a PDF of the Velo Apartments offering memorandum

Transcription

VELO APARTMENTS
14 UNITS • PORTLAND, OREGON
Investment Real Estate • www. hfore.com • (503) 241.5541
OFFERING MEMORANDUM
OFFERING MEMORANDUM
VELO APARTMENTS
7339 SE Milwaukie Avenue • Portland, Oregon
TABLE OF CONTENTS
Asset Overview
3
Location 13
Comparables27
Operations Analysis 35
Offer Terms
41
HFO INVESTMENT REAL ESTATE
Lee Fehrenbacher • [email protected]
Greg Frick • [email protected]
Cody Vaz • [email protected]
Jack Stephens • [email protected]
Todd Tully • [email protected]
Tyson Cross • [email protected]
www.hfore.com • 503.241.5541
Licensed in the States of Oregon and Washington.
ASSET OVERVIEW
INVESTMENT OVERVIEW
The Velo Apartments offers investors an exceptional opportunity to acquire
a newly built asset located in Sellwood, one of Portland’s most desirable
close-in neighborhoods.
results in lower utility costs for both owner and renters. Common area
amenities include a large bike storage room and community barbecue patio,
but arguably one of the property’s best features is just outside its front door.
Completed at the end of 2014, the Velo Apartments consists of 14 wellappointed one- and two-bedroom units. Each apartment features a rich
mix of amenities and finishes, including:
Located in Southeast Portland’s Sellwood neighborhood, the Velo is just
steps away from numerous shops, restaurants, and breweries that make the
area a popular destination. Sellwood’s “Antique Row” — a cozy strip with
an eclectic collection of antique shops along SE 13th Avenue — is a popular
spot for weekend treasure hunters. The Velo also provides easy access to
the city’s MAX light rail line and the Springwater Corridor — a section of
paved trail connecting Sellwood to downtown Portland — making it an
ideal home base for commuters.
•
•
•
•
•
•
Stainless steel appliances
Faux marble countertops
In-unit washers and dryers
Mini-split ductless HVAC with air conditioning
Designer light fixtures
A mix of contemporary concrete and vinyl wood flooring
Built with a high standard of insulation, energy efficient windows, and
water and gas monitoring systems, the property’s modern efficiencies
4 HFO INVESTMENT REAL ESTATE
With its superior design and location, investors will find the Velo
Apartments a truly unique investment opportunity in the heart of one of
Portland’s most popular neighborhoods.
EXECUTIVE SUMMARY
THE ASSET
Velo Apartments
Address
7339 SE Milwaukie Avenue
Portland, Oregon 97202
Total Units
14 Residential Units
Average Unit Size
583 SF
Avg. Scheduled Rent
$1,304
Avg. Scheduled Rent PSF
$2.24
Occupancy
99.3% (T6 Annualized Average)
OFFERING SUMMARY
Price:
$3,200,000
Price Per Unit:
$228,571
Price Per Sq. Ft.:
$392
Scheduled Cap Rate
4.95% (July 2016 T6 Annualized)
Projected Cap Rate
5.08%
For More Information
2424 SE 11th Avenue, Portland, Oregon 97214
www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548
VELO APARTMENTS • 14 UNITS • PORTLAND, OR
5
ASSET DETAILS
PHYSICAL INFORMATION
SITE SUMMARY
Number of Buildings
1
Location
7339 SE Milwaukie Avenue
Portland, OR 97202
Year Built
2014
Stories
Three-story walk-up
Total Acreage
0.12
NRSF
8,155
County
Multnomah
Average Unit Size (SF)
583
Tax Lot(s)
R526075
City
Portland
County
Multnomah
Acres
0.12 (5,279 sqft)
Siding
Fiber cement
Heating & AC
Daikin wall-mounted mini-split units
Laundry
Stacked washers & dryers in every unit
Per county records
UNIT MATRIX
UNIT MIX SUMMARY
Unit Type
Unit Count
Total SF
Avg Square
Feet
% of Total
Units
UNIT MIX
1 Bedrooms
11
5,869
534
79%
2 Bedrooms
3
2,286
762
21%
1 Bedroom - 79%
14
8,155
583
100%
2 Bedroom - 21%
Total / Averages
7
VELO APARTMENTS
Units feature contemporary stainless steel appliances and
hardware, rich mahogany cabinetry, maple wood-grain
vinyl flooring, and stylish exposed concrete floors on the
ground-floor units. All kitchens offer gas ranges and builtin microwaves, and every unit comes with energy efficient
full-sized washers and dryers.
9
LUXURIES OF HOME
Along with increased insulation in the walls and ceilings,
each apartment offers added comfort via energy efficient
dual pane windows and ductless mini-split heating and air
conditioning units. Living rooms and bedrooms are prewired for cable, phone and internet, and include generous
storage space.
