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OFFERING MEMOR ANDUM
67 Units • Portland, Oregon
www.hfore.com • (503) 241.5541
BROWN APARTMENTS
www.hfore.com • (503) 241.5541
Brown Apartments
TABLE OF CONTENTS
807 SW 14th Avenue • Portland, OR 97205
BROWN APARTMENTSOFFERING MEMORANDUM
HFO INVESTMENT REAL ESTATE
www.hfore.com • 503.241.5541
Licensed in the States of Oregon and Washington
Rob [email protected](971) 717.6335
Greg [email protected](971) 717.6332
I. Executive Summary 4
II. Location 17
III. Operations Analysis 30
IV. Offer Terms 36
Rob [email protected](971) 717.6335
Greg [email protected](971) 717.6332
Tours and Inquiries: All tours and inquiries regarding the Brown Apartments are to be directed to HFO Investment Real Estate at (503) 241.5541.
Rare opportunity, unique historic bricker. The Brown Apartments has been owner-managed for more than 20 years and offers a rare opportunity to acquire a historic bricker in Portland’s urban core. Much of the Brown Apartments’ historic character has been maintained with original hardwood floors, period lighting fixtures, clawfoot bathtubs, and trundle hideaway beds. Common area updates include new laundry systems, updated elevator and entryway.
Outstanding central location, high-demand district. The Brown Apartments is located on the eastern edge of the Goose Hollow neighborhood placing the asset between the exclusive Pearl District, the Timber’s Major League Soccer stadium, and the West End, one of Portland’s newest retail districts. Portland’s living room, Pioneer Court House Square, Portland State University urban campus and the Northwest District, which includes the Alphabet District, Nob Hill and Slabtown are short distances to the Brown Apartments via walking, biking or public transportation.
The Brown is immediately adjacent to the MAX light rail blue line. Both MAX line and bus service are accessible just two blocks away at the Providence Park MAX Station. The Portland Streetcar is less than three blocks away connecting the Brown Apartments to the Northwest District, the Central Eastside and Lloyd Center.
Stable operating history, increasing rents. The Brown Apartments’ self-management provides an opportunity to increase cash flow. The property does not currently charge for utilities. The property has the ability to implement individual metering of gas to each unit. Current rents average $1,011 per unit, or $2.26 per sq ft and are trending 8.2% higher than trailing 12-month rents. Leases signed over the previous six months average $1,026 per unit, or $2.29 per sq ft; an increase of 1.5% over current scheduled rents.
INVESTMENT SUMMARY
UNIT MIXUnit Type Unit Count Avg Sq Ft Total Sq Ft % of Total Units
Studios 50 395 19,750 74.6%
1 Bedrooms 17 604 10,268 25.4%
Total / Averages 67 448 30,018 100.0%
PRICING
Price $10,000,000
Price per Unit $149,254
Price per Sq Ft $333
ASSET SUMMARY
Property Brown Apartments
Address 807 SW 14th AvenuePortland, OR 97205
County Multnomah
Year Built 1915
Total Units 67
Approx NR Sq Ft 30,018 sq ft
Avg Unit Size 448 sq ft
Stories 5 floors
Acreage 0.23 acres
4 HFO INVESTMENT REAL ESTATE
LOCATION
Washington Park
Marquam Nature Park
GOOSE HOLLOW
GOOSE HOLLOW SOUTHWEST HILLS
SOUTHWEST HILLS
PEARL DISTRICT
PIONEER PLACE
OLD TOWN
DOWTOWN PORTLAND
SOUTH WATERFRONT
KINGS HEIGHTS NORTHWEST DISTRICT
PORTLAND
26
405Burnside St
Barbur Blvd
NW Lovejoy St
NW 23rd Ave
SW Washington St
SW Vi
sta Av
e
SW Alder St
SW Clay StSW Market St
SW Madison St
NW Glisan St
99W
BROWN APARTMENTS
84
LLOYD DISTRICT
KERN
WIL
LAM
ETTE
RIV
ER26
BUCKMAN
LADD’S ADDITION
CENTRAL EAST PORTLAND
5
Martin Luther King Jr Blvd
Grand Ave
12th AveNW
DISTRICT
5BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
Bike Score
94Transit Score
9097Walk Score
GOOSE HOLLOWThe Goose Hollow neighborhood is located on the western edge of Portland’s main downtown business district. Its central location provides residents with easy access to the city’s best amenities, including Washington Park, the Timbers’ stadium in Providence Park, Portland State University, the Portland Art Museum, and the Arlene Schnitzer Concert Hall. The Blue and Red max lines connect this vibrant neighborhood with the rest of the city, and the suburbs beyond. 46% of households in the Goose Hollow neighborhood do not own a car, and 20% commute via public transit.
