Daniel J. Flood Tower. A 210 Unit, 100% Project-Based Section 8 (HAP), Multi-Housing Community in Kingston (Wilkes-Barre), Pennsylvania

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1 Daniel J. Flood Tower A 210 Unit, 100% Project-Based Section 8 (HAP), Multi-Housing Community in Kingston (Wilkes-Barre), Pennsylvania

2 The Offering Holliday Fenoglio Fowler, L.P. ( HFF ) is pleased to exclusively present for sale Daniel J. Flood Tower, a 210-unit, 100% Project-Based Section-8 (HAP) senior multi-housing community in Kingston (Wilkes-Barre), Pennsylvania. Daniel J. Flood Tower stands prominently as the tallest building in the Greater Wyoming Valley and benefits from a strong connectivity to the powerful economies of the mid-atlantic and New England regions, including New York and Philadelphia. The Property features amenities specifically suited for a senior tenancy and provides essential affordable housing for the region s robust senior population. Daniel J. Flood Tower benefits from a Project-Based Section 8 (HAP) contract that covers all 210 units at the Property. The guaranteed rental revenue provided by the HAP contract, combined with an income qualified, at-risk resident base, makes Daniel J. Flood Tower an ideal candidate for preservation through the use of Low Income Housing Tax Credit (LIHTC) equity. The rehabilitation and preservation of Daniel J. Flood Tower will enable Investors to potentially increase contract rents to market while replacing and modernizing many of the mechanical systems at the Property, thereby substantially increasing NOI. Furthermore, Investors focused on pursuing Daniel J. Flood Tower as a hedge against inflation can secure long-term debt at interest rates near historic lows. PROPERTY OVERVIEW Address: 230 Wyoming Avenue City, State: Kingston, PA Year Built: 1974 Number of Units: 210 Units Census Tract: (Non-Qualified) Net Rentable SF: 112,095 Average Unit Size: 534 SF Buildings (Residential): 1, 16-Story Tower Buildings (Commercial): 14,413 SF, Street Level Acres: +/- 1.5 Acres Density: 140 Units / Acre Income Restrictions: 100% HAP - Senior (62+) HAP Contract Expiration: December 31, 2017 UNIT MIX C u r r e n t C o n t r a c t R e n t s P r o f o r m a C o n t r a c t R e n t s P r o f o r m a A n n u a l R e n t Units U n i t D e s c r i p t i o n % o f T o ta l S F 15 Studio 7% 383 $627 $765 $137, Bedroom, 1 Bath, HAP 29% 513 $726 $945 $680, Bedroom, 1 Bath, HAP 7% 558 $726 $945 $170, Bedroom, 1 Bath, HAP 57% 560 $726 $945 $1,360, Totals/Averages 100% 534 $719 $932 $2,349,000 PROPERTY AMENITIES / UNIT FEATURES Community Room Fully-Equipped Kitchens Include: Leasing Office -Frost-Free Refrigerator On-Site Management -Disposal Business Center -Electric Stove/Oven Laundry Facility Unit to Lobby Intercom Outdoor Patio Ceramic Tile Bathrooms Planned Social Events 2

3 Investment Highlights IDEAL PRESERVATION OPPORTUNITY The existing HAP contract covering all 210 units at Daniel J. Flood Tower virtually guarantees annual cash flow with minimal exposure to resident turnover and vacancy loss. Investors pursuing Daniel J. Flood Tower as a hedge against inflation can achieve consistent, stable returns while securing long-term debt at interest rates near historic lows. Furthermore, the guaranteed rental revenue provided by the HAP contract, coupled with an income qualified resident base, makes Daniel J. Flood Tower an ideal candidate for preservation using Tax Exempt Bond financing and Low Income Housing Tax Credits (LIHTCs). Investors that pursue a LIHTC Execution will benefit from: POTENTIAL TO INCREASE HAP CONTRACT RENT Current monthly contract rents at Daniel J. Flood Tower equal $627 and $726 for studio- and one-bedroom units, respectively. Should an investor acquire and rehabilitate Daniel J. Flood Tower using Low-Income Housing Tax Credit (LIHTC) equity, a significant opportunity exists to increase contract rents through an extension of the existing HAP contract. Based on a comprehensive survey of the surrounding rental market summarized below, HFF s analysis assumes Proforma contract rents of $765 and $945 for studio and one-bedroom units, respectively. LIHTC equity to off-set acquisition and renovation costs; The potential to further increase contract rents upon renovation; Increased LIHTC pricing from LIHTC investors attracted to Properties with existing HAP contracts and who may also have a CRA need; Dislocation in municipal bond markets will allow Investors to pursue short-term bonds at historically low interest rates while still qualifying for LIHTCs; and Ability to break chain of title but still receive acquisition credits. 3

