Apartment Valuations

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Apartment Valuations Underwritingin Southern
California

• October 2008
• Paul Runkle Associate Partner
  
  Joe Leon Partner
• Inland Empire Office
  
  Newport Beach West LA Office
• 951.506.2616
  
  949.223.0608 310.470.8963
• prunkle_at_hpapts.com
  
  jleon_at_hpapts.com

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Topic Overview

• What is taking place in the market?
• How are deals being underwritten?
• Where are deals being done and not done?
• Where do we see the market going?
• What is going to change the market dynamics?

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The Market Standoff
I told you Im a buyer at a 6 cap
_at_! you Im not selling at anything over 5.5
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Case Study 1

• 165 Units - Montclair, CA

• Current Cap 6.16

• Price/Unit 177,273

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Case Study 2

• 204 Units - Diamond Bar, CA

• Current Cap 5.5 ish

• Price/Unit Mid 180,000s

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Case Study 3

• 208 Units - Riverside, CA

• Current Cap ?

• Price/Unit TBD

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Project Details
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Valuation Return_at_ Varying Cap Rates
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Historical Capitalization Rates forInland
Empire, LA County and Orange County
2001 Avg. 7.8
2004 Avg. 6.2
2008 Avg. 5.2
2006 Avg. 5.0
2007 Avg. 4.9
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Inland EmpireAnnual Job Growth
Inland Empire is Southern Californias Growth
Engine.
While the forecast for 2008 is a
loss of 17,900 jobs, from 1984-2007
the region
created 819,876 jobs, an average of 34,162 jobs
per year.
Source CA Employment Development Department /
Economics Politics, Inc.
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