BAILEY HILL MEADOWS 70 Units - Eugene, Oregon OFFERING MEMORANDUM

Transcription

1 BAILEY HILL MEADOWS 70 Units - Eugene, Oregon OFFERING MEMORANDUM

2 INVESTMENT SUMMARY ASSET SUMMARY Property Location Bailey Hill Meadows County Lane Total Units 70 Year Built 1980/1986 Stories 2 stories Approximate Sq Ft 45,538 Average Unit Sq Ft 651 Acres 3.3 Density Bailey Hill Road Eugene, OR PRICING Price $7,500,000 Per Unit $107,143 Per Sq Ft $165 Cap Rate 5.82% (projected) FOR MORE INFORMATION Greg Frick greg@hfore.com Cody Hagerman cody@hfore.com Rob Marton rob@hfore.com Tyler Johnson tyler@hfore.com 2424 SE 11th Avenue, Portland, Oregon (503) Fax: (503) Brokers licensed in Oregon and Washington. 2 HFO INVESTMENT REAL ESTATE

3 INVESTMENT SUMMARY Bailey Hill Meadows is a low-density, 70-unit apartment community in southwest Eugene. The property is located on quiet, wooded acreage, and offers a low-density residential setting with immediate access to lifestyle services. Bailey Hill Meadows is less than one mile from nationally-anchored retail centers providing residents convenient access to Fred Meyer, Target and Walmart stores. Eugene is home to the University of Oregon and the property is four miles from campus. Bailey Hill Meadow was completed in 1980 and has completed extensive exterior improvements including new windows, paint and an asphalt seal coat. Its spacious apartments feature one-bedroom flats, twobedroom townhomes and one three-bedroom manager s apartment. All units have open floor plans with a deck or patio that extend the living areas. Residents can take advantage of on-site laundry and rentable storage units. Bailey Hill Meadows has historically demonstrated a vacancy rate below 2.0% and consistent rent growth. Current rents are 4.1% over October 2017 trailing 12-month average rents. Leases signed in 2017 have shown an additional increase of 6.4% over current scheduled rents. Investors will benefit from the extensive improvements at the property; this wellmaintained asset offers a solid Eugene location and is an outstanding investment opportunity. PROPERTY HIGHLIGHTS Well-maintained asset Significant recent improvements On-site laundry facilities On-site parking and additional storage options Minutes from the Bailey Hill Plaza shopping center, Valley River Center and downtown Eugene EXTENSIVE UPDATES Bailey Hill Meadows has completed extensive updates. New windows Painted in 2015 New seal coat in 2017 Deck replacement DETAILED UNIT MIX Unit Type Unit Count Average Sq Ft Total Sq Ft % of Total Units 1 Bedrooms , % 2 Bedrooms , % 3 Bedrooms 1 1,118 1, % Total / Averages , % 91.4% 7.2% 1.4% 1 Bedroom 2 Bedroom 3 Bedroom BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 3

4 Bailey Hill Meadows is a low-density, gardenstyle asset. The wooded site with mature landscaping creates a quiet atmosphere. Many of the apartments look on greenspaces. 4 HFO INVESTMENT REAL ESTATE

5 BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 5

6 Bailey Hill Meadows apartments include spacious one-bedroom flats and twobedroom townhomes. All apartments have radiant ceiling heat. 6 HFO INVESTMENT REAL ESTATE

7 BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 7

8 INVESTMENT SUMMARY CONSTRUCTION SUMMARY Total Units 70 apartments Year Built 1980/1986 No. Of Buildings Stories Construction Type Exterior Walls Roofing Laundry Service Heating Hot Water 11 apartment buildings 1 accessory building (storage units) 1 and 2 stories Wood frame on slab Wood siding Composition shingle Two full service laundry centers with three sets of washer and dryers Electric radiant heat Electric PARKING SUMMARY Open Surface Stalls Parking Ratio Storage SITE SUMMARY City Eugene County Lane No. of Tax Lots spaces 1.53 spaces per unit 18 units Tax Lot Number Zoning R-2 (Medium Density Residential) Jurisdiction City of Eugene 8 HFO INVESTMENT REAL ESTATE