The neighborhood’s walk score
Residents enjoy easy access to Interstate 405 and U.S Highway 26, creating a quick commute to the west side’s major employers like Nike, Columbia Sportswear and Intel, as well as OHSU and Portland’s Inner Eastside.
41,934 Current Est. Population
79% % Renter-occupied
Housing Units
+13.2% Est. Population
Growth (2019–2024)
37.4% Bachelor’s Degree
26% Postgraduate Degree
Demographic Snapshot: 1-mile Radius
According to Enterprise Community Partners, the Goose Hollow neighborhood is in the 99th percentile nationwide for accessibility of jobs, goods, and services, as well as for community institutions. Residents of Goose Hollow are highly educated – in the census tract, 58% of adults have a bachelor’s degree or higher, and 96% have at least a high school diploma. 87% of Goose Hollow residents are renters.
6 HFO INVESTMENT REAL ESTATE
PORTLAND METRO AREA The Portland Metro Area is one of the strongest apartment markets in the nation, as reflected in strong year-over-year rent growth and consistently tight vacancy. The area’s strong job market and high quality of life continues to attract new residents; between 2018 and 2019 approximately 72 people moved to the Portland metro area each day.* New apartment construction has not caught up to the housing demand created by in-migration.
*Portland Center for Population Research and State of Washington Office of Financial Management
PORTLAND MARKET SNAPSHOT
4.4% Metro-area vacancy
#2 for Oregon in Migration
in US
7.4% Year-over-year rent growth*
$68,125 Median household
income
3.9% Unemployment rate
(November 2019)
54% Millennials 25-34 in Portland
with a bachelor’s degree or higher
8,360 New Portland residents
(2018-2019)
38.3% Metro area renter-
occupied housing rate
4,474 Portland residents
per square mile
*Multifamily NW Apartment Report (Oct. 2018-2019)
7BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
8 HFO INVESTMENT REAL ESTATE
9BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
10 HFO INVESTMENT REAL ESTATE
11BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
12 HFO INVESTMENT REAL ESTATE
Many of the apartments at the Brown have original built-ins and classical fixtures. Upper floor units have downtown skyline views.
13BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
14 HFO INVESTMENT REAL ESTATE
The Brown Apartments offers residents common area laundry and bike storage.
15BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
ASSET OVERVIEWCONSTRUCTION SUMMARY
Year Built 1915
No. Of Buildings 1 Residential Building
Stories 5 stories
Construction Type Brick walls with wood-frame floors and roof
Foundation Concrete
Exterior Walls Brick façade
Roofing Duro-Last
Windows Wood with interior storm windows
Laundry Service 1 common area laundry room
Heating Common steam heat
SITE SUMMARY
City Portland
County Multnomah County
Jurisdiction Portland
Tax Account No. / Map and Tax Lot
R246743 / 1N1E33DD 6900
Zoning CX – Central Commercial High-Density Residential. The CX zone is a high-density commercial zone intended for development within Portland’s most urban and intense areas. The CX zone allows for intense development with high building coverage and large buildings placed close together. Development is intended to be pedestrian-oriented with a strong emphasis on a safe and attractive streetscape.
Specific allowable uses include retail sales and services, office space, household living, and institutional uses.