11
LOCATION
LOCATION: TO THE NORTHWEST
Willamette River
OHSU
South Waterfront
Downtown Portland
Springwater on the Willamette
Lloyd Center District
Westmoreland
Moreland Farmers’ Market
Moreland Theatre
Saburo’s Sushi House
ee Blvd
SE Byb
SE M
Velo Apartments
SE K
napp
St
SE 1
7th
ve
ie A
k
u
a
ilw
Ave
Moreland Veterinary Hospital
LOCATION: TO THE SOUTHEAST
Eastmoreland Golf Course
Westmoreland City Park
McLoughlin Industrial
Post5 Theatre
99E
Natural Pet Food Solution
Rose City Coffee Company
SE M
ve
eA
i
k
au
ilw
Velo Apartments
15
SOUTHEAST PORTLAND
PORTLAND
DOWNTOWN
26
Washington
Park
OMSI
SE Division St
SE 28th Ave
5
SE
Mc
2
213
Reed College
SE Woodstock Blvd
Eastmoreland Golf Course
Velo Apartments
SE Tacoma St
SE Jo
hnso
43
99E
224
MILWAUKIE
SE Holgate Blvd
Blv
d
bu
Bar
26
SE 72nd Ave
1
Oaks Amusement
Park
lvd
rB
lin
SE Powell Blvd
SE 52nd Ave
SW
er
e Riv
mett
Willa
Ave
cadam
HILLSDALE
gh
SE Milwaukie Ave
SW Ma
10
Lou
Mt Tabor City
Park
SE Cesar E Chavez Blvd
405
n Cr
eek
SE King Rd
Blvd
205
SELLWOOD
1
Restaurants and Dining
1
SE Tolman St
2
Llewellyn
Elementary School
SE Henry St
3
SE Tolman St
4
7
SE Duke St
Bluff
SE Claybourne St
SE Bybee Blvd
30
9
15
16
24
25
18 19 20
26
27 28
29
21 22 23
31 32
35
33 34
36
SE Rural St
37
7-Eleven
Portland U-Brew & Pub
Allergy Associates Research Center
Dairy Queen
Powell Veterinary Center
Vaya Creative
Quality Food Center
Philadelphia’s Steaks & Hoagies
13 Virtues Brewing Company
Westmoreland True Value Hardware
Bank of America
Papa Murphy’s Take ‘N’ Bake Pizza
H&R Block
Moreland Vision Source
Relish Gastropub
Samurai Lunch Box
US Post Office
Bible Club PDX
Cosmo Lounge
Kay’s Bar
Cha Cha Cha Mexican Taqueria
Oaks Bottom Public House
Nectar Frozen Yogurt Lounge
Wells Fargo Bank
Lifestyle Services
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
Fat Albert’s Breakfast Cafe
Moreland Theatre
Laurelwood Brewpub
Stickers Asian Cafe
Saburo’s Sushi House
FedEx Office Print & Ship Center
Pizzicato Pizza
Starbucks
Fuchsia
Coco & Toulouse Go Shopping
U.S. Bank
Stars Antiques Mall
Silver Lining
Snap Fitness
Classic Thai Cuisine
Plaid Pantry
Moreland Veterinary Hospital
ReSale Art.com
The Pool & Spa House
Wallace Books
Nurture Salon
Rose City Coffee Company
Bowl of Thistles
Sellwood Grooming & U Wash
38
Ave
SE 13th
SE Claybourne St
11
SE 18th Ave
17
8
SE 17th Ave
SE 16th Ave
SE 14th Ave
Trail
SE Glenwood St
12 13 14
6
SE Milwaukie Ave
10
5
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
Shopping/Entertainment
39
SE Ogden St
41
SE Knapp St
42 43
44
45 46
40
SE Knapp St
47 48
Velo Apartments
SE Flavel St
17
TO THE SOUTH
Restaurants and Dining
2
1
SE Lambert St
2
3
4
5
Shopping/Entertainment
Lifestyle Services
6
7
SE Oaks Park Way
Sellwood Park
SE Lexington St
9 10 11 12
21
22
25
23 24
26
27 28
30 31
29
ette
54
32 33
42
36 37
38 39 40 41
43 44
46 47
45
48
49 50
64
SE Umatilla St
55
56
SE 17th Ave
SE Tenino St
53
52
14. RE/MAX Equity Group
15. Cloud Cap Games
16. Blue Kangaroo Coffee Roasters
17. Zenbu Sushi
18. Tilde
19. Thai Lahnna
20. Unique Antique
21. Jade Bistro, Teahouse & Patisserie
22. Sellwood Cycle Repair
23. Tea Chai Te’
24. Grand Central Bakery
25. Mekong Vietnamese Grill
26. Sellwood Yoga
57
58
59
60
51
61
1. EcoPower Fitness
2. Oodles for Kids
3. Creative Minds Learning Center
4. Reverend’s BBQ
5. Foot Traffic Sellwood
6. A Cena Ristorante
7. Wei Wei - A Taste Of Taiwan
8. Sellwood Market
9. Umpqua Bank
10. Savory Spice Shop
11. Bishops Barbershop
12. Sellwood Antique Mall
13. Multnomah County Library
SE 19th Ave
18 19
SE 16th Ave
20
SE 15th Ave
15 16 17
34 35
SE Tacoma St
13 14
SE 13th Ave
SE Spokane St
SE 11th Ave
SE Nehalem St
SE 9th Ave
e Willam
SE 7th Ave
th
ater on
Springw
SE Miller St
SE Milwaukie Ave
8
SE Bidwell St
27. Sock Dreams
28. Ugly Mug Coffeehouse
29. The Sellwood Collective Antiques
30. Picazzo’s Pizza
31. Opa Pizzaria
32. Portland Homestead Supply
33. Sellwood Soap Company
34. Gino’s
35. Cat Hospital of Portland, Inc
36. Portofino
37. OnPoint Community Credit Union
38. Starbucks
39. Columbia Sportswear Outlet Store
Sellwood Middle School
40. The UPS Store
41. Feastworks Delicatessen &
Catering
42. Sellwood Community Center
43. New Seasons Market Sellwood
44. Kim’s Taekwon-Do Portland
45. Consignment Gallery
46. KeyBank
47. Bellagios Pizza
48. Sellwood Public House
49. American At Heart
50. Sellwood Flower Company
51. Either/Or
62
63
52. Sellwood Medical Clinic
53. Post5 Theatre
54. Classical Ballet Academy
55. Jakes Place
56. Old Portland Hardware & Architectural
57. PDX Sliders
58. 7-Eleven
59. Mio Sushi
60. Mike’s Drive-In
61. Sellwood Inn Pub
62. Piece of Cake Bakery
63. Sellwood Pet Supply
64. Boys & Girls Clubs of Portland
SELLWOOD AND MORELAND
Sellwood and Moreland are two neighborhoods
in close proximity to one another. It’s tempting
to lump them into one entity, but each area has
its own charm and atmosphere.
