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- A PLANNED COMMUNITY -

This project management presentation has been prepared by National Realty & Investment Advisors, LLC (NRIA) on the basis of
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TABLE OF CONTENTS
1

Executive Summary

Property Description

Area Overview

Comparable Properties

The Market

Investment Requirement

EXECUTIVE
SUMMARY

SoNo26 A Planned Community


Experience the excitement of SoNo26 26 groundbreaking luxury townhomes with garage & dedicated parking and common
manufacturing district first started turning heads in the early 90s, when a progressive, artist-heavy flock, lured by cheap studio space,
began migrating north from Old City. Our high ceilings, large windows, and hardwood floors evoke the industrial loft - a melding of
traditional warmth and contemporary urban living. All units enjoy a breathtaking common space and gourmet kitchen, equipped
with high-end stainless steel appliances and granite countertops. Feel free to entertain, relax, or unwind- our open floor plans are
suited for any mood and any occasion. Enjoy the view from your private roof deck, and pamper yourself in the master suite with its
walk-in closets and a spa-like master bath. We invite you to leave your car in your private garage or dedicated parking space - with
direct access to bus and train routes, community gardens, and shopping centers, you will rarely need it. Welcome to Northern Liberties,
welcome to SoNo26.
SoNo26 embraces the commingling of like-minded residents and a quirky network of bars, restaurants and boutiques within
neighborhood limits (Girard Avenue and Callowhill Street north and south, the Delaware River and Sixth Street east and west).
Already a hotbed of enviro-friendly construction, Northern Liberties value was further boosted by the additions of Liberties Walk and
the Piazza at Schmidts, ambitious mixed-use complexes that reimagined overlooked industrial bones. Long established as a force,
Northern Liberties has become an economic and cultural influence on the neighborhoods around it.

EXECUTIVE SUMMARY

park in Philadelphias Northern Liberties a perpetually up-and-coming neighborhood that has permanently arrived. This former

PROPERTY
DESCRIPTION

PROPERTY DESCRIPTION

Exterior Rendering

PROPERTY DESCRIPTION

Interior Rendering

PROPERTY DESCRIPTION

Media Room Rendering

PROPERTY DESCRIPTION

First Floor Living Room Rendering

PROPERTY DESCRIPTION

First Floor Dining Room Rendering

PROPERTY DESCRIPTION

Second Floor Rendering

PROPERTY DESCRIPTION

Third Floor Master Suite Rendering

PROPERTY DESCRIPTION

Roof Deck and Pilot House Suite Rendering

PROPERTY DESCRIPTION

Kitchen Rendering

PROPERTY DESCRIPTION

Living Room Rendering

TO BE DEMOLISHED

PROPOSED SITE PLAN

PROPERTY DESCRIPTION

Proposed Site Plan

Floor Plan Type A (9 Units)


FOOTPRINT: 833 SF (1ST FLOOR)
2ND FLOOR DECK
PILOT HOUSE AND ROOF DECK
PART FINISHED BASEMENT
W/MEDIA ROOM
PRIVATE DRIVE AND GARAGE
GFA: 2,015 SF
TOTAL GROSS USEABLE AREA:
2,389 SF (W/ BASEMENT)
218 SF GARAGE
153 SF 2ND FLOOR DECK
560 SF ROOF DECK
3,779 TUA
3 BR + 3.5 BATH

Floor Plan Type B (13 Units)


3-STORY 38-0 H
UNITS 10-22
FOOTPRINT: 704 SF (1ST FLOOR)
REAR YARD
PILOT HOUSE AND ROOF DECK
PART FINISHED BASEMENT
W/MEDIA ROOM
PRIVATE DRIVE + PARKING SPACE
GFA: 2,232 SF
TOTAL GROSS USEABLE AREA:
2,936 SF (W/ BASEMENT)
84 SF ROOF DECK
3,520 TUA
3 BR + 3.5 BATHS

PROPERTY DESCRIPTION

3-STORY 38-0 H
UNITS 1-9

Floor Plan Type C (3 Units)


FOOTPRINT: 750 SF (1ST FLOOR)
REAR YARD
PILOT HOUSE AND ROOF DECK
PART FINISHED BASEMENT
W/MEDIA ROOM
PRIVATE DRIVE + PARKING SPACE
GFA: 2,370 SF
TOTAL GROSS USEABLE AREA:
3,120 SF (W/ BASEMENT)
630 SF ROOF DECK
3,750 TUA
3 BR + 3.5 BATHS

Floor Plan Type D (1 Unit)


3-STORY 38-0 H
UNIT 26
FOOTPRINT: 720 SF (1ST FLOOR)
REAR YARD
PILOT HOUSE AND ROOF DECK PART
FINISHED BASEMENT
W/MEDIA ROOM
PRIVATE DRIVE + PARKING SPACE
GFA: 2,280 SF
TOTAL GROSS USEABLE AREA:
3,000 SF (W/ BASEMENT)
600 SF ROOF DECK
3,600 TUA
3 BR + 3.5 BATHS

PROPERTY DESCRIPTION

3-STORY 38-0 H
UNITs 23-25

Standard Building Specifications


Water tight 9 high concrete walls in basement
Brick faade with metal, cement board, wood, or stucco siding
O street parking (see site plan if appliacble)
Fiberglass roof deck and 100+ SF pilot house suite
(see site plan if applicable)
3+ bedrooms
Minimum 2.5 bathrooms
Upper floor laundry room (if permits)
Finished basement/ media room (if no garage)
Energy ecient dual zone hvac systems
Wood stairs with stained risers and treads
10 year tax abatement pending

Foundation
Concrete foundations, cast-in-place basement walls and
basement slab
Footings and foundation walls built with reinforced bars
(REBAR)
Continuous vapor barrier under basement slab
Waterproof coating applied to foundation walls
Sump pump & pit in basement with French drain around
perimeter of basement