16 HFO INVESTMENT REAL ESTATE
LOCATION
Nearby lifestyle conveniences:
0.3 mile
0.2 mile
0.07 mile 0.3 miles
0.3 miles 0.3 mile0.8 miles
1.2 mile
0.04 mile
0.1 mile
GROCERIES
SCHOOL
DININGBANK ENTERTAINMENT
PARK SHOPPING LIGHT RAIL
COFFEE
MEDICALBrown Apartments807 SW 14th AvenuePortland, OR 97205
17BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
GOOSE HOLLOW – THE NEIGHBORHOOD
The historic Multnomah Athletic Club (MAC), which overlooks Providence Park stadium where the Timbers and Thorns play, is a central feature of the Goose Hollow neighborhood. The MAC is a full-service athletic club, and also hosts conferences and events throughout the year. A major renovation of Providence Park was completed in 2019 adding 4,000 seats and bringing total capacity to 25,218.
Public school students in Goose Hollow and Downtown attend Chapman Elementary School, West Sylvan Middle School, and Lincoln High School.
CHAPMAN ELEMENTARY SCHOOL
WEST SYLVAN MIDDLE SCHOOL
LINCOLN HIGH SCHOOL
1.7 mile – 8 minutes drivingChapman students also outperform their state peers on all subject tests, and the school building itself is famous for the migrating Swifts that return to nest in its chimney every Fall.
4.5 mile – 10 minutes drivingWest Sylvan Middle School receives a 9/10 score on Great Schools, due to its students’ impressive test scores and high rates of academic progress.
0.3 mile – 1 minutes drivingLincoln High students outperform their statewide peers in science, English, and math. Lincoln’s graduation rate is 94%, well above state average.
18 HFO INVESTMENT REAL ESTATE
In the neighborhood directly surrounding Portland State University, 96% of adults have a high school diploma, while 60% of adults have a bachelor’s degree or higher. 80% of residents report feeling safe and secure in their neighborhood. The homeownership rate is extremely low downtown – approximately 90% of households rent. Most neighborhood residents are young students and professionals – only 2% of households have children, and the average number of occupants per household is 1.58.
Portland State University’s total enrollment for the 2017-18 school year was 27,670 students. 21,848 of these students were undergraduates. While 77.5% of PSU students are from Oregon, the university attracts people from all 50 states as well as 98 countries. The top non-US countries represented are China, India, Saudi Arabia, Kuwait, and Japan. PSU employs 7,258 full and part time workers, including 1,947 faculty members. The university partners with a variety of local stakeholders including Intel, OHSU, Portland Public Schools, City of Portland, Multnomah County, and PGE for student and community programs.
PORTLAND STATE UNIVERSITY
EDUCATIONDowntown Portland is home to the city’s thriving central business district, as well as Portland State University. It is the central transit hub in the city, featuring MAX light rail, buses, and the Portland Street Car. 47% of households do not have a vehicle, and 22% of workers commute by public transportation. The area has a walk score of 96, a transit score of 95, and a bike score of 92. Residents have access to a wide variety of amenities within walking distance, including bars and restaurants, grocery stores, shopping areas, parks, schools, and cultural attractions. More than 45% of residents living in the vicinity of PSU walk to work.
19BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
TO THE WEST
Brown Apartments
Multnomah Athletic Club
Providence Park MAX Station
Montgomery Park
Lincoln High School Track & Field
Washington Park
SW Taylor S
t
SW 15th Ave
SW Yam
hill St
Blue & Red lines
20 HFO INVESTMENT REAL ESTATE
TO THE NORTHEAST
Tiffany Center
Broadway Bridge
Brown Apartments
McMenamins Crystal Ballroom
SW 15th Ave 14th Ave
405
SW Yamhill St Blue & Red lines
