• (503) 241 · of Portland’s newest retail districts. Portland’s living room, Pioneer Court House Square, Portland State University urban campus and the Northwest District,

OFFERING MEMOR ANDUM

67 Units • Portland, Oregon

www.hfore.com • (503) 241.5541

BROWN APARTMENTS

www.hfore.com • (503) 241.5541

Brown Apartments

TABLE OF CONTENTS

807 SW 14th Avenue • Portland, OR 97205

BROWN APARTMENTSOFFERING MEMORANDUM

HFO INVESTMENT REAL ESTATE

www.hfore.com • 503.241.5541

Licensed in the States of Oregon and Washington

Rob [email protected](971) 717.6335

Greg [email protected](971) 717.6332

I. Executive Summary 4

II. Location 17

III. Operations Analysis 30

IV. Offer Terms 36

Rob [email protected](971) 717.6335

Greg [email protected](971) 717.6332

Tours and Inquiries: All tours and inquiries regarding the Brown Apartments are to be directed to HFO Investment Real Estate at (503) 241.5541.

Rare opportunity, unique historic bricker. The Brown Apartments has been owner-managed for more than 20 years and offers a rare opportunity to acquire a historic bricker in Portland’s urban core. Much of the Brown Apartments’ historic character has been maintained with original hardwood floors, period lighting fixtures, clawfoot bathtubs, and trundle hideaway beds. Common area updates include new laundry systems, updated elevator and entryway.

Outstanding central location, high-demand district. The Brown Apartments is located on the eastern edge of the Goose Hollow neighborhood placing the asset between the exclusive Pearl District, the Timber’s Major League Soccer stadium, and the West End, one of Portland’s newest retail districts. Portland’s living room, Pioneer Court House Square, Portland State University urban campus and the Northwest District, which includes the Alphabet District, Nob Hill and Slabtown are short distances to the Brown Apartments via walking, biking or public transportation.

The Brown is immediately adjacent to the MAX light rail blue line. Both MAX line and bus service are accessible just two blocks away at the Providence Park MAX Station. The Portland Streetcar is less than three blocks away connecting the Brown Apartments to the Northwest District, the Central Eastside and Lloyd Center.

Stable operating history, increasing rents. The Brown Apartments’ self-management provides an opportunity to increase cash flow. The property does not currently charge for utilities. The property has the ability to implement individual metering of gas to each unit. Current rents average $1,011 per unit, or $2.26 per sq ft and are trending 8.2% higher than trailing 12-month rents. Leases signed over the previous six months average $1,026 per unit, or $2.29 per sq ft; an increase of 1.5% over current scheduled rents.

