current ownership; and therefore, not applicable to Berkadia’s Pro Forma.

EXPENSES Operating Expenses: Trailing-12 July 2018 combined Operating Expenses for the Petoskey 76 properties were $378,882 ($4,985 per unit) which includes an allocation for Reserve for Replacement of $19,000 ($250 per unit). Year End 2015-2017 Operating Expenses were $351,006 ($4,618 per unit), $386,949 ($5,091 per unit) and $387,991 ($5,105 per unit) respectively. Historic Repairs and Maintenance / Turnover costs include a part time manager / maintenance couple along with expenses, both recurring and non-recurring capital improvements for these and other properties in the owners current portfolio. Berkadia’s Pro Forma expenses are based on an analysis of expenses per unit ratios for similar properties. Administrative: Administrative costs for this property averaged between $164-$354 per unit on the 2015 Year End through Trailing-12 through July 2018. Berkadia averaged these figures in the Pro Forma to $199 per unit which is in-line with comparable properties. Advertising and Promotion: Limited if any Advertising and Promotion costs have been incurred; however, Berkadia’s Pro Forma includes an increase to $1,400 ($18 per unit). Payroll: Payroll costs are included in the historical Repairs / Maintenance and Turnover figures. However, for purposes of estabilishing Berkadia’s Pro Forma, projected future cost are similar to the current allocation of one part time Manager / Leasing Agent / Maintenance individual working part time (between both phases) and an additional part time individual performing janitorial work and house cleaning activities mostly at the Pinecrest asset. The staff payroll of $38,000 total breaks down as follows, $31,500 (25 hours per week at $25 per hour) and $6,500 (6 hours per week at $25 per hour). Repairs, Maintenance, Turnover, and Contact Services: The property has been very well maintained. However, the Berkadia Pro Forma includes a Repairs, Maintenance, Turnover figure of $60,800 ($800 per unit) as well as Contract Service of $8,700 ($114 per unit). These figures are due in part to the fact that most all other maintenance activities (other than the Payroll figures above) are performed by local licensed and insured contractors, with the property and ownership for a number of years. Management Fee: In the event that a new owner chooses to hire a outside management firm, Berkadia has included a 4% management fee that can be supported by GSE and other lender underwriting standards for properties of similar size and quality. Real Estate Tax: The Berkadia Pro Forma includes real estate taxes being increased to the 2018 State Equalized Value (Assessed Value) levels. See Tax Analysis for additional information. Insurance: The Insurance costs for the past four years have average $361 per unit. The Berkadia Pro Forma includes a slight decrease to $24,700 ($325 per unit) which is in line with comparable properties. Replacement Reserve: Based on the age and condition of the property, a $250 per unit Replacement Reserve was included.

FIN

AN

CIA

L A

NA

LYSIS

PETO

SK

EY 7

6

NOTES TO PRO FORMA

22


Taxable SEV

2018

2018 Summer 2017 Winter Total 1,503,354.00$ 1,511,700.00$ 20,594.60$$ 56,782.85$ 77,377.45$

$$ 150,390.00 $$ 242,100.00 $ 6,191.91

$$ 225,586.00 $ 227,700.00 $

1,648.04 $$

2,472.07 $$ 9,287.99

4,543.87 $

6,815.92 $

Real Estate Tax ID #24-01-19-07-400-035

24-01-19-07-400-036

24-01-19-07-400-037

Total $ 1,879,330.00 1,981,500.00$ 24,714.71$ $ 68,142.64 $ 92,857.35

*Adjusted to Current SEV 105.44% 97,905.55

Taxable SEV 2018 Summer 2017 Winter Total 8,215.76$ 749,717.00 $ 756,900.00 $ 22,652.26$$ 30,868.02$