• US Bank• New Relic, Inc.• Iovation Inc.• CorVel Corporation• Miller Nash Graham & Dunn LLP
• KPFF Consulting Engineers• Survey Monkey• KBCM Technology Group• Clinicient• Holland & Knight LLP• Deloitte Development LLC• Digital Trends• Portland City Grill
• Smith Freed & Eberhard PC• All Med Healthcare Management• Regus• InComm Digital Solutions• Edward Jones• Fisher & Phillips LLP• Northwest Analytics Inc.• Kivel & Howard LLP
• Open Mesh, Inc.• Thede Culpepper Moore Munro &
Silliman LLP• Vevo• Sather, Byerly & Holloway LLP• Willamette Management Associates• Brighton Jones• Symbeo
• Magnate Worldwide• Naegeli Deposition & Trial• Geranium Lake Flowers• Five Pines Dental• Betts, Patterson & Mines, PS
Representative Tenants(US Bancorp Building)
21BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
TO THE SOUTHEAST
Brown Apartments
SW 14th Ave
14th Ave
SW Yamhill St
Financial District(Downtown Portland)
Blue & Red lines
405
22 HFO INVESTMENT REAL ESTATE
NEARBY TRANSIT & POINTS OF INTERESTEDUCATION Drive Distance
Pacific Northwest College Of Art 5 min 0.8 miPortland State University 5 min 1.4 miOregon Health and Science University 5 min 2.0 mi
AIRPORT Drive Distance
Portland International 20 min 13.9 mi
SHOPPING CENTER Walk Distance
Fred Meyer Stadium 9 min 0.4 miStadium Shopping Center 9 min 0.5 mi Whole Foods Market 5 min 0.3 mi
PARKS AND RECREATION Drive Distance
Forest Park Conservancy 2 min 0.2 miDirector Park 3 min 0.5 miFriends of the Columbia River Gorge 5 min 0.8 miLan Su Chinese Garden 6 min 0.9 miOregon Maritime Center and Museum 7 min 1.2 mi
MILITARY BASES Drive Distance
Portland Airport Air Guard Station 17 min 8.9 miCamp Withycombe National Guard 25 min 17.3 miCamp Bonneville Military Reservation 34 min 23.0 mi
COMMUTER RAIL Drive Distance
Beaverton Transit Center (West Side Express) 14 min 7.6 miHall/Nimbus 15 min 9.4 mi
Source: Apartments.com
23BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
Washington Park
Pioneer Courthouse
Square
Portland Art Museum
Union Station
Portland Saturday Market
DOWNTOWN
GOOSE HOLLOW
OLD TOWN CHINA TOWN
WIL
LAM
ETTE
RIV
ER
W Burnside St Burnside Bridge
Steel Bridge
SW Madison St
SW Washington St
Hawthorne Bridge
Morrison Bridge
SW Clay St
SW Jefferson St
SW Alder St
SW Market St
SW Pa
rk Av
eSW
Broa
dway
NW Na
ito Pk
wyTo
m Mc
Call W
aterfr
ont P
ark
NW Glisan St
23rd
Ave
NE M
artin
Luth
er Ki
ng Jr
Blvd
NE G
rand
Ave
99E
99E
84
405
5
Lincoln High School
Good Samaritan Hospital
26MAX Blue Line
MAX Green Line
MAX Orange Line
MAX Red line
MAX Yellow Line
Portland Streetcar A Loop
Portland Streetcar B Loop
Portland Streetcar North South Line
NEARBY TRANSIT & POINTS OF INTEREST
BROWN APARTMENTS
24 HFO INVESTMENT REAL ESTATE
LIFESTYLE CONVENIENCES AND EMPLOYERS
1
2 3
4
5
6
10
9
7 8
1112
13
14 15
1617 19
20
33
34 3518
212322
24 25
26
39
4027
41
56
57
55
5354
58
59
61
60
28
30
29
56
44
38
3637
4342
4549
4850
47
46 52 51
3132
Burnside St
SW Washington StSW Alder St
SW Morrison St
SW Jefferson St
SW Clay St
SW Columbia StSW Market St
NW Everett St
NW Glisan St
NW Broadway
Broa
dway
SW 5t
h Ave
SW 2n
d AveSW
6th A
ve
SW 10
th Av
eSW
Park
Ave
SW 18
th Av
e
14th
Ave
62
405
5
99W
Trader Joe’sFred MeyerWalgreensSt. Mary’s CathedralProvidence ParkMultnomah Athletic ClubLittle Red’s Bakeshop & CoffeeTiffany CenterWestside MarketLincoln High SchoolKGW Media GroupLeaky Roof Gastro PubDeschutes BreweryWhole Foods MarketPowell’s City of BooksMcMenamins Crystal BallroomJake’s Famous CrawfishTasty n AlderLiving Room TheaterStumptown Coffee RoastersBlue Star DonutsStarbucksJake’s GrillSaint CupcakeTargetMultnomah County Central LibraryPortland International Film FestivalPortland Art MuseumSafewayMcMenaminsU.S. BancorpPortland City GrillVoodoo Doughnut
1
11
21
9
19
29
5
15
25
3
13
23
7
17
27
2
12
22
10
20
30
31
6
16
26
4
14
24
8
18
28
33
32