Exterior siding
Flashings and caulking as necessary to provide water-tight
system
Brick faade with metal, cement board, wood, or stucco siding
All exterior wall surfaces shall receive home wrap

HVAC
Dual zone HVAC
Duct-work and exterior venting for bathroom exhaust fans
Duct-work & exterior venting for dryer venting provided

Windows
Vinyl geld-wyn or equal

Drywall and paint


5/8 gypsum wallboard on all locations
Double 5/8 drywall in garage
All drywall, trim, baseboard, casing to be painted with low VOC
paint. All white paint throughout

Electrical
200 amp electrical service
Decora outlets and switches per code
Recessed lights throughout
Smoke detectors & carbon monoxide detectors hard-wired
per code
Recessed lights throughout - 6 in main house & bedrooms,
low voltage in bathrooms
Most closets lighted
Exhaust fans in each bathroom
Lighting package provided on roof & exterior

Insulation
Exterior walls on 2nd & 3rd floor - R19
Exterior walls on ground floor - R19
Roof insulation - R38

PROPERTY DESCRIPTION

Building Specifications Overall

Plumbing
Kohler toilets, tubs, and bath fixtures Grohe bath fixtures
and faucets
Gas HVAC system, hot water heater, dryer and oven
Public water/sewer service
Drain, waste and vent piping
Sump pump
75 gallon Bradford White gas hotwater heater
Garbage disposal on all kitchen sinks
Cast iron waste lines
Pex water system
French drain in basement
Roofing
Fiberglass roofing
Aluminum flashings, roof edging, gutters and downspouts as
required

Rough carpentry
2 X 12 or TGI wood joists for floor framing and roof framing
Advantec sub-flooring shall be 3/4 tongue and groove
Zip wall system (or similar material) sheathing on exterior walls
Sub-flooring shall be glued to floor trusses with low VOC
adhesive
Demising partitions shall be 2 x 6 wood studs, 16 on center
with 5/8 zip wall system on the exterior surface and 5/8 drywall on the interior
Front and rear exterior partition walls shall be 2 x 6 wood
studs, 16 on center
Interior partition walls shall be 2 x 4 wood studs, 16 on
center
Finish carpentry
5 1/4 Flatstock baseboards
3 1/2 Flatstock door and window casing
Fully enclosed stairs, hardwood treads and risers
Modern style, brushed nickel lever handles and locksets

PROPERTY DESCRIPTION

Building Specifications Overall

Living Room
4-5 x 1/2 engineered flooring
9 0+ ceilings
Phone, cable and internet ready
5 1/4 baseboard moulding
Recessed lights (6)

Kitchen
Granite or manufactured quartz counters
Stainless steel appliances - Bosch appliance package
3/4 HP garbage disposal
Recessed lights (6)
Ultra Craft custom cabinetry with self close draws and
contemporary stainless hardware
5 1/4 baseboard moulding
9 0 + ceilings
4-5 X 1/2 engineered flooring
Tile backsplash

Powder Room
Tiled floors
Mirror over vanity
Ceiling exhaust fan

Dining Room
4-5 X 1/2 engineered flooring
9 0+ ceilings
5 1/4 baseboard moulding
Recessed lights (6)
Ceiling pendant light junction box

PROPERTY DESCRIPTION

Building Specifications Kitchen & Living Rooms

Hallway
4-5 X 1/2 engineered flooring
5 1/4 baseboard moulding
8 0+ ceilings
Recessed lights (6)
Laundry/Mechanical Room
Full sized washer/dryer units - front or top loading
Tile flooring and baseboards (4 high)
Recessed lights (6)
Custom cabinetry where applicable

Bedroom #1 - Front
4-5 X 1/2 engineered flooring
8 + ceilings
Walk in closet with white laminate shelving and lighting
Phone, cable and internet ready
Recessed lights (6)
Ceiling fan junction box
Full Bathroom Including:
Ultra Craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
Tiled floors and baseboard (4 high)
5 drop in tub with tile to ceiling
Mirror over vanity (or medicine cabinet)
Ceiling exhaust fan (Panasonic or equal ultra quiet)
Recessed lighting

Bedroom #2- Rear


4-5 X 1/2 engineered flooring
8 + ceilings
Walk in closet with white laminate shelving and lighting
Phone, cable and internet ready
Recessed lights (6)
Ceiling fan junction box
Full Bathroom Including:
Ultra craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
Tiled floors and baseboard (4 high)
5 drop in tub with tile to ceiling or shower
Mirror over vanity (or medicine cabinet)
Ceiling exhaust fan (Panasonic or equal ultra quiet)
Recessed lighting

Linen Closet
White laminate shelving

PROPERTY DESCRIPTION

Building Specifications Secondary Bedroom Levels

Master Bathroom
Ultra craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
9 + Ceilings
Ceiling exhaust fan
Custom tile shower with frameless glass enclosure
Overhead rain shower, ceiling & handheld shower heads
Mirrors over vanities (or medicine cabinet)
6 Recessed lighting

Hallway
4-5 X 1/2 engineered flooring
5 1/4 Baseboard moulding
9+ Ceilings
Recessed lights (6)

Linen Closet
White laminate shelving

Master Bedroom
4-5 X 1/2 engineered flooring
5 1/4 baseboard moulding
9+ ceilings
Up to 2 walk-in closets with built in shelving system-white
(if layout permits)
Phone, cable and internet ready
Recessed lights (6)
Junction box for ceiling fan

PROPERTY DESCRIPTION

Building Specifications Master Bedroom Level

Roof Deck
Fiberglass roof deck
Hose bib (frost free)
Surface mount light fixtures

Powder Room
Tiled floors
Mirror over vanity
Ceiling exhaust fan

Pilot House Suite


100+ SF
Ultra Craft custom cabinetry with self close draws and
contemporary stainless hardware w/ marble or quartz tops
Beverage center or wine cooler
Prep sink
Recessed lights (6)
5 1/4 baseboard moulding
4-5 X 1/2 engineered flooring
Tile backsplash

