RAYMOND APARTMENTS 16 Units - Portland, Oregon OFFERING MEMORANDUM

RAYMOND APARTMENTS 16 Units - Portland, Oregon OFFERING MEMORANDUM

INVESTMENT SUMMARY ASSET SUMMARY Property Location County Total Units 16 Year Built 1964 Stories Raymond Apartments 8110 SE Raymond Street Portland, OR 97206 Multnomah Two- story Approximate Sq Ft 8,532 Average Unit Sq Ft 533 Acres 0.3 acres PRICING Price $1,895,000 Per Unit $118,437 Per Sq Ft $222 Cap Rate 6.70% (projected) FOR MORE INFORMATION Jack Stephens jack@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 Raymond Apartments presents a potential buyer with a low-maintenance, well-maintained building with significant upside opportunity due to the ability to increase rents, and the improving desirability of the neighborhood. Raymond Apartments consists of fifteen one-bedroom flats and a two-bedroom single family residence. Half of the units at the Raymond Apartments have had recent improvements including new flooring, tile, hardware, appliances and doors. The property is located in the Lents neighborhood, which is currently experiencing a building boom and an extremely positive revitalization. The city of Portland has invested a significant amount of funding into the Lents Town Center Development and results are already coming to fruition. The Town Center has three large complexes totaling 267 units set to be completed this year. While new apartment construction can sometimes decrease demand for current rentals, this will not be the case for the Raymond Apartments as the asset is perfectly positioned to be the affordable housing option in a booming submarket. PROPERTY HIGHLIGHTS Spacious kitchens Renovated one-bedroom units New tile and carpet Updated hardware & appliances New vinyl windows Upside on rental income Up-and-coming neighborhood Unit Type UNIT MIX Unit Count Average Sq Ft Total Sq Ft % of Total Units 1 Bedroom / 1 Bathroom 15 500 7,500 93.75% 2 Bedroom / 1 Bathroom 1 1032 1,032 6.25% Total / Averages 16 533 8,532 100.0% 93.75% 1 Bedroom 6.25% 2 Bedroom RAYMOND APARTMENTS 16 UNITS PORTLAND, OR 3

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RAYMOND APARTMENTS 16 UNITS PORTLAND, OR 5

LOCATION 84 NE Glisan St DOWNTOWN PORTLAND E Burnside St SE Stark St SE Belmont St Mall 205 405 5 Willamette River 99E SE Hawthorne Blvd SE Division St SE Holgate Blvd SE Cesar Estrada Chavez Blvd SE 52nd Ave Mt. Tabor Park SE Powell Blvd SE Woodstock Blvd SE Duke St SE Foster Rd 26 205 Raymond Apartments SE 112th Ave SE 122nd Ave SE Flavel St SE 72nd Ave 213 6 HFO INVESTMENT REAL ESTATE

PORTLAND METRO AREA PORTLAND REGION Oregon s largest city, Portland, is near the confluence of the Willamette and Columbia Rivers. The Portland Metro Area consists of four counties: Multnomah, Washington, Clackamas, and Clark County, Washington. APARTMENT MARKET The Portland Metro Area consistently ranks among the nation s lowest for apartment vacancy rates according to the U.S. Census Bureau and other third-party services like REIS, MPF Research and Axiometrics. Vacancy is 4.37% according to Multifamily NW s Fall 2017 Apartment Report. REIS reports Portland metro year-over-year rents have grown 5.2%. Overall rents have increased 58.7% across the Portland Metro Area since 2010 that s 30 consecutive quarters of rent growth through the third quarter of 2017. SKILLED WORKFORCE & STRONG EMPLOYMENT 54% of Portland workers have an associate s degree or higher, outpacing the national average of 38%. According to the State of Oregon s Employment Department, Portland enjoys one of the fastest job growth rates in the Pacific Northwest, and the entire nation, having added 31,000 jobs in 2016 and 28,000 jobs in 2017. The Portland Metro Area s unemployment rate as of December 2017 is 3.8% its lowest level since 1995. DIVERSIFIED ECONOMY Portland is home to the headquarters of Fortune 500 companies Nike, Precision Castparts and Lithia Motors. Fortune 1000 companies headquartered here include Stancorp Financial, Greenbrier Companies, Columbia Sportswear, Schnitzer Steel Industries, and Portland General Electric. Tech and software companies continue to relocate their operations here or open major outposts in Portland. They are attracted by Portland s educated workforce, affordable high quality of life, and a low cost of doing business compared to the Bay 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. TOP 10 LISTS Portland consistently receives glowing reviews and rankings from the media. 2017 lists include: #3 City with Best Opportunities for Job Seekers This Year (Fast Company) 2016 lists include: America s Best City for Summer Travel (Travel + Leisure) Best City for Electric Cars in the U.S. (The Christian Science Monitor); Best Places to Live 2016 (Money Magazine) #8 Greenest City in the Nation (Wallethub) #8, World s Best Cities for Millennials (Matador Network) Food and Drink Capital of America (The Telegraph London) World s #10 Best City to Live In (Metropolis Magazine) 2015 lists include: America s Best Food City (Washington Post) #10 Best Big Cities in the U.S. (Conde Nast Traveler) One of the Best Cities for Millennials (Forbes) RAYMOND APARTMENTS 16 UNITS PORTLAND, OR 7