Stumptown Coffee RoastersPine Street marketT.J MaxxOffice DepotNordstromRegal Fox TowerColumbia SportswearArlene Schnitzer Concert HallDeparture Restaurant + LoungePioneer Courthouse SquareChase BankPioneer PlaceApple StoreNike PortlandBuffalo Wild WingsKiller BurgerNordstrom RackBank of AmericaRoss Dress for LessMicrosoft StoreThe UPS StoreAuditorium BuildingMultnomah County CourthousePortland BuildingWord Trade Center Portland24 Hour FitnessOregon DMVSt. Mary’s AcademyKeller Auditorium
41
51
39
49
59
35
45
55
43
53
37
47
57
42
52
40
50
60
61
62
36
46
56
34
44
54
38
48
58
MAX Line(s)Streetcar(s)
26
Brown Apartments
WIL
LAM
ETTE
RIV
ER
25BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
The Portland/Vancouver metro area including Clackamas county and the City of Happy Valley, is well served by an outstanding public transit system.
The MAX Blue Line was the first of the light rail’s five separate projects to be built, and was the first federally funded light rail project that used money initially earmarked to build freeways. The initial 15 miles of the Blue Line opened in 1986, with 30 rail stops that connect downtown Portland with the City of Gresham.
The Green Line was completed 2009 connecting Clackamas, along Interstate 205, to the Gateway Transit Center. The 8.3 miles of track provides transportation between 8 additional stations before connecting to the previously built I-84 track.
• The Blue Line continues through downtown Portland to the cities of Beaverton and Hillsboro
• The Red Line terminates at the Portland International Airport
• The Green Line connects to Clackamas Town Center
• The Orange Line is the MAX’s newest extension and connects to the City of Milwaukie
• Planners are working on funding and initial planning of a new line from downtown Portland to a new terminus roughly 8 miles south at Bridgeport Village shopping mall in Tigard.
WIL LAM
ETTE R I V ER
CLACKAMAS
WILLAM
ETTE RIVER
GRESHAM
BEAVERTONHILLSBORO
MAX Blue Line
MAX Green Line
MAX Orange Line
MAX Red line
MAX Yellow Line
Portland Streetcar A Loop
Portland Streetcar B Loop
Portland Streetcar North South Line
TRANSPORTATION SYSTEMS
DOWNTOWN PORTLAND
Brown Apartments
26 HFO INVESTMENT REAL ESTATE
PORTLAND REGIONHIGH TECH & CHIP MANUFACTURINGAttracted by the Portland area’s educated workforce and relative low cost of doing business, tech companies continue opening branches and—in some cases—relocating to the area entirely.
With over 20,000 employees, Intel is the area’s largest private employer. Intel acquired its first Portland location in 1974. The company is currently expanding its presence with forthcoming D1X microprocessor chip facilities at the Ronler Acres Campus in Hillsboro. This 1.1 million square foot factory is part of a five-year, $6 billion expansion, and is part of the company’s long-term plans for growth. Intel is the largest property taxpayer in Washington County, with payments of approximately $30 million a year.
Other notable Portland-area high-tech companies include ON Semiconductor and Tektronix.
SPORTSWEARNike has its world headquarters in Beaverton and employs 12,000 Portland-area residents. The company designs, develops and manufactures footwear, apparel, equipment and accessories. From here, Nike orchestrates production and design for one of the world’s most recognizable brands. In 2020 Nike will complete a $1 billion expansion of its Washington County campus.
Nike’s two key competitors have a major local presence as well. Those employers include the North American headquarters of Adidas with 1,898 employees, and a new 70,000 SF outpost of Under Armour. Under Armour has moved 100 employees into an iconic former YMCA.
GOVERNMENTThe U.S. Federal Government is among Portland largest employers, with 18,300 workers. The State of Oregon gives employment to an additional 15,100 residents in government and education.
