FOUNTAIN ARMS A 14 UNIT VALUE-ADD INVESTMENT OPPORTUNITY LOCATED IN EAST HOLLYWOOD (LOS ANGELES), CALIFORNIA. hfflp.com

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1 hfflp.com FOUNTAIN ARMS A 14 UNIT VALUE-ADD INVESTMENT OPPORTUNITY LOCATED IN EAST HOLLYWOOD (LOS ANGELES), CALIFORNIA Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number ( HFF )

2 THE OPPORTUNITY HFF is pleased to present for sale, Fountain Arms (the Property ), a charming 14-unit multi-housing property located within the highly desirable East Hollywood submarket of the City of Los Angeles. This 1924 vintage asset boasts three separate buildings that include 10 studios and 4 one-bedroom units offering private entrances in most units. The Property is designated a Walker s Paradise location with a 94 Walkscore, meaning that tenants here enjoy a wealth of walkable attractions, stores, restaurants and bars. Furthermore, the neighborhood of East Hollywood offers a dense concentration of hospitals, such as Kaiser Permanente Medical Center, Children s Hospital Los Angeles, and Hollywood Presbyterian Medical Center, offering a strong built-in tenant base. With the current rent roll 37% below market rents for renovated units, an incoming investor will have the opportunity to add value by renovating the balance of the units to further capture significant rent premiums. Strategically located in an in demand neighborhood for both tenants and investors, Fountain Arms is poised to benefit from favorable market fundamentals. Fountain Arms is being offered in conjunction with the neighboring Berendo Apartments (16 units) located at 1217 N. Berendo Street, totaling 30 units. As such, the portfolio can be purchased as individual assets, or in its entirety. Please refer to page 9 for a map of the portfolio and contact HFF for more information on the additional offerings. 2 EXECUTIVE SUMMARY

3 4 UNIT MIX 10 STUDIO (10) 1 BR / 1 BA (4) PROPERTY OVERVIEW PROPERTY ADDRESS 1234 N Berendo Street Los Angeles, CA UNITS 14 APPROXIMATE SF* 8,050 (575 sq. ft./unit) YEAR BUILT 1924 OCCUPANCY 86% ACREAGE 0.23 (9,905 Sq. Ft.) APN: ZONING: LAR3 *Based on ownership s approximation of gross SF EXECUTIVE SUMMARY 3

4 INVESTMENT HIGHLIGHTS PROXIMATE TO JOBS AND AMENITIES Fountain Arms benefits from its close proximity to local attractions and employment centers. Within a minute drive, residents can commute to over 750,000 jobs and 101 million square feet of office space within the Downtown, Hollywood and Mid-Wilshire employment centers. The Property is a short walk from Kaiser Permanente, Children s Hospital and Hollywood Presbyterian Medical Center, which combined employs over 19,000 individuals providing an excellent built-in tenant base. Tenants also enjoy the neighboring Barnsdall Art Park, situated a few blocks north of the Property and home to the Los Angeles Municipal Art Gallery and Frank Lloyd Wright s Hollyhock House. Fountain Arms is also only a short distance away from other local attractions including Sunset Junction (3.9 miles away) the Hollywood Bowl (3.5 miles away), the Griffith Observatory (3.0 miles away), the Hollywood Sign (3.1 miles away), Dodger s Stadium (3.8 miles away) and Staples Center (5.6 miles away). The neighborhood of East Hollywood has become a destination for a diverse array or popular restaurants, offering cuisine ranging from Filipino food at L.A. Rose Cafe to Middle Eastern dining at Falafel Arax. With several new restaurants and bars slated to open in the coming year, East Hollywood is likely to become one of the more popular dining neighborhoods in Los Angeles. SIGNIFICANT UPSIDE POTENTIAL New ownership has the opportunity to implement a renovation program toachieve significant rent premiums. Current ownership has renovated 4 of the 14 units, allowing new ownership the opportunity to renovate the balance of the units, as current rents are approximately 37% below renovated market rents. LOCATION CATERS TO THE GROWING TRANSIENT DEMOGRAPHIC Fountain Arms is considered a Walker s Paradise with a Walkscore of 94, according to Walkscore.com. Daily errands, dining, and entertainment do not require a car, catering to the demographic shift among renters who demand immediate access to amenities and public transportation. Residents benefit from convenience access to the Vermont/Sunset station (0.5 miles away from the Property), which runs from North Hollywood to Union Station in Downtown Los Angeles, connecting to all other lines. From the Property, residents can walk to numerous restaurants, local attractions and nightlife venues along Sunset Boulevard, Hollywood Boulevard, Vermont Avenue and Franklin Avenues. 4 EXECUTIVE SUMMARY

