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Portland, Oregon

74-UNIT APARTMENT COMMUNITY

OFFERING MEMORANDUM

32 OFFERING MEMORANDUM | KIDDER MATHEWSKIDDER MATHEWS | BEVERLY GROVE

TABLE OF CONTENTSJordan A. CarterSenior Vice President, [email protected]

EXCLUSIVELY REPRESENTED BY

Clay NewtonSenior Vice President, [email protected]

Tyler LinnVice [email protected]

Executive Summary

Section 1

Property Description

Section 2

Market Overview

Section 3

Property Economics

Section 4

The information contained herein is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.

This information has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.


EXECUTIVE SUMMARY

Section 1

The Offering

Investment Highlights

Market Overview

5KIDDER MATHEWS | BEVERLY GROVE4 OFFERING MEMORANDUM | KIDDER MATHEWS


The Beverly Grove Apartments are centrally located in Portland’s Gateway neighborhood. Built in 1969, the property has recently undergone significant renovations, and consists of 74 units, comprised of 68 large two-bedroom units, and six three-bedroom units over nine buildings, spread across a three acre site. Beverly Grove offers its residents ample off-street parking, convenient on-site laundry facilities, a sparkling pool with a community deck, and an on-site management office. Several units have been upgraded with washer/dryers and are achieving a $75 per month premium over current market rents.

Located just off of Halsey Street, Beverly Grove is centrally situated within the neighborhood. Residents have easy access to major transportation corridors via I-84 and I-205. Public transportation options are also readily available, with MAX blue, green, and red lines going through the Gateway MAX Station less than a mile away. Nearby bus stops for the 22, 23, 77, and 87 buses are located within blocks of the property. The Portland International Airport is located just five miles away, and Downtown Portland is a quick seven mile trip down I-84. Nearby shops and amenities include Mall 205, Target, Bi-Mart, Home Depot, Fred Meyer, Knott City Park, and much more.

Once dubbed the ‘Gateway to the Columbia Gorge,’ the Gateway Business District stretches from 102nd to 162nd Avenues and covers nearly 25% of East

EXECUTIVE SUMMARY

The Offering

ADDRESS 1820 NE 104th Avenue, Portland, OR 97220

NO. OF UNITS 74

NO. OF BUILDINGS 9

RENTABLE SQUARE FEET 68,630 SF

TOTAL SQUARE FEET 70,006 SF

AVERAGE UNIT SIZE 927 SF

LAND AREA 3.0 AC

APN R942270920

YEAR BUILT / RENOVATED 1969 / 2016

PARKING ± 100 Spaces

SIDING Wood Lap & T-III

HEAT Electric

AVERAGE MONTHLY RENT $1,266

NEW PRICE $13,150,000

PRICE PER UNIT $177,703

PRICE PER SQUARE FEET $185

IN-PLACE CAP RATE 5.57%

PRO FORMA CAP RATE 6.35%

GROSS RENT MULTIPLIER 11.70

98 OFFERING MEMORANDUM | KIDDER MATHEWSKIDDER MATHEWS | BEVERLY GROVE8

CENTRAL TRANSIT LOCATION

Beverly Grove residents benefit from a convenient array of transportation options, ranging from quick access to Portland-Metro’s major arterials, to easy and varied access to public transit.

Beverly Grove is situated one mile from I-84 going east-west, and seven miles from Portland City Center. Interstate 205 is one mile away, with Portland International Airport under seven miles north.

The property is located less than a mile from the Gateway MAX Station, which services the Blue, Green, and Red light rail lines, providing direct transit to Portland International Airport, Downtown Portland, Hillsboro, Beaverton, Clackamas, and Gresham job centers. The award-winning Trimet Blue, Green, and Red MAX lines cover nearly 70 miles of line, and serve roughly 100,000 riders on a daily basis (Trimet.org).

The Gateway MAX station also services seven different bus routes. These routes connect Gateway to the close-in neighborhoods, Portland City Center, Nob Hill, Southeast Portland, as well as many other popular locations for commuters and visitors alike.