HEALTHCARE AND RESEARCHHealth services are another major employment sector for the Portland area. The top healthcare employers in the area are Providence Health Systems, with 18,885 employees, and The Oregon Health Sciences University (OHSU), with 17,556 workers. OHSU is the recent recipient of a total of $1 billion in donations for cancer research from over 10,000 Oregon donors. Grants from the National Institutes of Health totaled $245.62 million in 2018.
MANUFACTURINGIn trucking and transportation, Daimler Trucks—with nearly 2,800 area workers—has big plans for the Portland area. The company recently spent $150 million renovating its Portland facility and invests heavily in research and development, including autonomous driving.
27BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
PORTLAND RANKINGS
Restaurant City of the Year– Bon Appetit –
Best City for an Active Lifestyle– Wallethub –
Most Entrepreneurial State – Amazon.com –
Greenest City in America– Newsweek –
Best Foodie City in America– Wallethub & Travelpulse –
No.6 rank by Jetsetter
Healthiest Cities to Live– Thrillist.com –
No.3
No.7
No.5
No.9
No.15No.10
No.1
No.7
No.1
No.4
No.4
No.8
No.5
No.8
No.9 No.10Top City for Entrepreneurs &
Start-Ups– Business.org –
No.23 rank by CNBC
Healthiest City in the U.S.– Active.com –
Best Cheap Destinations in the U.S.– U.S. News and World Report –
Fittest Cities in America– American College of
Sports Medicine –
Best Foodie Cities in the USA– U.S. News and World Report –
Most Educated City in America
– Wallethub –
Best City for Biking– Fast Company –
Best Place to Live in the U.S.– U.S. News and World Report –
Best Bike City in America– Bicycling Magazine –
Fittest Cities in America– CBS News –
Portland consistently receives glowing reviews and rankings from the media.
2019 lists include:
2018 lists include:
28 HFO INVESTMENT REAL ESTATE
JOB GROWTH BY INDUSTRY
Professional and Business Services
Transportation, Warehousing & Utilities
Education & Health Services
Healthcare & Social Assistance
Financial Activities
Administrative and Waste Services
Government
Full time employment increased 1.6% between October 2018 – October 2019, an increase of 20,200 positions. Below is an overview of net job creation by industry from October 2018 through October 2019:
According to the State of Oregon Employment Department, the Portland Metro region created jobs at the rate of 1.7% in 2019. Portland ranks 16th among the 50 largest metropolitan areas in the United States.
Among the influx of companies to the Portland metropolitan area—including many who have transplanted their world, North American or U.S. headquarters here—are Adidas, Daimler Trucks, KinderCare and Keen.
Other significant companies in the close-in Portland metro area include Umpqua Holdings, Weiden+Kennedy, NW Natural, PacifiCorp, PGE, New Seasons, Storables, McMenamins, McCormick & Schmick’s, Franz Bakery, Portland Brewing, Powell’s Books, ZGF Architects, and two major West Coast law firms: Stoel Rives and Schwabe, Williamson & Wyatt.
