WEST MAIN AT THE PARK 40 Units - Hillsboro, Oregon OFFERING MEMORANDUM
INVESTMENT SUMMARY ASSET SUMMARY Property West Main at the Park Location 1025 W Main Street Hillsboro, Oregon 97123 County Washington Total Units 40 Year Built 1994 Stories 2 stories Approximate Sq Ft 31,780 Average Unit Sq Ft 795 PRICING Price $5,300,000 Per Unit $132,500 Per Sq Ft $167 Projected Cap Rate 6.14% FOR MORE INFORMATION Tyson Cross tyson@hfore.com Greg Frick greg@hfore.com 2424 SE 11th Avenue, Portland, Oregon 97214 www.hfore.com (503) 241.5541 Fax: (503) 241.5548 Broker licensed in Oregon. 2 HFO INVESTMENT REAL ESTATE
INVESTMENT SUMMARY Built in 1994, West Main at the Park is an attractive, stable asset that consists of five twostory buildings with a competitive unit mix of large one-, two- and three-bedroom apartments. Of the 40 total units, 35 have significant updates including flooring, kitchen counters, bathroom vanities, interior doors, fans and fixtures. All units have individual storage rooms on the outside patios and all two-bedrooms have washer and dryer hookups. The property sits on nearly fiveand-a-half acres in a park-like setting abutting natural wetlands. Tenant amenities include built-in barbecue grills, picnic tables, a horseshoe pit, and a large grassy area for children to play. All tenants are being charged for utility usage but rents are slightly below market. It is expected that the property will benefit from continued rent growth. Investors looking for a quality asset requiring minimal work and robust future demand will find the West Main at the Park an exceptional opportunity. PROPERTY HIGHLIGHTS Significant interior updates Washer / dryer hookups in most units Private patios with storage Park-like setting with large outdoor area Abuts natural greenspace On-site manager s office UNIT MIX ANDRENT SUMMARY Unit Type Unit Count Average Sq Ft NR Sq Ft % of Total Units Average Scheduled Rent Average Scheduled Rent PSF 1 Bedroom / 1 Bathroom 8 620 4,960 20.0% $860 $1.39 2 Bedroom / 1.5 Bathroom 8 771 6,168 20.0% $891 $1.16 2 Bedroom / 2 Bathroom 20 830 16,600 50.0% $899 $1.08 3 Bedroom / 2 Bathroom 4 1013 4,052 10.0% $1,217 $1.20 Total / Averages 40 795 31,780 100.0% $922 $1.16 WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 3
WEST MAIN AT THE PARK The site includes five apartment buildings on approximately five acres. Many of the apartments at West Main at the Park overlook a large natural greenspace.
HILLSBORO Hillsboro, just west of Portland, is home to many high-tech companies, including Intel, and their thousands of employees. Once a tiny settlement extending three blocks in each direction from its county courthouse, Hillsboro has grown to become the fifth-largest city in Oregon, and the county seat of Washington County. Its population increased 14.1% from 2010 to 2016, when it reached 105,164. Hillsboro has retained its small-town charm and tradition, while at the same time offering convenient access to large employers and transportation options. Intel has three campuses located here, and Hillsboro s airport is the second-largest in Oregon. For decades, the west side of the Portland Metro Area has been referred to as part of the Silicon Forest a cluster of prominent high-tech companies that have had a positive impact on Oregon s economy and population. A major economic center of Washington County, Hillsboro has attracted many hightech businesses in the last two decades. It s been referred to as the tallest tree in the Silicon Forest. Most of its high-tech development is located along the Highway 26/Sunset Corridor, which connects Hillsboro with its neighboring city, Beaverton. Hillsboro residents are prosperous, with an estimated median household income of $67,757. According to the Spring 2017 Multifamily NW report, Hillsboro saw an average rent per square foot of $1.40 and an average vacancy rate of 2.82%, below the 4.01% average for the metro area. Other