Mount Royal Manor Offering Memorandum

Lake Superior 

Mount Royal Manor 

Offering Memorandum 

100 Elizabeth Street | Duluth, MN 55803 

Presented by:

NON-ENDORSEMENT NOTICE 

Marcus & Millichap Real Estate Investment Services, Inc. (“M&M”) is not affiliated with, sponsored by, or endorsed by any commercial 

tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or 

imply affiliation with, or sponsorship or endorsement by, said corporation of M&M, its affiliates or subsidiaries, or any agent, product, 

service, or commercial listing of M&M, and is solely included for the purpose of providing tenant lessee information about this listing 

to prospective customers. 

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing 

package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or 

endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial 

listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to 

prospective customers. 

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT THE 

MARCUS & MILLICHAP LISTING AGENT FOR MORE DETAILS.


Duluth, Minnesota 

presented by 

Presented by: 

Investment Sales: 

OFFICES NATIONWIDE 

www.marcusmillichap.com 

Mox Gunderson 

First Vice President Investments 

MINNEAPOLIS OFFICE 

Tel: (952) 852-9713 

Fax: (952) 852-9710 

mox.gunderson@marcusmillichap.com 

License: MN 40237387 | ND 8586 

Dan Linnell 



Tel: (952) 852-9770 

Fax: (952) 852-9710 

dan.linnell@marcusmillichap.com 

License: MN 40211216 

Josh Talberg 



Tel: (952) 852-9769 

Fax: (952) 852-9710 

josh.talberg@marcusmillichap.com 


Chris Collins 

Associate 


Tel: (952) 852-9758 

Fax: (952) 852-9710 

chris.collins@marcusmillichap.com 

License: MN 40336144


Table of Contents 

EXECUTIVE SUMMARY 

Offering Highlights ................................................................................................................... 8 

Summary of Terms ....................................................................................................................9 

PROPERTY DESCRIPTION 

Property Details .....................................................................................................................12 

Investment Overview .................................................................................................................13 

Property Photos ..................................................................................................................... 14 

Development Opportunity. ............................................................................................................16 

FINANCIAL ANALYSIS 

Rent Roll Summary .................................................................................................................. 20 

Operating Statement ................................................................................................................. 21 

Value Add Component. ...............................................................................................................22 

COMPETITIVE PROPERTY SET 

Recent Sales Map ....................................................................................................................27 

Recent Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 

Rent Comparables Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 

Rent Comparables ................................................................................................................... 32 

MARKET OVERVIEW 

Demographics ...................................................................................................................... 36 

Duluth Overview ....................................................................................................................38

summary 

EXECUTIVE SUMMARY



Offering Highlights 


100 Elizabeth Street 

Duluth, Minnesota 55803 

PROPERTY DETAILS 

Price 

Market Bid 

Units 114 

Rentable SF 71,364 

Year Built 1951 

Lot Size (AC) 

4.26 Acres 

APN 010-3360-00930 

County 

Saint Louis 

UNIT TYPE 

NUMBER 

OF UNITS 

APPROX 

SQUARE FEET 

Studio 13 414 

1 Bed / 1 Bath 76 624 

2 Bed / 1 Bath 23 740 

2 Bed / 2 Bath 2 1,588 

TOTALS/WEIGHTED AVERAGES 114 626 

8 

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are 

approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future 

performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2016 Marcus & Millichap ACT ID Y0510304



Summary of Terms 

Interest Offered: 

Fee simple interest in Mount Royal Manor; a 114 unit apartment community 

located at 100 Elizabeth Street in Duluth, Minnesota. 

Terms of the Sale: 

Mount Royal Manor is being offered on a Free and Clear basis. 

Offering Procedure: 

Purchasers wishing to make an offer should submit: 

• Letter of Intent (template available upon request) 

• Proof of Funds and Banking References 

• Resume (which includes a list of other investment real estate owned 

now or in the past) 

At the time the Owners select a Purchaser, they will have considered a number of 

factors including: price, contingency time frame(s), track record and the perceived 

ability of potential purchasers to complete the contemplated transaction. Therefore, 

interested purchasers are encouraged to submit as much of the above as possible 

with the Letter of Intent. Scheduled tour dates are as follows: 

Property Tours: 

Prospective purchasers are encouraged to visit the subject property prior to 

submitting offers. However, all property tours must be arranged with the Marcus 

& Millichap listing agents. Tours will be conducted in 45 minute time increments 

between 10:00 AM and 4:00 PM, with the last tour time to start at 3:15 PM. Please 

do not contact the tenants, on-site management or staff without prior approval. 



performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2016 Marcus & Millichap ACT ID Y0510304 

9

WOODLAND AVENUE 



Aerial View 

ELIZABETH STREET 

10 




description 

PROPERTY DESCRIPTION



Property Details 

THE OFFERING 

Subject Name 


Subject Address 

100 Elizabeth Street 

Subject City, State, Zip Duluth, Minnesota 55803 

Units 114 

Rentable SF 71,364 

PROPERTY SUMMARY 

Site Description 

Zoning 

Multifamily 

Density 

Urban Residential 

Parking 

Reserved Garage & Lot Spaces | Free Surface Parking 

Acreage 4.26 

Construction 

Framing 

Spancrete 

Parking Surface Asphalt 

Roofs 

Adhered Rubber with Rock Ballast 

Utilities 

Gas 

Owner 

Water / Sewer Owner 

Electric 

Tenant 

Amenities 

On-Site Management 24 Hour Emergency Maintenance 

Controlled Access Entry On-Site Laundry 

Elevators 

Storage Lockers Available 

12 






Investment Overview 

Marcus & Millichap is pleased to announce the exclusive listing of Mount Royal Manor, a 114 

unit apartment community located in the Chester Park neighborhood of Duluth, Minnesota. 

