CAMPUS LOOP 5 Units Salem, Oregon OFFERING MEMORANDUM

Transcription

1 CAMPUS LOOP 5 Units Salem, Oregon OFFERING MEMORANDUM

2 INVESTMENT SUMMARY ASSET SUMMARY Property Location County Total Units 5 Campus Loop 4020 Campus Loop NE Salem, OR Marion Year Built 1979 Approx. NR Sq Ft 5,195 Average Sq Ft 1,039 PRICING Price $650,000 Price Per Unit $130,000 Per Square Foot $125 Cap Rate 5.66% FOR MORE INFORMATION Adam Smith adam@hfore.com Greg Frick greg@hfore.com HFO Investment Real Estate 2424 SE 11th Avenue, Portland, Oregon (503) Fax: (503) Brokers licensed in Oregon and Washington. Campus Loop Apartments in Salem, Oregon is 200 yards from the entrance to Chemeketa Community College. The units are all two-bed, one-baths averaging 1,039 square feet. Built in 1979, the apartments have been well kept, and the building s roofs were replaced in Each unit has off-street parking and its own washer/dryer. Rents are on the upswing the highest recently achieved rent is $260 over previous leases. 2 HFO INVESTMENT REAL ESTATE

3 SALEM, OREGON SALEM REGION Salem is the capital city of Oregon state, and the country seat of Marion County. It is located between Portland and Eugene-Springfield, along the I-5 corridor. Salem s metro area includes Marion and Polk counties. APARTMENT MARKET The MultifamilyNW Fall 2018 apartment market survey of 8,355 apartment units reported that Salem and the surrounding vicinity showed a 4.11% vacancy rate. The area reported average rent rates of $1.21 per square foot, up three cents per square foot over 12 months. Reis, Inc. forecasts that, by 2020, Salem s asking rent growth rate will slightly exceed that of the Western U.S. and of nationwide medians. SKILLED WORKFORCE & STRONG EMPLOYMENT Government jobs account for 28% of metroarea employment. Other major employment fields are education and health (13%), retail trade (11%), and professional services (10%). WalletHub ranked Salem 6th on its list of the 10 cities with the highest rate of job growth. In addition to large corporations, universities, hospitals and public-sector employment, smaller businesses make up most of the Salem area s employment picture. Current unemployment in Salem, as of August 2018, is 4.1%--down from 4.6% a year earlier. In August of 2017, Amazon announced it would open a $90 million, 1 million square foot facility in the Mill Creek Corporate Center in Salem. The center is scheduled to open in the Fall of 2018, and will employ over 1,000 full time workers. Amazon was attracted to the area in part because of the Enterprise Zone initiative, which will provide three years of property tax breaks for the site. Salem also has a burgeoning beer industry. In the Fall of 2017, three new breweries opened in the city. Xicha Brewing opened the first Latin American brewery in Salem, and local breweries Bine Valley and Ratchet Brewery are also opened their doors at that time. DIVERSIFIED ECONOMY Thriving businesses abound in Salem. The city s Strategic Economic Development Corporation (SEDCOR) is the lead economic development agency for Marion and Polk Counties. This private, nonprofit membership organization s mission is to enhance and diversify the Mid- Willamette Valley area s economy. In its 2018 annual report, the city s Strategic Economic Development Corporation (SEDCOR) reported that it spurred on $108 million in capital investment in 2017, and assisted with retention and creation of 595 jobs. RECREATION Salem s recreational attractions include its riverfront carousel and its vintage Enchanted Village theme park, plus water-based activities along the Willamette River, including kayaking, boating fishing and water-skiing. Oregon s history can be seen via the state capitol building, Willamette Mission State Park and the Historic Deepwood Estate. CAMPUS LOOP 5 UNITS SALEM, OR 3