Sellwood has a small-town feel and a strong
sense of community pride. It feels a little less
hipster-y than the rest of the southeast area—
but there’s still a kid-friendly anything-goes vibe.
Although Sellwood is considered more familyfriendly, Moreland combines urban hustle and
bustle with a strong sense of sustainability and
community.
From coffee roasters to locally-owned
bookshops to a wide swath of antique stores, the
neighborhood is a browser’s paradise. No need
to rush through this area—it invites you to slow
down, take your time, and enjoy the sights. The
eclectic mix of antiques and just plain ol’ stuff
at Stars Antique Mall is like an endless estate
sale, while the breakfast cafe Fat Albert’s, among
other Moreland restaurants, offers hurry-free
noshing.
From Mike’s Drive-In’s traditional burgers
and shakes to a Cena’s fine Italian dining,
there is a bistro for every taste and budget in
the area. Grocery options range from a New
Seasons market to an old-school QFC. For
coffee, residents have a variety of choices, from
Starbucks to Kahveology, a local coffee roaster
with a pleasant, sunny retail space.
The beautiful residential streets of the two
neighborhoods invite a leisurely stroll. Classic
bungalows nestle together on cozy, tree-lined
streets. The fairy-tale cottages of East Moreland
are among the city’s most enchanting structures.
Though this is an older Portland neighborhood,
there are more modern buildings, and signs of
new construction can be seen and heard.
19
CLOSE-IN PORTLAND SUBMARKET
DEMAND GENERATORS
Portland is consistently ranked as one of the
world’s greenest cities. In 2012 Travel+Leisure
magazine ranked Portland as the #1 most
pedestrian and transit-friendly city in the
United States. With reviews like that, it’s easy to
understand why the area’s population continues
to increase. Companies continue to relocate to
Portland, and area employment is on the rise.
A variety of employment opportunities are
found throughout close-in Portland. Major
institutions include hospitals (OHSU, Legacy
Hospital, the Portland VA Medical Center and
Providence); government employers including
federal, state, city and county; Portland Public
Schools, Portland State University, and major
banks, grocery store chains, retailers and hotels.
Close-in Portland is packed with technology
companies and start-ups. Many large and small
employers like Vestas, Microsoft, and others have
established offices in brand-new, or recently
redeveloped, buildings in the Pearl.
Since the 1990s, companies that have moved
their world, North American or U.S. headquarters
to Portland include Adidas, Daimler Trucks,
KinderCare and Keen. Other close-in Portlandbased companies are Umpqua Holdings,
Weiden+Kennedy, NW Natural, PacifiCorp,
PGE, New Seasons, Storables, McMenamins,
McCormick & Schmick’s, Franz Bakery, Portland
Brewing, Stumptown Coffee, Banfield Pet
Hospital, Powell’s Books, ZGF Architects and
the major west coast law firms Stoel Rives and
Schwabe, Williamson & Wyatt.
For many metro areas, including Portland, being economically competitive in today’s
knowledge and information economy depends on attracting and retaining young, collegeeducated (YCE) migrants. On this indicator, Portland has been most successful: since 1980, the
Portland metropolitan region has attracted college - educated individuals under the age of 40
at some of the country’s highest net migration rates in good economic times and bad.
Jason Jurjevich and Greg Schrock
Is Portland Really the Place Where Young People Go To Retire? Migration Patterns of Portland’s
Young and College-Educated, 1980 - 2010
NET JOB GROWTH BY INDUSTRY
DECEMBER 2014: YEAR-OVER-YEAR
CONSTRUCTION
MANUFACTURING
100
3,300
5,800
TRADE, TRANSPORTATION & UTILITIES
4,900
PROFESSIONAL & BUSINESS SERVICES
HEALTH CARE & SOCIAL ASSISTANCE
LEISURE & HOSPITALITY
4,000
4,700
CLOSE-IN PORTLAND SUBMARKET
POPULATION
Not only does Portland have one of the lowest
apartment vacancy rates in the country, but as of
mid 2016, it has the fourth tightest office market
in the country after Nashville, Salt Lake City, and
San Francisco at 8.8%, down from 9.4% a year
earlier. (Jones Lang LaSalle, June 2016). After
years of minimal additions to office space, Greater
Portland now has more than 1.3 million sq ft of
office space under construction.