9 SITE PLAN AND FLOOR PLANS Garage Community Garden Bailey Hill Road Mist Court Balcony Patio Bedroom Kitchen Bedroom Living Room Kitchen Bedroom Living Room 1 BEDROOM 625 Sq Ft 2 BEDROOM 1.5 BATH 884 Sq Ft BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 9

10 EUGENE SPRINGFIELD MARKET HIGHLIGHTS APARTMENT MARKET Exceptionally strong rental market, with 96.3% occupancy, according to the Fall 2017 Multifamily NW Apartment Report HIGHLY SKILLED WORK FORCE 38.3% of workers have a bachelor s degree 17.5% of workers have graduate or professional degrees higher than the 15.5% U.S. average. SIGNIFICANT REDUCTION IN UNEMPLOYMENT Recent job losses in construction, manufacturing, professional and business services have been offset with growth in the government, information, educational and health services sectors. Unemployment has fallen from a high of 13.5% in March of 2009 to 4.6% in October, HIGHLY DIVERSIFIED ECONOMY Today s Eugene/Springfield economy is quite diverse. Wood product manufacturing is only 1% of the modern employment mix. 10 HFO INVESTMENT REAL ESTATE

11 EUGENE/SPRINGFIELD MAJOR EMPLOYERS The Eugene/Springfield economy is supported by many industries and businesses of all sizes. At the heart of Eugene s revenue is its legion of home-grown small and medium-sized businesses. Most Eugene companies employ fewer than 20 workers. Including sole proprietorship firms and limited partnerships, more than 10,000 businesses currently operate in and around Eugene/Springfield. The government, education, healthcare, professional services and leisure and hospitality sectors make up more than 50% of the MSA s total employment. The area s growing Silicon Shire, a network that connects more than 200 tech businesses, also provides a number of jobs. Home to the University of Oregon and a federal courthouse, Eugene s government employment adds stability to the area s economy. SACRED HEART MEDICAL CENTER Major employers in the Eugene/Springfield and their approximate number of employees include: EUGENE/SPRINGFIELD TOP EMPLOYERS* Employer # of Employees University of Oregon 4,800 Peace Health Medical Group 4,200 Springfield Public Schools 3,900 Lane County 2,000 Eugene School District 1,900 US Government 1,625 Lane Community College 1,100 State of Oregon 1,100 Walmart 1,050 Symantec 1,000 Monaco Coach Corporation 1,000 Royal Caribbean International Call Center 900 McKenzie Willamette Hospital 750 Weyerhauser Co. 600 Rosboro Lumber Co. 500 Datalogic Scanning 425 City of Springfield 420 Harry and David Call Center 400 Pentagon Federal Credit Union Call Center 400 Willamalane Parks and Rec. District 325 Williams/Franz Bakery 300 BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 11

12 LIFESTYLE CONVENIENCES Randy Pape Beltline W 7th Ave W 5th Ave W 6th Ave W 7th Ave 126 International Fitness W 11th Ave S Bertelsen Rd Bagel Sphere 126 Bailey Hill Meadows Bailey Hill Rd W 18th Ave Oregon Ballet Academy Bigfoot Gym SELCO Credit Union Garfield St Chambers St W 18th Ave Churchill High School Mc Cornack Churchill Sports Park Elementary School Kennedy Middle School Westmoreland City Park Willow Creek Rd Bailey Hill Rd 12 HFO INVESTMENT REAL ESTATE

