Description

Assignment Title:  “ONE EMBACADERO PLACE”

Deliverable: A WRITTEN REPORT OF THE ANALYSIS OF THE CASE, INTERPRETATION OF THE RESULTS, CONCLUSIONS AND RECOMEMDATIONS ( 5PAGES, 1.5 SPACING, 12 PITCH)

EMBACADERO REAL ESTATE INVSTMENT PARTNERSHIP: ONE EMBACADERO PLACE INVESTMENTS

BACKGROUND

The Embarcadero Real Estate Investment Partnership LLC owns an apartment building complex, One Embarcadero Place, located near Shoal Creek Road and Anderson lane in suburban Dallas. Embarcadero Partnership wishes to sell the property and is in serious negotiations with a motivated buyer. There is an outstanding mortgage loan balance of $9,045,000 on the property that the buyer may assume since the mortgage is assumable. The contract rate on the existing mortgage is 9%, monthly payments, with a remaining amortization period of 22 years at the time of sale. This existing first mortgage has a term of 10 years, i.e. it is balloon loan as most commercial real estate mortgages are. If the buyer assumes the outstanding mortgage balance the amount of equity investment (or down payment) that will be required is $4,455,000, because asking price (which is firm) is $13,500,000. If the existing first mortgage were assumed by the buyer, the required debt service would be based on the remaining amortization period of 264 months and contract interest rate of 9%. Embarcadero Partnership paid points and fees on the original loan in the amount of $234,741 when it first obtained the mortgage loan to finance the apartment property.

BRIEF PROPERTY AND MARKET CONDITION DESCRIPTIONS

The city skyline is just one of the many highlights you will notice at One Embarcadero Place Apartment Complex located in the historic part of Dallas. At One Embarcadero you will find boutique shops and other services within walking distance as well as affordable dining opportunities. The amenities in the complex include convenient free parking, high tech security, a fitness center and private pool, court yard for hosting guests and community events and friendly, professional on-site staff. Many of the luxury apartments have an array of stylish features including washer and dryer and the kitchens are equipped with modern appliances. The exterior of the building is a combination of brick, wood and textured veneer

The Embarcadero Complex is fifteen years old, has 156 units spread over 5 floors with total gross leasable area (GLA) of 178,453 square feet. The property is in satisfactory physical condition, although it would need refurbishing after purchase. The units are typically rented to middle class fully employed individuals employed by major companies headquartered in the Dallas Metropolitan Area.

The average asking rent in the subject building (i.e. Embarcadero complex) is $11.75/year/square foot of GLA. The median asking rent for similar properties in the market area is $11.20 /year/ square foot of GLA, and asking rent range from a low of $9.99/year/square foot of GLA to a high of $12.20/year/ square feet of GLA in Metro Dallas which includes Dallas City proper. The typical apartment building in the market area has GLA of 185,466 square feet. The net operating income (NOI) for the typical apartment property in the market area is shown in Table 1 below.