Mount Royal Manor is being offered on a Free-and-Clear Basis. 

Due to strong job growth in the medical, education, and financial fields, Duluth has created a 

diverse job market to ensure stability, thus helping Duluth become one of the most desirable 

metros in the Midwest. With multiple new companies drawn to the area, Duluth’s population 

of 86,000 residents has produced an unemployment rate of 3.7% which is below state (3.9%) 

and national averages (4.4%). Mount Royal Manor is conveniently located one block from the 

University of Minnesota Duluth which enrolls over 10,000 students annually and was recently 

named the “#8 Public University in the United States” by USNews.com. 

The seven-story building gives tenants picturesque and unparalleled views of the University, 

Downtown Canal Park, and Lake Superior, creating a true North Shore experience for residents. 

Additionally, residents are able to enjoy a wide variety of recreational activities, such as, 

Grandmas Marathon, The Superior Hiking Trail, Spirit Mountain, and the famous Bayfront 

Festival Park. Annually these attractions bring more than 3.5 million tourists to the Duluth area, 

accounting for an economic impact of $780 million. 

Constructed in 1951, Mount Royal Manor showcases a striking example of early modernism 

architecture unique to the property’s neighborhood. Inside you will find multiple floor plans 

including two stunning top floor penthouse suites featuring a private elevator and breathtaking 

180 degree views of Duluth. The property consists of an additional 13 studio, 76 one-bedroom, 

and 23 two-bedroom apartments. Ranging in size from 414 square feet to 1,813 square feet, 

residents have numerous floor plans and price ranges to suit their individual needs. 

Mount Royal Manor offers new ownership multiple avenues to increase property value and the 

bottom line. First, by re-branding into a student focused apartment community, a new owner 

can create revenue through renting units per bed similar to neighboring properties such as 

BlueStone Lofts and BlueStone Flats. Secondly, the property is a strong candidate for both 

State and Federal Historic Tax Credits which will allow a new owner to inject major capital 

improvements to common area and in-unit upgrades. Once completed, Mount Royal Manor 

should achieve competitive rents with neighboring properties. Lastly, with a current housing 

shortage of 4,470 units, as outlined by the Image Duluth 2035 Comprehensive Plan, a new 

owner can achieve additional income growth by developing an additional 126 units on the 

northern sector of the parcel. 

Investment Highlights 

■ Walking Distance to University of Minnesota Duluth Campus 

■ Irreplaceable Hilltop Location 

■ Low Supply, High Barrier to Entry Market 

■ Value-Add Opportunity Through Repositioning 

■ Historical & Federal Tax Credits and/or Renovation Potential 

■ Phase II Development Opportunity on Additional Acreage 




13



Property Photos 

14 






Property Photos 




15


Phase II: New Development Opportunity 

Mount Royal Manor offers the new owner a rare development opportunity. 

Considering the property sits on over 4 irreplaceable hilltop acres, is within 

walking distance to University of Minnesota Rendering Duluth campus, numerous retail 

establishments, overlooks Lake Superior and downtown Duluth; Mount Royal 

Manor has all the ingredients for a strong lease-up and healthy rent per square 

foot. 

Current ownership began exploring the potential for developing 126 additional 

apartments adjacent to Mount Royal Manor’s northwest corner. Adding these 

apartments, with a Class A amenity package, should see rents at or near the 

$2.00 per square foot range, in line with new construction nearby. 

By coupling 126 brand new apartments and high-end amenities with the existing 

114 units at Mount Royal, new ownership will realize marketing and leasing 

synergies while also benefiting from added scale, further enhancing profit margin 

and best positioning the completed project for either a 3-5 year exit, or long term 

hold. 

Site Plan 


urban development: apartments commercial hospitality 

16 






Phase II: New Development Opportunity 

TOTAL GROSS AREA 

LEVEL 

AREA 

Level 6 

25,825 ft² 

Level 5 

25,825 ft² 

Level 4 

25,825 ft² 

Level 3 

25,825 ft² 

Level 2 

25,826 ft² 

Level 1 

30,764 ft² 

Level -1 

30,764 ft² 

Grant Total 

190,655 ft² 

RESIDENTIAL UNIT MIX 

ROOMS 

NAME COUNT UNIT AREA BED BATH DEN 

Unit 0-1 10 457 ft² 0 1 0 

 