Real Estate Tax ID #24-01-19-07-150-003

Total $ 749,717.00 $ 756,900.00 $ 8,215.76 $ 22,652.26 $ 30,868.02

100.96% 31,163.76

Note - Winter 2018 Taxes - Posted December 1, 2018 Due February 14, 2019

Actual RE Taxes Pinecrest Glen Haven-35

Parcels-36 -37

$ 2,472.07

$ 6,815.92

$

20,594.60 $ 16,474.49 $$

56,782.85 $ 45,423.06 $$

20,171.03 $ 16,135.64 $ 2,421.24

1,648.04 $

4,543.87 $

1,614.15 $

$ 57,056.98 $ 45,642.29 $ 4,565.85 $ 6,848.84

$ 2,399.64 19,991.12 $ 15,991.73 $ 1,599.75 $

$ 57,075.61 $ 45,660.62 $ 4,565.96 $ 6,849.03

$ 2,392.47 19,937.39 $ 15,949.95 $ 1,594.97 $

$ 55,881.64 44,705.43$ 4,470.45$ 6,705.76$

$

8,215.76 $$

22,652.26 $$

8,046.79 $$

22,761.61 $$

7,975.01 $$

22,762.13 $

7,951.17 $$

22,285.97 $$

7,825.95 $ 19,623.44 $ 15,698.77 $ 2,354.811,569.86 $

2015 Summer2014 Winter2014 Summer

HISTORICAL TAX FIGURES

PINECREST

2017 Winter2017 Summer2016 Winter2016 Summer2015 Winter

2018 Summer

GLEN HAVEN

*Adjusted to Current SEV

1

FIN

AN

CIA

L AN

ALY

SIS

PETO

SK

EY 7

6

REAL ESTATE TAX ANALYSIS

23


COMPARABLE RENTAL PROPERTIES


COMPARABLE RENTAL PROPERTIES SUMMARY

PROPERTY CITYDISTANCE (MI)FROM SUBJECT UNITS BUILT OCCUPANCY SF ASKING RENT RENT / SF

Glen Haven Petoskey 50 2006 100% 1,017 $1,150 $1.13

Pinecrest Petoskey 26 2004 100% 1,020 $990 $0.97

Bear Creek Meadows Petoskey 0.70 240 2006 98% 1,052 $1,031 $0.98

Hillside Club Apartments Petoskey 2.14 160 1999 98.2% 1,100 $920 $0.84

Petoskey Park Petoskey 2.33 12 1989 100% 786 $676 $0.86

Little Traverse Village Petoskey 2.23 72 1980 95.8% 814 $858 $1.05

Totals / Averages* 1.61 106 97% 984 $951 $0.97

*does not include subject

Bear Creek Meadows Hillside Club Apartments Petoskey Park Little Traverse Village

S

1

2

3

4

S

1

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6 25



GLEN HAVEN - Subject905 Glen Haven Circle Petoskey, MI 49770

UNITS: 50BUILT: 2006OCCUPANCY: 100%

UNIT MIX: UNITS TYPE SF ASKING RENT RENT / SF40 2/2.00 1,000 $1,150 $1.156 2/2.00 1,060 $1,150 $1.084 2/2.00 1,120 $1,150 $1.03

50 1,017 $1,150 $1.13

PINECREST - Subject1297 La Chaumiere Petoskey, MI 49770


UNIT MIX: UNITS TYPE SFASKING

RENT RENT / SF26 2/2.00 1,020 $990 $0.9726 1,020 $990 $0.97

2 Bed / 2 Bath 100%

2 Bed / 2 Bath 100%

S

S

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6

26



BEAR CREEK MEADOWS1600 Bear Creek LanePetoskey, MI 49770

DISTANCE (MI): 0.70UNITS: 240BUILT: 2006OCCUPANCY: 98%

UNIT MIX: UNITS TYPE SF ASKING RENT RENT / SF14 1/1.00 750 $895 $1.1914 1/1.00 870 $915 $1.0557 2/2.00 1,000 $1,010 $1.0125 2/2.00 1,000 $1,015 $1.0259 2/2.00 1,100 $1,015 $0.9223 2/2.00 1,100 $1,025 $0.9324 3/2.00 1,150 $1,150 $1.0024 3/2.00 1,250 $1,175 $0.94

