AUD Project - High Density Program Cases (see market analysis below for more information on AUD Program)
Land Use Zone: C-G Commercial General
Land Use Designation: Priority Housing Overlay
Neighborhood: Eastside/Downtown, nestled below the Riviera. Easy access to 101 freeway, 5 minutes from Trader Joes, CVS and other retailers, 10 minute walk to State Street
Existing Site Conditions: Existing structures will be demolished at project commencement
Site Environmental Assessment: Property is in the final stages of environmental clean-up
Project Information:
Unit Mix: 16 Studios, 25 Two Bedrooms
Total Building Sq. Footage (including automated garage parking): 44,180 Sq. Ft.
Total Rentable Sq. Footage: 30,189 Sq. Ft.
Efficiency Ratio (net rentable interior s.f. space to gross s.f. of building area less parking): 30,189/(44,180-2448)=72%
Projected Total Rent Collected/Month: $116,055.00
Projected Total Rent Collected/Year: $1,392,660.00
Average Rent/Sq. Ft.: $3.96
Average Rent/Door: $2,918.17
Annual Rent/Unit: $35,018.05
Annual Expense/Unit: $9,511.00
Projected NOI Rentable/Ft.: $2.77
Total Project Cost: $18,000,000
Estimated Total Cost of Construction: $10,200,000
Land Cost: $3,875,000 ($94,512/unit)
Municipal Fees: $500,000
Indirect: $2,550,000
Contingency reserve: $875,000
Target Cap Rate: 5.5%
Lease Terms: Standard Residential Lease (min. 6 month term)
Project Ownership: Plaza Riviera Partners, LLC (a single purpose entity)
Title Insurance: Fidelity National Title CLTA
Property Management Fee: 4%
Property Taxes: 1.067%
MARKET ANALYSIS - SANTA BARBARA, CA
Housing:
Average Santa Barbara Rents (Vintage 30+ years Units): Studio - $2,000, 1 Bed - $2,300, 2 bed - $2,800, 3 Bed - $3,500
Operating Expenses for comparable properties: +/-28%
Vacancy Rate: South Coast vacancy rate about 2%
Downtown Santa Barbara Notable Sales of Multifamily Units in 2018 (vintage 30+ years):
104 Chapala St. & 28 W. Mason St., SB CA | 8 units | $3,650,000 ($456,250 PPU) | 3.33% CAP
215 W. Arrellaga St. SB | 10 units | $3.7M ($370,000 PPU) | 3.4% CAP
125 W. Mason Street, SB | 5 units | $3.4M ($680,000 PPU) | 3.15% CAP
712 W. Anapamu St, SB | 8 units | $2,170,000 ($271,250 PPU) | 2.89% CAP
Median Home Value: Santa Barbara (City) $2,00,000 | Santa Barbara (County): $594,400
Average Household Income: $103,356 (expected to grow 14% over the next five years)
4 Properties Built since 2000 (Santa Barbara City) | 21 Properties Build since 2000 (Santa Barbara Country)
Total Unit Supply: 312 (Santa Barbara City) | 2,163 (Santa Barbara County)
Core Units Per Person Ration: 1:298 (Santa Barbara City, 93,699 total population) | 1:208 (Santa Barbara County, 449,922 total population)
Greater than 60% of population reside in renter-occupied housing
AUD Program:
Program to increase the density and increase the supply of rental units within the City of Santa Barbara. More information here.
The program has an initial duration of 8 years or until 250 new units under the Program have been constructed in the High Density Residential or Priority Housing Overlay areas, whichever occurs first.
Progress to date: 118 units have been constructed and issued certificates of occupancy, 58 units have building permits, leaving 74 units to be built, of which Plaza Riviera constitutes 41 units. Leaving only 33 units to be approved and built under AUD.
Employment:
Average Household Income: $103,356 (expected to grow 14% over the next five years)
Unemployment As of September 2018: 3.3% in Santa Barbara County (Compared to 3.7% in September 2017) | 4.1% (California)
Top Employers:
UCSB - 4,600 employees
Cottage Health System - 2,600 employees
Santa Barbara City College
Raytheon Electronic Systems
Yardi Systems
Growing Tech Hub:
Procore Technologies
LinkedIn/Lynda
Honey
Citrix
AppFolio
Curvature
Invoca
LogicMoniter
Well Health
Zoom
DEBT ANALYSIS
Debt to Equity (at total debt to actual total hard cost): 65%
Debt to Equity (at anticipated appraised value at stabilization) @4.5% cap 11,700,000/22,282,685= 53% @5% cap= 11,700,000/20,054,420= 58% @5.5% cap= 11,700,000/18,231,290= 64%
Coverage Ratio: Based on I/O @ a 5.5% interest rate = 1.56x and Based on a 30 amort.: 1.26x