FIRCREST APARTMENTS 27 Units Gresham, Oregon OFFERING MEMORANDUM

Transcription

1 FIRCREST APARTMENTS 27 Units Gresham, Oregon OFFERING MEMORANDUM

2 INVESTMENT SUMMARY ASSET SUMMARY Property Location County Total Units 27 Year Built 1970 Stories Fircrest Apartments NE Halsey Street Gresham, OR Multnomah 2 stories Approx. NR Sq Ft 24,826 Average Sq Ft 919 Acreage 1.36 Density units per acre PRICING Price $3,050,000 Price Per Unit $112,963 Per Square Foot $123 Scheduled Cap Rate 6.55% Projected Cap Rate 6.85% FOR MORE INFORMATION Greg Frick greg@hfore.com Rob Marton rob@hfore.com HFO Investment Real Estate 2424 SE 11th Avenue, Portland, Oregon (503) Fax: (503) Brokers licensed in Oregon and Washington. 2 HFO INVESTMENT REAL ESTATE

3 INVESTMENT SUMMARY Fircrest Apartments is a 27-unit garden court community located in north Gresham, Oregon. The asset was completed in 1970 and offers generously sized two- and three-bedroom floor plans. The community is in close proximity to major manufacturing and technology employers found near the Northeast Halsey transportation corridor. Those employers include Jensen part manufacturing, International Paper, and Microchip Technology. Wood Village Town Center offers shopping and grocery services, and Interstate 84 provides residents easy access to the Portland metro area. The Fircrest Apartments floor plans average 919 sq ft and offer a patio or private deck that is an extension of the living areas. The property centers on a large, private lawn area. The courtyard includes a children s jungle gym. There is plentiful off-street parking outside each apartment. PROPERTY HIGHLIGHTS Proven rent increase for updated apartments Extensive interior and exterior updates Strong location in close proximity to large employers Garden-court with large private courtyard On-site laundry and plentiful off-street parking Decks and patios overlooking large lawn area with kids play area Fircrest Apartments has completed a number of improvements. Since 2012, more than $320,000 has been spent on interior and exterior updates. Updates include new roofs, seal coat, exterior paint and landscaping improvements. Interior improvements include appliance replacement, hard surface replacements and flooring updates in select units. Fircrest Apartments rents currently average $982 per unit or $1.07 per sq. ft. Updated units have achieved average rents of $1,018 per unit; an increase of 7.03% above apartments with classic finishes. Fircrest Apartments strong location convenient to a number of large employers and major arterials makes for an attractive investment. 96.3% 2 Bedroom 3.7% 3 Bedroom FIRCREST APARTMENTS 27 UNITS GRESHAM, OR 3

4 All units at Fircrest Apartments have a deck or patio with storage. All of the apartments overlook a central courtyard and lawn. 4 HFO INVESTMENT REAL ESTATE

5 FIRCREST APARTMENTS 27 UNITS GRESHAM, OR 5

6 LOCATION Blue Lake Ground NE Sandy Blvd Fairview Lake 30B Troutdale Airport 84 NE Halsey St NE Glisan St E Burnside St NE 162nd Ave Fircrest Apartments DMV NE 181st Ave Reynolds School District Wood Village Town Center Edgefield Reynolds High School SE 223rd Ave SE Division St SE 202nd Ave SE Burnside St Gresham Station Gresham Golf Course 6 HFO INVESTMENT REAL ESTATE

7 GRESHAM Gresham s population in 2016 was 111,523, according to the U.S. Census bureau. Between 2010 and 2016, the population of the city increased by 5.6% according to the Census Bureau. Approximately 47.5% of Gresham s 38,921 households rent, and the average number of persons per household is Median household income in Gresham is $49,866. In November 2016, Gresham voters approved a $291.2 bond for the Gresham- Barlow school district. The vote occurred after the Reynold s School District, which also serves Gresham, announced that it would replace three elementary schools and work on improvements to Reynolds High School with money raised from the 2015 school bond. The City of Gresham aims to strengthen and grow the manufacturing sector in Gresham by offering incentives to companies willing to bring jobs to the city. Within their Enterprise Zone, businesses can receive a property tax abatement on new investment for 3-5 years, and within their 500-acre Investment Zone, businesses can receive a 15-year tax abatement. The goal of the city is to attract high paying jobs that will position Gresham as a regional manufacturing and industrial center. Gresham has also streamlined the permitting process for industrial development, guaranteeing a decision within a 66-day period. Amazon is building a new facility just north of Gresham in Troutdale. The 855,000 square foot fulfillment center with 49 loading docks and 276 trailer parking spaces occupies 73 acres and will employ 1,500 when it opens in the summer of DOWNTOWN GRESHAM The vacancy rate in Gresham remains low, but is beginning to increase slowly. As of October 2017, the vacancy rate for the Gresham/ Troutdale/Fairview submarket was 3.8% overall, up from 3.43% in April, but below the metro area average of 4.37%. While the vacancy rate for studios and one-bedrooms units is higher, the vacancy rate for 2-bedroom and 3-bedroom units remains below 3%. This low vacancy rate has held steady since Average rent per square foot is $1.27, up from $1.18 in April. Year over year this represents an 11.3% increase in rents for this submarket. FIRCREST APARTMENTS 27 UNITS GRESHAM, OR 7

