K I L L I N G S W O R T H

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1 K I L L I N G S W O R T H 12 UNITS - PORTLAND, OR Investment Real Estate www. hfore.com (503) OFFERING MEMORANDUM

2 INVESTMENT OVERVIEW 1334 Killingsworth is a brand-new apartment building in the trendy Alberta Arts District of Northeast Portland. The property features 12 spacious apartment units with top-of-the-line finishes, and offers investors the opportunity to secure a highly desirable, income-producing asset in a growing market. Killingsworth s location, unit mix and finishes appeal to Portland s professional demographic. Property Highlights 9 ceilings Air conditioning Stainless steel appliances Washer/dryer in each unit Bonus room designed for use as an office WALKABLE NEIGHBORHOOD VERY BIKEABLE Quality wood laminate flooring Quartz countertops In-apartment bicycle racks 51 CONVENIENT TRANSIT 2 HFO INVESTMENT REAL ESTATE

3 EXECUTIVE SUMMARY PRICE SUMMARY Price $3,400,000 Price Per Unit $283,333 Per Square Foot $266 Projected Cap Rate 5.08% PHYSICAL INFORMATION Address 1334 NE Killingsworth Street Portland, OR Year Built N Rosa Parks Way NE Ainsworth St 5 99E NE Dekum St NE Ainsworth St NE Columbia Blvd 30 Stories 3-story walk-up Gross Building Sq Ft 12,768 City Portland NE Killingsworth St NE Killingsworth St County Acres Parking Laundry Multnomah 0.18 (7,840 Sq Ft) Street In-unit washer & dryer N Going St NE Alberta St 1334 Killingsworth NE Prescott St TAX INFORMATION Tax ID R N Interstate Ave N Mississippi Ave N Vancouver Ave N Williams Ave NE Fremont St NE 15th Ave For More Information Lee Fehrenbacher lee@hfore.com Willamette River NW Front Ave NE Knott St Jack Stephens jack@hfore.com 2424 SE 11th Avenue, Portland, Oregon (503) Fax: (503) E 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 3

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5 MODERN DESIGN Spacious floor plans with private decks Ample natural light Over-sized kitchen counter with bar seating in select units Generously sized bedrooms Stainless steel appliances Sleek quartz countertops Separate dining and living room areas in townhome units KILLINGSWORTH 12 UNITS PORTLAND, OR 5

6 LOCATION MAP N Ainsworth St NE Ainsworth St N Killingsworth St 5 99E NE Killingsworth St N Channel Ave Willamette River N Going St Killingsworth 30 NW Front Ave N Greeley Ave N Mississippi Ave N Vancouver Ave N Williams Ave NE Fremont St NE 15th Ave NE Knott St NW Nicolai St 405 NW Vaughn St 30 Willamette River NW Interstate Ave NE Broadway St Washington Park NW 23rd Ave NW Lovejoy St E 6 HFO INVESTMENT REAL ESTATE

7 AMENITY MAP Restaurants and Dining Shopping/Entertainment Lifestyle Services NE Ainsworth St 1 NE 12th Ave NE 15th Ave NE 17th Ave NE 22nd Ave NE 24th Ave NE 26th Ave NE 28th Ave NE Jarrett St 2 Alberta NE Jarrett St 3 Park 5 8 NE Killingsworth St NE Emerson St Killingsworth NE 15th Ave NE 17th Ave NE Sumner St NE 22nd Ave NE 24th Ave NE 26th Ave NE 28th Ave NE 30th Ave NE 32nd Ave NE 33rd Ave NE Alberta St Alberta Street Vintage 2. First Impressions Preschool 3. McMenamins Kennedy School 4. Habitat for Humanity 5. Upcycles 6. Handsome Pizza 7. 7-Eleven 8. Prospect Bottleshop & Bar 9. Tea Bar 10. Don Pedro s Produce 11. Portland Fire Department # NE Portland Tool Library 13. Vernon Elementary School 14. Extracto Coffee Roasters 15. Milagros Boutique 16. Nonna 17. Yakuza Lounge 18. Wilder Bar Cafe 19. Beast 20. Tropical Baking Company 21. Expatriate 22. The People s Yoga 23. Subway 24. Concordia Ale House 25. Hotlips Pizza 26. Walgreens 27. Radio Room 28. EcoPower Fitness 29. Tin Shed Garden Cafe 30. Bamboo Sushi NE 31. Sweet Street Barbeque 32. Alberta Co-op Grocery 33. Helser s 34. Green Bean Books 35. Barista 36. Community Cycling Center 37. Solae s Lounge 38. Grasshopper 39. Healthy Pets Northwest 40. The Hilt 41. Via Chicago 42. Bunk Alberta 43. Little Big Burger 44. Salt & Straw 45. Ciao Vito 46. Pine State Biscuits 47. Townshend s Teahouse 48. Great Notion Brewing 49. Peacock Window 50. Hana Japanese Bistro 51. Thicket 52. Alleyway Cafe & Bar 53. Enzo s Caffe Italiano 54. Mae Ploy Thai Cuisine 55. Thai Noon 56. The Waffle Window 57. Suite 6 Boutique 58. The Station 59. The Herbal Apothecary 60. Tonallis Donuts & Cream 61. La Bonita 62. Stella Taco 63. Dar Salam 64. Caffe Vita 65. Together Gallery 66. Appliance Hospital 67. Alberta Rose Theatre 68. Bristlecone 69. Vita Cafe 70. Cha Ba Thai 71. The Big Egg 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 7