Storage Closet (if layout permits)


White laminate shelving

PROPERTY DESCRIPTION

Building Specifications Roof Deck

Basement - Main Room/ Media Room


Fully carpeted or tiled
Phone, cable and internet ready
5 1/4 baseboard moulding

Powder Room (if applicable)


Porcelain tile flooring and baseboards (4 high)
Mirror over sink
Ceiling exhaust fan (Panasonic or equal ultra quiet)
Single vanity with granite or quartz countertop

PROPERTY DESCRIPTION

Building Specifications Basement

AREA
OVERVIEW

Philadelphia is the largest city in the Commonwealth of Pennsylvania and the fifth largest metropolitan area in the United States
with over eight million residents. As the second most powerful city on the East Coast after New York, Philadelphia serves as the
business capital of Pennsylvania and one of the most important economic and cultural hubs in the country. The City is ideally situated
100 miles from New York City and 140 miles from Washington, DC, strategically located in the epicenter of the wealthiest corridor in
the United States.

AREA OVERVIEW

Philadelphia:
The 5th Largest Metropolitan Area in the United States

Northern Liberties, formerly known as a an industrial & manufacturing hub is a neighborhood of great current signifigance in
Central Philadelphia. The neighborhood extends from Girard Avenue to Callowhill Street and from North 6th Street to the banks of
the Delaware River. Northern Liberties was in existence long before the city of Philadelphia had even been established. Its name
comes from Northern Liberties Township, which appeared in local legislature from the 1770s. By 1854, it was annexed to the district
of Philadelphia, allowing Philadelphia to surpass Baltimore as the second largest city in the United States. Being located outside
of the bustling city allowed Northern Liberties to thrive industrially. Many manufacturing mills, factories, and plants produced the
tools and commodities needed within the city. By the 19th century, many Immigrants began to populate this area. Their heritage can
still be seen today in the areas numerous and highly varied churches. In 1985, the area was declared as a historic district that is now
dedicated to preserving the Italianate, Greek Revival, and Federal style buildings that characterize the area. Today Northern Liberties
is a beautiful community with close to 4,500 residents and known for its eclectic and hip collection of restaurants, shops, and art
galleries.

AREA OVERVIEW

Area Overview

Subject Property

SoNo26

AREA OVERVIEW

Northern Liberties:
Neighborhood Boundaries

Philadelphias economy has undergone a dramatic transformation from its traditional manufacturing base to one driven by a variety
of industries, with a special emphasis on the healthcare and higher education sectors. Philadelphia is home to 98 hospitals and more
than 90 institutions of higher education, which employ more than 580,000 highly educated professionals across the region. The
Philadelphia Metropolitan Area is also home to nine Fortune 500 companies, including AmerisourceBergen, Aramark, Campbell Soup
Company, Comcast,Crown Holdings, E.I. du Pont de Nemours, and Lincoln National, among others. In 2013, these nine companies
generated in excess of $249 billion in annual revenues, representing nearly 67% of the Philadelphia Metropolitan Areas gross
metropolitan product (GMP).
The citys large and diversified economy has helped generate a GMP of $364 billion, one of the highest in the United States. As of
August 2014, the Philadelphia Metropolitan Areas unemployment rate stood at 6.7%, lower than major U.S. cities such as Atlanta,
Chicago, and Los Angeles. More recently, Philadelphias fast-growing biomedical and pharmaceutical industries have brought 14
major pharmaceutical firms and nearly 100 biotech firms to the area. Eight of the worlds largest pharmaceutical companies are
located within a 50-mile radius of Philadelphia, including Astra Zeneca, Bristol-Myers Squibb, GlaxoSmithKline, Janssen Biotech,
Merck, and Novo Nordisk. Philadelphia is also one of the top 15 markets in the U.S. for venture capital investment with nearly $350
million of committed capital across 105 dierent investments.

Within a 5-hour drive of 25% of the U.S. population


State-of-the-art international airport within a two-hour flight of half of the U.S. population
Amtraks 30th Street Station serves nearly 4.2 million riders per year and oers high-speed trains to New York,
Washington, DC, and Boston
SEPTA has the 6th largest rapid transit system by ridership in the country
Home to 98 hospitals and over 90 institutions of higher education
Headquarters of 9 Fortune 500 Companies with revenue of over $249 billion
CHOP expected to add ~500 full-time doctors, researchers and other employees
Penn Health gearing up for $1.5 billion hospital expansion, nearly doubling bed count

AREA OVERVIEW

Philadelphia:
Diversified Economy

Philadelphias educational leadership began in 1740 with the


founding of one of the countrys first universities, the Ivy League,
world-class University of Pennsylvania. Over 250 years later,
the region is home to leading universities specializing in
biotechnology, business, finance, medicine, and technology,
which produce highly skilled graduates that continue to
stimulate Philadelphias economy. Philadelphia is also home
to five nationally recognized schools of medicine, including
Drexel University College of Medicine, Philadelphia College of
Osteopathic Medicine, Temple University School of Medicine,
Jeerson Medical College, and the Perelman School of Medicine
at the University of Pennsylvania.
Second highest number of four-year colleges in the country
after New York, with more than 90 degree-granting institutions
The second largest student population of any city on the East
Coast, with approximately 368,000 students and more than
66,000 graduates each year
Highly educated workforce with more than 75% of Center City
residents holding at least a Bachelors degree
Drexel University strategic plan to increase student population
by 10,405 students by 2021 and full time employees by 4,119
during same period.
32,000 students downtown with an additional 54,000 across
the Schuylkill River in University City

