HAZELWOOD APARTMENTS 16 Units • Portland, OFFERING MEMORANDUM

www.hfore.com (503) 241.5541 2 HFO INVESTMENT REAL ESTATE EXECUTIVE SUMMARY ASSET SUMMARY DETAILED UNIT MIX Location 17-39 SE 127th Avenue % of Total Unit Type Unit Count Average Sq Ft Total Sq Ft City, State Portland, OR 97233 Units County Multnomah 2 Bed / 1.5 Bath 8 900 7,200 50.0% 2 Bed / 1.5 Bath Townhome 8 1,000 8,000 50.0% Total Units 16 Total / Averages 16 950 15,200 100.0% Year Built 1996 / 1999 Approx. NR Sq Ft 15,200 Average Unit Size 950 Sq. Ft.

Hazelwood Apartments is a 16-unit community located in the Hazelwood PRICE SUMMARY neighborhood on Portland’s east side. The property provides tenants with spacious 2-bedroom, 1.5-bath floor plans that average 950 square feet. The eight townhomes Price $2,200,000 were built on the first tax lot in 1996, and the second southern phase was finished Price Per Unit $137,500 in 1999. Per Square Foot $145 Hazelwood Apartments is located near the intersection of SE Market Street and Projected Cap Rate 5.06% SE 127th Street. Its convenient location offers plenty of walkable and driveable amenities including Fred Meyer, Domino’s, Burgerville, Dutch Bros. Lincoln City Park, and several retailers at Mall 205. Hazelwood Apartments’ rents currently average TOURS AND INQUIRIES $956 per unit or $1.01 per square foot; projected rents average $1,038 per unit or $1.09 per sq ft. Greg Frick • [email protected] 2424 SE 11th Avenue, Portland, Oregon 97214 The property’s favorable unit size and mix, and eastside Portland location make this www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548 a great opportunity for either a first-time investor looking to get into the multifamily market or an experienced investor looking to expand their portfolio. Please do not disturb tenants.

HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 3 4 HFO INVESTMENT REAL ESTATE HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 5 6 HFO INVESTMENT REAL ESTATE HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 7 LIFESTYLE CONVENIENCES

COLUMBIA RIVER

Sandy River Delta Park

Blue Lake 30B Regional Park The Grotto Troutdale Airport 84

NE Halsey St

Gateway Shopping NE Glisan St Glendoveer Golf & Tennis SE 122nd Ave 205 SE Stark St MAX Blue line SE 223rd Ave NE Hogan Dr SE 162nd Ave Hazelwood SE 182nd Ave

SE 148th Ave NE Burnside St SE 202nd Ave Mall 205 SE TroutdaleDr NE Kane Dr NE Kane SE Division St Fubonn Shopping SE Powell St

Kelly Butte 26 Nature Park

Powell Butte Nature Park

8 HFO INVESTMENT REAL ESTATE PORTLAND MARKET SNAPSHOT MAJOR EMPLOYERS GOVERNMENT SPORTSWEAR HEALTHCARE AND RESEARCH The U.S. Federal Government is Portland Nike has its world headquarters in Beaverton Health services are another major employment metro’s overall largest employer, with 20,500 and employs 12,000 Portland-area residents. The sector for the Portland area. The top healthcare workers. The State of Oregon gives employment company designs, develops and manufactures employers in the area are Providence Health to an additional 14,000 residents. footwear, apparel, equipment and accessories. Systems, with 17,543 employees, and The From here, Nike orchestrates production and Oregon Health Sciences University (OHSU), HIGH TECH & CHIP MANUFACTURING design for one of the world’s most recognizable with 16,200 workers. OHSU is the recent Attracted by the Portland area’s educated brands. In 2019 Nike will complete a $1 billion recipient of a total of $1 billion in donations workforce and relative low cost of doing expansion of its Washington County campus. for cancer research from over 10,000 Oregon business, tech companies continue moving donors. Grants from the National Institutes of to Portland—opening major branches and, in Nike’s two key competitors have a major local Health totaled $182.7 million in 2016. some cases, relocating to the area entirely. presence as well. Those employers include the North American headquarters of Adidas with MANUFACTURING With over 19,300 employees, Intel is the area’s 1,200 employees, and a new 70,000 SF outpost In trucking and transportation, Daimler Trucks— largest private employer. Intel acquired its of Under Armour. Under Armour has moved with nearly 3,000 area workers—has big plans for first Portland location in 1974. The company 100 employees into an iconic former YMCA. the Portland area. The company recently spent is currently expanding its presence with $150 million renovating its Portland facility and forthcoming D1X microprocessor chip facilities invests heavily in research and development, at the Ronler Acres Campus in Hillsboro. This including autonomous driving. 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.

HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 9 PORTLAND METRO SNAPSHOT

PORTLAND REGION TOP 10 LISTS Oregon’s largest city, Portland, is near the confluence of the Willamette Portland consistently receives glowing and Columbia Rivers. The Portland Metro Area consists of four counties: reviews and rankings from the media. Multnomah, Washington, Clackamas, and Clark County, Washington. 2019 lists include: • #4 Best City for an Active Lifestyle (Wallethub) APARTMENT MARKET DIVERSIFIED ECONOMY • #7 Healthiest Cities to Live (Thrillist.com) The Portland Metro Area consistently ranks Portland is home to the headquarters of • #7 Best Cheap Destinations in the U.S. (U.S. among the nation’s lowest for apartment Fortune 500 companies Nike and Lithia Motors. News and World Report) vacancy rates according to the U.S. Census Fortune 1000 companies headquartered here • # 8 Best Place to Live in the U.S. (U.S. News and Bureau and other third-party services like REIS, include Columbia Sportswear, Greenbrier World Report) MPF Research, and Axiometrics. The U.S. Census Cos. and Portland General Electric. Fortune • #8 Fittest Cities in America (CBS News) Bureau pegged Portland’s Q3 2018 vacancy 500 companies based outside Oregon with • #9 Best Foodie Cities in the USA (U.S. News and rate at 4.5% and the U.S. average at 7.1%. major operations here are Precision Castparts World Report) and Intel. REIS forecast 2018 Portland metro year-over- 2018 lists include: year rents growth at 3.0% and the Multifamily Tech and software companies continue to • #1 Restaurant City of the Year (Bon Appetit) NW Apartment Report survey proved average relocate their operations here or open major • #1 Best Foodie City in America (Wallethub & October 2017-18 year-over-year rent growth outposts in Portland. These companies enjoy Travelpulse) #6 (Jetsetter) at 3.3%. Portland’s educated workforce, affordable high quality of life, and a low cost of doing • #3 Healthiest City in the U.S. (Active.com) SKILLED WORKFORCE & STRONG EMPLOYMENT business compared to the Bay Area. • #3 Best Place for Business and Careers (Forbes) In a 2018 WalletHub report comparing 150 of • #4 Best City for Biking (Fast Company) the largest U.S. metros, Portland is listed as Companies which have opened major branches in Portland include Airbnb, Google, • #9 Top City for Entrepreneurs and Start-Ups the 15th most educated city in America. More (Business.org) #23 (CNBC) than half of Multnomah County workers have Squarespace, Mozilla, Simple, Survey Monkey, • #10 Greenest City in America (Newsweek) a college degree, well ahead of the national SalesForce and New Relic, Inc. Portland’s tech average of 38.5%. startup companies include Viewpoint, Jama • #10 Most Entrepreneurial State (Amazon.com) Software, Thetus, Urban Airship, Acquia, • #15 Most Educated City in America (Wallethub) According to the State of Oregon’s Employment Elemental Technologies, Act-On, Puppet Labs, Department, Portland enjoys one of the fastest and The Clymb. job growth rates in the Pacific Northwest, and the entire nation. Data indicates the area added 31,000 jobs in 2016, 28,000 jobs in 2017, and 29,000 in 2018.

10 HFO INVESTMENT REAL ESTATE HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 11 OPERATIONS ANALYSIS

RENT ROLL ANALYSIS Average Scheduled Average Scheduled Average Projected Rents Unit Type Unit Count Square Feet Average Projected Rents Rents Rents per Sq Ft per Sq Ft 2 Bedroom / 1.5 Bathroom 8 900 $883 $0.98 $975 $1.08 2 Bedroom / 1.5 Bathroom 8 1,000 $1,029 $1.03 $1,100 $1.10 Totals / Averages 16 950 $956 $1.01 $1,038 $1.09