leading employers in the Hillsboro area include Salesforce, Nike, the Hillsboro and Beaverton School Districts, Providence Hospital, and Comcast Cable. TriMet s MAX Blue Line train makes stops at nine locations in the Hillsboro area, enabling an easy commute to and from the downtown Portland area. Hillsboro is an ideal place to live for the Photo credit to Sam Beebe employees of its myriad businesses, as well as their families. Residents and visitors enjoy Hillsboro s farmers markets, dog parks, arts venues, community gardens and its locally-owned restaurant and shopping options. It is the host of the secondlargest Fourth of July parade in Oregon State. Other annual events include its Latino Cultural Festival, Celebrate Hillsboro and the Oregon International Air Show. Hillsboro is also home to the Metro area s only pro baseball team, the Hillsboro Hops. INTEL FACILITY 6 HFO INVESTMENT REAL ESTATE
LIFESTYLE CONVENIENCES NW Hornecker Rd Glencoe High School NE Jackson School Rd NE 25th Ave Hillsboro Airport NW Connell Ave E 1st Ave NE Cornell Rd Washington County Fair Complex NE Brookwood Pkwy McKay Creek Golf Course & Driving Range HILLSBORO 8 West Main at the Park Washington County Museum Tualatin Comm Hospital E Main St Hillsboro parks and Recreation DMV Contech Engineered Solutions 219 8 SE Minter Bridge Rd SE River Rd Hillsboro High School WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 7
RENT COMPARABLES MAP - WEST MAIN AT THE PARK Sedona Park Apartments 2 West Main at the Park S 3 Nutmeg Apartments Park Apartments 1 5 Maple Terrace Apartments Aspen Grove 4 8 HFO INVESTMENT REAL ESTATE
RENT COMPARABLES - WEST MAIN AT THE PARK S 1 WEST MAIN AT THE PARK 1025 W Main Street, Hillsboro, OR Year Built: 1994 Total Units: 40 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH 8 620 $860 $1.39 2 BED / 1.5 BATH 8 771 $891 $1.16 2 BED / 2 BATH 20 830 $899 $1.08 3 BED / 2 BATH 4 1,013 $1,217 $1.20 Average 40 795 $922 $1.16 Avg Sq Ft 795 Avg Rent $922 Avg Rent Sq Ft $1.16 PARK APARTMENTS 760 SE 10th Avenue, Hillsboro, OR Year Built: 1979 Total Units: 34 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH 22 538 $904 $1.68 2 BED / 1 BATH 12 717 $1,050 $1.46 Average 34 601 $956 $1.59 Avg Sq Ft 601 Avg Rent $956 Avg Rent Sq Ft $1.59 WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 9
RENT COMPARABLES - WEST MAIN AT THE PARK 2 3 SEDONA PARK APARTMENTS 2050 NE Barberry Drive, Hillsboro, OR Year Built: 1977 Total Units: 20 Unit type Units Sq Ft Rent Rent/Sq Ft 2 BED / 1 BATH 20 775 $1,095 $1.41 NUTMEG APARTMENTS 1435 SE Oak Street, Hillsboro, OR Year Built: 1974 Total Units: 41 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH 20 625 $842 $1.35 2 BED / 1 BATH 21 750 $975 $1.30 Average 20 775 $1,095 $1.41 Average 41 689 $910 $1.32 Avg Sq Ft 775 Avg Rent $1,095 Avg Rent Sq Ft $1.41 Avg Sq Ft 689 Avg Rent $910 Avg Rent Sq Ft $1.32 10 HFO INVESTMENT REAL ESTATE
RENT COMPARABLES - WEST MAIN AT THE PARK 4 5 ASPEN GROVE 5992 SE Drake Street, Hillsboro, OR Year Built: 1998 Total Units: 40 Unit type Units Sq Ft Rent Rent/Sq Ft 2 BED / 2 BATH 40 900 $1,316 $1.46 MAPLE TERRACE APARTMENTS 1535 SE Maple Street, Hillsboro, OR Year Built: 1971 Total Units: 50 Unit type Units Sq Ft Rent Rent/Sq Ft 1 BED / 1 BATH 12 579 $950 $1.64 2 BED / 1 BATH 38 780 $1,066 $1.37 Average 40 900 $1,316 $1.46 Avg Sq Ft 900 Avg Rent $1,316 Avg Rent Sq Ft $1.46 Average 50 732 $1,038 $1.42 Avg Sq Ft 732 Avg Rent $1,038 Avg Rent Sq Ft $1.42 WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 11