Unit 0-2 13 

Total Gross Area 

581 ft² 0 1 0 

Level 

Area 

Unit 1-1 45Level 6 25,825719 ft² ft² 1 1 0 

Level 5 25,825 ft² 

Unit 1-2 

Level 4 

8Level 3 

ft² 

25,825802 ft² 

ft² 1 1 1 

Level 2 25,826 ft² 

Unit 2-1 

Level 1 

Level -1 

20Grand total 

30,764 ft² 

30,764 ft² 

996 ft² 

190,655 ft² 

2 2 0 

Unit 2-2 10 998 ft² 2 2 0 

Unit 3-1 10 1,188 ft² Residential Unit Mix 3 3 0 

Unit Area 

Rooms 

Unit 4-1 10 1,498 Gross ft² Net 4 3 ADA0 

Name Count Area Area Bed Bath Den Type 

Total: 126 

Unit 0-1 10 457 ft² 0 1 0 

Unit 0-2 13 581 ft² 0 1 0 

Unit 1-1 45 719 ft² 1 1 0 

Unit 1-2 8 802 ft² 1 1 1 

Unit 2-1 20 996 ft² 2 2 0 

Unit 2-2 10 998 ft² 2 2 0 

Unit 3-1 10 1,188 ft² 3 3 0 

Unit 4-1 10 1,498 ft² 4 3 0 

Grand total: 126 126 

PARKING SCHEDULE 

LEVEL 

COUNT 

14 SPACES 

15 SPACES 

15 SPACES 

Garage Stalls 

Parking Schedule 

Level -1 94 

Level Type Count 

Level 1 94 

Garage Stalls 

Level -1 94 

Level 1 94 

188 

TOTAL 188 

Site Stalls 

Site Stalls 

Level 1 68 

68 

256 

Level 1 68 

TOTAL 68 

GRAND TOTAL 256 

 

 




17

2 BLOCKS

analysis 

FINANCIAL ANALYSIS



Rent Roll Summary 

RENT ROLL SUMMARY 

As of July, 2017 

Current 

Potential 

# of Average Rental Average Average Monthly Average Average Monthly 

Unit Type Units SF Range Rent Rent / SF Income Rent Rent / SF Income 

Studio 13 414 $649 - $775 $699 $1.69 $9,084 $737 $1.78 $9,587 

1 Bed / 1 Bath A 21 500 $754 - $961 $849 $1.70 $17,835 $880 $1.76 $18,486 

1 Bed / 1 Bath B 6 565 $860 - $990 $924 $1.63 $5,542 $972 $1.72 $5,832 

1 Bed / 1 Bath C 4 607 $855 - $954 $911 $1.50 $3,643 $928 $1.53 $3,712 

1 Bed / 1 Bath D 44 650 $803 - $1,064 $905 $1.39 $39,841 $939 $1.44 $41,321 

1 Bed / 1 Bath E 1 798 $1,022 - $1,022 $1,022 $1.28 $1,022 $1,062 $1.33 $1,062 

2 Bed / 1 Bath A 3 667 $928 - $1,211 $1,105 $1.66 $3,314 $1,244 $1.87 $3,732 

2 Bed / 1 Bath B 5 731 $1,200 - $1,288 $1,235 $1.69 $6,175 $1,257 $1.72 $6,286 

2 Bed / 1 Bath C 5 743 $1,087 - $1,248 $1,200 $1.62 $6,000 $1,223 $1.65 $6,117 

2 Bed / 1 Bath D 6 760 $1,108 - $1,248 $1,201 $1.58 $7,207 $1,251 $1.65 $7,505 

2 Bed / 1 Bath E 4 798 $1,152 - $1,243 $1,188 $1.49 $4,751 $1,227 $1.54 $4,906 

PH 2 Bed/ 2 Bath A 1 1,813 $2,620 - $2,620 $2,620 $1.45 $2,620 $2,620 $1.45 $2,620 

PH 2 Bed/ 2 Bath B 1 1,362 $2,266 - $2,266 $2,266 $1.66 $2,266 $2,266 $1.66 $2,266 

Totals/Weighted Averages 114 626 $959 $1.53 $109,300 $995 $1.59 $113,432 

Gross Annualized Rents $1,311,600 $1,361,184 

20 






Operating Statement 

YR 1 

TRAILING 12 2017 BUDGET CURRENT 

PER UNIT PER SF 

RE TAX ADJUST 

Income 

Effective Rental Income 

Market Rent 1,361,184 1,361,184 1,361,184 1,361,184 11,940 19.06 

Loss / Gain to Lease (71,138) 5.2% (45,114) 3.3% (49,584) 3.6% (13,612) 1.0% (119) (0.19) 

Gross Scheduled Rent 1,290,046 1,316,070 1,311,600 1,347,572 11,821 18.87 

Physical Vacancy (104,805) 8.1% (43,100) 3.3% (65,580) 5.0% (67,379) 5.0% (591) (0.94) 

Economic Vacancy 

Bad Debt/Concessions (13,027) 1.0% (2,500) 0.2% (13,027) 1.0% (13,476) 1.0% (119) (0.19) 

Total Vacancy ($117,832) 9.1% ($45,600) 3.5% ($78,607) 6.0% ($71,432) 6.0% ($709) ($1) 

Economic Occupancy 90.87% 96.54% 94.01% 94.00% 

Total Effective Rental Income 1,172,214 1,270,470 1,232,993 1,266,718 11,194 17.74 