PUBLIC TRANSPORTATION
All of downtown and close-in Portland is
accessible by public transit that includes an
extensive (and expanding) light rail system and
streetcar and a national award-winning public
bus system. Portland is ranked among the
most bicycle-friendly cities in the world, with
approximately 8% of commuters biking to work—
the highest proportion of any major U.S. city.
Portland
RECENT AREA CONSTRUCTION & ACTIVITY
Planning for additional construction in the South
Waterfront area continues. The $160 million
Oregon Collaborative Life Sciences Building
wrapped up construction in 2014. Over 30
additional acres have yet to be developed along
the South Waterfront. In September, 2015, the
area began service on a $135 million transit and
light rail bridge across the Willamette River.
Many areas of close-in Portland continue to
experience growth, rejuvenation and renewal.
New apartments are under construction all
over the City of Portland. Despite the uptick in
building, a shortage of apartments, along with
population and economic growth, are expected
to keep apartments in high demand.
SHARE OF COMMUTERS WHO WALK, BIKE
AND PUBLIC TRANSIT BY CITY
2014 US CENSUS
POPULATION GROWTH BY COUNTY
2010 to 2015
42,668
Jackson County
Vancouver
10,929
9,154
34,132
Clark County, WA
20,000
12%
Hillsboro
14,740
10,000
14%
Gresham
17,429
Marion County
20%
Beaverton
24,609
Deschutes County
24%
Eugene
52,974
Clackamas County
Lane County
Portland
48,509
Multnomah County
Washington County
Portland’s close-in neighborhoods and
regions include Alberta Arts District,
Belmont, the Central Eastside, Division/
Clinton, Downtown, Hawthorne, Lloyd
District, Mississippi/Williams, NW
Portland/Nob Hill, Old Town Chinatown,
the Pearl District, South Waterfront and
Sellwood-Moreland.
30,000
40,000
50,000
60,000
11%
7%
Bend
6%
Clackamas County
6%
Walk
Bike
Transit
21
PORTLAND/VANCOUVER MSA
PORTLAND REGION
Oregon’s largest city, Portland is near the
confluence of the Willamette and Columbia
Rivers. The Portland-Vancouver MSA consists
of four counties: Multnomah, Washington,
Clackamas, and Clark County, Washington —
where Portland spills over the Washington side of
the Columbia River.
MARKET HIGHLIGHTS
APARTMENT MARKET
•
Greater Portland consistently ranks among
the nation’s lowest for apartment vacancy
rates according to the U.S. Census Bureau
and other third-party services like Reis, MPF
Research and Axiometrics.
• YardiMatrix reported that Portland had the
nation’s strongest 2015 rent growth, at
more than 14%.
HIGHLY SKILLED WORK FORCE
• 54% of Portland workers have an associate’s
degree or higher, outpacing the national
average of 38%.
• Portland is home to the headquarters of
Fortune 500 companies Nike, Precision
Castparts and Lithia Motors and the
headquarters of Fortune 1000 companies
Stancorp Financial, Greenbrier Companies,
Columbia Sportswear, Schnitzer Steel
Industries, and Portland General Electric.
HIGHLY DIVERSIFIED ECONOMY
Portland’s economy, which has successfully
shifted away from agriculture and timber
production, boasts a diverse mix of
manufacturers. These include Intel, Precision
Castparts and Freightliner. Manufacturing
represents about 39% ($74 billion) of Oregon’s
economic output — second only to Indiana. On
a percentage basis, Oregon’s manufacturing has
grown more quickly than the nation’s since 2009
— largely in the Portland area.
In 2015, manufacturing employed 187,100 in
Oregon with high-tech manufacturing jobs
paying an average of $123,453 compared to
average overall industry wages of $64,000*.
A December 2015, Milken Institute report ranked
Portland 8th in the U.S. for job creation, largely
because of its increase in high-tech jobs. The
state estimates that the city will add a total of
55,000 manufacturing jobs between 2012-2022.
(Sources: National Association of Manufacturers, Oregon
Employment Department & Oregon Office of Economic
Analysis, 2015)
*2014 data
TOP 10 LISTS
Portland cconsistently receives glowing reviews
and rankings from the media.
2015 lists included:
•
Portland International Airport Voted
America’s Best Airport by readers 2013-2015
(Travel + Leisure)
•
America’s Best Food City (Washington Post);
•
Greenest City in America (Travel + Leisure);
•
USA’s Coolest City (International Traveler);
•
A Top 10 U.S. Conference City (Smart
Meetings);
•
#10 Best Big Cities in the U.S. (Conde Nast
Traveler);
•
One of the Best Cities for Millennials (Forbes);
•
Best Food Town (Sunset);
•
Best Beer City in America (Thrillist).
PORTLAND/VANCOUVER MSA: EXPANSION
METRO EXPANSIONS AND INVESTMENT
With 18,600 employees, Intel is the area’s largest
private employer. Recently, following a five year,
$6 billion expansion, the company unveiled vast,
long-term plans for future growth. (47 min.
drive time)
In January of 2015, Nike began a $150 million
expansion of its Beaverton world headquarters.