INVESTMENT SUMMARY

UNIT MIXUnit Type Unit Count Avg Sq Ft Total Sq Ft % of Total Units

Studios 50 395 19,750 74.6%

1 Bedrooms 17 604 10,268 25.4%

Total / Averages 67 448 30,018 100.0%

PRICING

Price $10,000,000

Price per Unit $149,254

Price per Sq Ft $333

ASSET SUMMARY

Property Brown Apartments

Address 807 SW 14th AvenuePortland, OR 97205

County Multnomah

Year Built 1915

Total Units 67

Approx NR Sq Ft 30,018 sq ft

Avg Unit Size 448 sq ft

Stories 5 floors

Acreage 0.23 acres

4 HFO INVESTMENT REAL ESTATE

LOCATION

Washington Park

Marquam Nature Park

GOOSE HOLLOW

GOOSE HOLLOW SOUTHWEST HILLS

SOUTHWEST HILLS

PEARL DISTRICT

PIONEER PLACE

OLD TOWN

DOWTOWN PORTLAND

SOUTH WATERFRONT

KINGS HEIGHTS NORTHWEST DISTRICT

PORTLAND

26

405Burnside St

Barbur Blvd

NW Lovejoy St

NW 23rd Ave

SW Washington St

SW Vi

sta Av

e

SW Alder St

SW Clay StSW Market St

SW Madison St

NW Glisan St

99W

BROWN APARTMENTS

84

LLOYD DISTRICT

KERN

WIL

LAM

ETTE

RIV

ER26

BUCKMAN

LADD’S ADDITION

CENTRAL EAST PORTLAND

5

Martin Luther King Jr Blvd

Grand Ave

12th AveNW

DISTRICT

5BROWN APARTMENTS • 67 UNITS • PORTLAND, OR

Bike Score

94Transit Score

9097Walk Score

GOOSE HOLLOWThe Goose Hollow neighborhood is located on the western edge of Portland’s main downtown business district. Its central location provides residents with easy access to the city’s best amenities, including Washington Park, the Timbers’ stadium in Providence Park, Portland State University, the Portland Art Museum, and the Arlene Schnitzer Concert Hall. The Blue and Red max lines connect this vibrant neighborhood with the rest of the city, and the suburbs beyond. 46% of households in the Goose Hollow neighborhood do not own a car, and 20% commute via public transit.

The neighborhood’s walk score

Residents enjoy easy access to Interstate 405 and U.S Highway 26, creating a quick commute to the west side’s major employers like Nike, Columbia Sportswear and Intel, as well as OHSU and Portland’s Inner Eastside.

41,934 Current Est. Population

79% % Renter-occupied

Housing Units

+13.2% Est. Population

Growth (2019–2024)

37.4% Bachelor’s Degree

26% Postgraduate Degree

Demographic Snapshot: 1-mile Radius

According to Enterprise Community Partners, the Goose Hollow neighborhood is in the 99th percentile nationwide for accessibility of jobs, goods, and services, as well as for community institutions. Residents of Goose Hollow are highly educated – in the census tract, 58% of adults have a bachelor’s degree or higher, and 96% have at least a high school diploma. 87% of Goose Hollow residents are renters.


PORTLAND METRO AREA The Portland Metro Area is one of the strongest apartment markets in the nation, as reflected in strong year-over-year rent growth and consistently tight vacancy. The area’s strong job market and high quality of life continues to attract new residents; between 2018 and 2019 approximately 72 people moved to the Portland metro area each day.* New apartment construction has not caught up to the housing demand created by in-migration.

*Portland Center for Population Research and State of Washington Office of Financial Management

PORTLAND MARKET SNAPSHOT

4.4% Metro-area vacancy

#2 for Oregon in Migration

in US

7.4% Year-over-year rent growth*

$68,125 Median household

income

3.9% Unemployment rate

(November 2019)

54% Millennials 25-34 in Portland

with a bachelor’s degree or higher

8,360 New Portland residents

(2018-2019)

38.3% Metro area renter-

occupied housing rate

4,474 Portland residents

per square mile

*Multifamily NW Apartment Report (Oct. 2018-2019)







Many of the apartments at the Brown have original built-ins and classical fixtures. Upper floor units have downtown skyline views.



The Brown Apartments offers residents common area laundry and bike storage.


ASSET OVERVIEWCONSTRUCTION SUMMARY

Year Built 1915

No. Of Buildings 1 Residential Building

Stories 5 stories

Construction Type Brick walls with wood-frame floors and roof

Foundation Concrete

Exterior Walls Brick façade

Roofing Duro-Last

Windows Wood with interior storm windows

Laundry Service 1 common area laundry room

Heating Common steam heat

SITE SUMMARY

City Portland

County Multnomah County

Jurisdiction Portland

Tax Account No. / Map and Tax Lot

R246743 / 1N1E33DD 6900

Zoning CX – Central Commercial High-Density Residential. The CX zone is a high-density commercial zone intended for development within Portland’s most urban and intense areas. The CX zone allows for intense development with high building coverage and large buildings placed close together. Development is intended to be pedestrian-oriented with a strong emphasis on a safe and attractive streetscape.