Other Income 

Telecommunication Leases 123,875 125,712 125,712 129,483 1,136 1.81 

Garage & Other Income 42,223 45,072 42,223 43,490 381 0.61 

Total Other Income $166,098 $170,784 $167,935 $172,973 $1,517 $2.42 

Effective Gross Income $1,338,312 $1,441,254 $1,400,928 $1,439,691 $12,629 $20.16 

Expenses 

Payroll 105,257 109,859 105,257 108,451 951 1.52 

Repairs & Maintenance 37,484 43,593 37,484 38,609 339 0.54 

General & Administrative 64,289 64,859 64,289 66,218 581 0.93 

Contract Services 26,965 30,892 26,965 27,774 244 0.39 

Trash Removal 7,875 8,660 7,875 8,111 71 0.11 

Cleaning & Supplies 24,692 23,700 24,692 25,433 223 0.36 

Marketing and Advertising 16,281 12,600 16,281 16,769 147 0.23 

Management Fee 73,323 5.0% 74,087 5.0% 70,046 5.0% 71,985 5.0% 631 1.01 

Non-Controllable 

Real Estate Taxes 145,363 148,560 137,060 196,605 1,725 2.75 

Insurance 18,017 36,456 36,456 37,550 329 0.53 

Utilities - Electric 10,377 7,678 10,377 10,688 94 0.15 

Utilities - Water & Sewer 34,734 41,151 34,734 35,776 314 0.50 

Utilities - Gas 39,303 49,658 39,303 40,482 335 0.53 

Operating Reserves 34,200 34,200 34,200 34,200 300 0.48 

Total Expenses $638,160 $685,953 $645,019 $718,614 $6,304 $10.06 

Expenses as % of EGI 47.70% 47.60% 46.00% 49.90% 

Net Operating Income $700,152 $755,301 $755,909 $721,077 $6,325 $10.10 




21



Value-Add Opportunity 

New ownership can take advantage of a renovation budget that focuses on strategic renovations to the 

units and common areas; re-branding the asset with a focus on student and professionals; considering the 

properties close proximity to both the University of Minnesota and downtown Duluth; all while maintaining the 

property’s vintage charm, and remaining well below the rent levels of nearby newly constructed properties. 

Additionally, a renovated Mount Royal would share nice synergies with the potential Phase II development, 

further enhancing the Post-Renovation Market Potential by allowing tenant access to the Phase II Class A 

amenity package. Furthermore, the first floor common area and leasing office could be converted to a selfserviced 

internet cafe’, community room, and/or additional apartment units. 

RENOVATION IDEA 

Scheduled Non-Renovated Market Potential Post-Renovation Market Potential 

# of Average Rental Average Average Monthly Average Average Monthly Average Average Monthly 

Unit Type Units SF Range Rent Rent / SF Income Rent Rent / SF Income Rent Rent / SF Income 

Studio 13 414 $649 - $775 $699 $1.69 $9,084 $737 $1.78 $9,587 $912 $2.26 $11,862 

1 Bed / 1 Bath A 21 500 $754 - $961 $849 $1.70 $17,835 $880 $1.76 $18,486 $1,080 $2.16 $22,686 

1 Bed / 1 Bath B 6 565 $860 - $990 $924 $1.63 $5,542 $972 $1.72 $5,832 $1,172 $2.07 $7,032 

1 Bed / 1 Bath C 4 607 $855 - $954 $911 $1.50 $3,643 $928 $1.53 $3,712 $1,122 $1.85 $4,487 

1 Bed / 1 Bath D 44 650 $803 - $1,064 $905 $1.39 $39,841 $939 $1.44 $41,321 $1,139 $1.75 $50,096 

1 Bed / 1 Bath E 1 798 $1,022 - $1,022 $1,022 $1.28 $1,022 $1,062 $1.33 $1,062 $1,262 $1.58 $1,262 

2 Bed / 1 Bath A 3 667 $928 - $1,211 $1,105 $1.66 $3,314 $1,244 $1.87 $3,732 $1,494 $2.24 $4,482 

2 Bed / 1 Bath B 5 731 $1,200 - $1,288 $1,235 $1.69 $6,175 $1,257 $1.72 $6,286 $1,507 $2.06 $7,536 

2 Bed / 1 Bath C 5 743 $1,087 - $1,248 $1,200 $1.62 $6,000 $1,223 $1.65 $6,117 $1,473 $1.98 $7,367 

2 Bed / 1 Bath D 6 760 $1,108 - $1,248 $1,201 $1.58 $7,207 $1,251 $1.65 $7,505 $1,501 $1.98 $9,005 

2 Bed / 1 Bath E 4 798 $1,152 - $1,243 $1,188 $1.49 $4,751 $1,227 $1.54 $4,906 $1,477 $1.85 $5,906 

PH 2 Bed/ 2 Bath A 1 1,813 $2,620 - $2,620 $2,620 $1.45 $2,620 $2,620 $1.45 $2,620 $2,920 $1.61 $2,920 

PH 2 Bed/ 2 Bath B 1 1,362 $2,266 - $2,266 $2,266 $1.66 $2,266 $2,266 $1.66 $2,266 $2,566 $1.88 $2,566 