240 1,052 $1,031 $0.98

HILLSIDE CLUB APARTMENTS501 Valley Ridge DrivePetoskey, MI 49770

DISTANCE (MI): 2.14UNITS: 160BUILT: 1999OCCUPANCY: 98.2%


RENT RENT / SF16 1/1.00 800 $785 $0.9896 2/2.00 1,100 $905 $0.8248 3/2.00 1,200 $995 $0.83

160 1,100 $920 $0.84

1 Bed / 1 Bath 12%

2 Bed / 2 Bath 68%

3 Bed / 2 Bath 20%

12%20%

68%

1 Bed / 1 Bath 10%

2 Bed / 2 Bath 60%

3 Bed / 2 Bath 30%

30%

60%

1

2

1

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6 27



PETOSKEY PARK2052 East Mitchell RoadPetoskey, MI 49770

DISTANCE (MI): 2.33UNITS: 12BUILT: 1989OCCUPANCY: 100%

UNIT MIX: UNITS TYPE SF ASKING RENT RENT / SF12 1/1.00 680 $570 $0.8410 2/1.00 850 $670 $0.7910 2/2.00 850 $810 $0.9532 786 $676 $0.86

LITTLE TRAVERSE VILLAGE301 Lafayette AvenuePetoskey, MI 49770

DISTANCE (MI): 2.23UNITS: 72BUILT: 1980OCCUPANCY: 95.8%


RENT RENT / SF8 1/1.00 660 $800 $1.218 1/1.00 660 $800 $1.218 1/1.00 660 $800 $1.2116 2/1.00 880 $885 $1.0116 2/1.50 880 $840 $0.9510 2/1.50 895 $840 $0.945 2/1.50 925 $954 $1.031 2/2.00 1,010 $1,800 $1.78

72 814 $858 $1.05

1 Bed / 1 Bath 38%

2 Bed / 1 Bath 31%

2 Bed / 2 Bath 31%

38%31%

31%

1 Bed / 1 Bath 33%

2 Bed / 1 Bath 23%

2 Bed / 1.5 Bath 43%

2 Bed / 2 Bath 1%

33%43%

23%

3

4

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6

28


TWO

BED

$1,200

$450

$300

$150

$0

Peto

skey

Park

|$7

40

Littl

e Tr

aver

se V

illag

e |

$887

Hill

side

Clu

bA

part

men

ts|

$905

Pine

cres

t|$9

90

Bear

Cre

ekM

eado

ws

|$1

,015

Gle

nH

aven

|$1

,150

$1,050

Average

$950

$900

$750

$600

COMPARABLE RENTAL PROPERTIES ANALYSIS

1

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6 29


Subject:

Glen Haven 905 Glen Haven Circle Petoskey, MI 49770

Little Traverse Village

301 Lafayette Avenue

Petoskey, MI 49770

4.

Petoskey Park

2052 East Mitchell Road

Petoskey, MI 49770

3.

Hillside Club Apartments

501 Valley Ridge Drive

Petoskey, MI 49770

2.

Bear Creek Meadows

1600 Bear Creek Lane

Petoskey, MI 49770

1.