The company is adding 1.3 million square feet of
office space and parking for 2,500 vehicles. (49 min.
drive time)
Nike Campus
In 2016, Daimler Trucks completed consolidation of
its U.S. headquarter’s operations on Swan Island, in
a new $150 million building. (29 min. drive time)
Oregon Health Sciences University (OHSU) leads
the way in government-funded healthcare — and
secures numerous grants for the advancement
of health sciences. OHSU recently acquired a
$1 billion gift for cancer research, thanks to a
matching grant of $500 million. More than 10,000
Oregon donors helped make the grant a reality.
Grants from the National Institutes of Health have
grown from $184 million in 2011 to $211.25 million
in 2014. This infuses the economy with jobs and
income from outside the Portland MSA. (30 min.
drive time)
OHSU Campus
23
PARKS: OAKS AMUSEMENT PARK
Oaks Park is a small amusement park located
3.5 miles south of downtown Portland near the
Sellwood Bridge. It opened in May of 1905 and is
one of the oldest operating amusement parks in
the country.
The 44-acre park includes midway games, about
two dozen seasonal rides, a skating rink that
is open year round, and picnic grounds. The
park was conceived as an attraction timed to
accompany the 1905 Lewis and Clark Centennial
Exposition and was built by the Oregon Water
Power and Railway Company. It attracted
300,000 visitors during its first season, and
continued to attract about that many patrons
each year for a decade.
Today, Oaks Park is home to America’s largest
roller skating rink west of the Mississippi and still
uses live pipe organ music during some sessions.
It features over 20 family rides along with
toddler-friendly kiddie rides. The park also offers
miniature golf, carnival and video games.
In 2005 the park celebrated its 100 years of
continuous operation making it among the
oldest in the US.
SPRINGWATER CORRIDOR TRAIL
The Springwater Corridor Trail is a 21-mile
segment of a 40-mile loop from the Sellwood
neighborhood through Gresham to the town of
Boring, Oregon. This haven of lush green space
is primarily used for biking, jogging, walking
and other outdoor activities. The winding waters
of Johnson Creek gently punctuate a series of
wetlands, buttes and pastures.
The trail was originally a light-rail line, developed
at the start of the 20th century to connect
Portland to the Town of Springwater. Passenger
service ran from 1903 to 1958, and popular
attractions such as Oaks Amusement Park—and
five city parks—were built to popularize the train
line. The line was used for freight transportation
until 1989.
After the land was put up for sale, a conservation
group called the 40-Mile Loop Trust rallied to
preserve it—citing the city's original intentions,
dating back to 1904, to create a trail that would
link the city's many parks. By 1990, after much
political drama, the city approved the trail. By
2006, nearly all of its pathways were paved, and
several bridges were built over Johnson Creek,
which crosses the trail several times en route to
the Willamette River.
The Springwater Corridor Trail is generally set
apart from public roads. The scenic route offers
connections to many parks and open spaces
such as Tideman Johnson Nature Park, BeggarsTick Wildlife Refuge, the I-205 Bike Path, Leach
Botanical Garden, Powell Butte Nature Park and
Gresham’s “Main City Park.”
An estimated 400,000 Oregon residents use
the Springwater Corridor. It is heavily used as a
bicycle commute lane to downtown Portland
during rush-hour. The 10-to-12 foot wide
pavement accommodates two lanes of foot and
bicycle traffic. Whether the user's goal is to get
in a workout or stop and admire Mother Nature,
the Springwater Corridor Trail is an essential
part of life in Southeast Portland.
Velo Apartments
25
PORTLAND TRANSPORTATION SYSTEMS
The Portland/Vancouver metro area is well served
by an outstanding public transit system that is
centered around the downtown core. TriMet, the
area’s public transit agency, continues to expand
transportation options to service residents and
workers who depend on bus and light-rail train
service to get to and from jobs, schools and other
daily events.
NORTH PORTLAND
WI
LL
AM
ET
TE
R
WILLAMETTE RIVER
NW PORTLAND
BEAVERTON
PSU
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.
VE
MAX runs every 15 minutes, or better, and
provides connections to major employment
centers throughout the Portland metro area,
including Hillsboro, Gresham, Milwaukie and
Portland International Airport.
RI
MAX Blue Line
MAX Green Line
MAX Orange Line
MAX Red line
MAX Yellow Line
The Orange Line, TriMet’s newest light rail
extension, connects eastside neighborhoods
(including Sellwood) to downtown Portland and
the greater metro area.
The Green Line was completed in 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.
