BORICA GARDENS 6 Units • Portland, Oregon OFFERING MEMORANDUM 2 HFO INVESTMENT REAL ESTATE EXECUTIVE SUMMARY ASSET SUMMARY DETAILED UNIT MIX Location 2332 SE 121st Avenue Unit Type Unit Count Average Sq Ft Total Sq Ft % of Total Units City, State Portland, OR 97216 2 Bed / 1.5 Bath 6 1,000 6,000 100.0% County Multnomah Total / Averages 6 1,000 6,000 100.0% Total Units 6 Year Built 2000 Approx. NR Sq Ft 6,000 Average Unit Size 1,000 Sq. Ft. Borica Gardens is a 6-unit townhome community located in the Mill Park PRICE SUMMARY neighborhood on Portland’s east side. The property provides tenants with large 2-bedroom 1.5-bath townhome floor plans. Each unit is 1,000 square feet and has Price $1,200,000 updated finishes. Price Per Unit $200,000 Borica Gardens is located near the intersection of SE 122nd and SE Division Street. Per Square Foot $200 Its convenient location offers plenty of walkable amenities including Mill City Projected Cap Rate 5.60% Elementary School and Park, David Douglas High School, Grocery Outlet, Home Depot, Target, and 23-acre Kelly Butte Natural Area. Borica Gardens’ rents currently average $1,242 per unit or $1.24 per square foot. The TOURS AND INQUIRIES projected rents of $1,350 are based on the highest achieved amounts. Jack Stephens • [email protected] The property’s turn-key condition, favorable unit size, and central southeast Greg Frick • [email protected] Portland location make this a great opportunity for either first-time investor looking 2424 SE 11th Avenue, Portland, Oregon 97214 to get into the multifamily market, or an experienced investor looking to grow their www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548 portfolio. Please do not disturb tenants. BORICA GARDENS • 6 UNITS • PORTLAND, OREGON 3 4 HFO INVESTMENT REAL ESTATE BORICA GARDENS • 6 UNITS • PORTLAND, OREGON 5 6 HFO INVESTMENT REAL ESTATE BORICA GARDENS • 6 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 Ave SE 223rd NE Hogan DrNE Hogan SE 162nd Ave SE 182nd Ave SE 148th Ave NE Burnside St SE 202nd Ave Mall 205 SE Troutdale Dr NE Kane Dr SE Division St Fubonn Shopping Borica Gardens SE Powell St Kelly Butte 26 Nature Park Powell Butte Nature Park 8 HFO INVESTMENT REAL ESTATE GRESHAM MARKET SNAPSHOT GRESHAM MARKET DRIVERS GRESHAM SCHOOLS The vacancy rate in Gresham remains low, but Gresham’s population in 2017 was 111,053 In November 2016, Gresham voters approved is beginning to slowly increase. As of April 2019, according to the Census Bureau. Between 2010 a $291.2 million bond for the Gresham-Barlow the vacancy rate for the Gresham/Troutdale/ and 2017 the city’s population increased by school district. The vote occurred after the Fairview submarket was 3.4%. The vacancy rate 5.1%. Approximately 47.5% of Gresham’s 38,921 Reynold’s School District, which also serves for 2-bedroom 1-bathroom units in Gresham households rent, and the average number Gresham, announced that it would replace is 2%. This submarket has seen below-market of people per household is 2.78. Median three elementary schools and is making average vacancy rates since 2010. household income in Gresham is $49,866. improvements to Reynolds High School with money from the 2015 bond. Source: Multifamily NW Spring 2019 Report BORICA GARDENS • 6 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 PORTLAND MARKET SNAPSHOT The following market conditions have made Portland one of the strongest The Portland Metro Area is experiencing historically high demand for multifamily markets in the nation for several years: housing, and it’s no secret that developers have been working to meet • The Metro Area’s vacancy rate has consistently ranked among the demand. In 2018: nation’s lowest. Multifamily NW’s Spring 2019 Report cited average • 45 properties, totaling 2,312 units, completed construction in vacancy for the Portland Metro Area as 4.95%.** Portland’s core. • Despite large numbers of new units coming online throughout the metro area in 2016 and 2017, between Spring 2018 and 2019 rents per New apartment deliveries have affected the rental market, resulting in: square foot grew by 3.7%. Since fall 2012 rents have grown by 68%.** • The return of concessions. New properties are offering concessions • Significant in-migration continues: After three consecutive years in as they complete lease-up, and we expect to see rental specials the #1 spot, Oregon has been the #2 most popular destination for continue, unaffected by season. people moving within the United States since 2016. • Softening in rent growth. Rent escalations are slowing after years of • The inventory of for-sale housing was 2.8 months as of November historically high rent growth. 2018, after holding at less than two months for the entire period *Source: US Census and PSU Center for population research for four-county metro area. between 2015 and Spring 2018. **Multifamily NW Apartment Report. BORICA GARDENS • 6 UNITS • PORTLAND, OREGON 11 OPERATIONS ANALYSIS Average Scheduled Scheduled Rents per Projected Rents Type Units Count Avg Sq Ft Projected Rents Rents Sqft per Sq Ft 2 Bedroom / 1.5 Bathroom 6 1,000 $1,242 $1.24 $1,350 $1.35 Total / Average 6 1,000 $1,242 $1.24 $1,350 $1.35 Income Current Scheduled Rents Projected Operations Note Scheduled Gross Rent $89,424 $14,904 $97,200 $16,200 1 Less: Vacancy/Credit Loss -$4,471 -$745 -5.0% -$4,860 -$810 -5.0% 2 Net Rental Income $84,953 $14,159 $92,340 $15,390 Other Income $0 $0 $5,034 $839 3 Includes: Utility Billing (RUBs) $0 $0 0% $4,434 $739 50% Includes: Miscellaneous $0 $0 $600 $100 Gross Operating Income $84,953 $14,159 $97,374 $16,229 Expenses Projected Per Unit % GOI Projected Per Unit % GOI Operations Operations Real Estate Taxes $8,353 $1,392 9.8% $8,353 $1,392 8.6% 4 Insurance $2,152 $359 2.5% $2,152 $359 2.2% Total Utilities $9,277 $1,546 10.9% $9,277 $1,546 9.5% Fee Management $5,097 $850 6.0% $5,842 $974 6.0% 5 Landscaping $1,848 $308 2.2% $1,848 $308 1.9% Maintenance/Repairs $1,200 $200 1.4% $1,200 $200 1.2% Turnover $1,500 $250 1.8% $1,500 $250 1.5% Reserves $4,250 $250 1.9% $4,250 $250 1.7% 6 Total Expenses -$29,427 -$30,172 Expenses per Unit -$4,905 -$5,029 % of Gross Operating Income -35% -31% Net Operating Income (NOI) $55,526 $67,201 12 HFO INVESTMENT REAL ESTATE OPERATIONS ANALYSIS 1.