Specific allowable uses include retail sales and services, office space, household living, and institutional uses.


LOCATION

Nearby lifestyle conveniences:

0.3 mile

0.2 mile

0.07 mile 0.3 miles

0.3 miles 0.3 mile0.8 miles

1.2 mile

0.04 mile

0.1 mile

GROCERIES

SCHOOL

DININGBANK ENTERTAINMENT

PARK SHOPPING LIGHT RAIL

COFFEE

MEDICALBrown Apartments807 SW 14th AvenuePortland, OR 97205


GOOSE HOLLOW – THE NEIGHBORHOOD

The historic Multnomah Athletic Club (MAC), which overlooks Providence Park stadium where the Timbers and Thorns play, is a central feature of the Goose Hollow neighborhood. The MAC is a full-service athletic club, and also hosts conferences and events throughout the year. A major renovation of Providence Park was completed in 2019 adding 4,000 seats and bringing total capacity to 25,218.

Public school students in Goose Hollow and Downtown attend Chapman Elementary School, West Sylvan Middle School, and Lincoln High School.

CHAPMAN ELEMENTARY SCHOOL

WEST SYLVAN MIDDLE SCHOOL

LINCOLN HIGH SCHOOL

1.7 mile – 8 minutes drivingChapman students also outperform their state peers on all subject tests, and the school building itself is famous for the migrating Swifts that return to nest in its chimney every Fall.

4.5 mile – 10 minutes drivingWest Sylvan Middle School receives a 9/10 score on Great Schools, due to its students’ impressive test scores and high rates of academic progress.

0.3 mile – 1 minutes drivingLincoln High students outperform their statewide peers in science, English, and math. Lincoln’s graduation rate is 94%, well above state average.


In the neighborhood directly surrounding Portland State University, 96% of adults have a high school diploma, while 60% of adults have a bachelor’s degree or higher. 80% of residents report feeling safe and secure in their neighborhood. The homeownership rate is extremely low downtown – approximately 90% of households rent. Most neighborhood residents are young students and professionals – only 2% of households have children, and the average number of occupants per household is 1.58.

Portland State University’s total enrollment for the 2017-18 school year was 27,670 students. 21,848 of these students were undergraduates. While 77.5% of PSU students are from Oregon, the university attracts people from all 50 states as well as 98 countries. The top non-US countries represented are China, India, Saudi Arabia, Kuwait, and Japan. PSU employs 7,258 full and part time workers, including 1,947 faculty members. The university partners with a variety of local stakeholders including Intel, OHSU, Portland Public Schools, City of Portland, Multnomah County, and PGE for student and community programs.

PORTLAND STATE UNIVERSITY

EDUCATIONDowntown Portland is home to the city’s thriving central business district, as well as Portland State University. It is the central transit hub in the city, featuring MAX light rail, buses, and the Portland Street Car. 47% of households do not have a vehicle, and 22% of workers commute by public transportation. The area has a walk score of 96, a transit score of 95, and a bike score of 92. Residents have access to a wide variety of amenities within walking distance, including bars and restaurants, grocery stores, shopping areas, parks, schools, and cultural attractions. More than 45% of residents living in the vicinity of PSU walk to work.


TO THE WEST

Brown Apartments

Multnomah Athletic Club

Providence Park MAX Station

Montgomery Park

Lincoln High School Track & Field

Washington Park

SW Taylor S

t

SW 15th Ave

SW Yam

hill St

Blue & Red lines


TO THE NORTHEAST

Tiffany Center

Broadway Bridge

Brown Apartments

McMenamins Crystal Ballroom

SW 15th Ave 14th Ave

405

SW Yamhill St Blue & Red lines

• US Bank• New Relic, Inc.• Iovation Inc.• CorVel Corporation• Miller Nash Graham & Dunn LLP