13 EUGENE/SPRINGFIELD: THE EMERALD EMPIRE In June 1846, Eugene E. Skinner and his family founded a settlement on the banks of the Willamette River in Oregon s lush Willamette Valley. Two years later, the Briggs family made the first settlement in what would become known as Springfield. Skinner s settlement had its own post office by 1850, and was incorporated as Eugene City in Springfield followed suit in The two cities have retained a connection and are separated by the Interstate 5 highway. Combined, the Eugene-Springfield MSA is home to Oregon s third-largest population. Nestled between the Cascade Mountains stunning beauty and the scenic Oregon Coast Range, Eugene (pop. 163,400) and Springfield (pop. 60,135) pride themselves in being among the nation s most livable cities. The area s natural splendor, cultural attractions and other desirable features continue to attract people and commerce. The area s mix of more stable, traditional university, federal, and state jobs, combined with a growing tech industry and a high number of small-to-medium employers, is appealing to those seeking to relocate to Oregon. The area attracts a highly skilled workforce. Almost 40% of Eugene-Springfield residents have a bachelor s degree, with 17.5% possessing graduate or professional degrees higher than the US average of 15.5%, according to the 2013 US Census. Livability.com ranked downtown Eugene among its Top 10 downtowns for 2014; it made SACRED HEART MEDICAL CENTER the site s Top 20 rankings for An estimated 1,500 new residents have moved into new and recently remodeled apartments during the last two years. They, among others, have discovered the wide array of restaurants, bars and entertainment venues that has revitalized Eugene s downtown and made it a hip urban playground. Apartment occupancy in the area extremely strong according to MultifamilyNW, which reported occupancies at 97% in its Fall 2015 Apartment Report. An estimated 1,500 new residents have moved into new and recently remodeled apartments during the last two years. Downtown s convergence of restaurants, bars and entertainment venues make life in Eugene lively. More than 20 new businesses have opened in downtown Eugene since 2012 as developers have invested over $200 million in construction projects. Major projects at the University of Oregon include the new 12,000- seat arena on Franklin Boulevard, dubbed the Knight Arena after Nike founder and major UO donor Phil Knight. BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 13

14 EUGENE/SPRINGFIELD TECH INDUSTRY ON THE RISE The Eugene/Springfield area plays host to a growing number of tech companies. More than 220 Eugene/Springfield area tech companies have joined together under the banner of the Silicon Shire, a local networking group that includes such firms as Alacrity Services, CBT Nuggets, VersaLogic, Zynga and Presidio. Many of these firms are actively hiring. Like the Silicon Forest located in Beaverton and Hillsboro, the Silicon Shire is another major conglomeration of tech businesses from small start-ups to major corporations that are bringing jobs and growth to their area, and make Eugene and Springfield increasingly attractive destinations for Oregon residents. The former Hynix computer chip plant in west Eugene was sold to Corning, inc. for $13.4 million in November, The company makes a range of products including optical fiber, cover glass for mobile devices and liquidcrystal displays for TV. When operated by Hynix from the plant was one of the largest private employers in Lane County. Springfield is home to the software security company Symantec, the largest technology employer in Lane County with more than 1,000 employees. 14 HFO INVESTMENT REAL ESTATE

15 EUGENE/SPRINGFIELD TECH INDUSTRY ON THE RISE Tech Companies with More than 100 Employees in the Eugene- Springfield Area include: 3C Interactive Alacrity Services Century Link City of Eugene Information Services Division Datalogic Feeney Wireless Life Technologies Presidio The Register Guard Symantec Digital marketing software developer Subsidiary of Lowes, software to connect contractors to clients Telecommunications Computer network management & operations Hardware developer of bar code readers, data collection tools, sensors, and vision systems Internet of things (IoT) integration & services Biotech arm of ThermoFisher Scientific Tech services Digital media, news, and advertising company, news app developer Cyber security software developer Tech Companies with Employees in the Eugene-Springfield Area include: 4Medica Inc. CBT Nuggets Deck Monitoring IDX LLC Information Services, University of Oregon Lane Community College Computer IT ISTE Palo Alto Software Pipeworks Rosen Aviation Sococo Versalogic Zynga Developer of could-based clinical data software Developer of online IT training videos for system admins Developer of solar energy monitoring software Developer of real estate data software IT Services IT Services Education technology Developer of business planning software Game developer In-flight entertainment products Tech services providing digital workspaces Hardware manufacturer of Single Board Computers Online game developer BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 15