Investment Highlights

Superior Location

Beverly Grove is less than one mile from the Gateway MAX

Station, easily connecting residents to Downtown

Portland & Portland International Airport.

NE HALSEY STREET

GATEWAY RETAIL CORRIDOR

GATEWAY SHOPPING CENTER

GATEWAY MAX CENTER

NE WEIDLER STREET

NE 102ND AVENUE

1 MILE

I-84 & I-205

7 MILES

PORTLAND CITY CENTER

5 MILES

PORTLAND INTERNATIONAL

AIRPORT

Gateway Max Station

KIDDER MATHEWS | BEVERLY GROVE

Bus 15: Gateway to SE Portland,

city center, and Nob Hill

Bus 19: Gateway to Laurelhurst,

City Center, Eastmoreland,

Woodstock, and Mt. Scott

Bus 22: Parkrose to Gateway

Bus 23: Sandy to Gateway

Bus 24: Fremont to Gateway

Bus 25: Gateway to Rockwood

Bus 87: Gateway to Rockwood

via Airport Way

GATEWAY DISCOVERY PARK


RETAIL & ENTERTAINMENT

Located just a block from main arterial streets, Beverly Grove is in close proximity to numerous retail and entertainment destinations. Within a two-mile radius of the property you’ll find abundant restaurant choices, retailers, and grocery stores.

With over 700,000 SF of retail space located within a half-mile of Beverly Grove, tenants have a short walk to the Fred Meyer anchored Gateway Shopping Center, with an Office Depot, Ross, Kohl’s, and several other national retailers, along with a WinCo Foods just across the street. Mall 205, home to Target, 24 Hour Fitness, The Home Depot, and several restaurants including, Olive Garden and Portland Seafood Co., are also close by.

NE HALSEY STREET

NE GLISAN STREET

NE

12

2N

D A

VE

NU

E

NE

10

2N

D A

VE

NU

E

GATEWAY SHOPPING CENTER

SACRAMENTO ELEMENTARY SCHOOL

GLISAN STREET STATION

11

GATEWAY GREEN

GATEWAY MAX CENTER

MADISON HIGH SCHOOL

MULTNOMAH UNIVERSITY

PORTLAND CHRISTIAN SCHOOLS

KAISER

Retail Abundance

Over 700,000 SF of retail space is located within a half-

mile of Beverly Grove.

OFFERING MEMORANDUM | KIDDER MATHEWS

GATEWAY DISCOVERY PARK


Dynamic Long-Term Vision

Beverly Grove is in the Gateway Regional Center, which is slated to

receive up to $164M for public improvements by 2022

12 KIDDER MATHEWS | BEVERLY GROVE

PROSPER PORTLAND

The city of Portland’s economic and urban development agency, Prosper Portland, has partnered with the Gateway community in a shared effort to implement a dynamic vision for the Gateway Regional Center that has focused on developing a more urban, mixed-use environment with East Portland’s commercial activity and employment in order to benefit the area’s livability and economy. The Gateway Regional Center, a major transportation hub, is slated to have received up to $164 million for public improvements by 2022, all intended to improve livability and increase job creation in the area.

The area’s unique advantages, like its unparalleled location at the intersection of major transportation corridors, provide it with excellent access to activity centers, including Portland International Airport, and Downtown Portland. Prosper Portland initiated plans to capitalize on Gateway’s prime location, and upgrade its transportation and open space networks in 2001, making an already central location even more efficient and accessible. The MAX red line

opened in 2001, and provided transport to the airport through Gateway. The MAX Green line was added in 2009, further connecting Gateway to southeast Portland and Clackamas.

Located in the Halsey/Weidler Business District, Beverly Grove is located in one of the focus areas of the Gateway Action Plan, which aims build upon the previous urban renewal work done to revitalize the Gateway Community corridor. The Gateway Action Plan will take advantage of growing population and employment bases, and provide a framework to continue to redevelop neighborhoods, and increase housing and employment opportunities while continuing to offer access to high-quality transportation services and urban amenities.