• KPFF Consulting Engineers• Survey Monkey• KBCM Technology Group• Clinicient• Holland & Knight LLP• Deloitte Development LLC• Digital Trends• Portland City Grill

• Smith Freed & Eberhard PC• All Med Healthcare Management• Regus• InComm Digital Solutions• Edward Jones• Fisher & Phillips LLP• Northwest Analytics Inc.• Kivel & Howard LLP

• Open Mesh, Inc.• Thede Culpepper Moore Munro &

Silliman LLP• Vevo• Sather, Byerly & Holloway LLP• Willamette Management Associates• Brighton Jones• Symbeo

• Magnate Worldwide• Naegeli Deposition & Trial• Geranium Lake Flowers• Five Pines Dental• Betts, Patterson & Mines, PS

Representative Tenants(US Bancorp Building)


TO THE SOUTHEAST

Brown Apartments

SW 14th Ave

14th Ave

SW Yamhill St

Financial District(Downtown Portland)

Blue & Red lines

405


NEARBY TRANSIT & POINTS OF INTERESTEDUCATION Drive Distance

Pacific Northwest College Of Art 5 min 0.8 miPortland State University 5 min 1.4 miOregon Health and Science University 5 min 2.0 mi

AIRPORT Drive Distance

Portland International 20 min 13.9 mi

SHOPPING CENTER Walk Distance

Fred Meyer Stadium 9 min 0.4 miStadium Shopping Center 9 min 0.5 mi Whole Foods Market 5 min 0.3 mi

PARKS AND RECREATION Drive Distance

Forest Park Conservancy 2 min 0.2 miDirector Park 3 min 0.5 miFriends of the Columbia River Gorge 5 min 0.8 miLan Su Chinese Garden 6 min 0.9 miOregon Maritime Center and Museum 7 min 1.2 mi

MILITARY BASES Drive Distance

Portland Airport Air Guard Station 17 min 8.9 miCamp Withycombe National Guard 25 min 17.3 miCamp Bonneville Military Reservation 34 min 23.0 mi

COMMUTER RAIL Drive Distance

Beaverton Transit Center (West Side Express) 14 min 7.6 miHall/Nimbus 15 min 9.4 mi