16 UNIVERSITY OF OREGON EUGENE With its high-profile sports teams, and a prime location near the Oregon Coast and the Cascade Mountains, the University of Oregon is a major draw, as one of the state's big three universities. Founded in 1876, The U of O is among 36 public universities in the Association of American Universities an organization of schools with a shared goal of scientific exploration and courses of study that cross over into different disciplines. Students at the University of Oregon can choose from over 270 majors and minors, spread across departments and programs in the school's College of Arts and Sciences, six professional schools and colleges, and its Robert Donald Clark Honors College. Expansion, Renovations and Fundraising The U of O Campus has recently had $92 million in expansions and renovations including upgrades to the library, recreation center, student resource center, athletic facilities, and numerous academic facilities. In October, 2014, the school announced a $2 billion fundraising campaign, designed to help the school's academic programs. By July, 2016, donors had given $1 billion toward this goal. Among those donations was a $50 million endowment from Microsoft's Steve and Connie Ballmer. In 2017, the U of O received an additional $500 million from Phil and Penny Knight. University of Oregon Facts: Students that University-owned housing can accommodate: 17.5%* (Axiometrics) Admissions since 2010: +15.4% 2016 Freshman enrollment: 3,949 Undergraduate median age: 20.8 Oregon residents 52.1% Students and Faculty According to information published by U.S. News and World Report, the UO has nearly 30,000 students and faculty members on its 295-acre campus. The UO campus is also an arboretum of more than 4,000 trees, consisting of approximately 500 species. Programs The university's science departments, which include anthropology, biology, physics, mathematics, psychology, computer and information science, and geological sciences, receive national attention for their work in various branches, including genetics, optics, and neuroscience. UO is home to over 30 research centers and institutes from the Center for the Study of Women in Society to the Northwest Indian Language Institute. The OREGON DUCKS It's impossible to write about the University of Oregon without mentioning its football team, the Oregon Ducks. Famous for their longstanding rivalry with the Oregon State Beavers, the Ducks benefit from a partnership with Nike and private financial support from Phil Knight, and have consistently been in the national spotlight for college sports. The Ducks have proven a significant driver in out-of-state recruitment. The school attracts students from Florida to Washington, and from countries that include Vietnam, Thailand, the United Arab Emirates, Canada, China and Japan. The UO campus is convenient to the amenities of downtown Eugene, including cinemas, art museums and a performing arts center. The University has its own shopping district, which is located on 13th Avenue. 16 HFO INVESTMENT REAL ESTATE

17 EUGENE/SPRINGFIELD: PEACEHEALTH/MCKENZIE WILLAMETTE SACRED HEART MEDICAL CENTER PeaceHealth, a medical services company headquartered in Vancouver, Washington, operates 10 hospitals in three states, including two hospitals in the Eugene area. One is located in Eugene s University district; the other is in Springfield. The Sacred Heart Medical Center in Eugene s University District was established in 1924 and experienced six expansions between 1941 and Since 2008, it has operated 104 beds. Sacred Heart is known for its emergency service and its senior-based features such as its Acute Care for Elders program and its Gerontology Unit. The hospital also offers telemedicine services, outpatient therapy, and an 18-bed rehabilitation center. According to U.S. News and World Report s most recent data, Sacred Heart had 25,593 patient visits to its hospital s emergency room and a total of 2,606 admissions. The hospital provides work for more than 900 employees and a large group of volunteers. In the early 2000s, the campus needed additional expansion but had no available room at its current location. This led to the 2006 construction of the Peace Health at RiverBend campus in Springfield, at an approximate cost of $567 million. This imposing structure is visible from great distances and features 338 licensed beds, 386 private patient rooms, 28 operating rooms, and 16 labor and delivery suites. A competing hospital, Springfield s McKenzie-Willamette Medical Center has 113 licensed beds and more than 225 active physicians. Its large list of departments and specialties ranges from allergy and immunology to vascular surgery. McKenzie-Willamette is in the midst of an $80 million dollar expansion of its campus, adding more than 153,000 square feet, and renovating more than 56,000 square feet of existing structures. The building s new four-story patient tower will house a four-bed, Level II neonatal intensive care unit, expanded surgical and cardiovascular units, and more beds for medical and surgical patients. Construction of the expansion is scheduled for completion in BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 17

18 RENT COMPARABLES 569 Properties The Crossings Barger Dr 569 Bailey Hill Meadows Royal Ave S Bertelsen Rd 99 Woodland Creek Northwest Expy W 11th Ave River Rd Valley River Center EUGENE W 13th Ave Devonshire Hills W 18th Ave Kentfield 105 Autzen Stadium 99 5 Gateway Mall 126 Bailey Hill Meadows Bailey Hill Road Eugene, OR Devonshire Hills 3088 W 15th Avenue Eugene, OR Kentfield 601 Country Club Road Eugene, OR The Crossings 4175 Wagner Street Eugene, OR Woodland Creek 1455 Bailey Hill Road 225Eugene, OR Gimpl Hill Rd Lorane Hwy Willamette St E 30th Ave Lane Community College 18 HFO INVESTMENT REAL ESTATE