FOR MORE INFORMATION, VISIT:

https://prosperportland.us/portfolio-items/gateway-regional-center/


THE GATEWAY PARK & URBAN PLAZA

The Gateway community has long desired a public space to cherish and enjoy in the heart of the neighborhood, and the Gateway Discovery Park will provide just that. The Gateway Redevelopment and Neighborhood Park Project aims to promote and reinforce the identity of Gateway as a family friendly, multi-generational, and multicultural place to live and work. Construction on Gateway Discovery Park broke ground in May of 2016, and opened in August 2018.

The neighborhood park is a 3.2-acre space located on the corner of NE Halsey and NE 106th, just two blocks from Beverly Grove. The park includes an urban plaza, green space, inclusive nature playground, skate park and picnic area. The park will make tremendous contributions to the Gateway Eco-district.

The park will function as Gateway’s “living room” with spaces and activities for all age groups. The plaza is sized to accommodate an interactive water feature, seating, dining, conversation, and a variety of events, festivals or even a farmers market.

GATEWAY GREEN

Opened in 2017, Gateway Green is one of Portland’s newest public parks. This 25-acre space, now devoted to cycling, running & walking trails, and nature preservation, and play areas, was once unused public land located between I-84 and I-205.

Located one mile from Beverly Grove Apartments, Gateway Green is one of Portland’s first (and only) parks dedicated to off-road cycling. Visitors can also walk, run, and hike throughout the park, and learn about habitat preservation and restoration. In addition to the soft surface trails for walking and running that are located throughout the park, visitors can also enjoy access to natural surface, off-road single-track trails, and a bike skills area to challenge riders of all levels, using the natural topography of the land.

Unit with Washer & Dryer

Gateway Park Open House #2, March 24, 2015

Preferred Concept: Plan

SEATING AND PLANTING EDGE

PROMENADEWITH OVERHEAD LIGHTS

PLAZA

PICNIC GROVE

WATER FEATURE & PERFORMANCE SPACE

PERFORMANCE SPACE SEATING

PUBLIC RESTROOM & STORAGE

OPEN LAWN

SKATE SPOT

NEIGHBORHOOD ENTRYWAY

PICNIC GROVE

QUIET SWING AND SPIN

SAND AND WATER DISCOVERY


PLAY PLAZABUILDING IMAGINATION ZONE

BOULDER HILL AND SLIDE


CLIMBING FOREST

NE WASCO STREET

NE

106T

H A

VEN

UE

NE HALSEY STREET

NE

104T

H A

VEN

UE

NE CLACKAMAS STREET

Gateway Park Preferred Concept Plan

Technical riding tracks Nature play area

0 150 300 600 Gateway Park Preferred Concept Plan

DEMONSTRATED UPSIDE

Ownership has put in place a value-add plan to further enhance the revenue stream at Beverly Grove through the installation of washers and dryers in units. To date, the program has been implemented on three of the two-bedroom units. The cost to permit and install a new washer/dryers is approximately $4,000 per-unit and has resulted in increased rents of approximately $75/month (over market rents for units without washer/dryers), resulting in a 20% return on investment.


PROPERTY DESCRIPTION

Section 2

Unit Mix Summary

Common Area & Interior Highlights

Floor Plans

Maps & Aerials

OFFERING MEMORANDUM | KIDDER MATHEWS 1716 KIDDER MATHEWS | BEVERLY GROVE


PROPERTY DESCRIPTION

Unit Mix Summary

UNIT TYPE NO. OF UNITS

AVG SF

CURRENT RENT

CURRENT RENT / SF

HIGHEST RENT

ACHIEVED

HIGHEST RENT

ACHIEVED / SF

PRO FORMA RENT

PRO FORMA RENT / SF

2 Bedroom / 1 Bathroom 68 910 $1,242 $1.36 $1,395 $1.53 $1,370 $1.51

3 Bedroom / 1 Bathroom 3 1,120 $1,518 $1.36 $1,610 $1.44 $1,650 $1.47

3 Bedroom / 1.5 Bathroom 1 1,050 $1,450 $1.38 $1,450 $1.38 $1,650 $1.48


TOTALS / AVERAGE 74 68,630/ 927 $1,266 $1.36 $1,410 $1.52 $1,392 $1.50


Common Area Highlights

Abundant green space

100 designated surface parking spaces available

(1.4 per unit)

