The Waller Group is proud to present the 60.6% occupied, 71-unit value-add property in Toledo, OH. The subject property is conveniently located downtown, just a 6-minute walk from Fifth Third Field, a 10-minute walk to ProMedica headquarters, a 5-minute walk to Owens Corning (located just behind the property), and a 6-minute walk from the newly expanded Glass City Center ($60mm is projected to be spent on the expansion project, which is expected to be finished by the end of 2022). The property is a rare value-add opportunity available because current ownership is looking to reinvest proceeds.
The subject property has been owned by current ownership for 30 plus years. Current management only leases furnished units, so 40% of the units are unoccupied because they are unfurnished. Current rents are 60%+ below market rents. This will allow new ownership to stabilize occupancy and raise rent up to $254 / unit, which is a $0.76 sqft bump. With this bump new ownership can achieve an annual NOI of $281,444. Based upon a projected exit cap rate of 7.50%, new ownership would see a projected valuation at stabilization of $3,752,588. There is the opportunity to implement additional income fees through implementing lease violation fees, laundry income, and parking fees. Another cost saving opportunity would be utilizing water conservation opportunities such as updates on faucets, showers, and low flow toilets, which can save up to 20% on water bills.
Specific risks such as small unit size and lack of individually metered units can be mitigated by budgeting for utility billbacks and Murphy beds. There is the opportunity for extended stay furnished units due to neighborhood walkability and urban demand, which can boost projected revenues above current proforma projections. Alternatively, new ownership could combine half of every other unit to increase the unit size to 450 ft for 1 BD units, adding 40 1 BD units, which would be a total of 51 units.
The city may be open to including the adjoining land to increase overall land size for the right development project. Additionally, the property is located within a Community Reinvestment Area (CRA), which provides real property tax abatement on the improvement value for new construction and rehabilitated residential and commercial structures. Proforma financials were underwritten with a 5% management fee.