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6 OPERATIONS ANALYSIS CAMPUS LOOP 5 UNITS SALEM, OREGON Income Current Scheduled Rents Projected Rents Note Scheduled Gross Rent $60,540 $12,108 $72,000 $14,400 1 Less: Vacancy/Credit Loss -$3,027 -$ % -$3,600 -$ % 2 Net Rental Income $57,513 $11,503 $68,400 $13,680 Other Income $0 $0 $1,500 $300 3 Includes: Miscellaneous $0 $0 $1,500 $300 Gross Operating Income $57,513 $11,503 $69,900 $13,980 Expenses Projected Operations Per Unit % GOI Projected Operations Real Estate Taxes $4,325 $ % $4,325 $ % 4 Insurance $1,675 $ % $1,675 $ % 5 Total Utilities $4,843 $ % $4,843 $ % Fee Management $4,601 $ % $5,592 $1, % 6 Landscaping $1,000 $ % $1,000 $ % Maintenance/Repairs $2,250 $ % $2,250 $ % 7 Turnover $750 $ % $750 $ % Reserves $1,250 $ % $1,250 $ % 8 Total Expenses -$20,694 -$21,685 Expenses per Unit -$4,139 -$4,337 % of Gross Operating Income -36% -31% Net Operating Income (NOI) $36,819 $48,215 Per Unit % GOI 6 HFO INVESTMENT REAL ESTATE

7 OPERATIONS ANALYSIS CAMPUS LOOP 5 UNITS SALEM, OREGON 1. RENTS Rents are based on a September 2018 rent roll. Current scheduled rents average $1,009 per unit or $0.97 per square foot. Projected rents are based off of market data in the Salem area for similar sized two-bedrooom units, totalling $1,200 or $1.15 per sq. ft. Unit Type RENT ROLL ANALYSIS: MARKET RENTS Unit Count Square Feet Average Scheduled Rents Average Scheduled Rents per Sq Ft Average Market Rents Average Market Rents per Sq Ft 2 Bedroom / 1 Bathroom 5 1,039 $1,009 $0.97 $1,200 $1.15 Totals / Averages 5 1,039 $1,009 $0.97 $1,200 $ VACANCY The projected operations stabilize vacancy at 5.0%. The property currently has no vacancies. 3. OTHER INCOME Campus Loop currently does not collect any other income. Campus Loop currently does not charges their residents for RUBs to recapture their water & sewer expense. A new owner could implement a RUBs system to help boost ancillary income. Projected operations include miscellaneous income at $300 per unit or $1,500 total. Those charges are related to administrative fees. CAMPUS LOOP 5 UNITS SALEM, OR 7

8 OPERATIONS ANALYSIS CAMPUS LOOP 5 UNITS SALEM, OREGON 4. PROPERTY TAXES Oregon s property taxes are evaluated on a fiscal year starting July 1. Property tax values for the tax year are published October 15. 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 Campus Loop for the tax year total $4,325. The gross taxes are used in the projected operations in anticipation of the tax year. 5. INSURANCE Property insurance reflects the current policy premium of $1,675 annually. 6. MANAGEMENT FEE The fee management includes administration, advertising, and payroll costs. Campus Loop is owner-managed, 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, third-party management company. 7. REPAIR & MAINTENANCE (R&M) AND TURNOVER Repairs and maintenance for Campus Loop are projected at $450 per unit, or $2,250 annually. In addition to R&M, we project turnover costs to be $750, or $150 per unit. 8. 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, or $1,250 total. 8 HFO INVESTMENT REAL ESTATE

9 CAMPUS LOOP CAMPUS LOOP 5 UNITS SALEM, OREGON ASSET SUMMARY Property Location County Total Units 5 PRICING Price $650,000 Price Per Unit $130,000 Per Square Foot $125 Cap Rate 5.66% Campus Loop 4020 Campus Loop NE Salem, OR Marion Year Built 1979 TOURS AND INQUIRIES Please do not disturb tenants. All tours and inquiries regarding Campus Loop are to be directed to HFO Investment Real Estate at (503) Adam Smith adam@hfore.com Greg Frick greg@hfore.com Jack Stephens jack@hfore.com Tyson Cross tyson@hfore.com Lee Fehrenbacher lee@hfore.com Todd Tully todd@hfore.com Brokers licensed in Oregon and Washington. CAMPUS LOOP 5 UNITS SALEM, OR 9

10 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.