Source: Apartments.com


Washington Park

Pioneer Courthouse

Square

Portland Art Museum

Union Station

Portland Saturday Market

DOWNTOWN

GOOSE HOLLOW

OLD TOWN CHINA TOWN

WIL

LAM

ETTE

RIV

ER

W Burnside St Burnside Bridge

Steel Bridge

SW Madison St

SW Washington St

Hawthorne Bridge

Morrison Bridge

SW Clay St

SW Jefferson St

SW Alder St

SW Market St

SW Pa

rk Av

eSW

Broa

dway

NW Na

ito Pk

wyTo

m Mc

Call W

aterfr

ont P

ark

NW Glisan St

23rd

Ave

NE M

artin

Luth

er Ki

ng Jr

Blvd

NE G

rand

Ave

99E

99E

84

405

5

Lincoln High School

Good Samaritan Hospital

26MAX Blue Line

MAX Green Line

MAX Orange Line

MAX Red line

MAX Yellow Line

Portland Streetcar A Loop

Portland Streetcar B Loop

Portland Streetcar North South Line

NEARBY TRANSIT & POINTS OF INTEREST

BROWN APARTMENTS


LIFESTYLE CONVENIENCES AND EMPLOYERS

1

2 3

4

5

6

10

9

7 8

1112

13

14 15

1617 19

20

33

34 3518

212322

24 25

26

39

4027

41

56

57

55

5354

58

59

61

60

28

30

29

56

44

38

3637

4342

4549

4850

47

46 52 51

3132

Burnside St

SW Washington StSW Alder St

SW Morrison St

SW Jefferson St

SW Clay St

SW Columbia StSW Market St

NW Everett St

NW Glisan St

NW Broadway

Broa

dway

SW 5t

h Ave

SW 2n

d AveSW

6th A

ve

SW 10

th Av

eSW

Park

Ave

SW 18

th Av

e

14th

Ave

62

405

5

99W

Trader Joe’sFred MeyerWalgreensSt. Mary’s CathedralProvidence ParkMultnomah Athletic ClubLittle Red’s Bakeshop & CoffeeTiffany CenterWestside MarketLincoln High SchoolKGW Media GroupLeaky Roof Gastro PubDeschutes BreweryWhole Foods MarketPowell’s City of BooksMcMenamins Crystal BallroomJake’s Famous CrawfishTasty n AlderLiving Room TheaterStumptown Coffee RoastersBlue Star DonutsStarbucksJake’s GrillSaint CupcakeTargetMultnomah County Central LibraryPortland International Film FestivalPortland Art MuseumSafewayMcMenaminsU.S. BancorpPortland City GrillVoodoo Doughnut

1

11

21

9

19

29

5

15

25

3

13

23

7

17

27

2

12

22

10

20

30

31

6

16

26

4

14

24

8

18

28

33

32

Stumptown Coffee RoastersPine Street marketT.J MaxxOffice DepotNordstromRegal Fox TowerColumbia SportswearArlene Schnitzer Concert HallDeparture Restaurant + LoungePioneer Courthouse SquareChase BankPioneer PlaceApple StoreNike PortlandBuffalo Wild WingsKiller BurgerNordstrom RackBank of AmericaRoss Dress for LessMicrosoft StoreThe UPS StoreAuditorium BuildingMultnomah County CourthousePortland BuildingWord Trade Center Portland24 Hour FitnessOregon DMVSt. Mary’s AcademyKeller Auditorium

41

51

39

49

59

35

45

55

43

53

37

47

57

42

52

40

50

60

61

62

36

46

56

34

44

54

38

48

58

MAX Line(s)Streetcar(s)

26

Brown Apartments

WIL

LAM

ETTE

RIV

ER


The Portland/Vancouver metro area including Clackamas county and the City of Happy Valley, is well served by an outstanding public transit system.

The MAX Blue Line was the first of the light rail’s five separate projects to be built, and was the first federally funded light rail project that used money initially earmarked to build freeways. The initial 15 miles of the Blue Line opened in 1986, with 30 rail stops that connect downtown Portland with the City of Gresham.

The Green Line was completed 2009 connecting Clackamas, along Interstate 205, to the Gateway Transit Center. The 8.3 miles of track provides transportation between 8 additional stations before connecting to the previously built I-84 track.

• The Blue Line continues through downtown Portland to the cities of Beaverton and Hillsboro

• The Red Line terminates at the Portland International Airport

• The Green Line connects to Clackamas Town Center

• The Orange Line is the MAX’s newest extension and connects to the City of Milwaukie

• Planners are working on funding and initial planning of a new line from downtown Portland to a new terminus roughly 8 miles south at Bridgeport Village shopping mall in Tigard.

WIL LAM

ETTE R I V ER

CLACKAMAS

WILLAM

ETTE RIVER

GRESHAM

BEAVERTONHILLSBORO

MAX Blue Line

MAX Green Line

MAX Orange Line

MAX Red line

MAX Yellow Line

Portland Streetcar A Loop

Portland Streetcar B Loop

Portland Streetcar North South Line

TRANSPORTATION SYSTEMS

DOWNTOWN PORTLAND

Brown Apartments


PORTLAND REGIONHIGH TECH & CHIP MANUFACTURINGAttracted by the Portland area’s educated workforce and relative low cost of doing business, tech companies continue opening branches and—in some cases—relocating to the area entirely.

With over 20,000 employees, Intel is the area’s largest private employer. Intel acquired its first Portland location in 1974. The company is currently expanding its presence with forthcoming D1X microprocessor chip facilities at the Ronler Acres Campus in Hillsboro. This 1.1 million square foot factory is part of a five-year, $6 billion expansion, and is part of the company’s long-term plans for growth. Intel is the largest property taxpayer in Washington County, with payments of approximately $30 million a year.