AREA OVERVIEW

Philadelphia:
Home to the Nations Leading Universities

Center City:
Impressive Population Growth

As the third largest downtown population in the US (behind NYC


and Chicago), Philadelphia is ranked as one of the most walkable
/ bikeable cities in America. The Center City neighborhood
epitomizes this trend (scoring 98 for each) reflecting the new
generation of renters favoring walkable, urban neighborhoods.
Within Philadelphia, Rittenhouse Square boasts the highest
pedestrian trac counts in the city ( approximately 23,000 people
per day), and is especially pedestrian-oriented.
Over 61% and 63% of residents in a one-mile radius of Walnut
and Chestnut, respectively, take alternative means of transportation to work, far exceeding the national average of 19%.
This trend is being further encouraged by the City of Philadelphia,
which is revealing a new Bike Share program this fall. With an
initial rollout of 150 to 200 stations and over 2,000 bikes to be
spread across the city over the next year, anticipated ridership is
around 500,000 trips annually by 2015, with local use anticipated
to surpass 2.5 million trips per year over the first six years of operations. The growing role of bicycles in Philadelphia will increase the
dynamism and connectivity of the market, significantly expanding
the pedestrian count in Rittenhouse Square and Society Hill.

Center City: By the Numbers


288,500 jobs, or 44% of Philadelphias total workforce,
with a total purchasing power of $13 billion
Most diversified workforce in the region with the oce
sector generating 31% of all jobs
305,000 daily commuters with SEPTA recording a 10.2%
and 13.1% increase for subway and bus routes, respectively,
into downtown over the last decade
409 cultural institutions as well as 14 colleges / universities
and 5 hospitals
2nd nationally behind only Manhattan in the number of
downtown art and cultural institutions
More than 3,200 retail establishments, 11,300 hotel rooms,
and 37.5 million square feet of Class A oce space
24.2% population growth from 2000 to 2013
The adjacent University City is one of the nations preeminent
education, health, and R&D nodes with UPenn, Drexel, and
CHOP, creating a significant opportunity for Philadelphias
two largest employment centers to further integrate and
drive growth for the region

AREA OVERVIEW

Center City has experienced the largest and most geographically


concentrated growth in Philadelphia. Since 2000, the Center
City core population has grown by more than 24% driven by a
persistent migration of young, urban professionals seeking to live
in an amenity-rich, urban mixed-use environment. By comparison,
the core Center City population growth since 2000 has exceeded
that of major cities,including Boston (7.5%), San Francisco
(6.2%), and New York (5.4%). Center City has one of the highest
concentrations of residents with post-secondary education in the
United States: in 2000, nearly 68% of Center Citys residents held
at least a Bachelors Degree. By 2013, the figure had grown to more
than 75%.This incredible population growth, particularly among
educated residents, has contributed to a boom in multifamily
deliveries. Since 2000, approximately 2,100 multifamily units have
been delivered in Center City.

Comcast has broken ground on a $1.2 billion (or $800 PSF),


1,121-foot skyscraper at 1800 Arch Street in late 2014. Designed
by world-renowned architect Lord Norman Foster, Comcasts
new tower will become the tallest building in the city and will
accommodate the companys rapid growth, as Comcast expects to
add approximately 3,000 employees from around the country. The
project is expected to create 6,300 temporary construction related
jobs and an additional 14,400 jobs in Pennsylvania, and bring an
abundance of talent to the region, making Philadelphia a central
hub for broadcasting and technology.
SoNo26 is ideally positioned to benefit from the delivery of the
Comcast Center. Even though its one dozen blocks east, SoNo26
will be a unique residential alternative to capture Comcast-related
residential growth, while providing a contrasting historical
aesthetic to the ultra-modern and high-tech vertical oce campus.

AREA OVERVIEW

The Comcast Innovation and Technology Center:


A Key Center City Growth Driver

COMPARABLE
PROPERTIES

822 N. American Street

718 N. 4th Street

444 Fairmount Avenue

322 Brown Street

Subject Property

SoNo26

COMPARABLE PROPERTIES

Comparable Properties

Comparable Sale # 1
322 Brown Street, Unit A, Philadelphia, PA
Sale Date: 12/05/2014

Sale Price: $835,000

Comparable Sale # 2
718 N. 4th Street, Philadelphia, PA
Sale Date: 12/03/2014

Sale Price: $750,000

COMPARABLE PROPERTIES

Comparable Properties

Comparable Sale # 3
310 Fairmount Avenue, Philadelphia, PA
Sale Date: 07/29/2014

Sale Price: $749,900

Comparable Sale # 4
822 N. American Street 3, Philadelphia, PA
Sale Date: 9/30/2015

Sale Price: $1,050,000

COMPARABLE PROPERTIES

Comparable Properties

THE
MARKET

Philly Hits Sweet Spot in Oce Space Demand

In recent weeks, weve been covering news of Phillys flourishing housing


boom and rising home values. Now, we might soon add oce properties
to that increase: Finance & Commerce reports the city has hit a sweet
spot in oce demand with sales doubling to $1.4 billion:
Real estate values approaching or surpassing peak levels in New
York, Boston and Washington have buyers turning to Philadelphia
for its higher yields, rising rents and falling vacancies. Thats
bolstering oce deals in the fifth-largest U.S. city at a time when
Manhattan-like towers have opened with luxury condominiums
and cable operator Comcast Corp. is developing a skyscraper
that will be the areas tallest.
The website adds that this boom in demand could be part of larger
Philadelphia renaissance attributed to local university graduates
sticking around instead of leaving for jobs in other cities, as
Bob Walters, CBRE Groups executive managing director, put it.

A recent study by City Observatory backs this idea with


findings that show young college grads spur on economic
and neighborhood revitalization.
As a result of all this, real estate investors growing
interest has prompted landlords to cash out:
About $400 million of oce buildings are for sale within a
four-block radius in the Market Street West district of
downtown that is being marketed by Jones Lang LaSalle,
said Doug Rodio, a broker at the company.