Recently remodeled on-site management office

Debit card enabled laundry facilities

Central leasing office

Secured entry pool

Large, communal sun deck


Interior Highlights

Beginning in 2015, current ownership started renovations on select

units upon turnover. To date, they have completed 100% of the unit

turns on all 74 units, resulting in achieved rents above $1,300. Below is

a list of some of the upgrades that were undertaken in each unit.

Stainless steel appliance package

Stainless steel sinks

Modern cabinet doors & boxes

Brushed nickel cabinet pulls

New countertops

Upgraded wood-look vinyl

flooring

Updated lighting package

KITCHENS

Modern cabinet doors & painted

boxes

Brushed nickel cabinet pulls

New solid piece ceramic sinks


New or resurfaced tub & shower

BATHROOMS

New wood-look vinyl flooring

(living areas & halls)

New carpet (bedrooms)

Washer/dryers ( some units )

New trim & door packages


Vertical blinds

BEDROOMS / LIVING AREA


Floor Plans

UNIT TYPENO. OF UNITS

SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT

2 Bedroom / 1 Bathroom 44 915 $1,244 $1,370

TOTAL 44 40,260 $54,736 $60,280

Average Rent / SF $1.36 $1.50

TWO BEDROOM / 1 BATHROOM TWO BEDROOM / 1 BATHROOM THREE BEDROOM / ONE BATHROOM THREE BEDROOM / ONE BATHROOM


SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT

2 Bedroom / 1 Bathroom 24 900 $1,237 $1,395

TOTAL 24 21,600 $29,688 $33,480



SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT

3 Bedroom / 1 Bathroom 1 1,220 $1,495 $1,495

TOTAL 1 1,220 $1,495 $1,495



SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT


TOTAL 2 2,140 $3,060 $3,220



Floor Plans


SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT

3 Bedroom / 1.5 Bathroom 1 1,050 $1,450 $1,450

TOTAL 1 1,050 $1,450 $1,450


THREE BEDROOM / ONE & ONE HALF BATHROOM THREE BEDROOM / TWO BATHROOM THREE BEDROOM / TWO BATHROOM


SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT


TOTAL 1 1,150 $1,610 $1,610



SIZE (SF)

CURRENT AVG RENT

HIGHEST ACHIEVED

RENT


TOTAL 1 1,210 $1,610 $1,610



NE 104TH AVENUE

28

Portland

Milwaukie

Vancouver

Gresham

Beaverton

PORTLAND INTERNATIONAL AIRPORT

DOWNTOWN PORTLAND

KIDDER MATHEWS | BEVERLY GROVE

30

26


MARKET OVERVIEW

Section 3

Portland MSA

Portland Rankings

Apartment Market

OFFERING MEMORANDUM | KIDDER MATHEWS 31KIDDER MATHEWS | BEVERLY GROVE30


MARKET OVERVIEW

Portland is considered one of the nation’s most livable cities. Located on the banks of the Willamette River only 90 minutes from snow-capped peaks, and the Pacific Ocean, one might not realize Portland’s bustling downtown and waterfront are the heart of a metropolitan region with more than two million people. Twelve bridges span a wide elbow of the Willamette River, connecting the east and west sides of town. Throughout the metro area are thriving neighborhoods filled with restaurants, record shops, bars, funky clothing stores, antique malls, and art galleries.

Portland is known for its progressive bike-friendly attitude, lively music and restaurant scenes, food carts, farmers’ markets, and endless recreation possibilities. Beyond the metro area residents enjoy the Pacific Northwest’s natural beauty via slopes, sails, surf and trails.