5 GRIFFITH OBSERVATORY PARU S ZANKOU CHICKEN HOLLYWOOD/WESTERN METROLINK FOUNTAIN ARMS SUNSET BLVD. CHURCH OF SCIENTOLOGY SQUARE ONE DINING HOLLYWOOD BLVD. BARSDALL ART PARK HOLLYHOCK HOUSE KAISER PERMANENTE LOS ANGELES MEDICAL CENTER FOUNTAIN AVE PUBLIC HOUSE VERMONT/SUNSET METROLINK HOLLYWOOD PRESBYTERIAN MEDICAL CENTER LA ROSE CAFE LOS FELIZ THEATER THE DRESDEN STARBUCKS CHILDREN S HOSPITAL HOMESTATE LOS FELIZ HILLHURST AVE. VISTA THEATER VONS VERMONT AVE. HOLLYWOOD HOTEL RITE AID EXECUTIVE SUMMARY 5

6 STRONG ECONOMIC DRIVERS WITH HISTORIC INTEGRITY Fountain Arms is surrounded by a number of new commercial and residential projects, which will continue to reshape an already burgeoning location. East Hollywood and the surrounding neighborhoods of Hollywood and Los Feliz have retained an aura of historic prestige while maintaining a constant inflow of new developments. The local area has either recently completed, ongoing, or planned development totaling over $4.8 billion. These include projects such as Olive Hill, Cen Fed s 200 unit mixed use project, Hollywood Presbyterian Medical Center s $200 million expansion, CIM s Paseo Plaza, which will offer 370,000 square feet of premier retail and restaurants as well as 375 units, and the Icon at Sunset Bronson Studios which is the Los Angeles headquarters for Netflix. APARTMENT FUNDAMENTALS REMAIN IN LANDLORD S FAVOR PASEO PLAZA According to AXIOMetrics, rent has grown in the submarket to $2,497, outperforming the Los Angeles average by 11.4% year-over-year. Average effective rent growth in the submarket is forecast to average 4.1% per year over the next five years. Vacancy in the Property s submarket is currently 5.06% and is expected to average 4.89% over the next five years. With very limited new multifamily construction in the immediate area, market fundamentals here should remain in the landlord s favor (AXIOMetrics). 6 EXECUTIVE SUMMARY

7 RENTERS PRICED OUT OF HOME OWNERSHIP Currently, the median home value within a one mile radius of Fountain Arms is $658,442, equating to a monthly cost of ownership at $2,588 after tax and interest savings. The current asking rent for market-rate units at Fountain Arms represents a +/- 66% discount to ownership. This assumes a buyer can produce a 20% down payment and qualify for a mortgage, further increasing the barrier to home ownership. EXECUTIVE SUMMARY 7

8 8 MARKET OVERVIEW

9 Fountain Arms is being offered in conjunction with the neighboring Berendo Apartments (16 units) located at 1217 N. Berendo Street, totaling 30 units. As such, the portfolio can be purchased as individual assets, or in its entirety. Please see below for a map of the portfolio, and contact HFF for more information. Sunset Boulevard Fountain Avenue FOUNTAIN ARMS BERENDO APARTMENTS

10 FOUNTAIN ARMS INvestment Contacts FINANCING FOUNTAIN ARMS BLAKE A. ROGERS Managing Director T CA License # ALEXANDRA CANIGLIA Associate acaniglia@hfflp.com T CA License # STEVEN PASKOVER Director spaskover@hfflp.com T CA License # hfflp.com ATLANTA AUSTIN BOSTON CAROLINAS CHICAGO DALLAS DENVER HOUSTON INDIANAPOLIS LOS ANGELES MIAMI NEW JERSEY NEW YORK CITY ORANGE COUNTY (CA) ORLANDO PHILADELPHIA PHOENIX PITTSBURGH PORTLAND (OR) SAN DIEGO SAN FRANCISCO TAMPA WASHINGTON, D.C. LONDON