THE MARKET

By Angelly Carrion | October 22, 2014 | http://www.phillymag.com

Oil, natural gas surge makes Philadelphia


the new energy hotspot

The city best known for Rocky, cheese steaks and sharp-elbowed
sports fans is developing a new reputation as a nexus of oil and gas
transportation, which bodes well for its economy.
With little fanfare, Philadelphia is undergoing a revolution powered by
the U.S. energy renaissance. Renewed investment and activity in the
regions sprawling railway network and aging infrastructure is turning
the City of Brotherly Love into a potential energy hub that some believe
can rival Houston.
Energy experts cite two major factors working in Phillys favor: its
proximity to the booming Marcellus Shale, where 5,400 shale wells
churned out nearly 2 trillion cubic feet of natural gas during the first six
months of the year; and the citys bustling commercial railroad system,
which has made it a transit point for oil being shipped from North
Dakotas Bakken formation.
Along the Northeast corridor, there are maybe six distribution pipeline
proposals for natural gas, said Vincent Devito, a law partner at
Boston-based Bowditch & Dewey. A lot is intended for exports and
the quickest and easiest way is through Philadelphias infrastructure.
Devito, a former Department of Energy ocial, said the city is already a
draw for gas and energy related businesses that like to be close to the
pipeline for easy access, he said. Philly is in a fortunate spot because
they are part of the Northeast corridor, theres a lot of business and
remarkable opportunities for business and economic development.
Most recently, Philadelphias profile in the energy sector got a large
boost from Sunoco Logistics Partners, a pipeline investment vehicle that
announced it would construct a $2.5 billion pipeline from the Marcellus
into Philly. The new pipeline will complement an existing gas artery that
may hike the regions natural gas transport by fourfold.

With the U.S. experiencing an embarrassment of fossil fuel riches, Sunoco


and other companies are channeling billions into pipeline investment
across the country. As local rail companies like Monroe Energy negotiate
for increased access to Bakken crude, Philadelphia is one of several
regions that stands to benefit from the influx of oil and gas.
Philly has physical infrastructure, land and access to export markets, or
you can transport [natural gas] to other markets in the U.S., said Adam
Karpf, a portfolio manager at Atlantic Trust, which has $24 billion in
assets under management.
The new Houston?

THE MARKET

Tom DiChristopher | Javier E. David | November 16, 2014


http://www.cnbc.com

Oil, natural gas surge makes Philadelphia


the new energy hotspot

Once its up and running, Sunoco Limiteds pipeline will funnel nearly
300,000 barrels per day of natural gas liquids (NGL) to Philadelphias
Marcus Hook Industrial Complex.
The city is not what most would normally consider an energy hub.
Traditionally, oil and gas production has taken place in locations
further south, like Houston and New Orleans.
However, the U.S. energy boom has upended many of those assumptions,
transforming unlikely cities into hubs of fossil fuel production. Combined
with a set of refineries that are being retrofitted for natgas purposes,
Philadelphia could eventually rival energy powerhouses in Texas and
Louisiana, some energy watchers say.
Houston is not as close to the demand centers as Philadelphia is. The
East Coast is an amazing engine of demand, said Michael Krancer, chair
of the energy industry practice at Blank Rome law firm.

The citys 8.4 percent unemployment rate is well above the national
average, and even above Pennsylvanias. Many of the cities and states
that are ground zero for shale production have seen jobless rates
plummet. For that reason, energy watchers are reasonably optimistic
that Philly can see some of the same magic other oil and gas producing
regions have experienced through the shale boom.
Energy development in the region can help stem a brain drain of
educated professionals out of the area, Krancer added.
The potential is even greater than Houston, he said. The parts of the
state that are benefiting the most from this are the parts of the state
that have been economically challenged for a generation or two.

THE MARKET

Tom DiChristopher | Javier E. David | November 16, 2014


http://www.cnbc.com

Is Philadelphia in a Housing Bubble?

One morning in August, Philadelphias deputy mayor for economic


development, Alan Greenberger, was headed to the groundbreaking
for a new mixed-use complex near the citys Art Museum. The
project will include nearly 300 luxury apartments and a Whole Foods.
On his way there, he stopped at the construction site for a luxury
apartment building on a busy central corridor, Chestnut Street.
Greenberger had come to take part in an announcement with the
Associated General Contractors of America, who had just ranked
Philadelphia metro region number three in the number of construction
jobs added.
Ive been here now, this September, this will be my 40th year in
Philadelphia, he told assembled architects and dignitaries. He said
hed been discussing this the day before with a local developer.
Neither of us can remember, in our lifetimes in this city, a construction
boom of this magnitude.
A whole lot of those workers are building housing.

Construction job numbers have been rising in about two-thirds of


U.S. metro areas tracked by the general contractors association
over the past year, and most of the top regions are located in southern
states with housing a major driver throughout the country. In 2012,
Philadelphias Center City District (CCD), an economic development
non-profit, calculated that developers had completed 463 residential
units in central Philadelphia. In 2014, the CCD estimated, that number
could soar to 2,600. Most of it will be luxury and mid-market housing,
with monthly rents above the citys average.
Whos Moving to Center City Philadelphia?
The short version: Most of the people who will occupy these new homes
and apartments will fall into two growing Philadelphia demographics.
Theyre the young and employed, and those nearing or over retirement
age.
The urban aspirations of young professionals and empty nesters,
isnt stu we talk about generally, this is a very specific relationship,
Greenberger told me recently. Young people in particular, specifically
those 25 to 34, he says, want to be here because they can the live city
life they want, can get to work, and its more aordable
than other cities.

THE MARKET

By Emma Jacobs | Next City | October 6, 2014

Is Philadelphia in a Housing Bubble?