19 RENT COMPARABLES S 1 BAILEY HILL MEADOWS Bailey Hill Road, Eugene, OR Total Units: 70 * Avg Sq ft: 642 Year Built: 1980 Avg Rent: $840 Avg Rent/Sq ft: $1.31 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $825 $ BED / 1.5 BATH $1,050 $1.19 Average * $840 $1.31 WOODLAND CREEK 1455 Bailey Hill Road, Eugene, OR Total Units: 211 * Avg Sq ft: 633 Year Built: 1978 Avg Rent: $871 Avg Rent/Sq ft: $1.38 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $830 $ BED / 1.5 BATH $975 $1.15 Average * $871 $1.38 * Does not include manager unit. * Includes floor plans applicable to Bailey Hill Meadows only. The comparable may also include floor plans and unit types not found at Bailey Hill Meadows. BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 19

20 RENT COMPARABLES 2 3 DEVONSHIRE HILLS 3088 W 15th Avenue, Eugene, OR Total Units: 168 * Avg Sq ft: 848 Year Built: 1970 Avg Rent: $844 Avg Rent/Sq ft: $1.00 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $795 $ BED / 1.5 BATH 33 1,000 $895 $0.90 Average * $844 $1.00 * Includes floor plans applicable to Bailey Hill Meadows only. The comparable may also include floor plans and unit types not found at Bailey Hill Meadows. THE CROSSINGS 4175 Wagner Street, Eugene, OR Total Units: 208 Avg Sq ft: 809 Year Built: 1999 Avg Rent: $1,031 Avg Rent/Sq ft: $1.28 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $869 $ BED / 1.5 BATH $1,065 $1.26 Average $1,031 $ HFO INVESTMENT REAL ESTATE

21 RENT COMPARABLES 4 KENTFIELD 601 Country Club Road, Eugene, OR Total Units: 82 * Avg Sq ft: 704 Year Built: 1978 Avg Rent: $895 Avg Rent/Sq ft: $1.27 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH $895 $1.27 Average * $895 $1.27 * Includes floor plans applicable to Bailey Hill Meadows only. The comparable may also include floor plans and unit types not found at Bailey Hill Meadows. BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 21

22 OPERATIONS ANALYSIS: HISTORICAL OPERATIONS Income October 2017 TTM 2017 YTD 6-mos Annualized 2017 YTD 3-mos Annualized Potential Gross Market Rent $668,775 $697,010 $705,240 Less: Loss to Lease ($36,396) -5.4% ($54,186) -7.8% ($53,756) -7.6% Scheduled Gross Rent $632,379 $642,824 $651,484 Less: Vacancy/Credit Loss ($7,952) -1.3% ($12,281) -1.9% ($11,490) -1.8% Less: Bad Debt/Recovery ($771) -0.1% ($1,470) -0.2% ($5,660) -0.9% Net Rental Income $623,656 $629,073 $634,334 Other Income $73,356 $75,765 $72,952 Inclds: Utility Billing (RUBs) $31, % $32, % $34, % Inclds: Laundry $6,799 $7,189 $7,037 Gross Operating Income $697,012 $704,838 $707,286 Expenses March 2017 TTM % GOI March 2017 TTM % GOI March 2017 TTM % GOI Real Estate Taxes $62,090 $62,090 $62,090 Insurance $10,928 $10,928 $10,928 Garbage $5,578 $5,578 $5,578 Sewer/Water $30,504 $30,504 $30,504 Electric $6,584 $6,584 $6,584 Total Utilities $42,665 $42,665 $42,665 Administrative/Advertising $16,680 $16,680 $16,680 Fee Management $28, % $28, % $28, % Onsite Payroll $86, % $86, % $86, % Landscaping $19,174 $19,174 $19,174 Maintenance/Repairs $11,860 $11,860 $11,860 Turnover $11,800 $11,800 $11,800 Reserves $17,500 $17,500 $17,500 Total Expenses ($308,082) ($308,082) ($308,082) Expenses per Unit ($4,401) ($4,401) ($4,401) % of Gross Operating Income 44% 44% 44% Net Operating Income (NOI) $388,930 $396,756 $399, HFO INVESTMENT REAL ESTATE