Pinecrest

1297 La Chaumiere

Petoskey, MI 49770

COMPARABLE RENTAL PROPERTIES MAP

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6

30


COMPARABLE SALE PROPERTIES

UNIT MIX:

One Bedroom - 12%Two Bedroom - 68%Three Bedroom - 20%

BEAR CREEK MEADOWS


Petoskey, MI 49770

BUILT: 2006

UNITS: 240

PRICE / UNIT: $132,083

PRICE / SF: $125.55

AVG SF: 1,052

SOLD FOR: $31,700,000

CLOSED ON: 6/18

CAP RATE: 6.5%

UNIT MIX:

One Bedroom - 32%Two Bedroom - 68%

BURWICK FARMS

525 West Highland Road

Howell, MI 48843

BUILT: 1989

UNITS: 264


PRICE / SF: $103.99

AVG SF: 1,040

SOLD FOR: $28,550,000

CLOSED ON: 9/16

CAP RATE: 6.4%

S 1 2

PINECREST1297 La ChaumierePetoskey, MI 49770


GLEN HAVEN905 Glen Haven CirclePetoskey, MI 49770


S

UNIT MIX:

One Bedroom - 41%Two Bedroom - 49%Three Bedroom - 10%

RIDGES OF CASCADE

5985 Cascade Ridge

Grand Rapids , MI 49546

BUILT: 2016

UNITS: 237


PRICE / SF: $217.64

AVG SF: 1,105

SOLD FOR: $57,000,000

CLOSED ON: 7/17

CAP RATE: 5.9%

3

1

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6 31


COMPARABLE SALE PROPERTIES ANALYSIS

PR

ICE

/U

NIT

$250K

$218,750

$187,500

$156,250

$125K

$93,750

$62,500

$31,250

$0

Burw

ick

Farm

s

Bear

Cre

ek M

eado

ws

Ridg

es o

f Cas

cade CA

P R

AT

E

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

Ridg

es o

f Cas

cade

Burw

ick

Farm

s

Bear

Cre

ek M

eado

ws

PR

ICE

/S

F

$240.00

$210.00

$180.00

$150.00

$120.00

$90.00

$60.00

$30.00

$0.00

Burw

ick

Farm

s

Bear

Cre

ek M

eado

ws

Ridg

es o

f Cas

cade

Average$147,970

Average6.28

Average$137.72

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6

32


Ridges of Cascade

5985 Cascade Ridge

Grand Rapids , MI 49546

3.

Burwick Farms

525 West Highland Road

Howell, MI 48843

2.

Bear Creek Meadows


Petoskey, MI 49770

1.

COMPARABLE SALE PROPERTIES MAP

Subject:

Glen Haven 905 Glen Haven Circle Petoskey, MI 49770

Pinecrest

1297 La Chaumiere

Petoskey, MI 49770

1

MA

RKET P

OSIT

ION

ING

PETO

SK

EY 7

6 33


LOCATION AND MARKET OVERVIEW


GLEN HAVEN and PINECREST

NEIGHBORHOOD QUICK FACTS

PETOSKEY, MI DEMAND DRIVER

McLaren Northern Michigan Hospital

FROM THE

PROPERTY2.3mi

JOBS

SUPPORTED950HOSPITAL

BEDS202

NEIGHBORHOOD SHOPPING

Marshalls | The Home Depot | Petoskey Cinema

FROM THE

PROPERTY0.7mi

SF SHOPPING

DESTINATION300k

TOTAL

STORES 18

NEIGHBORHOOD CONVENIENCES

Within a two-mile radius of the property

JOBS

SUPPORTED

STUDENTS

ENROLLED

100

2.5k

DEMAND DRIVER

North Central Michigan College

FROM THE

PROPERTY1.8mi

PRIMARY EDUCATION

Sheridan ES | Petoskey MS | Petoskey HS

STUDENTS

SERVED2.9k

SCHOOLS

AND CENTERS7JOBS

SUPPORTED 300

DEMAND DRIVER

Odawa Casino Resort

FROM THE

PROPERTY1.1mi

JOBS

SUPPORTED250SF

FACILITY300k

$274.7kMedian Housing Unit Value

(Within Three Miles)

$48.1kMedian Household Income


4.7%County Unemployment Rate

(July 2018)

9.9kPopulation


33%Renter Occupied Housing Units


Public Schools of Petoskey

1

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6 35


INTRODUCTIONEmmet County is located in the northernmost part of the lower

peninsula of Michigan, east of Lake Michigan and south of the Straits of

Mackinac. The county is 468 square miles in area, and has a population

of approximately 33,580 people. The county seat, Petoskey, is also the

largest city in the county, with 5,800 residents.