8 OPERATIONS ANALYSIS FIRCREST APARTMENTS 27 UNITS GRESHAM, OREGON Income Current Scheduled Rents Projected Operations Note Scheduled Gross Rent $318,094 $11,781 $321,020 $11,890 1 Less: Vacancy/Credit Loss ($15,905) ($589) -5.0% ($16,051) ($594) -5.0% 2 Net Rental Income $302,190 $11,192 $304,969 $11,295 Other Income $38,839 $1,438 $38,839 $1,438 3 Includes: Utility Billing (RUBs) $19,258 $ % $19,258 $ % Includes: Laundry $4,138 $153 $4,138 $153 Gross Operating Income $341,029 $12,631 $343,808 $12,734 Expenses Projected Operations Per Unit % GOI Projected Operations Per Unit % GOI Real Estate Taxes $23,319 $ % $23,319 $ % 4 Insurance $7,051 $ % $7,051 $ % 5 Total Utilities $32,059 $1, % $32,059 $1, % 6 Fee Management $34,103 $1, % $34,381 $1, % 7 Landscaping $4,943 $ % $4,943 $ % Maintenance/Repairs $24,399 $ % $17,550 $ % 8 Turnover $8,752 $ % $8,752 $ % Reserves $6,750 $ % $6,750 $ % 9 Total Expenses ($141,376) ($134,805) Expenses per Unit ($5,236) ($4,993) % of Gross Operating Income 41% 39% Net Operating Income (NOI) $199,653 $209,004 8 HFO INVESTMENT REAL ESTATE

9 OPERATIONS ANALYSIS FIRCREST APARTMENTS 27 UNITS GRESHAM, OREGON 1. RENTS Rents are based on a December 2018 rent roll. Currently scheduled rents average $982 per unit or $1.07 per sq. ft. A total of 10 units, approximately 37% of the units, have been updated at Fircrest. The updated apartments are achieving rents averaging $1,018 per unit, an increase of 7.03% over apartments with classic finishes. The projected rents are based on recent move-in rates and rates achieved for updated apartments at Fircrest Apartments. Unit Type Unit Count RENT ROLL ANALYSIS: MARKET RENTS Square Feet Average Scheduled Rents Average Scheduled Rents per Sq Ft Average Market Rent Average Market Rent per Sq Ft % Change 2 Bedroom / 1 Bathroom Classic $946 $1.03 $962 $ % 2 Bedroom / 1 Bathroom Upgraded $1,018 $1.11 $1,018 $ % 3 Bedroom / 1 Bathroom Classic $1,185 $1.20 $1,185 $ % Totals / Averages $982 $1.07 $991 $ % 2. VACANCY, CONCESSIONS, AND BAD DEBT/RECOVERY The projected operations stabilize vacancy at 5.0%. 3. OTHER INCOME Other Income includes administrative fees, month-to-month income, pet fees, laundry income and utility charges (RUBs). For the previous 12-months, other income totaled $37,829. RUBs were implemented at Fircrest Apartments in RUBs were added on lease renewals throughout the year, and the historical operations do not represent a stabilization of RUBs collections. The RUBs income has been adjusted to reflect full implementation, which is now complete. RUBs charges average $59 per unit per month, capturing 68% of water, sewer and garbage utility costs. Laundry. Fircrest Apartments has on-site laundry facilities. The previous 3-months operations annualized generated approximately $4,138 in laundry income. These collections are carried forward. FIRCREST APARTMENTS 27 UNITS GRESHAM, OR 9

10 OPERATIONS ANALYSIS FIRCREST APARTMENTS 27 UNITS GRESHAM, OREGON 4. PROPERTY TAXES Oregon s property taxes are evaluated on a fiscal year starting July 1. Property tax values for the tax year were published October 15. Fircrest Apartments taxes increased 3.23% over In Oregon, property taxes are not reassessed on sale and are limited to a 3.0% annual increase at the state level. Property taxes paid by November 1 each year receive a 3.0% discount. The gross property taxes for Fircrest Apartments for the tax year total $24,041. Most investors take advantage of the discount and the net taxes after discount totaling $23,319 are used in the projected operations. 5. INSURANCE Property insurance reflects the current policy premium of $7,051 annually. 6. UTILITIES Utilities have been adjusted for garbage costs. The garbage expense is above market rate, in part, due to the on-going renovations. 7. MANAGEMENT FEE The fee management includes administration, advertising, and payroll costs. Fircrest Apartments is ownermanaged, and the historical management fee includes compensation for the current ownership. The management fee has been adjusted to reflect costs for a property that is managed by an independent, thirdparty management company. 8. REPAIR & MAINTENANCE (R&M) AND TURNOVER R&M has been adjusted for one-time expenses associated with the on-going renovations and additional capital costs. 9. 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. 10 HFO INVESTMENT REAL ESTATE

11 FIRCREST APARTMENTS 27 UNITS GRESHAM, OREGON ASSET SUMMARY Property Address County Total Units 27 Year Built 1970 Average Sq Ft 919 Fircrest Apartments NE Halsey Street Gresham, OR Multnomah PRICING Price $3,050,000 Price Per Unit $112,963 Per Square Foot $123 Scheduled Cap Rate 6.55% Projected Cap Rate 6.85% TOURS AND INQUIRIES Please do not disturb tenants. All tours and inquiries regarding Fircrest Apartments are to be directed to HFO Investment Real Estate at (503) Rob Marton Greg Frick Jack Stephens Tyson Cross Lee Fehrenbacher Todd Tully Adam Smith Brokers licensed in Oregon and Washington. FIRCREST APARTMENTS 27 UNITS GRESHAM, OR 11

12 HFO Investment Real Estate Passion Collaboration Specialization 2424 SE 11th Avenue Portland, OR 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 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.