AIRPORT
GRESHAM
SE PORTLAND
Portland Streetcar A Loop
Portland Streetcar B Loop
Portland Streetcar North South Line
SE ByBee Station
Velo Apartments
SOUTH
WATERFRONT
CLACKAMAS
MILWAUKIE
•
The Green Line connects PSU to Clackamas
Town Center
•
The Red Line terminates at the Portland
International Airport
•
The Orange Line is the MAX’s newest
extension and connects south to the City
of Milwaukie
•
The Blue Line continues through
downtown Portland to the cities of
Beaverton and Hillsboro
COMPARABLES
RENT COMPARABLE LOCATIONS
SE Pow
ell Blvd
26
SE 28th Ave
SE 17th Ave
SE Holgate Blvd
4
SE Woodstock Blvd
WILL
5
The Moreland Apartments
VER
d
ghlin Blv
SE McLou
TE RI
Ave
SE Milwaukie Ave
AMET
cadam
SW Ma
5
Brooklyn Yard
99E
S
Madison @ Sellwood
2
SE Tacoma St
Velo Apartments
1
Sellwood Apartments
3
Moreland Crossing
SE Joh
nson C
reek B
lvd
RENT COMPARABLES
S
1
VELO APARTMENTS
SELLWOOD APARTMENTS
7339 SE Milwaukie Avenue, Portland, OR
Year Built: 2014
Total Units: 14
1721 SE Tacoma Street, Portland, OR
Year Built: 2014
Total Units: 46
Unit type
Units
Sq Ft
Rent
Rent/Sq Ft
1 BD x 1 BA
11
534
$1,235
$2.31
2 BD x 2 BA
3
762
$1,555
$2.04
Average
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
14
583
$1,304
$2.24
583
$1,304
$2.24
Unit type
Units
Sq Ft
Rent
Rent/Sq Ft
0 BD / 1 BA
7
320
$850
$2.66
1 BD / 1 BA
31
489
$1,263
$2.58
2 BD / 1 BA
8
611
$1,623
$2.66
Average
46
485
$1,262
$2.61
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
485
$1,262
$2.61
29
RENT COMPARABLES
2
3
MADISON @ SELLWOOD
MORELAND CROSSING
1315 SE Umatilla Street, Portland, OR
Year Built: 2015
Total Units: 21
8150 SE 23rd Avenue, Portland, OR
Year Built: 2013
Total Units: 67
Unit type
2 BD / 2 BA
Average
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
Units
Sq Ft
Rent
Rent/Sq Ft
21
1,040
$1,800
$1.73
21
1040
$1,800
$1.73
1040
$1,800
$1.73
Unit type
Units
Sq Ft
Rent
Rent/Sq Ft
0 BD / 1 BA
23
559
$1,298
$2.32
1 BD / 1 BA
22
678
$1,470
$2.17
2 BD / 1 BA
4
835
$1,660
$1.99
2 BD / 2 BA
18
981
$2,033
$2.07
Average
67
728
$1,573
$2.16
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
2013
67
$2.51
RENT COMPARABLES
4
5
BROOKLYN YARD
THE MORELAND APARTMENTS
4780 SE Milwaukie Avenue, Portland, OR
Year Built: Under Construction
Total Units: 46
1636 SE Harold Street, Portland, OR
Year Built: 2016
Total Units: 14
Unit type
Units
Sq Ft
Rent
Rent/Sq Ft
0 BD / 1 BA
10
491
$1,436
$2.93
1 BD / 1 BA
28
599
$1,642
2 BD / 1 BA
7
859
2 BD / 2 BA
1
Average
46
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
Units
Sq Ft
Rent
Rent/Sq Ft
0 BD / 1 BA
3
495
$1,295
$2.62
$2.74
1 BD / 1 BA
11
552
$1,468
$2.66
$2,316
$2.70
2 BD / 1 BA
4
835
$1,660
$1.99
696
$1,795
$2.58
2 BD / 2 BA
18
981
$2,033
$2.07
617
$1,703
$2.76
Average
14
540
$1,431
$2.65
1040
$1,800
$1.73
Unit type
Avg Sq Ft
Avg Rent
Avg Rent Sq Ft
540
$1,431
$2.65
*Property is currently in lease-up. Certificate of Occupancy is slated for mid-Sept.
31
COMPARABLE SALES
1
2
MORELAND APARTMENTS
3
CRESTON APARTMENTS
KILN APARTMENTS
1636 SE Harold Street
Portland, Oregon
Year Built
2016
Total Units
14
Avg Unit Size
535
3651 SE Francis Street
Portland, Oregon
Year Built
2014
Total Units
12
Avg Unit Size
740
33 N Beech Street
Portland, Oregon
2014
Year Built
19
Total Units
639
Avg Unit Size
Sale Date
Sale Price
7/29/2016
$3,500,000
Sale Date
Sale Price
6/15/2016
$2,800,000
Sale Date
Sale Price
4/29/2016
$6,750,000*
$ / Unit
$ / SQFT
Cap Rate
$250,000
$468
4.93%
$ / Unit
$ / SQFT
Cap Rate
$233,333
$315
5.27%
$ / Unit
$ / SQFT
Cap Rate
$355,263
$587
4.60%
Property went under contract to an exchange
buyer prior to completion and only three leases
were signed at the time of sale. Cap rate on
projected income was sub-5 percent. Similar
finishes, amenities and location to the Velo.
Property features larger two-bedroom units with
similar finishes to that of the Velo. The property
sold off market to a local investor in a 1031
exchange.
Property features condo-quality finishes and
amenities; passive house energy efficient
design. Similar walk score and proximity to the
downtown core as the Velo. Sold to an exchange
buyer out of California.
* The Kiln is a mixed-use building and approximately 12
percent of the property’s square footage is retail space.
Sales price/unit, sales price/square foot and cap rate
have not been adjusted to account for the retail space.