OPERATIONS ANALYSIS INCOME Scheduled rents for West Main at the Park as of October 1 average $922 per unit, or $1.16 per sq. ft. The average rents reflect rent increases on seven units. The rent increases bring one-bedroom apartments to $901 per unit, or $1.45 PSF and two-bedroom apartments to $964 per unit, or $1.16 Per Sq. Ft not including utility charges. Even with these increases, West Main at the Park s rents trail market rents. Market rate rents are projected at $1,069 per unit based rents achieved at comparable properties. VACANCY/CREDIT LOSS OTHER INCOME West Main at the Park operations include a market-rate 5.0% vacancy rate based on lender underwriting requirements. Vacancy in Hillsboro has averaged less than 3.0% since 2013. West Main at the Park charges residents for utilities (RUBs). RUBs collections are approximately $26,424 per year in other income. The operations include a projected other income collection of $2,500 for administrative fees including pet, application and late fees. EXPENSES West Main at the Park projected operating expenses assume the asset will be managed by a professional third-party management company. Unless otherwise noted, the expenses are based on June 2017 YTD annualized operations. PROPERTY TAXES The property taxes reflect projected 2016/2017 gross property taxes, per the Washington County assessors office. INSURANCE The current insurance premium for West Main at the Park totals $5,420 annually, or $136 per unit. MANAGEMENT The management fee assumes professional, third-party management at a rate of 10% of GOI. Management includes leasing and administrative oversight. MAINTENANCE/REPAIR Maintenance/repair costs average $608 per unit and include payroll, landscaping and supplies. TURNOVER The operations have been adjusted for turnover costs. Assuming professional, 3rd party management, the turnover cost is estimated at $9,000 annually. CAPITAL RESERVES Operations for West Main at the Park include a lender-anticipated reserve requirement of $250 per unit, or $10,000 annually. 12 HFO INVESTMENT REAL ESTATE
OPERATIONS ANALYSIS Type # Units Avg Sq Ft Average Scheduled Rents Avg Rent per Sq Ft Projected Rents Avg Projected Rent per Sq Ft 1 Bedroom / 1 Bathroom 8 620 $860 $1.39 $925 $1.49 2 Bedroom / 1.5 Bathroom 8 771 $891 $1.16 $975 $1.26 2 Bedroom / 2 Bathroom 20 830 $899 $1.08 $1,025 $1.23 3 Bedroom / 2 Bathroom 4 1,013 $1,217 $1.20 $1,350 $1.33 Total / Average 40 795 $922 $1.16 $1,069 $1.59 Income Current Scheduled Rents Per Unit % GOI Projected Operations Per Unit % GOI Scheduled Gross Rent $442,320 $11,058 $513,000 $12,825 Less: Vacancy/Credit Loss -$22,116 -$553-5.0% -$25,650 -$641-5.0% Net Rental Income $420,204 $10,505 $487,350 $12,184 Other Income $28,924 $723 6.4% $28,924 $723 5.6% includes: RUBs $26,424 $661 59.9% $26,424 $661 59.9% Gross Operating Income $449,128 $11,228 $516,274 $12,907 Expenses Historical Operations Per Unit % GOI Projected Operations Per Unit % GOI Real Estate Taxes $46,324 $1,158 10.3% $46,324 $1,158 9.0% Insurance $5,420 $136 1.2% $5,420 $136 1.0% Total Utilities $44,116 $1,103 9.8% $44,116 $1,103 8.5% Fee Management $43,001 $1,075 9.6% $51,627 $1,291 10.0% Maintenance/Repairs $24,317 $608 5.4% $24,317 $608 4.7% Turnover $9,000 $225 1.7% Capital Reserves $10,000 $250 2.2% $10,000 $250 1.9% Total Expenses -$173,177 -$4,329-39% -$190,804 -$4,770-37% Net Operating Income (NOI) $275,951 $6,899 61% $325,470 $8,137 63% WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 13
14 HFO INVESTMENT REAL ESTATE
WEST MAIN AT THE PARK PRICING Price $5,300,000 Per Unit $132,500 Per Square Foot $167 Projected Cap Rate 6.14% Avg Square Foot 795 Tours and Inquiries Please do not disturb tenants. All tours and inquiries regarding West Main at the Park are to be directed to HFO Investment Real Estate at (503) 241.5541 Tyson Cross tyson@hfore.com Greg Frick greg@hfore.com Jack Stephens jack@hfore.com Lee Fehrenbacher lee@hfore.com Todd Tully todd@hfore.com 2424 SE 11th Ave Portland, OR 97214 www.hfore.com Phone: (503) 241.5541 Fax: (503) 241.5548 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. 2017 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. WEST MAIN AT THE PARK 40 UNITS HILLSBORO, OR 15
Investment Real Estate Passion Collaboration Specialization 2424 SE 11th Ave Portland, OR 97214 www.hfore.com (503) 241.5541