ACCT 4200 Group Project

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KSU Real Estate
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Henderson Place Apartments
Judy Campbell Roger Caulk Andrea Henson Angelina
Ofori-Kuragu Melissa Phifer Chris Townsend
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Deal Summary

• Owners require a 15 return on investment
• Investment alternatives
• Buy an operating apartment complex
• Renovate an existing apartment complex
• Build a new apartment complex

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Deal Summary

• 180 unit apartment complex located in Smyrna
• Overall project cost 12.6M
• Financing with 3-year bridge loan
• Refinancing with 15-year permanent loan
• Initial equity investment of 3.78M

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Target Market
Target Market

• Echo-boomers (ages 18-34)
• Growing population segment
• Vast majority rent before buying
• Business professionals
• Young families
• College students

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Apartment Location
Smyrna, Georgia

• Population over 54,000
• Five-year growth rate gt 35
• Over 20,000 persons between ages 25-34
• Major Employers include Lockheed, Dobbins,
  Sprint and Home Depot

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Apartment Location
Smyrna, Georgia

• Average work commute time in metro Atlanta
  approx. 24 minutes
• Work commute times from Smyrna average
  under 20 minutes
• Near several malls and major shopping centers,
  golf courses, and recreation areas
• Excellent local schools, universities and
  hospitals

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Apartment Description

• 180 unit apartment complex located in Smyrna
• 120 two-bedroom (1200 ft2)
• 30 one-bedroom (800 ft2)
• 30 three-bedroom (1600 ft2)

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Apartment Amenities

• Bright, open floor plans
• Double pane windows
• Over-sized walk-in closets
• Dishwashers
• Garbage disposals

• Washer/Dryer hookups
• Microwaves
• High-tech hookups
• Fire and security systems
• Fireplaces

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Our Community

• Coin Laundry
• Gated Community
• Weight Room
• Abundant Parking
• Garbage Collection
• Business Facilities
• Picnic Area With Grill

• Playground
• Car Wash
• Pool and Toddler Pool
• Dry Cleaning Service
• Tennis and Volleyball
• On-premises School Bus Stop

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Competition

• Over 20 apartment complexes located in Smyrna
  comprised of over 6,000 apartment units
• Complexes average over 90 occupancy
• Average rental rates
• One-bedroom 750/month
• Two-bedroom 950/month
• Three-bedroom 1,100/month
• Average security deposit 250

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CompetitiveAdvantages

• Excellent customer satisfaction
• Competitive pricing
• Superior property maintenance

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Marketing Strategy

• Word of mouth
• Brochures
• Advertising in local newspapers
• Open houses
• Apartment locators

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Personnel Summary

• One property manager
• Two part-time office personnel
• Two maintenance personnel
• One groundskeeper

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Management Summary

• Property manager makes day-to-day decisions
• Approves tenants
• Manages maintenance and office personnel
• Promotions
• Owners will make strategic decisions
• Capital expenditures
• Set overall policies

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Rental Policies

• Reservation Deposit of 280 will be submitted
  with application for residency
• 80 non-refundable
• 200 security deposit
• Minimum one-year lease
• Applicant(s) must have monthly gross income of
  at least 3 times monthly rental amount

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FinancialPresentation
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Project Costs

• Land - 1,800,000
• 10 acres _at_ 180,000 per acre
• Building - 10,800,000
• 180 units _at_ 60,000 per unit
• Start-up costs - 50,000
• Trucks and short-term assets

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Key Assumptions

• Short-term interest rates 5
• Long-term interest rates 7
• Inflation rate 3
• Marginal tax rate 40

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Key Risks

• Change in interest rates
• Decline in Smyrna economy
• Long-term competition

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Pricing Strategy
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Income Statement
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Cash Flow
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Breakeven
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Ratios
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Deal Summary

• 180 unit apartment complex located in Smyrna
• Overall project cost 12.6M
• Financing with 3-year bridge loan
• Refinancing with 15-year permanent loan
• Initial equity investment of 3.78M

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Questions orComments?