Totals/Weighted 

Averages 

114 626 $959 $1.54 $109,300 $995 $1.59 $113,432 $1,204 $1.92 $137,207 

22 





Value-Add Opportunity 

YEAR 1 

RENOVATED 

YEAR 3 * 

Income 

Effective Rental Income 

Gross Potential Rent 1,361,184 1,746,755 

Loss / Gain to Lease (13,612) 1.0% (26,201) 1.5% 

Gross Scheduled Rent 1,347,572 1,720,554 

Physical Vacancy (67,379) 5.0% (86,028) 5.0% 

Economic Vacancy 

Bad Debt/Concessions (13,476) 1.0% (8,604) 0.5% 

Total Vacancy ($80,855) 6.0% ($94,630) 5.5% 

Economic Occupancy 94.00% 94.50% 

Total Effective Rental Income 1,266,718 1,625,923 

Other Income 

Telecommunication Leases 129,483 137,369 

All Other Income 43,490 63,527 

Total Other Income $173,973 $200,896 

Effective Gross Income $1,439,691 $1,826,819 

Expenses 

Payroll 108,451 115,017 

Repairs & Maintenance 38,609 40,960 

General & Administrative 66,218 70,250 

Contract Services 27,774 29,465 

Trash Removal 8,111 8,605 

Cleaning & Supplies 25,433 26,982 

Marketing and Advertising 16,769 17,791 

Management Fee 71,985 5.0% 86,841 5.0% 

Non-Controllable 

Real Estate Taxes 196,605 208,578 

Insurance 37,550 39,836 

Utilities - Electric 10,688 8,550 

Utilities - Water & Sewer 35,776 37,955 

Utilities - Gas 40,482 42,947 

Operating Reserves 34,200 36,283 

Total Expenses $718,614 $770,061 

Expenses as % of EGI 49.90% 42.15% 

Net Operating Income $721,077 $1,056,758 


PROPOSED UNIT UPGRADES AND ESTIMATED COSTS 

Item Cost Per Unit Total Cost 

UNITS 

In-Unit Rehab $10,000 $1,140,000 

EXTERIOR / GROUNDS 

Roof Repair / Replacements $877 $100,000 

Penthouse Deck Replacement $132 $15,000 

Garage Repairs $1,535 $175,000 

Landscaping $175 $20,000 

Sidewalk, Asphalt, Curb Replacement $482 $55,000 

COMMON AREA 

Common Area Carpet / Wall Paper $2,500 $285,000 

Open Stairwell Door Replacement $44 $5,000 

FOB System $500 $57,000 

Cameras $439 $50,000 

Miscellaneous $88 $10,000 

Common Area LED Lighting $219 $25,000 

MECHANICAL UPGRADES 

Boiler & Hot Water Heater Replacement $4,386 $500,000 

Domestic Hot / Cold / Waste Pipe Replacement $13,158 $1,500,000 

Unit Fuse Panel Replacement $1,623 $185,000 

Remove Old Oil Tank $219 $25,000 

TOTAL $36,377 $4,147,000 

UNIT MIX 

Average Monthly Rental Premium 

Unit Type 

To Current Market Rents 

Studio $175 

1 Bedroom / 1 Bath $200 



* Reflects Growth Rate for Year 3/Stabilized Pro Forma 




23

competitive 

COMPETITIVE PROPERTY SET



Recent Sales Map 

1 

Recent Sales 

Subject - Mount Royal Apartments 

1 Les Chateaux 

2 Grandeville at Cascade Lake 

3 College Station 

3 

2 

26 






Recent Sales Comparables 

MOUNT ROYAL MANOR - SUBJECT 100 Elizabeth Street, Duluth, MN 55803 

Sales Price 

Market Bid 

No. of Units 114 


Units 

Unit Type 

13 Studio 

76 1 Bdr 1 Bath 


2 Penthouse 2 Bdr 2 Bath 

1 LES CHATEAUX 3800 London Road, Duluth, MN 55804 

Close of Escrow 7/20/2016 

Sales Price $19,750,000 


Price/SF $131.27 

Price/Unit $140,071 


Units 

Unit Type 

1 Studio 1 Bath 



38 2 Bdr 1.5 Bath 

15 3 Bdr 1.5 Bath 

2 GRANDEVILLE AT CASCADE LAKE 182 Grandeville Road SW, Rochester, MN 55902 







Units 

Unit Type 





3 COLLEGE STATION 1341 Pohl Road, Mankato, MN, 56001 







Units 

Unit Type 









27



Rent Comparables Map 

4 

3 

2 

5 

1 

Rent Comparables 

1 

2 

3 

4 

5 

6 

Subject - Mount Royal Apartments 

ENDI 

Bluestone Lofts 

Bluestone Flats 

Kenwood Village 

Les Chateaux 

Baypoint Shoreline & Estates 

6 




29



Rent Comparables - Value Add 

1 ENDI 2120 London Road, Duluth, MN 55812 

No. of Units: 157 

Year Built: 2017 

Occupancy: 90% 

NOTES: 

Tenants are charged Water, Sewer, and Refuse through a 

Bill Back System. Tenants are also responsible for Heat 

and Electricity. Underground Parking is available for $85 

per month. 