Emmet County has a diverse economy, with primary economic drivers

that include tourism, health care, and manufacturing. Service jobs—

many of which are tourism related—make up 40% of the jobs in the

county. Additionally, health care positions comprise 25% of the local

jobs. Specialists and general laborers in blue-collar industries account

for more than 17% of the countywide workers, approximately half of

which are in manufacturing companies.

Residents of Emmet County have easy access to numerous recreational

activities, including water sports, snow skiing, golf, and hiking. A

wide selection of shopping destinations is also available in the coastal

communities of Petoskey and Harbor Springs.

Top-Rated County

Desirable Lifestyle

Safe City

Top Choice to Live

Emmet County ranked #10 among “Best Counties to Live in Michigan”- Niche

Petoskey designated a “Dream Town”- Coastal Living

Petoskey recognized as one of the top 20 “Safest Cities in Michigan”- safewise.com

Petoskey listed among the “Great Towns of America”- greattowns.com

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6

ECONOMIC AND DEMOGRAPHIC INFORMATION - EMMET COUNTY, MICHIGAN MSA

36


DEMOGRAPHICS

1STLARGEST CITY

IN EMMET COUNTY (PETOSKEY)

62% OF WORKERS ARE IN

WHITE-COLLARPOSITIONS

1STHIGHEST COUNTY

POP. GROWTH RATE

IN NORTHERN MICHIGAN REGION

(2010 TO 2016)

34.7k 6.9k 14.4k 7.6k $57.3k

Emmet County's

population is forecast

to grow 3.5% over the

next ive years

Over 21% of residents

are in the key renter age

group, between 18 and 35

The number of

households in Emmet

County is projected to

increase 3.5% over the

next ive years

32% of Emmet

County's residents at

least 25 years old have

a bachelor’s degree or

higher

Emmet County's median

household income

is projected to reach

$57,305 by 2023, up

9.2% from 2018

1

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6


37Petoskey76.BerkadiaREA.com


METRO EMPLOYMENT TRENDS

0%

4%

8%

12%

16%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

Employment Trends

Unemployment Rate*Projected

JULY2018 4.7%the county's monthly

unemployment rate was

down 60 bps annually

EMMET COUNTY, MI

LARGEST EMPLOYERS

McLaren Northern Michigan Hospital 950

LTBB Gaming Administration 250

Moeller Aerospace Technology 240

Bay Harbor Co. Inc. 200

The Home Depot Inc. 200

Walmart Inc. 200

Circuit Controls Corp. 180

Petoskey Plastics 170

Bay Blufs Medical Care Facility 160

Lowe’s 150

Source: Northern Lakes Economic Alliance

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6


38


TOURISM

SLOPES AT BOYNE MOUNTAIN 3,500+Tourism Jobs

$375 millionAnnual Tourism

Expenditures

Tourism is a major local economic driver. More than 3,500 of the 16,500 workers in the county are

employed in tourism-related jobs. Direct tourism payrolls in the county total $95.8 million each

year. The most recent data indicate visitors to Emmet County spend more than $357 million

annually. Popular destinations include Odawa Casino Resort, the Historic Gaslight District in

Petoskey, Wilderness State Park, Tunnel of Trees scenic drive on M-119, snow skiing at Boyne

Mountain and Nub’s Nob, and goling at Boyne Highlands and Little Traverse Bay.

HEALTH CARE

MCLAREN NORTHERN MICHIGAN HOSPITAL 22 CountiesServed by McLaren

Northern Michigan

4,100+Countywide Health

Care Jobs

More than 4,100 people work in the health care industry in Emmet County. The largest health

care facility is the 202-bed McLaren Northern Michigan Hospital in Petoskey, which serves 22

counties. The hospital was recently ranked among the top 3% of hospitals nationwide by the

Centers for Medicare and Medicaid Services. Bay Blufs Medical Care Facility is another large

employer in the area. The 120-bed long-term care facility in Harbor Springs employs 160 workers.