Portland is a walkable and bikable city. Within walking distance of most parts of downtown is the campus of Portland State University, the world-class Portland Art Museum, Waterfront Park, Pioneer Courthouse Square, the Oregon Historical Society, a performing arts complex, and a concert hall. For the sports-minded, Portland is home of the MLS Timbers, NBA Trail Blazers, and WHL Winterhawks. Outdoor enthusiasts love Forest Park, the largest city park in the nation, with 5,000 acres of hiking and biking trails, a zoo, public gardens and beautiful old-growth woods. The downtown core is connected by one of the world’s leading public transportation systems, a combination of buses, streetcars, and light-rail trains, putting the entire metro area only a couple stops away.

Portland MSA

$24.3B

ADDED TO PORTLAND MSA ECONOMY DUE TO TECH SECTOR IN 2017

3RD FASTEST

GDP GROWTH IN THE COUNTRY DURING 4Q17

(FOR OREGON)

$164B

TOTAL GDP FOR PORTLAND-VANCOUVER-

HILLSBORO IN 2016

10TH

HIGHEST PERCENTAGE OF WORKFORCE IN TECH

IN THE COUNTRY

3.6%

PORTLAND MSA UNEMPLOYMENT

RATE

4.1%

NATIONAL UNEMPLOYMENT

RATE


PORTLAND MSA ECONOMIC DRIVERS

The Portland-Vancouver-Hillsboro region added more than 3,600 tech jobs in 2017, employing a total of 134,200 workers throughout the area. Those numbers give the Portland area the 10th highest percentage of workforce in tech in the country. The tech sector alone added over $24.3 billion into the Portland Metro economy last year.

Portland’s manufacturing sector is also going strong, with firms such as Intel, Nike, Adidas, Columbia Sportswear, and Boeing employing more than 40,000 workers, and contributing to the area’s current unemployment rate of 3.6%, below the national average of 4.1%.

Oregon had the third fastest GDP growth (3.7%) nationally for the last quarter of 2017, with a total gross domestic product for the Portland metro area at over $164 billion in 2016. Oregon’s GDP growth is due in large part to its durable goods output, primarily coming out of the computer and electronic manufacturing sectors.

Investing in Portland

ULI 2017 Emerging Trends ranks Portland 3rd among 78 metro areas for real

estate investment

Oregon personal income growth was 5th nationally at 1.3% (2016)

Portland ranked #20 on Business Insider’s Top 50 Best Cities for 2016

Portland MSA multifamily vacancy is below 5.0%

Portland MSA is the 8th strongest rental market in the nation, per Axiometrics

Portland’s current unemployment rate is 3.6%, a 41-year low

Growing Population

Oregon was the #2 moving destination in 2017 for people moving from one

state to another, according to United Van Lines

Portland has added 42,000 residents over the last three years, an increase of

1.7%, well above the national average

Portland had the 19th highest population growth by US Metro from 2010 to 2017

Portland estimates around 40,000 new migrants a year, of which more than

40% have a college degree

Employment

Portland MSA employment is at an all-time high, employing

±1,072,600 workers

In the past year, Portland MSA has added over 48,400 jobs, an increase of 2.6%

Portland MSA is expected to add ±48,000 additional jobs in the next two years

Nike announced a major $275M+ expansion that will create 500 new jobs

Kaiser Hospital in Hillsboro was completed with 1,100 new jobs

Daimler Trucks recently completed a $150M headquarters on Swan Island,

creating 400 new jobs

Adidas is expanding its North American headquarters by 200,000 SF, adding

±1,100 jobs in the process

Top Manufacturing Firms in Portland

19,300 EMPLOYEES IN OR & SW WA

12,000 EMPLOYEES IN OR & SW WA

2,800 EMPLOYEES

1,700 EMPLOYEES

1,579 EMPLOYEES

1,500 EMPLOYEES

35OFFERING MEMORANDUM | KIDDER MATHEWS

Portland Rankings

Best Places for Businesses &

Careers

FORBES 2017

#1America’s

“Coolest” City Right Now

INTERNATIONAL TRAVELER JAN 2016

#1America’s Greenest

Cities

TRAVEL & LEISURE MAY 2015

#1Fittest City in

America

HUFFINGTON POST

#1Top 10 Cycling Cities

TRAVEL CHANNEL 2016

#2Moving

Destination of 2016

UNITED VAN LINES 2017

#2


EAST PORTLAND

The East Portland population is one of the largest in the metro area, with a high concentration of residents aged 20-34. That concentration of young residents bodes well for future apartment occupancy.