MSA PORTLAND
2,500
3,300
3,500
3,300
3,300
2,500
6,600
29BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OR
Income T6 Lease Rents Annualized Projected Operations NoteScheduled Gross Rent $826,195 $12,331 $826,195 $12,331 1
Less: Vacancy/Credit Loss -$41,310 -$617 -5.0% -$41,310 -$617 -5.0% 2
Net Rental Income $784,885 $11,715 $784,885 $11,715 Other Income $7,880 $118 $64,977 $970 3
Includes: Laundry $6,575 $98 $6,575 $98 Includes: Utility Billing (RUBs) $0 $0 0.0% $48,402 $722 65.0% Includes: Miscellaneous $1,305 $19 $10,000 $149
Gross Operating Income $792,765 $11,832 $849,862 $12,685 Expenses November 2019 TTM Per Unit % GOI Projected Operations Per Unit % GOI
Real Estate Taxes $38,807 $579 4.9% $76,682 $1,145 9.0% 4Insurance $9,813 $146 1.2% $35,000 $522 4.1% 5
Garbage $16,136 $241 2.0% $16,136 $241 1.9%
Sewer/Water $41,519 $620 5.2% $41,519 $620 4.9% Electric $15,664 $234 2.0% $15,664 $234 1.8% Gas $16,809 $251 2.1% $16,809 $251 2.0%
Total Utilities $90,128 $1,345 11.4% $90,128 $1,345 10.6%Administrative $13,442 $201 1.7% $13,442 $201 1.6% Fee Management $23,783 $355 3.0% $25,496 $381 3.0% 6 On-site Payroll $30,555 $456 3.9% $48,000 $716 5.6% 7Contracted Services $3,288 $49 0.4% $8,732 $130 1.0% Maintenance/Repairs $41,796 $624 5.3% $41,796 $624 4.9% Turnover $10,884 $162 1.4% $10,884 $162 1.3% Reserves $16,750 $250 2.1% $16,750 $250 2.0% 8
Total Expenses -$279,245 -$366,908 Expenses per Unit -$4,168 -$5,476% of Gross Operating Income 35.2% 43.2%
Net Operating Income (NOI) $513,520 $482,953
30 HFO INVESTMENT REAL ESTATE
OPERATIONS ANALYSIS
1. RENTS The Brown Apartments has demonstrated consistent rent increases. Rents achieved on move-ins over the last six-months (T6) average $1,028 per unit, or $2.29 per unit. Currently, scheduled rents average $1,010 per unit or $2.25 per sq ft and T6 lease annualized demonstrate an increase of 1.5%. T6 leases are 7.7% higher than November 2019 TTM average rents.
2. VACANCY/CREDIT LOSS, CONCESSIONS, AND BAD DEBT
The historical operations do not include historical vacancy. Projected operations include a 5.0% vacancy rate based on lender underwriting requirements. Lenders consider the long-term nature of a property and its market location. Lenders typically underwrite to a 5.0% vacancy.
Approximately 24 units have signed leases in 2019 YTD resulting in an average 2.4% vacancy per month for the previous eleven (11) months.
RENT ROLL ANALYSIS: MARKET RENTS
Unit Type Unit Count
Square Feet
Lowest Achieved Rent
Highest Achieved Rent % Diff Average T6
Leases
Average T6 Leases Rent
per Sq Ft
Studio 50 395 $900 $995 10.6% $974 $2.47
1 Bedroom / 1 Bathroom 17 604 $1,050 $1,195 13.8% $1,185 $1.96
Totals / Averages 67 448 $975 $1,095 12.2% $1,028 $2.29
BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
31BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
Actual Rents Studio One-Bedroom Total
$900 2 2
$925 4 4
$950 14 14
$975 17 17
$995 10 10
$1,050 2 2
$1,095 1 1
$1,100 1 1
$1,125 1 1
$1,150 2 2
$1,175 6 6
$1,195 2 2
Total * 47 15 62
* Occupied units only.
Studio One-Bedroom
Sche
duled
Rent
$1,000
$900
$1,050
$1,150
$1,100
$1,200
$1,250RENT RANGES BY UNIT TYPE
$950
Average Rent Maximum RentMinimum Rent
$850
OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OR
32 HFO INVESTMENT REAL ESTATE
3. OTHER INCOME The Brown Apartments’ other income is minimal for a property of this size. Communities the size of The Brown could generate up to $10,000 annually in additional revenue—not including laundry or utility RUBs. The table below estimates potential other income collections, which have been rounded up in the projected operations to cover lease termination fees.
• RUBs. A few of The Brown Apartments’ competitors are charging residents for utilities (RUBs). An investor may implement RUBs charges to align with the Portland market. The projected RUBs collections are based on charges found at comparable properties and would cover water, sewer, garbage, and gas (heat). Stabilized RUBs charges could generate more than $48,402 of income annually. The average cost to residents would be $60 monthly per unit. This charge covers approximately 65% of water, sewer, garbage and gas expenses.