Unit Type Units SF Rent Rent/SF 

1 Bdr 1 Bath 60 581-8971 $1,000-$1,300 $1.56 

2 Bdr 2 Bath 65 1,060-1,575 $2,025-$2,300 $1.64 

3 Bdr 2.5 Bath 18 2,855-3,497 $4,250 $1.34 

Total/Wtd. Avg. 143 1,245 $2,210 $1.78 

2 BLUESTONE LOFTS 101 Summit Street, Duluth, MN 55803 




NOTES: 

Owner pays Refuse and Cable. Underground Parking 

is available for $95 per month, Surface parking is also 

available for $20-$25 per month depending on lot 

location. 


Studio 1 Bath 4 452 $980 $2.17 

1 Bdr 1 Bath 5 696-833 $1,230-$1,450 $1.76 

2 Bdr 2 Bath 44 971-1,174 $1,578-$1,678 $1.56 

4 Bdr 4 Bath 46 1,430-1,560 $2,780 $1.87 

Total/Wtd. Avg. 99 1,208 $2,120 $1.76 

3 BLUESTONE FLATS 133 Summit Street, Duluth, MN 55803 




NOTES: 

Owner pays Refuse & Cable. Underground Parking is 

available for $125 per month, Surface Parking is also 

available for $20-$25 per month. 


Studio 1 Bath 16 508-515 $1,080-$1,120 $2.15 

1 Bdr 1 Bath 80 616-715 $1,280-$1,380 $2.00 

2 Bdr 2 Bath 43 971-1,174 $1,860-$2,530 $2.05 

3 Bdr 2 Bath 3 1,333 $3,018 $2.26 

Total/Wtd. Avg. 142 812 $1,633 $2.01 

4 KENWOOD VILLAGE 1515 Kenwood Avenue, Duluth MN 55811 




NOTES: 

Owner pays water, sewer and refuse. One underground 

parking stall is included in rent. 

Unit Type Units Avg SF Rent Rent/SF 

Studio 1 Bath 13 459-540 $1,210 $2.42 

1 Bdr 1 Bath 28 693-892 $1,310-$1,620 $1.85 

2 Bdr 2 Bath 21 1,001-1,182 $2,005 $1.84 

3 Bdr 2 Bath 21 1,147-1,288 $2,070-$2,360 $1.82 

Total/Wtd. Avg. 83 921 $1,673 $1.82 

30 






Rent Comparables - Current 

5 LES CHATEAUX 3800 London Road, Duluth, MN 55804 




NOTES: 

The landlord is responsible for water, sewer, trash, heat 

and gas. The tenant is responsible for electric. The 

property offers underground garage parking for $60 per 

month. 


Studio 1 Bath 1 525 $830 $1.58 

1 Bdr 1 Bath 59 810 $999-$1,065 $1.27 

2 Bdr 1 Bath 28 1,100 $1,310-$1,680 $1.36 

2 Bdr 1.5 Bath 38 1,191 $1,328-$1,842 $1.33 

3 Bdr 1.5 Bath 15 1,200-1,875 $1,767-$2,355 $1.47 

Total/Avg. 141 1,185 $1,624 $1.37 

6 BAYPOINT SHORELINE & ESTATES 1900 Saint Louis Ave, Duluth, MN, 55802 




NOTES: 

The landlord is responsible for water, sewer, gas, heat 

and garbage. The tenant is responsible for electric. The 

property offers heated underground parking for $75 per 

month. 