Low asking rents in East Portland contribute to the area’s extremely low vacancy rates. According to Multifamily NW’s Spring 2018 Apartment Report, at 3.39%, the Outer NE Portland submarket has the lowest vacancy rates in the Portland-MSA. Properties near light rail stations have historically exhibited stronger rent growth, particularly in communities with access to the Green Line. Those properties with more than 20 units that were within a five-minute walk of a light rail station have a 7% rent premium over the East Portland submarket average.

According to CoStar, Construction inventory in East Portland has been limited in the past few years, with less than 5% of inventory added since 2010. Because of the limited inventory, vacancy rates in East Portland are now at 3.39%, well below the Portland metro average, with rent growths that have been moderate, with lower rates.

Apartment Market

PORTLAND

Portland was designated the #2 moving destination by United Van Lines in 2017, and Oregon has consistently ranked as one of the top five states for in-migration numbers over the last several years. Employers such as Intel, Nike, Adidas, and Amazon have attracted a skilled workforce to the metro area. Amazon alone has invested around $2.8 billion into the Oregon economy, with ground broken for three new distribution centers, of one million square feet each, in late 2017.

The Portland-metro area is currently in the middle of extensive apartment construction. While vacancies have gone up due to the increased supply of new units in the past few years, Portland’s overall vacancy rate, at 4.85%, remains comparable to the national average. Substantial demand in the multifamily market should alleviate concerns about oversupply. The influx of well-educated young professionals to the area should have a mitigating effect on vacancy rates as construction increases. According to CoStar, as of April 2018, there are more than 9,000 units under construction, with about 5,600 expected to be delivered in 2018. An overwhelming majority of the new construction has taken place in the city’s Core, close to downtown, while submarkets outside of the Core, like Gateway, have seen relatively limited new construction.

The metro area remains popular with Millennials in search of creative, eco-friendly, and affordable spaces with good access to transit hubs, walkable neighborhoods, and entertainment options. Employment, population, and income growth all exceed national averages, providing solid economic indicators that demand in the Portland apartment market will remain robust, particularly amongst younger generations.

Portland’s population growth is still one of the strongest in the country due to high net migration trends. The metro area gained 30,066 residents between July 2016 and July 2017, increasing Portland’s population to 2,453,168 and making it the 22nd fasting growing metropolitan area out the nation’s 100 largest cities. With a growth rate of 1.36%, Portland is one of only 28 cities in the country that are growing by at least 1% a year. The State of Oregon Employment Department places Portland’s population growth at 19th in country, with a 10% population increase from 2010 to 2017.

350

UNITS ADDED FROM 2010-2017

(3.5% OF TOTAL)