4 Investment Highlights NOTABLE, WELL-MAINTAINED COMMUNITY Originally constructed in 1974, Daniel J. Flood Tower is comprised of 210 units situated on an approximately 1.5 acre parcel directly off Wyoming Avenue in Downtown Kingston. The 16-story, high-rise building is the tallest structure in the Wyoming Valley and features efficiently designed studio and one-bedroom floor plans averaging 534 square feet. Each unit at Daniel J. Flood Tower contains a fully equipped kitchen, ceramic tile bathrooms, and apartment to lobby intercoms. Residents also have the option to rent wall mounted heating and cooling units for $10 per month. Two, 2,000 pound Otis elevators serve the building and the Property is equipped with an advanced fire detection system. Daniel J. Flood Tower offers an amenity package tailored for a senior residency that includes a large community room, business center, and an on-site laundry facility. SUPPLEMENTAL REVENUE VIA COMMERCIAL INCOME STREAMS Distinct from the residential component, Daniel J. Flood Tower features approximately 14,413 square feet of ground level retail space that generates nearly $125,000 in annual net commercial rental income. With approximately 2,400 square feet currently available for lease, an investor can immediately generate enhanced returns by leasing up any remaining vacant commercial space. private high schools. The college prep and boarding school enrolls over 450 students from 17 countries and boasts an endowment of $55 million. Several nearby medical institutions serve the greater Scranton-Wilkes Barre MSA, including the Geisinger Wyoming Valley Medical Center, the Wilkes-Barre VA Medical Center and the country s largest rehabilitation facility, the Allied Rehab Hospital. Located less than three miles from Daniel J. Flood Tower, the Wyoming Valley Mall and Arena Hub Plaza combine for over 1.35 million square feet of retail and feature national tenants that include JC Penney, Macy s, Sears, Dick s Sporting Goods, Best Buy, and Old Navy. Aside from the Property s ground floor retail space, Daniel Flood Tower s roof has been leased to 3rd party cellular providers in the past and already contains the infrastructure needed to sign on a new lessee. Current ownership has negotiated an agreement with Blue Wireless that is awaiting lessee execution, the terms of which can be found in the financial analysis section of this offering memorandum. CONVENIENT LOCATION PROXIMATE TO REGIONAL ECONOMIC DRIVERS Clearly visible from surrounding cities and major roadways, Daniel J. Flood Tower can be accessed directly via Wyoming Avenue, Kingston s main thoroughfare that sees an average daily traffic count of nearly 20,000 cars. Adjacent to the Property, Wyoming Seminary spans across a 22 acre campus and ranks as one of Pennsylvania s top 4

5 Investment Highlights ATTRACTIVE DEMOGRAPHICS CULTIVATE HIGH QUALITY OF LIFE Nearly 60% of the residents within a 1-mile radius of Daniel J. Flood Tower hold white collar jobs, while over 73% of residents within that radius work within the private sector. Demand for affordable senior housing will remain strong as the mature population surrounding Daniel J. Flood Tower continues to age. Over 33% of residents within a 5-mile radius of the Property are of ages 55 and older. As one of the safer communities in the region, Kingston residents have enjoyed consistently low crime rates. Violent crimes in Kingston are reported over 90% less often than the national average. Renowned private high school 450 students from 17 countries $55 Million endowment Market Street Daniel J. Flood Tower Wyoming Avenue (20,000 AADT) 5

6 Wyoming Valley Mall, Arena Hub Plaza 4,700 students 35-acre campus 412 beds 400 Physicians 60,000 patients treated annually Downtown Wilkes-Barre Kirby Park 52 acres Tennis courts, running track, pond, softball fields Wyoming Valley Middle School Daniel J. Flood Tower West Side Mall 452,897 square feet Wyoming Avenue (20,000 AADT) Renowned private high school 450 students from 17 countries $55 Million endowment 6

7 Transaction guidelines Daniel J. Flood Tower is being offered all-cash on an as-is basis, subject to rent, income, and age restrictions as required by the HAP Contract and Regulatory Agreement. Offer Due Date: Thursday, March 26, 2015 by 5 p.m. PST Tour Schedule: Tours will be scheduled for select days during the marketing period. All property tour requests are to be made and confirmed through HFF by contacting Doug Childers ( , dchilders@ hfflp.com) or Michael Fox ( , mfox@hfflp.com). Under no circumstances are Investors allowed to visit the Property without approval from HFF. Failure to adhere to this request will be taken into consideration by the Seller when offers are selected. Holliday Fenoglio Fowler, L.P. ( HFF ) a Pennsylvania licensed real estate broker HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. DOUG CHILDERS Director - Affordable Housing tel (404) fax (404) dchilders@hfflp.com MARK THOMSON Sr. Managing Director tel (484) fax (484) mthomson@hfflp.com ZAC PIERCE Sr. Managing Director tel (484) fax (484) zpierce@hfflp.com MICHAEL FOX Analyst tel (404) fax (404) mfox@hfflp.com