ELLIOTT HEIGHTS APARTMENTS

ELLIOTT HEIGHTS APARTMENTS 27 Units - Kelso, Washington OFFERING MEMORANDUM

INVESTMENT SUMMARY ASSET SUMMARY Property Elliott Heights Apartments Location County 206 Teresa Way Kelso, Washington 98626 Cowlitz Total Units 27 Year Built 1968 Stories 3 Approximate Sq Ft 22,500 Average Unit Sq Ft 833 PRICING Price $2,075,000 Per Unit $76,852 Per Sq Ft $92 Scheduled Cap Rate 6.24% Projected Cap Rate 7.29% FOR MORE INFORMATION Todd Tully todd@hfore.com Jack Stephens jack@hfore.com 2424 SE 11th Avenue, Portland, Oregon 97214 www.hfore.com (503) 241.5541 Fax: (503) 241.5548 Brokers licensed in Washington and Oregon 2 HFO INVESTMENT REAL ESTATE

INVESTMENT SUMMARY The Elliott Heights Apartments offer investors a rare opportunity to acquire a well-maintained secluded asset with a strong performance history. The Elliott Heights Apartments is a solid cash flow investment. Its resident amenities include built-in barbecue grills, heated indoor pool, picnic tables, a horseshoe pit and a large grassy area for children to play. Elliott Heights features a mixture of spacious two-bed one-bath and three-bed one-bath units averaging 833 square feet. Each apartment has a main water shutoff potentially allowing future sub-metering. Rents currently average $771 or $0.93 psf. New leases are averaging $850 per unit, or $1.02 per square foot an increase of 9.31% over scheduled rent. PROPERTY HIGHLIGHTS Year-round heated indoor pool Covered parking Beautiful views of the valley Decks and some patios 12 large storage units UNIT MIX AND RENT SUMMARY Unit Type Unit Count Average Sq Ft NR Sq Ft % of Total Units Average Scheduled Rent Average Scheduled Rent PSF 2 Bedroom / 1 Bathroom 18 800 14,400 66.67% $726 $0.91 3 Bedroom / 1 Bathroom 9 900 8,100 33.33% $863 $0.96 Total/ Averages 27 833 22,500 100.0% $771 $0.93 ELLIOTT HEIGHTS APARTMENTS 27 UNITS KELSO, WASHINGTON 3

ELLIOTT HEIGHTS APARTMENTS Elliott Heights has a favorable Kelso location just minutes from Interstate 5, with ample retail, restaurants, parks, schools and the Cowlitz River nearby. Elliott Heights is just 30-minutes from downtown Vancouver, Washington.

KELSO, WASHINGTON Located 48 miles north of Portland, Oregon, 125 miles south of Seattle, and 80 miles east of the Pacific Ocean, Kelso, is at the confluence of three rivers: the Columbia, the Cowlitz and the Coweeman. Kelso is the Cowlitz County seat Primary highway access to the area is via Interstate 5 with access less than 1.5 miles to the south. Elliott Heights has immediate access to Minor Road/Allen Street which are main roads through town. The Kelso-Longview area is in the beginning of an expansion stage of its life cycle resulting in part from sustained population growth in the Portland metropolitan area to the south. Elliott Heights is located in the predominant direction of growth, and projected demographics are positive. Given the history of the area and the growth trends, property values are anticipated to increase in the near term. The City of Kelso covers 7 square miles and has a population of approximately 12,000. Population growth in the area is expected to continue. COWLITZ HISTORICAL MUSEUM Primary employment sectors are as follows: Manufacturing (18.0%) Health Care/Social Assistance (14.6%) Retail Trade (11.5%) Education (10.4%) Construction (8.7%) The area is semi-rural in character and approximately 40% developed. The surrounding area is composed of the primary commercial areas to the South and East along Allen Street, W. Main and in Longview along W. Cowlitz, Ocean Beach Highway, and Washington Way. The subject is about a mile and a half from Three Rivers Mall, a 45-acre mall with major retailers including JC Penney, Target, Sears and Macy s. Photo credit to Sam Beebe THREE RIVERS MALL MALL MALL MALL 6 HFO INVESTMENT REAL ESTATE

