PRINGLE CREEK 6 Units Salem, Oregon OFFERING MEMORANDUM

PRINGLE CREEK 6 Units Salem, Oregon OFFERING MEMORANDUM

INVESTMENT SUMMARY ASSET SUMMARY Property Location County Total Units 6 Pringle Creek 1123 Cross Street SE Salem, OR 97302 Marion Year Built 1975 Approx. NR Sq Ft 3,900 Average Sq Ft 650 PRICING Price $775,000 Price Per Unit $129,167 Per Square Foot $199 Cap Rate 7.36% FOR MORE INFORMATION Adam Smith adam@hfore.com Greg Frick greg@hfore.com HFO Investment Real Estate 2424 SE 11th Avenue, Portland, Oregon 97214 www.hfore.com (503) 241.5541 Fax: (503) 241.5548 Brokers licensed in Oregon and Washington. 2 HFO INVESTMENT REAL ESTATE

INVESTMENT SUMMARY Pringle Creek Apartments, located south of downtown Salem, is a half-mile walk from the Salem Hospital and Willamette University. The six units are currently operated as short-term furnished rentals catering to the doctors and nurses at Salem Hospital, as well as professors and grad students at the university. Current leases carry a minimum three-month term with an average historical lease length of five months. This unique asset boasts a high cap rate and great ROI. Of the six units, four are 1-bedroom 1-bath, while the other two are 1-bedroom 1-bath plus an office/bedroom. PROPERTY HIGHLIGHTS Fully furnished units Convenient to large area employers Hardwood floors Updated appliances and finishes On-site laundry Pringle Creek PRINGLE CREEK 6 UNITS SALEM, OR 3

All units at Pringle Creek come furnished. They have been well maintained over the years. 4 HFO INVESTMENT REAL ESTATE

PRINGLE CREEK 6 UNITS SALEM, OR 5

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 8,3559 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, 6 HFO INVESTMENT REAL ESTATE 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.

SALEM, OREGON Glen Creek Rd NW Market St NE Walker Middle School D St NE 22 WILLAMETTE RIVER Front St SE Riverfront City Park Liberty St SE Commercial St SE Salem Shopping Center Mission St SE State St Ferry St SE Marion St NE Center St NE Salem Hospital Pringle Creek Bellevue St SE Salem Saturday Market Oregon State Capitol 12th St NE Willamette University Salem Station 14th St NE Capitol St NE North Salem High School 17th St NE PRINGLE CREEK 6 UNITS SALEM, OR 7

OPERATIONS ANALYSIS PRINGLE CREEK 6 UNITS SALEM, OREGON Income Current Scheduled Rents Note Scheduled Gross Rent $107,640 $17,940 1 Less: Vacancy/Credit Loss -$16,146 -$2,691-15.0% 2 Net Rental Income $91,494 $15,249 Other Income $0 $0 3 Includes: Miscellaneous $0 $0 Gross Operating Income $91,494 $15,249 Expenses Projected Operations Per Unit % GOI Real Estate Taxes $3,195 $533 3.5% 4 Insurance $5,700 $950 6.2% 5 Total Utilities $8,508 $1,418 9.3% Fee Management $9,149 $1,525 10.0% 6 Landscaping $600 $100 0.7% Maintenance/Repairs $1,800 $300 2.0% 7 Turnover $3,600 $600 3.9% Reserves $1,500 $250 1.6% 8 Total Expenses -$34,052 Expenses per Unit -$5,675 % of Gross Operating Income -37% Net Operating Income (NOI) $57,442 8 HFO INVESTMENT REAL ESTATE

OPERATIONS ANALYSIS PRINGLE CREEK 6 UNITS SALEM, OREGON 1. RENTS Rents are based on a September 2018 rent roll. Current rents average $1,495 per unit or $2.30 per square foot. Unit Type RENT ROLL ANALYSIS: MARKET RENTS Unit Count Square Feet Average Scheduled Rents Average Scheduled Rents per Sq Ft 1 Bedroom / 1 Bathroom 6 650 $1,495 $2.30 Totals / Averages 6 650 $1,495 $2.30 2. VACANCY The projected operations stabilize vacancy at 15.0%. The property currently has one vacant unit. 3. OTHER INCOME Pringle Creek does not currently collect any other income. Pringle Creek also does not charge residents for water & sewer utility expenses. A new owner could implement a billback system to boost ancillary income. PRINGLE CREEK 6 UNITS SALEM, OR 9

OPERATIONS ANALYSIS PRINGLE CREEK 6 UNITS SALEM, OREGON 4. PROPERTY TAXES Oregon s property taxes are evaluated on a fiscal year starting July 1. Property tax values for the 2017-2018 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 Pringle Creek for the 2017-2018 tax year total $3,195. The gross taxes are used in the projected operations in anticipation of the 2018-2019 tax year. 5. INSURANCE Property insurance reflects the current policy premium of $5,700 annually. 6. MANAGEMENT FEE The fee management includes administration, advertising, and payroll costs. Pringle Creek 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 traditional apartment asset managed by an independent, third-party management company. 7. REPAIR & MAINTENANCE (R&M) AND TURNOVER Repairs and maintenance for Pringle Creek are projected at $300 per unit, or $1,800 annually. In addition to R&M, we project turnover costs to be $3,600, or $600 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 $1,500 total. 10 HFO INVESTMENT REAL ESTATE

PRINGLE CREEK PRINGLE CREEK 6 UNITS SALEM, OREGON ASSET SUMMARY Property Location County Total Units 6 PRICING Price $775,000 Price Per Unit $129,167 Per Square Foot $199 Cap Rate 7.36% Pringle Creek 1123 Cross Street SE Salem, OR 97302 Marion Year Built 1975 TOURS AND INQUIRIES Please do not disturb tenants. All tours and inquiries regarding Pringle Creek are to be directed to HFO Investment Real Estate at (503) 241.5541. 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 Khari Gates khari@hfore.com Brokers licensed in Oregon and Washington. PRINGLE CREEK 6 UNITS SALEM, OR 11

HFO Investment Real Estate Passion Collaboration Specialization 2424 SE 11th Avenue Portland, OR 97214 www.hfore.com 503.241.5541 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. 2018 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.