200

UNITS TO BE DELIVERED IN 2018

Construction

$42M

TRADED IN 2017

$157M

TRADED IN 2016

SalesHISTORICALLY LIMITED SALES VOLUME

200,424

EAST PORTLANDPopulation

±23,000K

UNITS ADDED FROM 2012-2017

5,600

UNITS TO BE DELIVERED IN 2018Construction

$1.6B

TRADED IN 2017

$2.9B+

TRADED IN 2016Sales

Population

639,863

PORTLAND

2,389,228

PORTLAND MSA

SOURCE: COSTAR SOURCE: COSTAR


PROPERTY ECONOMICS

Section 4

Current Rents

Operating Statement & Comparative Analysis

Underwriting Assumptions & Notes

Apartment Sale Comparables

Rent Comparables

OFFERING MEMORANDUM | KIDDER MATHEWS 39KIDDER MATHEWS | BEVERLY GROVE38


Current Rents

PROPERTY ECONOMICS

UNIT TYPE NO. OF UNITS AVG SF

CURRENT RENT

CURRENT RENT / SF

HIGHEST RENT

ACHIEVED

HIGHEST RENT

ACHIEVED / SF

PRO FORMA RENT

PRO FORMA RENT / SF

2 Bedroom / 1 Bathroom 68 910 $1,242 $1.36 $1,395 $1.53 $1,370 $1.51


3 Bedroom / 1.5 Bathroom 1 1,050 $1,450 $1.38 $1,450 $1.38 $1,650 $1.48

3 Bedroom / Two Bathroom 2 1,180 $1,610 $1.36 $1,610 $1.36 $1,675 $1.42

TOTALS / AVERAGE 74 68,630/ 927 $1,266 $1.36 $1,410 $1.52 $1,392 $1.50

List Price

$13,150,000

Price per Unit

$177,703

In-place Cap Rate

5.57%

Pro Forma Cap Rate

6.35%

Price per SF

$185

GRM

11.70


Operating Statement & Comparative Analysis

CURRENT RENTS PRO FORMA RENTS

FY 2019 PER UNIT % OF EGI FY 2019

INCOME

Gross Potential Rent $1,123,870 $15,187 96.72% $1,236,120

Other Income $41,366 $559 3.55% $41,366

Utility Reimbursement Income $52,976 $716 4.55% $52,976

GROSS OPERATING INCOME $1,218,212 $16,462 104.83% $1,330,462

Vacancy Loss ($56,193) ($759) (5.00%) ($61,806)

EFFECTIVE OPERATING INCOME $1,162,018 $15,703 100.00% $1,268,656

EXPENSES

Office & Administrative ($14,523) ($196) (1.25%) ($14,523)

Marketing & Advertising ($16,710) ($226) (1.44%) ($16,710)

Payroll & Payroll Taxes ($62,597) ($846) (5.39%) ($62,597)

Repairs & Maintenance ($43,869) ($593) (3.78%) ($43,869 )

Turnover ($13,678) ($185) (1.18%) ($13,678)

Contract Services ($21,977) ($297) (1.89%) ($21,977 )

Cable/Internet ($21,146) ($286) (1.82%) ($21,146 )

Utilities (E/G/T/W/S) ($77,912) ($1,053) (6.71%) ($77,912)

Insurance ($14,503) ($196) (1.25%) ($14,503)

Property Taxes ($83,855) ($1,133) (7.22%) ($83,855)

Reserves ($18,500) ($250) (1.59%) ($18,500)

Management Fee ($40,671) ($550) (3.50%) ($44,403)

TOTAL EXPENSES ($429,941) ($5,810) (37.00%) ($433,673)

NET OPERATING INCOME $732,078 $9,893 $834,983

Underwriting Assumptions & Notes

INCOME

Gross Potential Income

Current column reflects estimated aggregate monthly rents that equate to $1.36 per square foot, or $1,266 per unit.

The pro forma column assumes all units are upgraded with washers/dryers at a $75 per month premium. Currently three units have been upgraded with washers/dryers. On average this equates to $1,392 per unit, or $1.50 per square foot, with an average premium of $126 per unit over the current average rents.

Vacancy Loss

Underwrote 5.0% vacancy loss market vacancy loss. Property underwent significant rehab of interior apartment units, therefore, historic vacancy has been higher. Vacancy in the outer NE Portland area is 3.39% per the NW Apartment Market Report for the spring of 2018.

Other Income

Underwrote all other income line items consistent with the Trailing-12 (T-12) ending in July 2018. General other income line item typically includes late charges, miscellaneous income, NSF fees, pet fees, damage/cleaning fees, transfer fees, application fees, cancellation/termination fees, redecorating fees, and month-to-month premiums.

Utility Reimbursements

Utility charges are underwritten consistent to current rent roll annualized.

EXPENSES

Payroll

Underwrote consistent with the T-12 payroll expense which equates to $846 per unit.

Marketing & Advertising

Underwrote to T-12, which equates to $226 per unit annually.