1 Bdr 1 Bath 49 780-823 $900-$1,100 $1.29 

2 Bdr 2 Bath 92 900-977 $1,095-$1,300 $1.28 

Total/Avg. 141 888 $1,143 $1.29 




31

overview 

MARKET OVERVIEW

MARKET PROPERTY MOUNT OVERVIEW ROYAL NAME MANOR 

Demographic Summary 

Created on July 2017 

POPULATION 1 Miles 3 Miles 5 Miles 

• 2021 Projection 

Total Population 12,211 48,713 68,572 

• 2016 Estimate 


• 2010 Census 




• Daytime Population 

2016 Estimate 19,381 68,302 98,528 

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 

• 2021 Projection 

Total Households 3,648 19,397 28,050 



Average (Mean) Household Size 2.50 2.24 2.24 





Growth 2015-2020 0.03% 0.59% 1.11% 

HOUSING UNITS 1 Miles 3 Miles 5 Miles 

• Occupied Units 

2021 Projection 3,648 19,397 28,050 

2016 Estimate 3,850 20,610 29,646 

Owner Occupied 2,255 10,230 15,763 

Renter Occupied 1,391 9,053 11,979 

Vacant 204 1,327 1,903 

• Persons In Units 

2016 Estimate Total Occupied Units 3,647 19,283 27,743 

1 Person Units 28.30% 35.74% 35.29% 

2 Person Units 32.82% 32.73% 33.62% 

3 Person Units 14.09% 13.48% 13.55% 

4 Person Units 14.81% 10.93% 10.72% 

5 Person Units 6.64% 4.86% 4.66% 

6+ Person Units 3.32% 2.26% 2.17% 


MARKETING DEMOGRAPHICS TEAM 

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 


$200,000 or More 7.07% 3.74% 3.24% 

$150,000 - $199,000 6.74% 3.15% 3.18% 

$100,000 - $149,000 14.72% 10.46% 10.05% 

$75,000 - $99,999 11.22% 9.94% 10.56% 

$50,000 - $74,999 17.50% 17.24% 18.60% 

$35,000 - $49,999 13.44% 13.97% 13.72% 

$25,000 - $34,999 8.51% 11.10% 10.67% 

$15,000 - $24,999 11.29% 13.16% 13.02% 

Under $15,000 9.50% 17.23% 16.96% 

Average Household Income $90,538 $66,142 $64,747 

Median Household Income $57,968 $43,278 $44,618 

Per Capita Income $30,286 $27,759 $27,619 

POPULATION PROFILE 1 Miles 3 Miles 5 Miles 

• Population By Age 

2016 Estimate Total Population 12,277 48,746 68,341 

Under 20 30.88% 23.81% 23.09% 

20 to 34 Years 33.76% 32.57% 29.76% 

35 to 39 Years 3.17% 4.60% 4.97% 

40 to 49 Years 7.39% 9.30% 9.94% 

50 to 64 Years 14.52% 17.04% 18.35% 

Age 65+ 10.25% 12.68% 13.91% 

Median Age 22.96 29.51 32.61 

• Population 25+ by Education Level 

2016 Estimate Population Age 25+ 5,411 27,723 41,583 

Elementary (0-8) 0.40% 1.20% 1.22% 

Some High School (9-11) 1.65% 4.20% 4.72% 

High School Graduate (12) 13.92% 21.22% 23.38% 

Some College (13-15) 18.12% 21.11% 22.49% 

Associate Degree Only 6.55% 9.17% 9.84% 

Bachelors Degree Only 35.30% 27.01% 24.58% 

Graduate Degree 23.63% 15.47% 13.10% 

• Population by Gender 

2016 Estimate Total Population 12,277 48,746 68,341 

Male Population 49.97% 49.47% 49.67% 

Female Population 50.03% 50.53% 50.33% 

Source: © 2016 Experian 

2 

34 






Demographic Summary 

Geography: 1-3-5- Miles 

Population 

In 2016, the population in your selected geography is 12,277. The population has 

changed by -1.30% since 2000. It is estimated that the population in your area 

will be 12,211.00 five years from now, which represents a change of -0.54% from 

the current year. The current population is 49.97% male and 50.03% female. 

The median age of the population in your area is 22.96, compare this to the US 

average which is 37.68. The population density in your area is 3,895.76 people 

per square mile. 

Households 

There are currently 3,647 households in your selected geography. The number of 

households has changed by -2.23% since 2000. It is estimated that the number 

of households in your area will be 3,648 five years from now, which represents a 

change of 0.03% from the current year. The average household size in your area 

is 2.50 persons. 

Income 

IIn 2016, the median household income for your selected geography is $57,968, 

compare this to the US average which is currently $54,505. The median 

household income for your area has changed by 12.26% since 2000. It is 

estimated that the median household income in your area will be $67,219 five 

years from now, which represents a change of 15.96% from the current year. 

Race and Ethnicity 

The current year racial makeup of your selected area is as follows: 92.06% White, 1.50% 

Black, 0.10% Native American and 3.11% Asian/Pacific Islander. Compare these to US 

averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% 

Asian/Pacific Islander. People of Hispanic origin are counted independently of race. 

People of Hispanic origin make up 1.73% of the current year population in your 

selected area. Compare this to the US average of 17.65%. 

Housing 

The median housing value in your area was $205,090 in 2016, compare this to 

the US average of $187,181. In 2000, there were 2,666 owner occupied housing 

units in your area and there were 1,063 renter occupied housing units in your 

area. The median rent at the time was $576. 

Employment 

In 2016, there are 4,022 employees in your selected area, this is also known as 

the daytime population. The 2000 Census revealed that 74.68% of employees 

are employed in white-collar occupations in this geography, and 25.14% are 

employed in blue-collar occupations. In 2016, unemployment in this area is 

10.15%. In 2000, the average time traveled to work was 16.00 minutes. 

The current year per capita income in your area is $30,286, compare this to the 

US average, which is $29,962. The current year average household income in 

your area is $90,538, compare this to the US average which is $78,425. 

Demographic data © 2016 by Experian. 




35



Location Overview 

Economic Development 

The city of Duluth is the hub of a thriving region in northeastern Minnesota called the Arrowhead. With $9 billion in annual consumer spending and approximately $2 billion 

planned for new capital investments, Duluth is positioned to benefit from economic opportunities for years to come. 

Its international seaport accesses the world through the St. Lawrence Seaway. Natural resources such as taconite (iron ore) and timber helped build the area economy 

and continue to fuel growth today. Duluth and its neighboring communities have benefited from the expansion of new industries in health care, precision manufacturing, 

metal fabrication and aerospace. 

The Duluth International Airport provides state-of-the-art services from high-speed Internet for travelers to 24/7 air traffic control and radar coverage. More than $73.9 

million in capital investments at the airport are either completed or pending, including a new and improved fixed-base operator, Category II instrument landing capabilities 

to minimize delays in foul weather, auto-pay parking system, in-line baggage screening process, and 24 hour U.S. Customs assistance. The airport also recently completed 

a $65 million new passenger terminal project. 