COMPARABLE SALES
4
5
VIEW POINT TERRACE
6
NORTH MASS APARTMENTS
THE LOUIE
3939 SW View Point Terrace
Portland, Oregon
Year Built
2015
Total Units
12
Avg Unit Size
845
4227 N Massachusetts Avenue
Portland, Oregon
Year Built
2016
Total Units
12
Avg Unit Size
710
312 NE Monroe Street
Portland, Oregon
Year Built
2015
Total Units
12
Avg Unit Size
573
Sale Date
Sale Price
4/15/2016
$3,700,000
Sale Date
Sale Price
3/1/2016
$3,000,000
Sale Date
Sale Price
2/29/2016
$2,850,000
$ / Unit
$ / SQFT
Cap Rate
$308,333
$365
4.99%
$ / Unit
$ / SQFT
Cap Rate
$250,000
$364
5.26%
$ / Unit
$ / SQFT
Cap Rate
$237,500
$414
5.25%
Property features large units and condo-quality
finishes. Sold off-market to an exchange buyer
out of Washington. Was not fully leased when it
went under contract, but was nearly stabilized at
the time of sale.
Property features similar finishes to that of
the Velo and a mix of small flats and larger
townhome units; not as strong of a location.
Property was vacant at the time of sale, and sold
off market during construction to an exchange
buyer out of California.
Property features similar finishes to that of the
Velo and a mix of small studios and larger twobedroom townhome units; not as strong of a
location. Property sold to a California-based
private investor.
33
OPERATIONS ANALYSIS
OPERATIONS ANALYSIS
INCOME
Scheduled rents average $1,304 per unit, or $2.24 PSF. The rent comparables demonstrate that the Velo’s rents trail the market. Based on current trends,
market rents for the Velo Apartments are projected at $1,350 per unit, or $1.33 per SQ FT. This a conservative 3.5% increase over current scheduled rents.
VACANCY/CREDIT LOSS, BAD DEBT AND
CONCESSIONS
For underwriting purposes, The Velo Apartments is analyzed using a 3.0% vacancy rate based on lender underwriting
requirements. The property has had limited vacancy since its lease up. Given the strength of the housing market and
low vacancy rates throughout the entire Portland metro area, vacancy factors for underwriting purposes include
concessions and bad debt.
OTHER INCOME
Other income includes administrative fees, utility billing and pet rent. The majority of the other income is derived
from the utility billing. Residents are charged RUBs for garbage, gas and water/sewer charges. The water/sewer
charges are monitored and billed through Minol. Garbage is a flat fee of $5.00 per unit.
UTILITIES
Utility/Service
Provider
MONTHLY CHARGE (RUBS)
Property Pays
Resident Pays
Electricity
Portland General Electric
(PGE)
x
Separately Metered
Gas
NW Natural Gas
x
RUBs managed by Minol. Charge
calculated by unit SF and total occupants.
Water/ Sewer
City of Portland
x
RUBs managed by Minol. Charged by
meter.
Trash
Heiberg Waste
x
$5 per month per unit flat fee
OPERATIONS ANALYSIS
RENTS AS OF AUGUST 2016
1 Bedroom
Scheduled Rent
432
sq. ft.
$1,020
1
$1,200
532
sq. ft.
538
sq. ft.
2 Bedroom
554
sq. ft.
595
sq. ft.
762
sq. ft.
Total *
1
1
$1,215
1
1
$1,245
1
$1,250
1
$1,270
1
1
1
1
2
1
$1,365
1
1
$1,370
1
1
$1,385
1
1
$1,495
1
1
$1,550
1
1
$1,620
1
1
13
Total *
1
4
1
1
3
3
Square Foot
Average
Scheduled Rents
Average Scheduled
Rent PSF
Average Market
Rents
Average Market
Rent PSF
* Represents occupied units only. At time of analysis, one unit was turning over.
Unit Type
Unit Count
1 Bedroom / 1 Bathroom
2
432
$1,020
$2.36
$1,056
$2.44
4
532
$1,241
$2.33
$1,285
$2.41
1
538
$1,215
$2.26
$1,258
$2.34
1
554
$1,250
$2.26
$1,294
$2.34
3
595
$1,373
$2.31
$1,421
$2.39
3
762
$1,555
$2.04
$1,609
$2.11
14
583
$1,304
$2.24
$1,349.6
$2.32
TOTALS / AVERAGES
37
OPERATIONS ANALYSIS
EXPENSES
The Velo Apartments’ operating expenses assume the property will continue to be managed by a professional third-party management company. The
property was stabilized in December 2015 and all of the projected expenses are based on July 2016 annualized operations with adjustments to the
following selected costs:
PROPERTY TAXES
The property taxes are estimated for the 2016/2017 tax year based on the current assessed values increased by 3.0% and
the available millage rate.
Oregon’s property taxes are evaluated on a fiscal year starting July 1st. Property taxes paid in full prior to November
1st receive a 3.0% discount. Most property owners take advantage of this discount, and the projected taxes have been
adjusted for the discount.
UTILITIES
The water/sewer expenses have been annualized. Water and sewer bills are received quarterly.
MANAGEMENT
The management fee assumes professional, third-party management and includes property oversight, leasing and
administrative costs. The current management fee averages 8.2% and is adjusted for projected income.