8 OPERATIONS ANALYSIS Killingsworth is currently in lease-up, and is therefore evaluated using projected rents and operations. INCOME Rents are projected at $1,777 per unit, or $1.67 per square foot. VACANCY/CREDIT LOSS, BAD DEBT AND CONCESSIONS OTHER INCOME For underwriting purposes, Killingsworth is analyzed using a 5.0% vacancy rate based on lender underwriting requirements. 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. It is estimated that Killingsworth could collect roughly $5,080 per year in additional income, with $4,080 through the implementation of resident utility billing. EXPENSES Killingsworth s operating expenses assume the property will be managed by a professional third-party management company. The projected expenses represent standard operating expenses at similarly sized properties. PROPERTY TAXES INSURANCE Property taxes reflect the estimated value of gross property taxes for Multnomah County. Values are derived through an algorithm based on the property s projected NOI, assessed value and millage rate of Projected operations reflect a market standard premium of $2,400 annually, or $200 per unit. MANAGEMENT The management fee assumes professional, third-party management at a rate of 7.0% of GOI. MAINTENANCE/REPAIR TURNOVER Maintenance and repair costs, and turnover costs, have been projected at $5,400 per year and $3,000 per year respectively. 8 HFO INVESTMENT REAL ESTATE

9 OPERATIONS ANALYSIS SF Rent at 1.60 SF Rent at 1.67 SF Rent at 1.74 RUBS Bedroom / Bathroom Unit Count Square Foot SF Rent at 1.60 Rent per Sqft SF Rent at 1.67 Rent per Sqft SF Rent at 1.74 $20 1 Bedroom / 1 Bathroom $1,225 $1.88 $1,300 $2.00 $1,375 $20 1 Bedroom / 1 Bathroom $1,275 $1.83 $1,350 $1.93 $1,425 $30 2 Bedroom / 1 Bathroom $1,875 $2.00 $1,950 $2.08 $2,025 $30 2 Bedroom / 2.5 Bathroom 2 1,306 $1,950 $1.49 $2,025 $1.55 $2,100 $40 3 Bedroom / 2.5 Bathroom 2 1,402 $2,075 $1.48 $2,150 $1.53 $2,225 $30 2 Bedroom / 2.5 Bathroom 1 1,408 $2,025 $1.44 $2,100 $1.49 $2,175 $40 3 Bedroom / 2.5 Bathroom 1 1,612 $2,200 $1.36 $2,275 $1.41 $2,350 $ ,064 $1,702 $1.60 $1,777 $1.67 $1,852 Rent per Sqft $2.12 $2.04 $2.18 $1.65 $1.63 $1.59 $1.51 $ NE Killingsworth Street SF Rent at 1.60 SF Rent at 1.67 Avg Scheduled Gross Rent per Unit $1,702 $1,777 $1,852 Avg Scheduled Gross Rent per PSF $1.60 $1.67 $1.74 Avg Net Rental Income per Unit $1,617 $1,688 $1,759 Avg Net Rental Income per PSF $1.52 $1.59 $1.65 SF Rent at 1.74 INCOME SF Rent at 1.60 Per Unit % of GOI SF Rent at 1.67 Per Unit % of GOI SF Rent at 1.74 Per Unit % of GOI Scheduled Gross Rent 245,100 20, ,900 21, ,700 22,225 Less: Vacancy/Credit Loss (12,255) (1,021) -5.0% (12,795) (1,066) -5.0% (13,335) (1,111) -5.0% Net Rental Income $232,845 $19,404 $243,105 $20,259 $253,365 $21,114 Plus: Utility Billing (RUBs) 4, % 4, % 4, % Plus: Miscellaneous 1, , , Total Other Income $5,080 $ % $5,080 $ % $5,080 $ % Gross Operating Income - Residential $237,925 $19,827 $248,185 $20,682 $258,445 $21,537 Avg Effective Income Per Unit $1,652 $1,724 $1,795 EXPENSES SF Rent at 1.60 Per Unit % of GOI SF Rent at 1.67 Per Unit % of GOI SF Rent at 1.74 Per Unit % of GOI Real Estate Taxes Projected ,000 2, % 30,000 2, % 30,000 2, % Insurance 2, % 2, % 2, % Total Utilities 9, % 9, % 9, % Admin/Advertising 4, % 4, % 5, % Fee Management 16,655 1, % 17,373 1, % 18,091 1, % R&M/Housekeeping/Landscaping 5, % 5, % 5, % Turnover 1, % 3, % 3, % Capital Reserves 3, % 3, % 3, % Expenses (73,433) (6,119) -31% (75,557) (6,296) -30% (76,480) (6,373) -30% Net Operating Income (NOI) $164,492 $13,708 69% $172,628 $14,386 70% $181,965 $15,164 70% 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 9