General & Administrative

Underwrote to T-12 which equates to $196 per unit annually.

Repairs & Maintenance

Underwrote T-12 at $593 per unit annually.

Turnover

Underwrote to T-12 at $185 per unit annually.

Contract Services

Underwrote to T-12 which equates to $297 per unit annually.

Utilities

Underwrote to T-12 expense which equates to $1,339 per unit annually. Utilities include water/sewer, electricity, trash and cable/internet.

Management Fee

Underwrote to management fee of 3.5% of effective gross income.

Real Estate Taxes

Underwrote to 2017-18 tax year with a 3% discount. Property taxes paid before November 1st receive 3% discount.

Insurance

Underwrote to actual cost of $196 per unit annually. Property currently has a premium insurance for the property that covers earthquake insurance which is not included.

Capital Reserves

Underwrote to $250 per unit annually.

PARCEL ACCT NO. ACREAGE 2017-2018 TAXES

942270920 3.0 $86,447.99


Apartment Sale Comparables

KINGS MEADOW1973 SW 257th Avenue, Troutdale, OR

Sale Date 09.12.2018

Sale Price $9,050,000

Price / Unit $188,542

Price / SF $191

NRSF 47,280

No. of Units 48

Year Built 19961

JACKSON SQUARE5318 Lakeview Boulevard, Lake Oswego




Price / SF $200

NRSF 25,200

No. of Units 28

Year Built 19702THE HABITAT5735 SW Oleson Road, Portland




Price / SF $228

NRSF 67,060

No. of Units 85

Year Built 19733

WEST END10285-10305 SW Denney Road, Portland




Price / SF $177

NRSF 22,254

No. of Units 20

Year Built 19774

List Price $13,150,000


Price / SF $185

NRSF 68,630

No. of Units 74

Year Built/Ren 1969 / 2016

45OFFERING MEMORANDUM | KIDDER MATHEWS


Rent Comparables

PROPERTY ADDRESS AVERAGE SF ASKING RENT RENT / SF NOTES

Connery Place 8130 SE Mill Street 700 $1,395 $1.99 Upgraded; No W/D

The Astoria 1913 NE 73rd Avenue 603 $1,399 $2.32 Upgraded; No W/D

Hidden Oaks 4545 NE 125th Place 902 $1,520 $1.69 Upgraded & W/D

Hidden Oaks 4546 NE 125th Place 865 $1,375 $1.59 Upgraded; No W/D

Hidden Oaks 4547 NE 125th Place 895 $1,375 $1.54 Upgraded; No W/D

Gateway Terrace 827 NE 99th Avenue 860 $1,300 $1.51 Upgraded; No W/D

Weidler 111 11177 NE Weidler Street 795 $1,250 $1.57 Upgraded units; No W/D

Gateway Crossings 10332 NE Oregon Street 800 $1,250 $1.56 Upgraded units; No W/D

COMPARABLE AVERAGE 803 $1,306 $1.63

Beverly Grove 1820 NE 104th Avenue 910 $1,230 $1.35

TWO BEDROOM / ONE BATHROOM

Rent Comparables

PROPERTY ADDRESS AVERAGE SF ASKING RENT RENT / SF NOTES

Russellville Commons 1030 SE Pine Street 1348 $1,969 $1.46 Has W/D

Weilder 111 11177 NE Weidler Street 1008 $1,450 $1.44 Upgraded units; No W/D

Gateway Crossings 10332 NE Oregon Street 1000 $1,450 $1.45 Upgraded units; No W/D

COMPARABLE AVERAGE 1119 $1,623 $1.45

Beverly Grove 1820 NE 104th Avenue 1180 $1,580 $1.34

THREE BEDROOM / TWO BATHROOM

Exclusively represented by

Tyler LinnVice President503.221.2702

[email protected]

Jordan A. CarterSenior Vice President, Partner

[email protected]

Clay NewtonSenior Vice President, Partner

[email protected]

portland, oregon - loopnet · 2018-09-24 · portland international airport, downtown portland,...

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