LIFESTYLE CONVENIENCES ELLIOTT HEIGHTS APARTMENTS 27 UNITS KELSO, WASHINGTON 7

OPERATIONS ANALYSIS INCOME Elliott Heights Apartments current rents average $771 per unit, or $0.93 per sq ft. Rents have been achieved at the property as high as $850 per unit, or $1.02 per sq. ft. These projected operations are based on new lease rents. VACANCY/CREDIT LOSS OTHER INCOME Operations have been adjusted for a 5.0% vacancy rate based on lender underwriting requirements. Lenders consider the long-term nature of a property and the market in which it is located. Lenders typically underwrite to 5.0% vacancy in Cowlitz County Based on July 2017 annualized collections. Other income sources include laundry, administrative fees and damage/ cleaning fees. EXPENSES INSURANCE MANAGEMENT MAINTENANCE/REPAIR Historical operations do not include insurance costs. The insurance expense is projected based on costs found at similar properties and market rate operations. Management is a combination of administration, advertising, payroll and off-site management. The historical operations averaged 9.8% of GOI. The projected operations assume a rate of 10% based on standardized operations at similar properties. It is assumed that some maintenance/repair costs are capital expenditures; these have been adjusted for estimated one-time expenses to a market rate of $500 per unit annually. CAPITAL RESERVES Operations for Elliott Heights Apartments include a lender-anticipated reserve requirement of $250 per unit, or $6,750 annually. 8 HFO INVESTMENT REAL ESTATE

OPERATIONS ANALYSIS Floor plans # Units Avg Sq Ft Average Scheduled Rents Avg Rent per sq ft Projected Rents Avg Projected Rent per Sq Ft 2 Bedroom / 1 Bathroom 18 800 $726 $0.91 $800 $1.00 3 Bedroom / 2 Bathroom 9 900 $863 $0.96 $900 $1.00 Total / Average 27 833 $771 $0.93 $850 $1.02 Income Current Scheduled Rents Per Unit % GOI Projected Operations Per Unit % GOI Scheduled Gross Rent $249,960 $9,258 $275,400 $10,200 Less: Vacancy/Credit Loss -$12,498 -$463-5.0% -$13,770 -$510-5.0% Net Rental Income $237,462 $8,795 $261,630 $9,690 Plus: Laundry $2,154 $80 $2,154 $80 Plus: Miscellaneous $2,000 $74 $2,000 $74 Total Other Income $10,343 $383 4.2% $10,343 $383 3.8% Gross Operating Income - Residential $247,805 $9,178 $271,973 $10,073 Expenses Historical Operations Per Unit % GOI Projected Operations Per Unit % GOI Real Estate Taxes $14,005 $519 5.7% $14,005 $519 5.1% Insurance $6,075 $225 2.5% $6,075 $225 2.2% Total Utilities $36,374 $1,347 14.7% $36,374 $1,347 13.4% Fee Management $24,780 $918 10.0% $27,197 $1,007 10.0% Landscaping/Pool $12,535 $464 5.1% $12,535 $464 4.6% Maintenance/Repairs $13,500 $500 5.4% $13,500 $500 5.0% Turnover $4,212 $156 1.7% $4,222 $156 1.6% Reserves $6,750 $250 2.7% $6,750 $250 2.5% Total Expenses -$118,231 -$4,379-48% -$120,658 -$4,469-44% Net Operating Income (NOI) $129,574 $4,799 52% $151,315 $5,604 56% ELLIOTT HEIGHTS APARTMENTS 27 UNITS KELSO, WASHINGTON 9

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ELLIOTT HEIGHTS APARTMENTS PRICING Price $2,075,000 Per Unit $76,852 Per Square Foot $92 Scheduled Cap Rate 6.24% Projected Cap Rate 7.29% Avg Square Foot 833 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 Todd Tully todd@hfore.com Jack Stephens jack@hfore.com Greg Frick greg@hfore.com Tyson Cross tyson@hfore.com Lee Fehrenbacher lee@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. ELLIOTT HEIGHTS APARTMENTS 27 UNITS KELSO, WASHINGTON 11

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