OPERATIONS ANALYSIS INCOME The adjacent table summarizes Raymond Apartments historical and current operations. Current scheduled rents at Raymond Apartments average $721 per unit, or $1.35 per square foot. VACANCY/CREDIT LOSS OTHER INCOME Raymond Apartments was analyzed utilizing a 3% vacancy rate, which is based on lender underwriting requirements for multi-family assets. Raymond Apartments has maintained a vacancy rate below 3% for both 2017 and 2018 YTD. Historical operations reports for the Raymond Apartments reveal limited other income. Their 2017 operations total other income collected as $1,885. Projected operations moving forward are expected to see an increase in other income. The owner will be able to capitalize on the on-site laundry room by collecting $3,000 a year from laundry charges. In addition to that, the owner can implement an utility billing program. These improvements will increase their other income per unit to $665. CURRENT RENTS Rents 500 sq ft 1,032 sq ft $600 3 $625 2 $650 1 $725 5 $750 1 $795 1 $800 1 $810 1 $1,050 1 Total 15 1 8 HFO INVESTMENT REAL ESTATE

OPERATIONS ANALYSIS Type Units Count Avg Sq Ft Current Scheduled Rents Current Scheduled Rents per Sq Ft Projected Rents Projected Rents per Sq Ft 1 Bedroom / 1 Bathroom 15 500 $699 $1.40 $950 $1.90 2 Bedroom / 1 Bathroom 1 1,032 $1,050 $1.02 $1,250 $1.21 Total / Average 16 533 $721 $1.35 $969 $1.82 Income Current Scheduled Rents Per Unit Projected Rents Per Unit Scheduled Gross Rent $138,360 $8,648 $186,000 $11,625 Less: Vacancy/Credit Loss -$6,918 -$432-5.0% -$9,300 -$581-5.0% Net Rental Income $131,442 $8,215 $176,700 $11,044 Includes: Damages/Cleaning Fees $1,885 $118 $1,885 $118 Includes: Laundry $3,000 $188 $3,000 $188 Includes: Utility Billing (RUBs) $0 $0 0.0% $5,760 $360 Total Other Income $4,885 $305 3.5% $10,645 $665 5.7% Gross Operating Income (GOI) $136,327 $8,520 $187,345 $11,709 Expenses Projected Operations Per Unit % GOI Projected Operations Per Unit Real Estate Taxes $15,639 $977 11.5% $15,639 $977 8.1% Insurance $3,576 $224 2.6% $3,576 $224 1.8% Total Utilities $12,521 $783 9.2% $12,521 $783 6.7% Fee Management $10,906 $682 8.0% $14,988 $937 8.0% Maintenance/Repairs $7,200 $450 5.3% $7,200 $450 3.8% Turnover $2,400 $150 1.8% $2,400 $150 1.3% Reserves $4,000 $250 2.9% $4,000 $250 2.1% Expenses -$56,242 -$3,515-41.3% -$60,323 -$3,770-32% Net Operating Income (NOI) $80,085 $5,005 58.7% $127,022 $7,939 68% % GOI RAYMOND APARTMENTS 16 UNITS PORTLAND, OR 9

OPERATIONS ANALYSIS EXPENSES Raymond Apartments expenses have been adjusted for capital costs, management, and stabilized operations. Projected expenses total $3,770 a unit, or 32% of GOI. 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. Projected operations include current taxes for the 2017-2018 property tax year. Raymond Apartments taxes increased 8.48% over 2016-2017. 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 Raymond Apartments for the 2017-2018 tax year total $16,122. After deducting the 3.0% discount, net property taxes total $15,639. This amount is reflected in projected operations. INSURANCE MANAGEMENT FEE TURNOVER RESERVES MAINTENANCE/REPAIRS Owner operations show an annual insurance cost of $3,576, or $224 a unit. This number reflects 2.6% of gross operating income. Owner operations did not take into account a management fee. Management includes advertising, administration, payroll, and property oversight. This fee has been adjusted to a market rate of 8% which is representative of competitive rates found at similar properties in the Lents neighborhood. Turnover has been capitalized due to owner renovations on half of the units. Therefore, projected operations include a cost of $2,400 annually, which equals $150 per unit in turnover costs. Lenders require owners to place funds in reserve for replacements and repairs over and above typical, daily maintenance items. The reserves are estimated at $250 per unit, or $4,000 annually for Raymond Apartments. Maintenance/Repairs has been adjusted for market rate operations. Projected expenses are at $450 per unit. It is assumed the maintenance/repairs expense includes some costs associated with the recent renovations as well as some turnover costs. 10 HFO INVESTMENT REAL ESTATE

RAYMOND APARTMENTS PRICING Price $1,895,000 Per Unit $118,437 Per Sq Ft $222 Cap Rate 6.70% (projected) TOURS AND INQUIRIES Please do not disturb tenants. All tours and inquiries regarding Raymond Apartments are to be directed to HFO Investment Real Estate at (503) 241.5541. Jack Stephens jack@hfore.com Greg Frick greg@hfore.com Tyson Cross tyson@hfore.com Lee Fehrenbacher lee@hfore.com Todd Tully todd@hfore.com Adam Staton-Smith adam@hfore.com Craig Moore craig@hfore.com Brokers licensed in Oregon and Washington. 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. 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. RAYMOND APARTMENTS 16 UNITS PORTLAND, OR 11

Investment Real Estate Passion Collaboration Specialization 2424 SE 11th Ave Portland, OR 97214 www.hfore.com (503) 241.5541