23 OPERATIONS ANALYSIS: PROJECTED OPERATIONS Income Current Scheduled Rents Projected Operations Note Potential Gross Market Rent $760,440 $10,863 $760,440 $10,863 Less: Loss to Lease ($101,184) ($1,445) -13.3% -$55,944 -$ % Scheduled Gross Rent $659,256 $9,418 $704,496 $10,064 1 Less: Vacancy/Credit Loss ($32,963) ($471) -5.0% -$35,225 -$ % 2 Less: Bad Debt/Recovery $0 $0 0.0% $0 Net Rental Income $626,293 $8,947 $669,271 $9,561 Other Income $76,141 $1,088 $76,141 $1,088 3 Inclds: Utility Billing (RUBs) $34,647 $ % $34,647 $ % Inclds: Laundry $6,799 $97 $6,799 $97 Gross Operating Income $702,434 $10,035 $745,412 $10,649 Expenses Projected Operations Per Unit % GOI Projected Operations Per Unit % GOI Real Estate Taxes $60,381 $ % $60,381 $ % 4 Insurance $10,928 $ % $10,928 $ % Garbage $5,578 $80 0.8% $5,578 $80 0.7% Sewer/Water $30,504 $ % $30,504 $ % Electric $6,584 $94 0.9% $6,584 $94 0.9% Total Utilities $42,665 $ % $42,665 $ % 5 Administrative/Advertising $16,680 $ % $16,680 $ % 6 Fee Management $28,631 $ % $30,383 $ % 6 Onsite Payroll $86,754 $1, % $86,754 $1, % 7 Landscaping $19,174 $ % $19,174 $ % Maintenance/Repairs $11,860 $ % $11,860 $ % 8 Turnover $11,800 $ % $11,800 $ % 8 Reserves $17,500 $ % $17,500 $ % 9 Total Expenses ($306,373) ($4,377) -43.6% ($308,124) ($4,402) -41.3% Expenses per Unit ($4,377) ($4,402) % of Gross Operating Income 44% 41% Net Operating Income (NOI) $396,062 $437,288 BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 23

24 OPERATIONS ANALYSIS 1. RENTS Current scheduled rents at Bailey Hill Meadow average $785 per unit, or $1.21 per square foot. Rents have trended positively over both 2016 and 2017 YTD averages. Current scheduled rents are 4.1% per unit higher than 2017 trailing 12-month averages and have continued to increase leases demonstrate rents averaging $839 per unit, an increase of 6.4% or $54 per unit. The projected rents are based on the 2017 lease rates. $790 HISTORICAL RENT TRENDS $780 $785 $770 $776 Average Rents $760 $750 $753 $765 $740 $ YTD 12-months Annualized 2017 YTD 6-months Annualized 2017 YTD 3-months Annualized Current Scheduled Rents 24 HFO INVESTMENT REAL ESTATE

25 OPERATIONS ANALYSIS Scheduled Rents RENT VARIATION BY UNIT TYPE * $1,100 $1,050 $1,000 $950 $900 $850 $800 $750 $ Sq Ft 884 Sq Ft Minimum Rent Average Rent Maximum Rent RENT SUMMARY Rent * 625 sq ft 884 sq ft $715 1 $720 2 $725 5 $730 7 $734 2 $735 3 $740 5 $745 2 $755 2 $760 1 $765 2 $770 8 $775 5 $780 2 $785 2 $810 1 $820 1 $825 3 $840 1 $850 3 $870 2 $875 1 $880 1 $885 2 $ $ $1,050 1 Total 64 5 * Includes occupied unit only. Does not include manager s unit. BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 25

