1320 Fair Way – Calistoga, CA12 Unit Multifamily Property with Development Potential
$3.095 MM offering price
Executive Summary
Extensively Remodeled in 2015 this 12 unit 4 building apartment complex is 100% occupied and historically operates at 3% or less vacancy rate. Located in the heart of Napa County wine country, 1320 Fair Way sits under 5 minutes walking distance from every downtown Calistoga amenity. The world famous Silverado Trail, Solage Resort, and the soon to be completed Four Seasons are all less than 1 mile away.
This property is charming, up to date, and in high demand. Tenant diversity is comprised of winery owners, cellar masters, hotel executives, chefs, massage therapists, skilled and unskilled labor. Housing comes at premium for this region, as current housing stock and proposed projects cannot satisfy demand. Given this fact, 1320 Fair Way is unique opportunity to be in the path of progress in one of the regions fastest growing destinations for tourists and permanent housing for local residents.
Included with this purchase are plans to build two new duplexes on site. The build has been approved by council and permits are ready pending an approved bid for underground improvements. Zoned for up to 15 units, by combining two the studios into a one bedroom this property will see a significant jump in rents with the added units. Market rate rent comparables suggest $2,300-$2,500 for each two bedroom 2 bath unit. Although by itself with the additional units this property is strong addition to any investors portfolio, this unique opportunity to add units has tremendous upside.
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Executive Summary
Description Specification
Building Size (GLA) 23,225 sq. ft.
Occupancy 100%
Units 12
Walkscore 83
Year Built 1955
Year Renovated 2015
Stories 1
Acquisition Price $3,095,000
Price Per Unit $257k
Cap Rate 5.0%
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Description Specification
Total Acquisition Price $3,095,000
Year 1 NOI $126,474
Development Costs $1,200,000
Total Project Budget $4,295,000
Stabilized NOI $295,466
Stabilized Valuation $5,909,000
Stabilized Yield 6.8%%
Property Location Highlights
The subject property is located near the middle of Calistoga, which provides easywalkability to downtown Calistoga and a number of wineries, restaurants, and otherforms of entertainment and employment. With high barriers to entry driven by thetown’s historic status this existing multifamily property represents an unique opportunityto acquire a desirable clash flowing asset with upside potential in an affluent market.
Other Property Highlights
• High barrier to entry market eliminates the threat of new supply making this an ideal long term investment
• Ample parking, including parking spaces for new units, meets tenant demand
• Extremely limited inventory and transaction history within Calistoga and Napa County
• Current ownership has already secured drawings for additional units and the property could be expanded in as little as 12 months
• Prime location just west of Lincoln Ave places the property within walking distance of local retail amenities and employers
• Recently completed value add improvements demonstrate the demand for highly quality housing in Calistoga
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Area Overview
Calistoga, CA
Calistoga is a city of approximately 5,100 people located at the northern end of NapaCounty, approximately 54 miles north of San Francisco and 60 miles west of Sacramento.The city is a major tourist draw in wine country as it aims to create a more authenticwine country experience thanks to its ban on franchised restaurants and other nationalchains.
Calistoga is still a 1 stoplight town, but it has more wineries, spas and hot springs thanone can mention. Its small town feel with an abundance of hiking, relaxing and romanticspas and restaurants, and world class wineries embroil it as eclectic and overwhelminglycharming. What once was seen as a “must see stop” in the Napa Valley, Calistoga nowstands on its own as a “must stay destination.” The growth in tourism and hospitality, aswell as the production of world class wines, are creating jobs and industry, but housinghas not followed suit. A major housing shortage exists in this region and Calistoga is noexception. Local hotels, spas and wineries bus/shuttle employees in from neighboringcommunities to full employment needs.
The major employers in Calistoga include: Solange Resort, Calistoga School District,Indian Springs Calistoga Resort, and Calistoga Spa Hot Springs. The largest of the nearbyvineyards is Sterling Vineyards. Calistoga was named a “Distinctive Destination” by theNational Trust for Historic Preservation and tourism continues to be a major driver ofeconomic growth.
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Demographics
• Napa County is one of the most affluent communities in the US and housingprices greatly exceed both the state and national average
• Population growth, in Napa County and Calistoga, is below the national averagemainly due to lack of developable land, NIMBY pushback on proposed newdevelopments, and expensive land prices
• The affluent population of Calistoga and Napa County create favorable demandfactors for renovated multifamily units with contemporary finishes
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1 Mile 3 Mile 5 Mile
2018 Population 5,211 6,244 7,344
2023 Population 5,204 6,220 7,312
Average Age 41 42 43
Total Households 2,040 2,479 2,962
Median Household Income $57,259 $62,000 $66,276
Avg. Household Size 2.5 2.5 2.4
Median Home Value $618,481 $658,928 $690,918
Median Year Built 1972 1972 1972
Macro Location
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13 miles to Santa Rosa
57 miles to San Francisco
60 miles to San Sacramento
Micro Location
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Aerial Map
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Property Exterior Pictures
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Property Interior Pictures
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Rent Roll
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Unit Rent Misc. Charges Total Monthly Income Total Annual Income Move In Date Lease End Date
132001 $1,650 $67 $1,717 $20,610 7/9/2018 6/30/2019
132003 $1,600 $67 $1,667 $20,010 7/8/2017 3/31/2018
132004 $1,450 $67 $1,517 $18,210 11/4/2017 10/31/2019
132005 $1,750 $67 $1,817 $21,810 9/1/2018 8/31/2019
132006 $1,600 $67 $1,667 $20,010 10/14/2015 9/30/2019
132007 $1,310 $67 $1,377 $16,530 5/5/2018 4/30/2019
132008 $1,350 $0 $1,350 $16,200 11/9/2018 10/31/2019
132009 $1,250 $67 $1,317 $15,810 2/16/2018 1/31/2019
132010 $1,200 $67 $1,267 $15,210 8/4/2018 8/31/2018
132011 $1,250 $67 $1,317 $15,810 9/29/2018 8/31/2019
132012 $1,200 $37 $1,237 $14,850 9/8/2018 9/30/2019
132013 $2,300 $0 $2,300 $27,600 11/3/2018 10/31/2019
Total $17,910 $645 $18,555 $222,659
Historical Operating Expenses
13Fixed rate water and sewer passed through to tenants starting in July 2018. 2019 owner expenses should be reduced to approximately $3,000.