Income Current Scheduled Rents Projected Operations Note Scheduled Gross Rent $183,540 $11,471 $199,200 $12,450 1 Less: Vacancy/Credit Loss -$9,177 -$574 -5.0% -$9,960 -$623 -5.0% 2 Net Rental Income $174,363 $10,898 $189,240 $11,828 Other Income $0 $0 $5,523 $345 3 Includes: Utility Billing (RUBs) $0 $0 $5,523 $345 25.0% Gross Operating Income $174,363 $10,898 $194,763 $12,173 Expenses Projected Operations Per Unit % GOI Projected Operations Per Unit % GOI Real Estate Taxes $24,700 $1,544 14.2% $24,700 $1,544 12.7% 4 Insurance $3,791 $237 2.2% $3,791 $237 1.9% Total Utilities $22,438 $1,402 12.9% $22,438 $1,402 11.5% Fee Management $13,949 $872 8.0% $15,581 $974 8.0% 5 Landscaping $1,800 $113 1.0% $1,800 $113 0.9% Maintenance/Repairs $8,000 $500 4.6% $8,000 $500 4.1% 6 Turnover $3,200 $200 1.8% $3,200 $200 1.6% Reserves $4,000 $250 2.3% $4,000 $250 2.1% Total Expenses -$81,878 -$83,510 Expenses per Unit -$5,117 -$5,219 % of Gross Operating Income -47% -43% Net Operating Income (NOI) $92,485 $111,253

12 HFO INVESTMENT REAL ESTATE OPERATIONS ANALYSIS INCOME

1. RENTS Hazelwood Apartments’ current scheduled rents average $956 per unit, or $1.01 per sq ft. Projected rents are based off of highest achieved leases and average $1,038 per unit, or $1.09 per sq ft.

2. VACANCY Operations have been adjusted for a 5.0% vacancy rate based on lender underwriting requirements. Lenders consider the long-term nature of a property and the market in which it is located. Lenders typically underwrite to 5.0% vacancy.

3. OTHER INCOME Hazelwood Apartments is projected to generate $5,523 in other income in a full fiscal year. The other income includes utility charges (RUBs). • RUBs. The property is currently not charging for RUBs. Our projections show utility charges accounting for 100% of other income, generating $5,523. The projections show, on average, a monthly charge to residents of $29, which covers approximately 25% of the water, sewer, and garbage expense. EXPENSES Hazelwood Apartments’ professional management reflects market-rate operations with minimally adjusted expenses. The following expenses impact overall operations.

4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. Property tax values for the 2018-2019 tax TAX HISTORY year were published October 15. Projected operations Tax Year include current taxes for the 2018-2019 property tax year. 2017/2018 2018/2019 Hazelwood Apartments’ taxes increased 3.69% over 2017- Account # 2018. In Oregon, property taxes are not reassessed on sale and are limited to a 3.0% annual increase at the state R216762 $12,629 $13,113 level. Property taxes paid by November 1 each year receive R216763 $12,392 $12,867 a 3.0% discount. The gross property taxes for Hazelwood Total $25,021 $25,980 Apartments for the 2018-2019 tax year total $25,980. The % Change 3.69% price reflected in operations takes into account the 3.0% discount, totaling $24,700.

5. MANAGEMENT FEE The management fee has been projected to 8.0% of GOI, which represents standard independent, third-party management costs for properties in the metro area similar to Hazelwood Apartments.

6. RESERVES Lenders require reserves be set aside to address future capital costs associated with any property as it ages. The projected operations include reserves of $250 per unit, or $4,000 total. HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 13 OFFER TERMS ASSET SUMMARY Location 17-39 SE 127th Avenue City, State Portland, OR 97233 Total Units 16

PRICE SUMMARY Price $2,200,000 Price Per Unit $137,500 Per Square Foot $145 Projected Cap Rate 5.06%

QUESTIONS & TOUR REQUESTS: All tours and inquiries regarding Hazelwood Apartments are to be directed to HFO Investment Real Estate at (503) 241.5541. Please do not disturb tenants.

Greg Frick • [email protected] Jack Stephens • [email protected] Lee Fehrenbacher • [email protected] Todd Tully • [email protected] Adam Smith • [email protected] Rand Hoffman • [email protected] Khari Gates • [email protected] HFO Investment Real Estate 2424 SE 11th Avenue Portland, Oregon 97214 www.hfore.com (503) 241.5541

14 HFO INVESTMENT REAL ESTATE HAZELWOOD APARTMENTS • 16 UNITS • PORTLAND, OREGON 15 HFO Investment Real Estate Passion • Collaboration • Specialization

2424 SE 11th Avenue • Portland, OR 97214 www.hfore.com • 503.241.5541

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. ©2019 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.