By Emma Jacobs | Next City | October 6, 2014

Normally, he says, people move into more expensive housing as their


income improves, freeing up better housing to the next income level
until structures in the worst condition get demolished, and he didnt see
that happening in Philadelphia, for years.
Whats going on in Center City is causing it to expand outward, says
Victor Pinckney, vice president of the Homeowners Association of
Philadelphia. Hes focused on rehabbing homes in Philadelphia
neighborhoods north and northwest of Center City.
Banks are lending again, he says. Two years ago, three, I tried to do a
refinance and it wasnt going nowhere. A year and a half later they were
trying to throw money at me. Nothing had changed on my end.
Will the Market Break?
Mullin thinks Philadelphians are natural pessimists about their
long-suering economy. Its a very Philadelphia thing to say,
how can we support two water ice stands?
Greenberger notes theres some natural anxiety that comes with a
construction boom.

Boom cycles end, he acknowledges, but do they just sort of retreat


back to some sort of manageable level or do they bust? In this case, he
thinks the strength of the citys other sectors make it unlikely the floor
would fall out of the housing market.
Brad Doremus of realty data tracking firm Reis says the metros vacancy
rate fell from 4.4 percent at the close of 2011 to 3.3 percent as of
mid-2014, and the market seems ready to absorb new units through
the end of the year.
Past 2014, new construction is projected to outpace net absorption
on an annual basis for a few years, he added, but, this is not a big
worry the markets long-term average vacancy (since 1980) is
around 4.6 percent so it isnt a surprise that it would begin slowly
moving up again.
When the CCD presented its figures in March, President Paul Levy
identified two potential market constraints: the Philadelphia school
districts funding crisis and the pace of job growth.
To the extent that people are unsure about schools in every
neighborhood, thats going to limit peoples willingness to stay
or buy homes within the city, he says.
In an update two weeks ago, he told me, Every indicator we have seen,
as well as discussions with lenders and developers, suggests that the
demand remains strong for the new units that are coming on line.

THE MARKET

An upscale housing market driven by millennials may sound


counterintuitive. After all, headlines about the generations struggles
abound. However, Steve Mullin says that in a metro region with six
million residents, it doesnt take too many people changing their
behavior to result in market shifts. That is to say, the suburbs dont have
to empty out for the city to require new housing. Mullin, president of
Econsult Solutions, adds that for 50 years, Philadelphia basically had
no new, quality housing.

Why Philly homebuyers need


to channel inner Rocky
By Diana Olick | cnbc.com | October 15, 2015

The closer in to the city center, the higher that median price rises.
I have sold more homes this year within the first day or two or three
that it goes on the market because there is such a shortage. If something
shows nicely and is priced right, there will be multiple bids, and it will sell
right away, said Mike McCann, a real estate agent with Fox & Roach.
Closed sales are up just 2.4 percent from a year ago, and signed contracts
are down 13 percent. Homes are also selling nearly 5 percent faster than
a year ago. Demand is coming from what McCann calls meds and eds
growing demand from the citys many hospitals and universities.
After falling in the last decade, Philadelphias population has rebounded
since 2010, putting ever more pressure on housing. Comcast, owner of
NBCUniversal, parent company of CNBC and CNBC.com, is building a
second tower in the city, which is creating spino jobs in the downtown,
especially for young millennials. Downsizing baby boomers are also
adding to Philadelphias new residents.

They want to be in town. This is the first time weve had growth in the
city. The downtown marketplace has been expanding dramatically.
There are a lot of renovations of old neighborhoods that are being fixed
up and new construction. The market has expanded because of the
shortage of inventory, added McCann.
Helping the growth is a 10-year tax abatement for new construction.
That is adding new product to parts of South Philadelphia and
Kensington. The center core is spreading farther, and retail and
restaurants are following suit.

THE MARKET

House hunters in Philadelphia today might want to channel their inner


Rocky. It will take a good fight to find the right property at the right
price. Inventory in the city proper was down 10 percent in September
from a year ago, while the median price, $158,000, was up nearly the
same, according to the Berkshire Hathaway HomeServices Fox & Roach
HomExpert Market Report.

Renters Struggle to Find Available Units

As the country gains more renters, the demand for aordable rentals is
outstripping supply.
Real estate investors who are able to provide aordable rental housing
should have no problem finding tenants in many of the countrys major
metropolitan areas, according to a joint research project about renting
from New York Universitys Furman Center and Capital One, which
indicated the need for aordable rentals is growing.

The center noted that rents rose faster than household incomes in five of
the cities. This issue was most noticeable in Los Angeles and New York.
In Los Angeles, gross rent rose 11 percent while incomes fell 4 percent
between 2006 and 2013. In New York, gross rent rose 12 percent and
incomes had no growth. Conversely, incomes grew faster than rents in
three cities: Boston, Chicago and Houston.

According to the study, the number of major U.S. cities with a majority
renter population rose from five to nine, from 2006 to 2013. Further,
more than 50% of the population rents in these nine cities: Boston,
Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco
and Washington, D.C., according to Furman. Miami had the highest
share of renters as of 2013 65 percent but Boston, L.A., and New
York had 60 percent or more as well.

With the exception of Dallas and Houston, the average renter in


each metropolitan area could not aord the majority of recently
available rental units in his or her city. Even in the most aordable
cities, low-income renters could aord less than a tenth of the
available rentals. Rent is considered to be aordable when it
comprises less than 30 percent of household income.

Even as rental stock rose in each of the 11 cities studied, it didnt match
the pace of growth in the rental population, with the exception of
Atlanta.

Since 2006, there has been an increase in the share of low- and
moderate-income renters who are severely rent-burdened facing
rent and utility costs equal to at least half of their income.

Nine of the 11 cities saw double-digit growth in renters, and five


saw growth exceeding 20 percent Philadelphia, Miami, Boston,
Washington, D.C., and San Francisco.

Lack of aordability coupled with growing demand were key themes


of the study.
To be sure, real estate investors who are able to provide aordable
rental housing in any of these 11 cities likely will see high demand for
their properties.