1

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6




CONSTRUCTION AND DEVELOPMENT

MCLAREN NORTHERN MICHIGAN HOSPITAL EXPANSION

$120 million+Expansion and Renovation

170,000 SFExpansion

McLaren Northern Michigan Hospital has embarked on a multi-year expansion

and renovation of its facility in Petoskey. The development will exceed $120

million and be done in two phases. In the irst phase, a new hospital wing will

be built to add 92 private patient rooms, 12 observation beds, six ICU beds,

and state-of-the-art operating rooms. Renovation of the existing facility will

comprise the second phase. The entire project will be completed in 2022 or

2023.

HEADLANDS INTERNATIONAL DARK SKY PARK WATERFRONT EVENT CENTER

550-acreLight-Pollution Free Park

1 of 9Dark Sky Parks Worldwide

The Waterfront Event Center and Observatory addition to the popular tourist

attraction, Headlands International Dark Sky Park, opened in Mackinaw City in

June 2017. The 3,860-square-foot event center features a 20-inch telescope,

and will accommodate up to 278 people for private events and programs. The

550-acre Dark Sky Park is gaining popularity worldwide among stargazers

and amateur astronomers, as it is one of only nine dark sky parks in the world.

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6


40


FAIR MARKET RENT

FAIR MARKETRENT

$832HUD Fair Market Rent for 2018; up

4.0% from one year prior

According to the U.S. Department of Housing and Urban Development (HUD),

fair market rent in Emmet County in 2018 ranged from $539 per month for

an eiciency apartment to $1,290 per month for a four-bedroom apartment.

The fair market rent for a two-bedroom apartment was $832 per month, a

4.0% year-over-year gain. Since 2013, fair market rent for two-bedroom units

appreciated 9.0%.

For the 2019 iscal year, which begins at the end of September 2018, fair market

rent for a two-bedroom unit in Emmet County has been set for $817 per month

by HUD. Fair market rent will range from $536 for an eiciency unit to $1,214 for

a four-bedroom apartment.

$763

$769

$764

$770

$800

$832

$817

2013 2014 2015 2016 2017 2018 2019$600

$650

$700

$750

$800

$850 Occupancy & Ask Rent

Fair Market Rent

EMMET COUNTY APARTMENT MARKET

1

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6




EDUCATION

HIGHEREDUCATION 2,500+

students enrolled at North Central

Michigan College (NCMC)

DEGREES ANDCERTIFICATIONS 63

degrees and certiicates available

at NCMC

Five public school districts serve Emmet County: Public Schools of Petoskey,

Alanson Public Schools, Harbor Springs School District, Mackinaw City

Public Schools, and Pellston Public Schools. The districts oversee a total of

15 schools. Approximately 4,700 students attend these schools.

The county is also served by three post-secondary institutions, all in Petoskey.

The largest of these is North Central Michigan College. The two-year college

enrolls more than 2,500 students and ofers 24 associate degrees and 39

certiicates. NCMC employs 112 full-time faculty and staf and 163 part-time

staf and adjunct faculty. The college has an annual economic impact of

more than $253 million in the area.

Lake Superior State University (LSSU) and Spring Arbor University

(SAU) also have satellite campuses in Petoskey. LSSU ofers programs in

accounting, marketing, public relations, law enforcement, public safety, and

early childhood development, while SAU has an emphasis on social work,

education, and teacher certiication.

NORTH CENTRAL MICHIGAN COLLEGE—JACK & DOROTHY HARRIS SCIENCE CENTER

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6


42


TRANSPORTATION

PELLSTONREG. AIRPORT 51k

average annual passengers

I-75 MACKINACBRIDGE 346.2k

average monthly traic count in 2017

Emmet County is the gateway to Michigan’s upper peninsula. The Mackinac

Bridge (Interstate 75) extends from the northern extreme of Emmet County

to the upper peninsula, carrying an average of 346,000 vehicles per month.