10 RENT COMPARABLES MAP 30 The Elmore 1803 N Lombard St E Greenwich Village Apartments N Greenwich Ave NE Columbia Blvd Broadmoor Golf Course N Rosa Parks Way The Woodlawn 909 NE Oneonta St Dekum 1314 NE N Dekum St St 30 N Greeley Ave NE Ainsworth St N Killingsworth St N Going St 5 Verona 446 NE Simpson St Bradley Commons 432 NE Jessup St 99E 2 1 S 1334 Killingsworth 1334 NE Killingsworth St NE Ainsworth St NE Killingsworth St NE Alberta St NE Prescott St Willamette River N Interstate Ave N Mississippi Missippi Ave Ave N Vancouver Ave N Williams Ave NE 15th Ave NE Freemont St NE 33rd Ave NE 41st Ave NW Front Ave Willamette River 30 NE Knott St E 10 HFO INVESTMENT REAL ESTATE

11 RENT COMPARABLES 1 2 BRADLEY COMMONS 432 NE Jessup Street, Portland, OR Year Built: 2017 Total Units: 12 Unit type Units Sq Ft Rent Rent/Sq Ft 0 BED / 1 BATH $959 $ BED / 1 BATH $1,161 $ BED / 1.5 BATH $1,902 $1.95 Average $1,564 $2.11 Avg Sq Ft 740 Avg Rent $1,564 Avg Rent Sq Ft $2.11 THE VERONA 446 NE Simpson Street, Portland, OR Year Built: 2014 Total Units: 16 Unit type Units Sq Ft Rent Rent/Sq Ft 0 BED / 1 BATH $1,199 $ BED / 1 BATH $1,138 $ BED / 2 BATH 4 1,000 $1,591 $ BED / 2.5 BATH 4 1,000 $1,755 $1.76 Average $1,421 $1.90 Avg Sq Ft 748 Avg Rent $1,421 Avg Rent Sq Ft $ KILLINGSWORTH 12 UNITS PORTLAND, OR 11

12 RENT COMPARABLES 3 4 THE WOODLAWN 909 NE Oneonta Street, Portland, OR Year Built: 2014 Total Units: 18 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $1,529 $ BED / 1 BATH $1,898 $ BED / 2 BATH $2,169 $2.81 Average $1,753 $2.30 Avg Sq Ft 763 Avg Rent $1,753 Avg Rent Sq Ft $2.30 GREENWICH VILLAGE APARTMENTS 7400 N Greenwich Avenue, Portland, OR Year Built: 2013 Total Units: 10 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $1,117 $ BED / 1.5 BATH 5 1,426 $1,620 $1.14 Average 10 1,005 $1,369 $1.36 Avg Sq Ft 1,005 Avg Rent $1,369 Avg Rent Sq Ft $ HFO INVESTMENT REAL ESTATE

13 RENT COMPARABLES 5 6 THE ELMORE 1803 N Lombard Street, Portland, OR Year Built: 2016 Total Units: 12 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $1,125 $ BED / 1.5 BATH 6 1,152 $1,600 $ DEKUM 1314 NE Dekum Street, Portland, OR Year Built: 2016 Total Units: 28 Unit type Units Sq Ft Rent Rent/Sq Ft 0 BED / 1 BATH $975 $ BED / 1 BATH $1,195 $2.55 Average $1,363 $1.65 Avg Sq Ft 827 Avg Rent $1,363 Avg Rent Sq Ft $1.65 Average $1,116 $2.60 Avg Sq Ft 429 Avg Rent $1,116 Avg Rent Sq Ft $ KILLINGSWORTH 12 UNITS PORTLAND, OR 13