THE MARKET

By Robert Greenberg | B2R Finance

Housing Demand Rises in and Near Central


Business Districts
By Robert Greenberg | B2R Finance
Weve heard for several years now that the Millennial Generation prefers
to live in city centers and close to their place of employment. Now we
are beginning to hear about jobs moving back into city centers from
suburban environments.
For the real estate investor, this trend could open up opportunities for a
robust return on investment in housing located close to the urban core in
cities around the nation.
The countrys largest metropolitan areas are recording faster job growth
downtown in the city core than areas located further from the city
center, according to research by the think tank City Observatory, which
analyzed census data.
City Observatory looked at what occurred between 2007 to 2011 and
compared urban cores to their peripheral areas. It defines a city center
as the area within 3 miles of the center of each regions central business
district.
In city centers, jobs grew at a 0.5 percent annual rate, but in the
surrounding peripheral portion of metropolitan areas jobs declined 0.1
percent per year. City centers out-performed the surrounding areas for
job growth in 21 of the 41 metropolitan areas examined.
As recently as 2002-2007, peripheral areas were growing much faster
(1.2 percent annually) and aggregate job growth was stagnant in urban
cores (0.1 percent).
The strength of city centers appears to be driven by a combination of
the growing attractiveness of urban living, and the relatively stronger
performance of urban-centered industries (business and professional
services, software) relative to decentralized industries (construction,
manufacturing) in this economic cycle.
Many companies have announced that they are moving to or expanding
operations in city centers, in large measure to take advantage of
the growing number of younger workers living in close-in urban
neighborhoods.

THE EFFECT ON HOUSING


City centers often play a unique role in the local housing market. They
generally have the highest density of housing, and the proximity to
services and employment is valued by some high-income households
and households without cars. Often the housing located right in the city
core is in the form of high-rise condominiums and apartment buildings,
which can be expensive.
More moderately priced single-family housing can often be found
close-by, however. In some cities, older, depreciated housing in or close
to the center is the most aordable for low- and moderate-income
households. B2R Finance believes that these moderately priced homes
very close to the city center could hold potential as acquisition targets
for single-family rental investors.
This proximity to employment and other amenities can provide
opportunities for lower and moderate-income citizens to enjoy the
convenience of living near city centers. These homes, as rental property
investments, also hold potential for rental growth and strong occupancy
levels as the demand for urban housing grows in many metropolitan
areas nationwide.

THE MARKET

For more than half a century, suburban growth surpassed growth in


cities in both population and job growth but that is changing.

The Best Places to Buy Single-Family Rentals


in Q1 2015
By Robert Greenberg | B2R Finance

Plenty of good options still exist for single-family residential rental


investors in many U.S. counties, according to a recent report, analyzing
U.S. single-family housing data. Investors can use the data to look at
specific markets that have strong and growing populations of
Millennials, Gen-Xers, and Baby Boomers.
Single-family residential rental properties are expected to bring in an
average return of 9.05 percent during the first quarter of 2015, but 20
individual markets show the promise of returns of more than 15 percent.
Two counties in Georgia Clayton and Bibb show potential annual
gross yields of 25.83 percent and 22.33 percent, respectively, the highest
of 516 counties analyzed. Clayton County is located in the Atlanta metro
area, while Bibb County is in the Macon, Ga. metro area.
Baltimore and Richmond oer potential annual gross yields of more
than 20 percent and yields surpass 17 percent in the following counties:
Wayne (Detroit metro area); Philadelphia; Pasco and Hernando
counties (Tampa, Fla., metro area); Oswego (Syracuse, N.Y.) and
Wyandotte (Kansas City metro area).
Baltimore County also holds the distinction as the county with the
highest annual average cash flow $13,770 for a leveraged investor.
Philadelphia County (in the Philadelphia metro area) and Clayton County
(Atlanta metro area) round out the top three counties with the highest
average annual cash flow for the leveraged investor of $12,048 and
$11,352 respectively.
Although the rental returns forecast in some counties may be
eye-popping, the risks may be high was well. An investor should
certainly weigh those risks carefully by conducting thorough due
diligence. Most of the counties in the top 20 for the highest gross rental
yields also had unemployment rates above the national average, which
could translate into renters having trouble paying the rent. This could
suggest that investors may see more evictions in these counties than
in other, more economically stable markets and possible higher than
normal vacancies as well.

THE MARKET

Want double-digit returns and rents that soar more than 10 percent a
year? Its possible for the savvy real estate investor. A new report just
released by RealtyTrac identifies 20 markets with the potential to deliver
returns of more than 15% and several over 20% during Q1 2015.

Photo credit: Flickr user Jeanette Runyon.

In a contributing article to Next City, Emma Jacobs reports that Philadelphia could be in the midst of an unprecedented housing boom. The
growth spurt is evident throughout the city, which was ranked in third
place by the Associated General Contractors of America in a list of metro
regions who saw a rise in construction jobs.
Neither of us can remember, in our lifetimes in this city, a construction
boom of this magnitude, said deputy mayor of economic development
Alan Greenberger during the announcement.
According to Jacobs, the Center City District estimated that in 2012,
developers had constructed 463 residential units in the area. The CCD
now predicts developers could build up to 2,600 residential units, most
of which would be luxury and mid-market housing, this year. Victory
Pinckney of the Homeowners Association of Philadelphia added that
whats going on in Center City is causing it to expand outward.

But how long could this housing bubble last? Heres more from Next
City:
[Steve] Mullin [of Econsult Solutions] thinks Philadelphians are
natural pessimists about their long-suering economy. Its a
very Philadelphia thing to say, how can we support two water
ice stands?
Boom cycles end, he acknowledges, but do they just sort of
retreat back to some sort of manageable level or do they bust?
In this case, he thinks the strength of the citys other sectors make
it unlikely the floor would fall out of the housing market.
Jacobs writes that realty tracking firm Reis says [e]very indicator we
have seen, as well as discussions with lenders and developers, suggests
that the demand remains strong for the new units that are coming on
line.