Major Employers in Duluth 

Essential Health 7,880 

Saint Mary’s Duluth Clinic 6,000 

Heads Up 5,016 

Comfort Systems 1,755 

Saint Mary’s Medical Center 1,544 

Saint Luke’s Hospital of Duluth 1,533 

University of Minnesota Duluth 1,100 

United Health Care 950 

County of Saint Louis 824 

Duluth Entertainment Convention Center 586 

Duluth Messabe Iron Range Railway 550 

Proximity to Major Destinations & Amenities 

Mount Royal Shopping Circle 

University of Minnesota Duluth 

Lake Superior 

College of St. Scholastica 

St. Luke’s Hospital 

St. Mary’s Duluth Clinic 

Canal Park - Downtown Waterfront | Aerial Lift Bridge 

United Health Care 

Duluth Entertainment Convention Center 

Duluth International Airport 

Lake Superior Zoo 

Spirit Mountain Ski/Recreation Area 

0.4 Miles 

0.3 Miles 

1.6 Miles 

1.9 Miles 

2.0 Miles 

2.4 Miles 

3.7 Miles 

3.8 Miles 

3.8 Miles 

6.8 Miles 

9.1 Miles 

11.2 Miles 

36 






Market Information 

Duluth and its surrounding suburbs coupled with Superior Wisconsin, form 

a metropolitan area of nearly 300,000 residents called the twin ports. The 

Duluth-Superior Seaway Port is considered the largest freshwater port in 

the world, primarily shipping coal, iron ore and grain through the Great 

Lakes and St. Lawrence Seaway. As a popular tourist destination for the 

Midwest, Duluth features America’s only all-freshwater aquarium, the 

world’s longest freshwater sandbar, the Aerial Lift Bridge; Park Point, and 

the Superior Hiking Trail. Events hosted by the city feature the Homegrown 

Music Festival, the Bayfront Blues Festival, and the Northeastern Minnesota 

Book Awards. Local attractions such as the Duluth Art Institute at the Duluth 

Depot, the Tweed Museum of Art at the University of Minnesota Duluth and 

smaller local art galleries. 

Sources: Duluthian 




37



Duluth, Minnesota Overview 

propertyname 

The Duluth-Superior metro is located along the north shore of Lake 

Superior, at the westernmost point of the Great Lakes. The lake as well 

as nearby state and national parks and forests draw a multitude of 

visitors to the region for a wide range of outdoor activities. The metro 

consists of St. Louis and Carlton counties in Minnesota and Douglas 

County in Wisconsin. Duluth is the most populous city in the region with 

196,600 residents and is the seat of St. Louis County. Residents of the 

city are well educated with nearly 33 percent holding a bachelor’s 

degree, well above the U.S. level of 29 percent. 

Duluth 

OVERVIEW 

METRO HIGHLIGHTS 

TOURIST DESTINATION 

A variety of natural features as well as the Great Lakes Aquarium, Canal Park, 

Lake Superior Railroad Museum and the Glensheen Mansion draw visitors. 


PORTS 

The combined facilities in Duluth, Minnesota, and nearby Superior, Wisconsin, 

form the largest port on the Great Lakes, shipping commodities worldwide. 

The University of Minnesota Duluth, College of St. Scholastica, Lake Superior 

College, University of Wisconsin-Superior and Wisconsin Indianhead Technical 

College are all located within the metro. 

ECONOMY 

• A large tourism industry is underpinned by Lake Superior and the many state and national parks and 

forests nearby. The region offers an abundance of outdoor activities and is also the gateway to the 

North Shore and the Boundary Waters Canoe Area. 

• Aviation is a sizable component of the economy. Cirrus Aircraft is headquartered and manufactured 

in Duluth. Kestrel Aircraft, AAR Corp., Monaco Air, the 148 th Air National Guard and the Duluth 

International Airport also provide jobs in the area. 

• Other major economic drivers include healthcare, manufacturing, data centers and 

logistics/transportation. 

DEMOGRAPHICS 

2016 

POPULATION: 

280K 

Growth 

2016-2021*: 

1.5% 

2016 

HOUSEHOLDS: 

117K 

Growth 

2016-2021*: 

2.2% 

2016 

MEDIAN AGE: 

40.9 

U.S. Median: 

37.7 

2016 MEDIAN 

HOUSEHOLD INCOME: 

$61,800 

U.S. Median: 

$57,200 

* Forecast 

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau 

1 

38 




exclusively listed 

Exclusively listed by: 

Investment Sales: 

OFFICES THROUGHOUT THE U.S. AND CANADA 

www.marcusmillichap.com 

Mox Gunderson 



Tel: (952) 852-9713 

Fax: (952) 852-9710 

mox.gunderson@marcusmillichap.com 

License: MN 40237387 | ND 8586 

Dan Linnell 



Tel: (952) 852-9770 

Fax: (952) 852-9710 

dan.linnell@marcusmillichap.com 


Josh Talberg 



Tel: (952) 852-9769 

Fax: (952) 852-9710 

josh.talberg@marcusmillichap.com 


Chris Collins 

Associate 


Tel: (952) 852-9758 

Fax: (952) 852-9710 

chris.collins@marcusmillichap.com 

License: MN 40336144

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