Other Income Estimates Administrative Fees Application Fees Late Fees/ NSF/
Non-Compliance Pet Premium Annual Total
Total Units 67 % of Units 30% 35% 40% Expected # of Units 20.10 23.45 26.80 Charge Per Unit 1.50 1.00 1.00 Fees $45.00 $25 $25
Annual Total $1,357 $586 $8,040 $9,983Annual Per Unit $20 $9 $120 $149
OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OR
33BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OREXPENSESThe Brown Apartments’ operating expenses include limited property taxes due to the historical tax abatement that expires in 2023. The property insurance is also limited as the current owner does not have earthquake coverage. Expenses have been adjusted to include earthquake insurance coverage and for fully assessed property taxes. Unless noted below, operating expenses were created utilizing November 2019 TTM operations.
4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. Property tax values were released October 15 for the 2019-2020 tax year. The current historical tax abatement places the property taxes for the Brown at $40,008 for the 2019-2020 tax year.
The Brown Apartments currently has a historical tax abatement that expires in 2023 and cannot be renewed. The following table includes tax comparables for similar vintage properties. Based on the tax comparables and properties with related average unit sizes to the Brown Apartments. The projected taxes, should they be fully assessed today, are estimated at approximately $1,145 per unit, or $2.55 per sq ft.
5. INSURANCE Property insurance has been adjusted to include earthquake insurance due to the building’s unreinforced masonry construction. The projected cost for insurance is $522 per unit or $35,000 annually.
6. FEE MANAGEMENT Projected operations include a management fee of 3.0% of GOI, which reflects typical management costs for assets like The Brown Apartments in the Portland metro area.
TAX HISTORYTax Year 2017/2018 2018/2019 2019/2020Account #
R246743 $39,212 $39,760 $40,008
Total $39,212 $39,760 $40,008
% Change 5.22% 1.38% 0.62%
Property Units Year Built 2019 Taxes Per Unit per Sq Ft Average
Chelsea Court Apartments 32 1925 $31,740 $992 $2.31 430
Amber Court Apartments 39 1926 $41,600 $1,067 $2.24 477
Chapman Court 38 1926 $39,289 $1,034 $2.08 497
Marcella 46 1926 $54,984 $1,195 $2.27 527
Average 39 1926 $41,904 $1,072 $2.22 483
34 HFO INVESTMENT REAL ESTATE
7. PAYROLL Payroll has been adjusted to reflect third-party management. The payroll cost is for administration only and assumed a ¾ time for an on-site manager and additional leasing back up.
8. RESERVES Lenders require reserves to be set aside to address future capital costs associated with any property as it ages. The projected operations include reserves of $250 per unit.
OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OR
35BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
2424 SE 11th Avenue • Portland, OR 97214www.hfore.com • Phone: (503) 241.5541
QUESTIONS & TOUR REQUESTS:
All inquiries, questions, or tour requests are to be directed to HFO Investment Real Estate at (503) 241.5541.
Please do not disturb the residents.
Rob Marton • [email protected] Greg Frick • [email protected] Jack Stephens • [email protected] Lee Fehrenbacher • [email protected] Smith • [email protected] Tully • [email protected] Gates • [email protected] Rand Hoffman • [email protected]
HFO Investment Real Estate 2424 SE 11th AvenuePortland, Oregon 97214
www.hfore.com(503) 241.5541Fax: (503) 241.5548
Brokers licensed in the States of Oregon and Washington.
OFFER TERMSPRICING Price $10,000,000
Per Unit $149,254
Per Sq Ft $333
Cap Rate 4.83%
Avg Unit Size 448 sq ft
ASSET SUMMARY
Property Brown Apartments
Address 807 SW 14th AvenuePortland, OR 97205
County Multnomah
Year Built 1915
Total Units 67
Approx NR Sq Ft 30,018 sq ft
Avg Unit Size Sq Ft 448 sq ft
36 HFO INVESTMENT REAL ESTATE
Brown Apartments
Lincoln High School
Providence Park
37BROWN APARTMENTS • 67 UNITS • PORTLAND, OR
HFO Investment Real Estate
2424 SE 11th Avenue • Portland, OR 97214www.hfore.com • 503.241.5541
Passion • Collaboration • Specialization
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Parties who receive this information from unauthorized parties shall not be recognized. ©2020 HFO Investment Real Estate LLC. Build your legacy is a service mark of HFO Investment Real Estate. Licensed in the states of Oregon and Washington.