Other major highways in Emmet County are U.S. Route 31 and M-119.

Straits Regional Ride (SRR) provides transportation to communities in

Emmet, Cheboygan, and Presque Isle Counties. SRR operates nine routes

between Petoskey, Mackinaw City, and Cheboygan.

Pellston Regional Airport serves Emmet County and the surrounding counties

with lights to Detroit Metropolitan Wayne County Airport and Lansing

Capital Region International Airport. The airport serves approximately

51,000 commercial light passengers each year.

PELLSTON REGIONAL AIRPORT

1

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6




BY THE NUMBERS

TOTAL POPULATION

2010 32,694

2018* 33,580

2023* 34,768

Growth Rate (2017 - 2022) 3.5%

TOTAL HOUSEHOLDS

2010 13,601

2018* 13,973

2023* 14,470

Growth Rate (2017 - 2022) 3.5%

MEDIAN INCOME

2010 $47,086

2018* $52,500

2023* $57,305

Growth Rate (2017 - 2022) 9.2%

MEDIAN AGE

2010 41.8

2018* 44.1

2023* 44.1

MEDIAN HOME PRICE

July - 2017 $239,000

July - 2018 $245,000

Growth Rate Y-o-Y 2.5%

RENT VS. OWN

Average Mortgage Payment** $1,451

Average Rent $832

Diference $619

*Projected**30-yr ixed; 20% down; 4.65% interest rate; 1.75% property taxes;$1,000 annual homeowner's insurance

Sources: Berkadia; Tetrad; U.S. Census Bureau; U.S. Bureau of Labor Statistics; Moody’s; Wikipedia; Emmet County, Michigan; Northern Lakes Economic Alliance; North Central Michigan College; MichiganBusiness.org; Petoskey Chamber of Commerce; McLaren North Michigan Hospital; Bay Blufs Medical Care Facility; PublicSchoolReview.com; Mackinac Bridge Authority; U.S. Bureau of Transportation Statistics; Pellston Regional Airport; Headlands International Dark Sky Park; MyNorth.com; Imagine Magazine; Emmet Association of Realtors; Niche; NerdWallet; coastalliving.com; greattowns.com; safewise.com; U.S. Department of Housing and Urban Development

LOC

ATIO

N A

ND

MA

RKET O

VERVIE

W

PETO

SK

EY 7

6


44



DISCLAIMER & CONFIDENTIALITY AGREEMENT

The material contained in this document is confidential, furnished solely for the purpose of considering investment in the property described therein and is

not to be copied and/or used for any purpose or made available to any other person without the express written consent of Berkadia Real Estate Advisors

LLC and Berkadia Real Estate Advisors Inc. In accepting this, the recipient agrees to keep all material contained herein confidential.

This information package has been prepared to provide summary information to prospective purchasers and to establish a preliminary level of interest in

the property described herein. It does not, however, purport to present all material information regarding the subject property, and it is not a substitute for

a thorough due diligence investigation. In particular, Berkadia Real Estate Advisors LLC, Berkadia Real Estate Advisors Inc. and Seller have not made any

investigation of the actual property, the tenants, the operating history, financial reports, leases, square footage, age or any other aspect of the property,

including but not limited to any potential environmental problems that may exist and make no warranty or representation whatsoever concerning these

issues. The information contained in this information package has been obtained from sources we believe to be reliable; however, Berkadia Real Estate

Advisors LLC, Berkadia Real Estate Advisors Inc. and Seller have not conducted any investigation regarding these matters and make no warranty or

representation whatsoever regarding the accuracy or completeness of the information provided. Any pro formas, projections, opinions, assumptions or

estimates used are for example only and do not necessarily represent the current or future performance of the property.

Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. and Seller strongly recommend that prospective purchasers conduct an in-depth

investigation of every physical and financial aspect of the property to determine if the property meets their needs and expectations. We also recommend

that prospective purchasers consult with their tax, financial and legal advisors on any matter that may affect their decision to purchase the property and the

subsequent consequences of ownership.

All parties are advised that in any property the presence of certain kinds of molds, funguses, or other organisms may adversely affect the property and the

health of some individuals. Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. recommend, if prospective buyers have questions or

concerns regarding this issue, that prospective buyers conduct further inspections by a qualified professional.

The Seller retains the right to withdraw, modify or cancel this offer to sell at any time and without any notice or obligation. Any sale is subject to the sole

and unrestricted approval of Seller, and Seller shall be under no obligation to any party until such time as Seller and any other necessary parties have

executed a contract of sale containing terms and conditions acceptable to Seller and such obligations of Seller shall only be those in such contract of sale.

For more information on these and other Berkadia© exclusive listings, please visit our website at Berkadia.com

All information contained herein is from sources deemed to be reliable; however, it is not guaranteed. Printed in the USA. All rights reserved.

Copyright 2018 © by Berkadia Proprietary Holding LLC

Berkadia© is a trademark of Berkadia Proprietary Holding LLC

Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial

Mortgage LLC and Berkadia Commercial Mortgage Inc. In California, Berkadia Real Estate Advisors Inc. conducts business under CA Real Estate Broker License #01931050; Vincent B. Norris, CA BRE Lic. #843890. Berkadia Commercial Mortgage LLC conducts business

under CA Finance Lender & Broker Lic. #988-0701; and Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116.

This proposal is not intended to solicit commercial mortgage loan brokerage business in Nevada.

For state licensing details visit: http://www.berkadia.com/legal/licensing.aspx

Petoskey76.BerkadiaREA.com

MICHIGAN OFFICE

28411 Northwestern Highway, Suite 300

Southfield, MI 48034

248.646.7701 | Fax: 248.646.0320









a Berkshire Hathaway and Jefferies Financial Group company

SAN FRANCISCO, CA

SEATTLE, WA

SHREWSBURY, NJ

ST. LOUIS, MO

TAMPA, FL

TEMPE, AZ

TUCSON, AZ

WOODLAND HILLS, CA

HYDERABAD, INDIA

NEWPORT NEWS, VA

ORLANDO, FL

PASADENA, CA

PHILADELPHIA, PA

PHOENIX, AZ

PORTLAND, OR

RALEIGH, NC

RICHMOND, VA

SALT LAKE CITY, UT

SAN ANTONIO, TX

SAN CLEMENTE, CA

SAN DIEGO, CA

HOUSTON, TX

IRVINE, CA

JACKSONVILLE, FL

KANSAS CITY, MO

LENOX, MA

LEXINGTON, KY

LOS ANGELES, CA

MEMPHIS, TN

MIAMI, FL

MIDVALE, UT

MURRIETA, CA

NEW YORK, NY

CHATTANOOGA, TN

CHEVY CHASE, MD

CHICAGO, IL

CLEARWATER, FL

CLEVELAND, OH

COLORADO SPRINGS, CO

COLUMBUS, OH

DALLAS, TX

DENVER, CO

DETROIT, MI

EL SEGUNDO, CA

HENDERSON, NV

ALBUQUERQUE, NM

AMBLER, PA

ATLANTA, GA

AUSTIN, TX

BALD HEAD ISLAND, NC

BATON ROUGE, LA

BIRMINGHAM, AL

BOCA RATON, FL

BOSTON, MA

BRENTWOOD, TN

CAMAS, WA

CHARLESTON, SC

MICHIGAN OFFICE

28411 Northwestern Highway, Suite 300

Southfield, MI 48034

248.646.7701 Fax: 248.646.0320|

Offering Memorandum - LoopNet

Documents