14 COMPARABLE SALES This survey focused on properties similar to 1334 Killingsworth that sold in the Portland area within the past year. The table below provides a summary of information from surveyed sales. Sale prices per unit range between $216,000 and $250,000. The average per-unit price is $236,550. The oldest property is the 16-unit Verona, built in The newest property is the 12-unit on Bradley Commons, built in The average year of completion for sales comparables was The most recent asset sold, Velo Apartments, sold for $216,071 per unit in December The property sizes range between 12 and 16 units. At an average of 13 units, the comparables are of a similar size to 1334 Killingsworth at 12 units. Property City Year Built COMPARABLE SALES Total Units Sale Date Sale Price $ / Unit $ / Foot Average Unit Size Bradley Commons Portland In Contract $2,950,000 $245,833 $ % Velo Apartments Portland Dec-16 $3,025,000 $216,071 $ % Moreland Apartments* Portland Jul-16 $3,500,000 $250,000 $ % Creston Apartments Portland Jun-16 $2,800,000 $233,333 $ % The Louie* Portland Feb-16 $2,850,000 $237,500 $ % Verona Portland Jan-16 $3,785,000 $236,563 $ % Average* $3,151,666 $236,550 $ % *Operations were not stabilized at time of sale. Cap Rate 14 HFO INVESTMENT REAL ESTATE

15 COMPARABLE SALES BRADLEY COMMONS Year Built 2017 Total Units 12 Sale Date In Contract Sale Price $2,950,000 $ / Unit $245,833 $ / SQFT $332 Cap Rate 5.24% VELO APARTMENTS Year Built 2016 Total Units 14 Sale Date 12/22/2016 Sale Price $3,025,000 $ / Unit $216,071 $ / SQFT $361 Cap Rate 5.14% MORELAND APARTMENTS Year Built 2016 Total Units 14 Sale Date 7/29/2016 Sale Price $3,500,000 $ / Unit $250,000 $ / SQFT $468 Cap Rate 4.93% CRESTON APARTMENTS Year Built 2014 Total Units 12 Sale Date 6/15/2016 Sale Price $2,800,000 $ / Unit $233,333 $ / SQFT $315 Cap Rate 5.27% THE LOUIE Year Built 2015 Total Units 12 Sale Date 2/29/2016 Sale Price $2,850,000 $ / Unit $237,500 $ / SQFT $414 Cap Rate 5.25% VERONA Year Built 2014 Total Units 16 Sale Date 1/29/2016 Sale Price $3,785,000 $ / Unit $236,563 $ / SQFT $307 Cap Rate 5.58% 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 15

16 THE CITY OF ROSES Word of Portland s impressive livability is spreading across the country. Its mild temperatures, stunning natural surroundings and its growing craft food and beverage scene, among other attractions, are calling many. Portland, for these people, is the Oregon city of choice. The Portland apartment market is viewed, regionally and nationally, as a strong market for the placement of investment capital. The city s reputation as one of the nation s top moving destination four years running ( ) in United Van Lines annual National Movers Study assures a continued renter demand. Portland attracts an educated, active, environmentally conscious and creative 16 HFO INVESTMENT REAL ESTATE community of people who stand behind the city s impressive variety and sustainability practices. You can have a decadent burger here just don t forget to compost the leftovers! People who live in Greater Portland embrace its natural beauty and the opportunity to try new things in a city that s open to all walks of life. And, speaking of walking, Portland was made for foot traffic. With more than 150 miles of regional trails, and mixed-use neighborhoods with amenities close-by, it s a great city to explore without a car. The area offers a strong, far-reaching public transit system including the MAX light-rail lines making an automobile seem not so necessary. Portlanders are cyclists, too. Most residents live within a quarter mile of a bike lane, neighborhood greenway, or multi-use path. Whether commuting to work or running everyday errands, many Portland residents make biking part of their daily routine. Artists and artisans make their homes here and help maintain Portland s quirky vibe while offering unique, hand-crafted goods and services. Large and small employers across a wide range of industries provide jobs and economic stability making Portland one of the most appealing cities in the nation. From Oregon was the #1 destination for people moving from other states. In 2016 Oregon was #2 and the greater Portland area remains at the heart of this mass migration.

