Mount Royal Manor Offering Memorandum
Mount Royal Manor is a 114 unit apartment community located in the Chester Park neighborhood of Duluth, Minnesota. 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.
Mount Royal Manor is a 114 unit apartment community located in the Chester Park neighborhood of Duluth, Minnesota. 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.
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FINANCIAL ANALYSIS<br />
Value-Add Opportunity<br />
YEAR 1<br />
RENOVATED<br />
YEAR 3 *<br />
Income<br />
Effective Rental Income<br />
Gross Potential Rent 1,361,184 1,746,755<br />
Loss / Gain to Lease (13,612) 1.0% (26,201) 1.5%<br />
Gross Scheduled Rent 1,347,572 1,720,554<br />
Physical Vacancy (67,379) 5.0% (86,028) 5.0%<br />
Economic Vacancy<br />
Bad Debt/Concessions (13,476) 1.0% (8,604) 0.5%<br />
Total Vacancy ($80,855) 6.0% ($94,630) 5.5%<br />
Economic Occupancy 94.00% 94.50%<br />
Total Effective Rental Income 1,266,718 1,625,923<br />
Other Income<br />
Telecommunication Leases 129,483 137,369<br />
All Other Income 43,490 63,527<br />
Total Other Income $173,973 $200,896<br />
Effective Gross Income $1,439,691 $1,826,819<br />
Expenses<br />
Payroll 108,451 115,017<br />
Repairs & Maintenance 38,609 40,960<br />
General & Administrative 66,218 70,250<br />
Contract Services 27,774 29,465<br />
Trash Removal 8,111 8,605<br />
Cleaning & Supplies 25,433 26,982<br />
Marketing and Advertising 16,769 17,791<br />
Management Fee 71,985 5.0% 86,841 5.0%<br />
Non-Controllable<br />
Real Estate Taxes 196,605 208,578<br />
Insurance 37,550 39,836<br />
Utilities - Electric 10,688 8,550<br />
Utilities - Water & Sewer 35,776 37,955<br />
Utilities - Gas 40,482 42,947<br />
Operating Reserves 34,200 36,283<br />
Total Expenses $718,614 $770,061<br />
Expenses as % of EGI 49.90% 42.15%<br />
Net Operating Income $721,077 $1,056,758<br />
<strong>Mount</strong> <strong>Royal</strong> <strong>Manor</strong><br />
PROPOSED UNIT UPGRADES AND ESTIMATED COSTS<br />
Item Cost Per Unit Total Cost<br />
UNITS<br />
In-Unit Rehab $10,000 $1,140,000<br />
EXTERIOR / GROUNDS<br />
Roof Repair / Replacements $877 $100,000<br />
Penthouse Deck Replacement $132 $15,000<br />
Garage Repairs $1,535 $175,000<br />
Landscaping $175 $20,000<br />
Sidewalk, Asphalt, Curb Replacement $482 $55,000<br />
COMMON AREA<br />
Common Area Carpet / Wall Paper $2,500 $285,000<br />
Open Stairwell Door Replacement $44 $5,000<br />
FOB System $500 $57,000<br />
Cameras $439 $50,000<br />
Miscellaneous $88 $10,000<br />
Common Area LED Lighting $219 $25,000<br />
MECHANICAL UPGRADES<br />
Boiler & Hot Water Heater Replacement $4,386 $500,000<br />
Domestic Hot / Cold / Waste Pipe Replacement $13,158 $1,500,000<br />
Unit Fuse Panel Replacement $1,623 $185,000<br />
Remove Old Oil Tank $219 $25,000<br />
TOTAL $36,377 $4,147,000<br />
UNIT MIX<br />
Average Monthly Rental Premium<br />
Unit Type<br />
To Current Market Rents<br />
Studio $175<br />
1 Bedroom / 1 Bath $200<br />
2 Bedroom / 1 Bath $250<br />
2 Bedroom / 2 Bath $300<br />
* Reflects Growth Rate for Year 3/Stabilized Pro Forma<br />
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<br />
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<br />
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<br />
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