26 OPERATIONS ANALYSIS Unit Type Unit Count Square Feet RENT ROLL ANALYSIS: SCHEDULED RENTS Lowest Achieved Rent Highest Achieved Rent % Diff Avg Scheduled Rent Avg Scheduled Rent per Sq Ft 1 Bedroom / 1 Bathroom Flat $715 $ % $774 $ Bedroom / 1.5 Bathroom Townhome $875 $1, % $918 $ Bedroom / 1.5 Bathroom Townhome 1 1,118 $840 $ % $840 $0.75 Totals / Averages $810 $ % $785 $1.21 Unit Type Unit Count Square Feet RENT ROLL ANALYSIS: MARKET RENTS Avg Scheduled Rent Avg Scheduled Rent per Sq Ft Average Market Rent Average Market Rent per Sq Ft % Change 1 Bedroom / 1 Bathroom Flat $774 $1.24 $831 $ % 2 Bedroom / 1.5 Bathroom Townhome $918 $1.04 $940 $ % 3 Bedroom / 1.5 Bathroom Townhome 1 1,118 $840 $0.75 $840 $ % Totals / Averages $785 $ % 2. OCCUPANCY, CREDIT LOSS AND BAD DEBT Bailey Hill Meadows vacancy has averaged less than 2.0% for the previous 12 months and has minimal bad debt. The projected operations include a market-rate vacancy of 5.0%. The vacancy rate includes both credit loss and bad debt to offset the impact on the operations of the low historical vacancy. 3. OTHER INCOME Bailey Hill Meadows generates other income from administrative fees, utility charges to residents, storage and laundry income. Utility charges (RUBs). Residents are charged for utilities. The property collected approximately $34,647 in RUBs income in the previous 3-month operations. The collections cover approximately 96% of water, sewer and garbage charges. Laundry. Residents have access to two (2) common area laundry rooms. The laundry rooms each have three sets of washers and dryers. The machines are coin operated and generated $6,799 in income for the previous 12-months. Storage Units. There are 18 storage units available to rent at Bailey Hill Meadows. Storage income totaled $9,983 for October 2017 trailing 12-month operations. 26 HFO INVESTMENT REAL ESTATE

27 OPERATIONS ANALYSIS 4. PROPERTY TAXES The table below summarizes Bailey Hill Meadows current property taxes. Property tax values for the 2017/2018 tax year were published October 15 and taxes increased 4.06% over the previous year. 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 prior to November 1 each year receive a 3.0% discount. The gross property taxes for Bailey Hill Meadows for the 2017/2018 tax year total $62,248. With the 3.0% discount, net property taxes total $60,381 which are reflected in the projected operations. PROPERTY TAX HISTORY Tax Year Account # 2014/ / / / ,896 28,464 29,224 $30, ,111 29,709 30,499 $31,482 Total $57,007 $58,173 $59,723 $62,248 % Change 2.37% 2.00% 2.60% 4.06% 5. UTILITIES Utilities at Bailey Hill Meadow including water, sewer, garbage and electric totaled $42,665 for the previous 12-months. Residents at Bailey Hill Meadows are charged for utilities including water/sewer and garbage and collections cover 96% of these expenses. The units are individually metered for electric. Utility Service Responsibility Utility Service Provider Monthly Charge Electric EWEB Individually metered Water EWEB 3rd party billing with Yardi Sewer EWEB 3rd party billing with Yardi Trash Royal Refuse Charge to resident based on square footage and occupant count BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 27

28 OPERATIONS ANALYSIS 6. ADMINISTRATION/AVERTISING AND MANAGEMENT Management costs including administration, advertising and fee management total 6.5% of Gross Operating Income (GOI). Bailey Hill Meadows is owner-managed and may benefit from independent, third-party management. 7. PAYROLL Bailey Hill Meadows is currently staffed with an on-site manager and a maintenance technician. 8. MAINTENANCE/REPAIR AND TURNOVER Maintenance/repair and turnover costs cover supplies and contracted services. The expenses do not include payroll. 9. REPLACEMENT RESERVES Replacement reserves are required by most lenders and are estimated at $250 per unit, or $17,500 annually. 28 HFO INVESTMENT REAL ESTATE

29 BAILEY HILL MEADOWS PRICING Price $7,500,000 Per Unit $107,143 Per Sq Ft $165 Cap Rate 5.82% (projected) TOURS AND INQUIRIES Please do not disturb tenants. All tours and inquiries regarding Bailey Hill Meadows are to be directed to HFO Investment Real Estate at (503) Greg Frick (971) Cody Hagerman (971) Rob Marton (971) Tyler Johnson (971) Brokers licensed in Oregon and Washington 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. BAILEY HILL MEADOWS 70 UNITS EUGENE, OR 29

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