Opex 2018 Total Per Unit
Leasing Commissions $2,216 $185
Ext Repairs/Maintenance $10,922 $910
Int Repairs/Maintenance $1,220 $102
Clean Up and Hauling $0 $0
Appliance Repairs $2,283 $190
Appliance Replacement $0 $0
Management Fee $12,368 $1,031
Cleaning $86 $7
Plumbing $2,182 $182
Heating/AC $0 $0
Grounds Maintenance $2,469 $206
Security Alarm $1,936 $161
Interior Painting $1,474 $123
PGE $1,966 $164
Water and sewer $14,715 $1,226
Trash $2,208 $184
Property Taxes $35,064 $2,922
Legal & Accounting $1,600 $133
Insurance $4,776 $398
Total $97,485 $8,124
In Place & Stabilized Proforma
14*Stabilized scenarios assumes 4 additional units will be built at a cost of $300k per unit and generate a monthly rent of $2,200 and market rent for existing units will increase to $2,000
In-Place Proforma Stabilized Proforma*
Rental Income $222,659 Rental Income $342,000
Other Income $1,300 Other Income $1,300
Total Income $223,959 Total Income $343,300
Leasing Commissions $2,216 Leasing Commissions $2,260
Ext Repairs/Maintenance $10,922 Ext Repairs/Maintenance $11,140
Int Repairs/Maintenance $1,220 Int Repairs/Maintenance $1,245
Clean Up and Hauling $0 Clean Up and Hauling $0
Appliance Repairs $2,283 Appliance Repairs $2,328
Appliance Replacement $0 Appliance Replacement $0
Management Fee $12,368 Management Fee $12,615
Cleaning $86 Cleaning $87
Plumbing $2,182 Plumbing $2,225
Heating/AC $0 Heating/AC $0
Grounds Maintenance $2,469 Grounds Maintenance $2,518
Security Alarm $1,936 Security Alarm $1,975
Interior Painting $1,474 Interior Painting $1,504
PGE $1,966 PGE $2,006
Water and sewer $14,715 Water and sewer $3,000
Trash $2,208 Trash $2,252
Property Taxes $35,064 Property Taxes $35,765
Legal & Accounting $1,600 Legal & Accounting $1,632
Insurance $4,776 Insurance $4,872
Total Operating Expenses $97,485 Total Operating Expenses $87,425
NOI $126,474 NOI $255,875
Comparable Rental Properties
• There is strong demand for high quality rental housing in the Napa County MSAand tenants have demonstrated a willingness to pay a premium for upgradedunits
• Rent growth at the subject property is expected to remain strong as there is nosupply scheduled to be delivered in the property’s submarket
• The potential to develop additional units on site should generate an attractivereturn, command premium pricing, and lease quickly due to strong captivedemand
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Property Name Address City Year Built Units Occupancy Avg. Sq. Ft. Rent
1320 Fair Way (Subject) 1320 Fair Way Calistoga 1955 12 100% 1,935 $1,493
Wineridge Apartments 1714 Washington Street Calistoga 1986 32 94% 906 $1,275
1402 Washington Street 1402 Washington Street Calistoga 1990 10 100% 1,200 $1,399
1001 Mission 1001 Mission Blvd Santa Rosa 1977 26 96% 985 $1,792
932 Brown 932 Brown Street Saint Helena 2002 4 100% 935 $2,715
1327 Monte Vista 1327 Monte Vista Ave Saint Helena 1968 6 100% 1,020 $1,586
Comparable Sales
• 1320 Fair Way’s asking price of $257k per unit represents an attractive pricepoint when compared to recent nearby sales
• The lack of new supply and captive demand for multifamily units has drivenstrong exit prices
• The high barriers to entry and lack of new supply bodes well for future propertylevel appreciation
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Property Name Address Year Built Units Sale Price Price Per Unit Sale Date
Parkwood Apartments 6899 Montecito Blvd 1978 56 $15,000,000 $267,857 Jan-19
Market Place Apartments 2315 Lomitas Ave 2004 28 $7,115,000 $254,107 Apr-18
Oaktree Apartments 16914 Sonoma Hwy 1987 18 $4,500,000 $250,000 Jul-17
Plaza Del Sol Townhomes 736 2nd Street 1973 33 $8,375,000 $253,788 Jan-18
Cypress Apartments 8564 Cypress Ave 1969 17 $3,800,000 $223,529 Jul-17
Madrone Apartments 15411 Marty Dr 1963 42 $9,950,000 $236,905 Aug-18
Development Rendering
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Development Plan
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