THE MARKET

Philly Housing is Having a Growth Spurt


By Angelly Carrion | October 27, 2014 | http://www.phillymag.com

INVESTMENT
REQUIREMENT

FINANCED PURCHASE 25% DOWN & REFI 5/1 Arm @ 3.75%


Financial Summary Estimates:

Construction Overview Estimates:


Gross Living Interior:

2,080 SF

4th Story Entertainment Suite

Land Purchase Price:

$187,308

4th Story Roof Top Deck

New Construction:

$435,000

Closing & Initial Project Management:

No. of Bedrooms:

No. of Bathrooms:

3.5

Bosch Appliances & Grohe Fixtures Package

Finished Basement:

Yes

w/Media Room or Basement w/Media Room

New HVAC CAC:

Yes

3,274 Useable Square Footage

Total Cost Amount:

$645,808

New Water Service:

Yes

1 Car Garage or Dedicated Parking Space

After Built Value (ABV/ARV):

$815,000

New Gas Service:

Yes

Units 1-9 Garage & Units 10-26 Parking Space

ASAP Built In Equity Profit:

$169,192

New Electric Service:

Yes

$23,500

INVESTMENT REQUIREMENT

Equity Overview
312 Fairmount Avenue, Philadelphia, PA 19123
UNITS 1-26

CASH REQUIRED:
$11,900 = RetainerDUE NOW!
$161,000 = (25% Deposit)Parked at Land Closing
29,814 = Construction Loan PaymentsPaid over Build
TOTAL CASH-IN = $202,714

LOANS:
$611,250 = Refinance loan amount
$484,808 = Construction loan amount

CASH-OUT at REFINANCE:
$126,442 = CASH BACK TO YOU!
Net cash to own this property is ONLY = $76,272
($202,714 - $126,442 = net cash to own)

RENT ECONOMIC BENEFITS:


$1,824 per year estimated positive cash flow + $12,348 annual pay
down of your mortgage = $14,172 annual economic benefit from rents:
$14,172/$76,272 (Cash Flow + Principal Pay Down/ Cash In) = 18.5%
Return

Your Gross Starting


EQUITY = $203,750
For Resale

INVESTMENT REQUIREMENT

Equity Overview
312 Fairmount Avenue, Philadelphia, PA 19123
UNITS 1-26

Assumptions

Annual Growth

Property Info
Purchase Price

$187,308

Construction

$435,000

Closing Costs

$23,500

Total Purchase

$645,808

Appraised Value

$815,000

Built-in Equity

$169,192

Annual Taxes

$1,020

0.00%

Annual Insurance

$1,000

0.00%

Property Mngt Fee

2.00%

$50

Closing Costs

$23,500

Total Initial Investment

$11,900

Asap 120-180 Cash Out

$0

Loan Info (refi)


Mortgage Type
Mortgage Term

Full Cash Out


30

Interest Rate

3.750%

Loan to Value %

Closing Cost as %

3.00%

75.00%

First Mort %

$611,250

Second Mort %
Second Mort Int Rate

0.000%

Other Info

Amount

Rents

$3,300.00

Equity Remaining
% Equity Remaining

Annual Growth
3.00%

$203,750
25.00%

INVESTMENT REQUIREMENT

Realty Wealth Rental Portfolio Business Plan


Date Created: 10/9/2015

Year 1

Year 2

Year 3

Year 4

Year 5

Total

$3,300

$3,399

$3,501

$3,606

$3,714

Monthly CD Revenue

$0

$0

$0

$0

$0

Annual CD Revenue

$0

$0

$0

$0

$0

$0

Annual Rent Revenue

$39,600

$40,788

$42,012

$43,272

$44,570

$210,242

Total Annual Revenue

$39,600

$40,788

$42,012

$43,272

$44,570

$210,242

$2,830

$2,830

$2,830

$2,830

$2,830

HOA

$100

$100

$100

$100

$100

Property Taxes

$85

$85

$85

$85

$85

Property Insurance

$83

$83

$83

$83

$83

Monthly Revenue (Income)


Monthly Rent Revenue

Monthly Expenses
First Mortgage Payment

Property Mngt Fee


Total Monthly Expenses
Annual Expenses
Net Annual Income/Loss
Deduct: Annual Depreciation
Taxable Gain or Loss

$50

$50

$50

$50

$50

$3,148

$3,148

$3,148

$3,148

$3,148

$37,776

$37,776

$37,776

$37,776

$37,776

$188,880

$1,824

$3,012

$4,236

$5,496

$6,794

$21,362

$23,484

$23,484

$23,484

$23,484

$23,484

($21,660)

$20,472)

($19,248)

($17,988)

($16,690)

INVESTMENT REQUIREMENT

Realty Wealth Rental Portfolio Business Plan


Date Created: 10/9/2015

Year 1

Year 2

Year 3

Year 4

Year 5

Total

$1,824

$3,012

$4,236

$5,496

$6,794

$21,362

Year-end Property Value

$831,300

$847,926

$864,885

$882,182

$899,826

Annual Increase to Prop Value

$16,300

$16,626

$16,959

$17,298

$17,644

$84,826

$0

$0

$0

$0

$0

$0

$7,798

$7,370

$6,929

$6,476

$6,008

$34,581

Economic Impact
Net Annual Rent Income/Loss

less: Total Deferred Interest


Tax Rate
add: Tax Benefit

36%

5 Year Economic Benefit


Return on initial $11,900 Investment

Equity Remaining

$203,750

Net Economic Gain

$344,518

$344,518
2,895%

Note: Actual results will vary based upon bank margin, realty appreciation, index interest rates, and actual investment rates. Past performance is not
a guarantee of future results. See your disclosure documents reviewed and closing documents for loan details. See your tax and investment advisors
for actual tax savings and investment review. This illustration does not include tax, investment, or legal advice. For concept illustration purposes only.

INVESTMENT REQUIREMENT

Realty Wealth Rental Portfolio Business Plan


Date Created: 10/9/2015