OPERATIONS ANALYSIS
Income
2016 YTD 6-mos Annualized
Scheduled Gross Rent
Less: Vacancy/Credit Loss
Net Rental Income
$219,060
($6,572)
$15,647
($469)
$217,654
$212,488
Includes: RUBs
$11,724
Other Income
$9,486
Gross Operating Income
Expenses
$219,220
($1,566)
Scheduled Rents of as August 2016
-1%
88%
$229,378
2016 YTD 6-mos Annualized
Real Estate Taxes
Market Rents
$226,727
-$6,802
$16,195
-$486
$15,178
$219,925
$15,709
$12,534
$895
$12,534
$895
$10,341
$739
$10,341
$739
$225,022
$16,073
$232,459
$16,604
-3.0%
88.1%
Projected Operations
-3.0%
88.1%
Projected Operations
$28,308
$28,308
$2,022
$26,050
$1,861
11.6%
$2,103
$2,103
$150
$2,103
$150
0.9%
Garbage
$1,077
$1,077
$77
$1,077
$77
0.5%
Sewer/Water
$5,822
$6,792
$485
$6,792
$485
3.0%
$459
$459
$33
$459
$33
0.2%
Gas
$1,455
$1,455
$104
$1,455
$104
0.6%
Minol Billing
$2,412
$2,412
$172
$2,412
$172
1.1%
Total Utilities
$11,225
$12,195
$871
$12,195
$871
5.4%
Fee Management
$18,194
$18,194
$1,300
$18,597
$1,328
8.0%
Insurance
Electric
7.9%
8.1%
Maintenance/Repairs
$5,823
$5,823
$416
$5,824
$416
2.6%
Turnover
$1,668
$1,668
$119
$1,666
$119
0.7%
Capital Reserves
$3,500
$3,500
$250
$3,500
$250
Total Expenses
($70,822)
($71,792)
($5,128)
($69,935)
($4,995)
($5,059)
31%
($5,128)
32%
($4,995)
30%
$158,556
$153,230
$162,524
Expenses per Unit
% of Gross Operating Income
Net Operating Income (NOI)
39
OFFER TERMS
VELO APARTMENTS
PRICING
Price
$3,200,000
Per Unit
$228,571
PSF
$392
July 2016 T6 Annualized Cap Rate
4.95%
Projected Cap Rate
5.08%
Avg. Sq. Ft.
583
Avg. Scheduled Rent
$1,304
Avg. Scheduled Rent PSF
$2.24
Tours and Inquiries
All tours and inquiries regarding The
Velo Apartments are to be directed
to HFO Investment Real Estate at
(503) 241.5541
CONFIDENTIALITY AGREEMENT AND DISCLAIMER
Seller and Agent make no representations or warranties as to the accuracy of the information contained in this Offering Memorandum. The enclosed
materials include highly confidential information and are being furnished solely for the purpose of review by prospective purchasers of the interest
described herein. Neither the enclosed materials, nor any information contained herein, is to be used for any other purpose or made available to any
other person without the express written consent of Seller.
The enclosed materials are being provided solely to facilitate the Prospective Purchaser‘s own due diligence, for which it shall be fully and solely
responsible. The material contained herein is based on information and sources deemed to be reliable, but no representation or warranty, express or
implied, is being made by Agent or Seller or any of their respective representatives, affiliates, officers, employees, shareholders, partners and directors,
as to the accuracy or completeness of the information contained herein. Summaries contained herein of any legal, or other, documents are not intended
to be comprehensive statements of the terms of such documents, but rather only outlines of some of the principal provisions contained therein. Neither
Agent nor Seller shall have any liability whatsoever for the accuracy or completeness of the information contained herein, or any other written or oral
communication or information transmitted, or made available, or any action taken or decision made by the recipient with respect to the Property.
Interested parties are to make their own investigations, projections, and conclusions without reliance upon the material contained herein.
Seller reserves the right, at its sole and absolute discretion, to withdraw the Property from being marketed for sale at any time and for any reason.
Seller and Agent each expressly reserves the right, at its sole and absolute discretion, to reject any and all expressions of interest or offers regarding the
Property, and/or to terminate discussions with any entity at any time, with or without notice. This Offering Memorandum is made subject to omissions,
correction of errors, change of price or other terms, prior to sale or withdrawal from the market without notice. Agent is not authorized to make any
representations or agreements on behalf of Seller.
Seller shall have no legal commitment or obligation to any interested party reviewing the enclosed materials, performing additional investigation and/
or making an offer to purchase the Property unless and until a binding written agreement for the purchase of the Property has been fully executed,
delivered and approved by Seller, and any conditions to Seller‘s obligations thereunder have been satisfied or waived.
By taking possession of, and reviewing, the information contained herein, the recipient agrees that (a) the enclosed materials and their contents are of
a highly confidential nature and will be held and treated in the strictest confidence, and shall be returned to Agent or Seller promptly upon request; (b)
the recipient shall not contact employees or tenants of the Property directly or indirectly regarding any aspect of the enclosed materials or the Property
without the prior written approval of Seller or Agent and (c) no portion of the enclosed materials may be copied or otherwise reproduced without the
prior written authorization of Seller or Agent.
If you have no interest in the Property at this time, please destroy or return this Offering Memorandum immediately to:
HFO Investment Real Estate
Attention: Cody Hagerman
2424 SE 11th Ave, Portland, OR 97214
503.241.5541
Build your legacy is a service mark of HFO Investment Real Estate.
43
Investment Real Estate
Passion • Collaboration • Specialization
2424 SE 11th Ave • Portland, OR 97214
www.hfore.com • (503) 241.5541

a PDF of the Velo Apartments offering memorandum

Transcription

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