Huge Economic Impact of Topgolf and Dave & Busters for Augusta

 

What are the economic implications of Topgolf and Dave & Buster’s coming to Village at Riverwatch?  According to projections from Augusta Economic Development Authority reported by Damon Cline, these two projects are expected to add $15 million to the local tax base, and add 200 jobs and generate $1M in sales tax revenue.  Hats off to the Economic Development Authority, who was able to help attract these developments without tax incentives, and the only expense is a $250K commitment  to construct the public road that will give these sites access.  

 

What do you think will be the impact of these new developments?  Comment below:

 

Additional Resources:

More Details in Great Article by Damon Cline on this Subject

Village @ Riverwatch website & contact for Jordan Trotter Real Estate who handles leasing

Topgolf Website

Dave & Buster’s Website

 

 

September 2019 Multifamily Update

There’s a lot of activity in Augusta’s Multifamily Market!  We’ve already reported that there are over 1500 apartments in development around Augusta, and Damon Cline published an article with even more projects and details two weeks ago.  Click here to download the Costar Multifamily Report, which has some great information about vacancy rates, rental rates, and the overall economy.  Below we’ve included listings from the MLS, Costar and Crexi if you’re looking to buy or want to keep up with the market.  Many of these properties trade off-market, so give us a call if you’re looking for off-market opportunities.  

 

Subscribe to our Multifamily Newsletter–click here! 

 

MLS Multifamily Search (Mostly Duplexes & Quads)

Augusta Market Multifamily Costar Listings

Georgia Costar Listings

South Carolina Costar Listings

North Carolina Costar Listings

Georgia CREXi Multifamily Inventory Export

SC CREXi Multifamily Inventory Export

NC CREXi Multifamily Inventory Export

 

Recent Notable Sales:

926 West Apartments, McKinley Inc. to McDowell Properties for 26.5M, $94.6K/Unit

Crane Creek Apartments, Southeastern Development to PASSCO Companies, $58.0M, $193K/Unit, 5.73% CAP

Ironwood Apartments, LIV Apartment Partners to Graycliff Capital Partners, $51.9M $185K/unit, 5.4% CAP

Metropolitan Augusta to Lexerd Capital – Sold Aug 26th, Terms not disclosed (and not yet public record)

 

What are your thoughts about the Multifamily Market?  Overheated?  Just getting started?  What activity are you seeing?  What do you think about rental rates?  We’d love to hear your comments! 

Car Wash Underwriting – Commercial Real Estate

 

 

Have you ever wondered how to evaluate a coin-operated car wash?  Today we’re going to underwrite a car wash.  Someone called me and asked me to give them an opinion of value on their car wash. 

I always start by evaluating the financial statements.  In this case I requested their last two year’s tax returns, in this case Schedule C’s.  My goal is to arrive at the NOI.  Remember, generally tax returns are drafted to minimize tax liability, so often they are inflated, or include things such as travel and deductible meals that you likely wouldn’t include on an operating statement. Here you see my revision of the Schedule C’s–depreciation and mortgage interest are both non-operating expenses that we’re going to remove from the operating Statements. 

Then I’m going to create a pro-forma, which is my guess as to the actual operation of the car wash.  You can see here that I’ve added some expenses–lawn care and utilities, and taken the average of the actuals on some of the other items, and then I look across the three different lines to get a guess of what a potential buyer might expect. 

Then I’m going to call a few lenders and get their guess on what financing assumptions will look like.  I want to know what the term, interest rate, and LTV might be for a loan on this asset.  In this case, two lenders I called, both guessed that at 75% LTV is likely, 5.65% interest, and 15 year term, and target DSCR of 1.5.   

I enter these loan assumptions and then I review the value indicators.  How does the property cash flow?