17 EMPLOYMENT EMPLOYMENT Attracted by Portland s educated workforce and favorable low cost of doing business, high-tech companies continue to open major branches and relocate to the area. Companies which recently opened major branches in Portland include: Airbnb, Google, Squarespace, Mozilla, Simple, Survey Monkey, SalesForce and New Relic, Inc. Portland s tech startup companies includes: Viewpoint, Jama Software, Thetus, Urban Airship, Acquia, Elemental Technologies, Act-On, Puppet Labs, The Clymb and Jive Software. MAJOR EMPLOYERS - # of Employees Intel - 18,500 Providence Health Systems - 16,139 Oregon Health Sciences University - 14,963 Nike - 8,500 Daimler Trucks - 2,800 Adidas - 1, UNEMPLOYMENT RATE ANNUAL: PORTLAND/VANCOUVER METRO AND U.S. (January January 2017) 10.0% 9.1% 8.7% 8.3% 8.4% 8.0% Portland US Percentage % 6.6% 5.8% 5.7% 4.8% 4.9% 4.9% 4.8% (Jan) 2012 (Jan) 2013 (Jan) 2014 (Jan) 2015 (Jan) 2016 (Jan) 2017 (Jan) Source: Multifamily NW Apartment Report 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 17

18 CLOSE-IN PORTLAND SUBMARKET DEMAND GENERATORS The following market conditions have made Portland one of the strongest multifamily markets in the nation for several years: The Metro Area s vacancy rate has consistently ranked among the nation s lowest. Multifamily NW s Spring 2017 Report cited average vacancy for NW Portland to be 2.03%. The same report states overall rent growth for the Portland Metro Area Spring 2016-Spring 2017 was 7.85%; 2016 s rent growth was 13%. Significant in-migration continues: After three consecutive years in the #1 spot, Oregon was the #2 most popular destination for people moving within the United States in The inventory of for-sale housing was less than two months throughout 2015 and VACANCY Portland is consistently ranked at the top of best cities lists. Portland International Airport has been voted the Nation s Best four years running. In 2016 the London Telegraph named Portland the Food and Drink Capital of America and the International Traveler called Portland the USA s Coolest City. With reviews like that, it s easy to understand why the area s population continues to increase by 80 people each day. 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); the federal, state, city and county governments; Portland Public Schools, Portland State University, 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. RENTS/SQ FT 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0% 7.67% % 4.02% (Mar.) Source: Multifamily NW Apartment Report $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 $ Source: Multifamily NW Apartment Report $1.47 $ (Mar.) 18 HFO INVESTMENT REAL ESTATE

19 CLOSE-IN PORTLAND SUBMARKET OFFICE DEMAND Not only does Portland have one of the lowest apartment vacancy rates in the country. As of Q1 2017, its office market vacancy rate was 9.9%, the seventh lowest in the country after Nashville, San Francisco, Seattle-Bellevue, Salt Lake, Austin, and Raleigh-Durham. (Jones Lang LaSalle, April 2017). After years of minimal additions to office space, Greater Portland now has more than 1.6 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, streetcar and a national award-winning public bus system. Portland is ranked among the most bicycle-friendly cities in the world, with close to 8% of commuters biking to work the highest proportion of any major U.S. city. RECENT AREA CONSTRUCTION & ACTIVITY 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 supply, a shortage of apartments, along with population and economic growth, are expected to keep apartments in high demand. Portland Multnomah County POPULATION GROWTH BY COUNTY 2010 to ,509 52,974 SHARE OF COMMUTERS WHO WALK, BIKE AND PUBLIC TRANSIT BY CITY 2014 US CENSUS Portland Eugene 20% 24% Washington County 42,668 Beaverton 14% Clackamas County Deschutes County Marion County Lane County Jackson County Clark County, WA 9,154 10,000 10,929 14,740 17,429 20,000 24,609 30,000 34,132 40,000 50,000 60,000 Gresham Hillsboro Vancouver Bend Clackamas County 7% 6% 6% 12% 11% Walk Bike Transit 1334 KILLINGSWORTH 12 UNITS PORTLAND, OR 19

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21 1334 KILLINGSWORTH PRICING Price $3,400,000 Per Unit $283,333 Per Square Foot $266 Projected Cap 5.08% Avg Square Foot 1,064 Avg Rent $1,777 Avg Rent per Sq Ft $1.67 Tours and Inquiries Please do not disturb tenants. All tours and inquiries regarding 1334 Killingsworth are to be directed to HFO Investment Real Estate at (503) Lee Fehrenbacher Jack Stephens Greg Frick Tyson Cross Todd Tully Cody Vaz 2424 SE 11th Ave Portland, OR Phone: (503) Fax: (503) 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 KILLINGSWORTH 12 UNITS PORTLAND, OR 21

22 Investment Real Estate Passion Collaboration Specialization 2424 SE 11th Ave Portland, OR (503)