Now I review industry specific resources–you can use the Business Reference Guide or similar resource.  It tells tells me a general rule of thumb is that car washes trade at 4 times gross sales–that would put this car wash at between $160,000 and $215,000.  Another guideline is “cost of real estate, equipment, improvements, plus 2 to 3 times EBIT“.    I’m also told that a market average is that operating expenses should be between 25 and 40 percent of Gross Sales (our numbers put it between 18% and 37%).

Another consideration on this property would be the value as a development site.  What are land comps selling for?  Is it suitable for commercial development?  If so, there is a chance the land is worth more than the car wash–keep that in mind.   

So now I have a pretty good ballpark guess on this car wash.  If I set the price down under $200K, the cash on cash-on-cash is between 26%-60% (obviously too high), and the Cap Rate is between 22% and 14%.  At $300K, the cash-on-cash is too low–7.55%, and DSCR is tight at 1.25.  My guess on this is that 250K is about right.  Remember, this is higher than the rule of thumb from the Business Reference Guide–but still leaves a decent margin for a potential buyer.  

What are your thoughts?  Have you ever owned or sold a coin-operated car wash?  Do you have any questions?  Feel free to comment below!  

 

Additional info:

Car Wash Underwriting Spreadsheet

Dultmeier Sales – Good information

Auto Care Forum 

Downtown Augusta’s Luxury Apartment Boom

Downtown Augusta is experiencing a luxury housing boom.  Over 1500 luxury apartments have just been delivered, are under construction or in planning in and around Downtown Augusta:

    • Ironwood, Downtown North Augusta, 280 units Website
      • Ironwood apartments are adjacent to SRP Park–the Greenjacket’s stadium, with an upscale hotel and retail space, connected to Hammond’s Ferry subdivision. 
    • Residence at Riverwatch, Riverwatch Pkwy: 260 Units Website
      • These apartments were delivered in 2018, adjacent to the Costco Regional Shopping Center, and will walking distance to Topgolf.  
    • Beacon Station, Wrightsboro Rd: 220 Units  Website
      • These apartments are adjacent to the Medical College of Georgia, and a landmark as one of the first market rate apartment projects to be built in the Laney-Walker Neighborhood.  
    • King Mill, Broad Street: 250 Units
      • This is a luxury apartment complex that will be built in the King Mill utilizing historic tax credits and connected to the Augusta Cyberworks.  
    • Train Depot, Reynolds Street: 140 Units
      • The city of Augusta is partnering with BLOC Development to bring these units to market. 
    • Historic Cotton Warehouse, Wrightsboro Rd, 190 Units
      • Burt Development of Albany, GA, bought these in February of 2018.  
      • Plans for Historic Tax Credit development
    • Ivey Apartments, Fenwick Street, 165 Units
  • What do you think is driving the growth downtown?  Do you have any more details about any of these projects?   Have we forgotten any upcoming multifamily projects? What impact will 1500 luxury apartments have on Downtown Augusta?
  •  

Update: Damon Cline at the Chronicle published a great story that goes into more detail on this.  Link

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How Opportunity Zones are Being Used by Startups

Opportunity Zones are a new tax investment vehicle similar to a 1031 Exchange that allows tax deferment on acquisition of real estate and also on investments in businesses.  This opens the door for small startups to raise funds for their ventures.  Remember that all of Downtown Augusta, Downtown Aiken, and many other city centers in the CSRA are designated as O zones.  

 

See the Forbes Article below for details on how Opportunity Alabama is doing this, as well as an article in Medium by Alex Flachsbart–Founder & CEO of Opportunity Alabama.  Also see Enterprise’s overview of OZone program. 

 

Forbes Article: https://www.forbes.com/sites/cognitiveworld/2019/08/07/opportunity-zones-ai/#2a445e2b6a14

 

Medium Article: https://medium.com/@info_24727/putting-the-opportunity-back-in-alabama-ef305a8b26a

 

Enterprise overview of O-Zones: https://www.enterprisecommunity.org/resources/policy-focus-opportunity-zone-program

 

#opportunityzone #downtownaugusta #cre #investaugusta #multifamily