Other notable Portland-area high-tech companies include ON Semiconductor and Tektronix.

SPORTSWEARNike has its world headquarters in Beaverton and employs 12,000 Portland-area residents. The company designs, develops and manufactures footwear, apparel, equipment and accessories. From here, Nike orchestrates production and design for one of the world’s most recognizable brands. In 2020 Nike will complete a $1 billion expansion of its Washington County campus.

Nike’s two key competitors have a major local presence as well. Those employers include the North American headquarters of Adidas with 1,898 employees, and a new 70,000 SF outpost of Under Armour. Under Armour has moved 100 employees into an iconic former YMCA.

GOVERNMENTThe U.S. Federal Government is among Portland largest employers, with 18,300 workers. The State of Oregon gives employment to an additional 15,100 residents in government and education.

HEALTHCARE AND RESEARCHHealth services are another major employment sector for the Portland area. The top healthcare employers in the area are Providence Health Systems, with 18,885 employees, and The Oregon Health Sciences University (OHSU), with 17,556 workers. OHSU is the recent recipient of a total of $1 billion in donations for cancer research from over 10,000 Oregon donors. Grants from the National Institutes of Health totaled $245.62 million in 2018.

MANUFACTURINGIn trucking and transportation, Daimler Trucks—with nearly 2,800 area workers—has big plans for the Portland area. The company recently spent $150 million renovating its Portland facility and invests heavily in research and development, including autonomous driving.


PORTLAND RANKINGS

Restaurant City of the Year– Bon Appetit –

Best City for an Active Lifestyle– Wallethub –

Most Entrepreneurial State – Amazon.com –

Greenest City in America– Newsweek –

Best Foodie City in America– Wallethub & Travelpulse –

No.6 rank by Jetsetter

Healthiest Cities to Live– Thrillist.com –

No.3

No.7

No.5

No.9

No.15No.10

No.1

No.7

No.1

No.4

No.4

No.8

No.5

No.8

No.9 No.10Top City for Entrepreneurs &

Start-Ups– Business.org –

No.23 rank by CNBC

Healthiest City in the U.S.– Active.com –

Best Cheap Destinations in the U.S.– U.S. News and World Report –

Fittest Cities in America– American College of

Sports Medicine –

Best Foodie Cities in the USA– U.S. News and World Report –

Most Educated City in America

– Wallethub –

Best City for Biking– Fast Company –

Best Place to Live in the U.S.– U.S. News and World Report –

Best Bike City in America– Bicycling Magazine –

Fittest Cities in America– CBS News –

Portland consistently receives glowing reviews and rankings from the media.

2019 lists include:

2018 lists include:


JOB GROWTH BY INDUSTRY

Professional and Business Services

Transportation, Warehousing & Utilities

Education & Health Services

Healthcare & Social Assistance

Financial Activities

Administrative and Waste Services

Government

Full time employment increased 1.6% between October 2018 – October 2019, an increase of 20,200 positions. Below is an overview of net job creation by industry from October 2018 through October 2019:

According to the State of Oregon Employment Department, the Portland Metro region created jobs at the rate of 1.7% in 2019. Portland ranks 16th among the 50 largest metropolitan areas in the United States.

Among the influx of companies to the Portland metropolitan area—including many who have transplanted their world, North American or U.S. headquarters here—are Adidas, Daimler Trucks, KinderCare and Keen.

Other significant companies in the close-in Portland metro area include Umpqua Holdings, Weiden+Kennedy, NW Natural, PacifiCorp, PGE, New Seasons, Storables, McMenamins, McCormick & Schmick’s, Franz Bakery, Portland Brewing, Powell’s Books, ZGF Architects, and two major West Coast law firms: Stoel Rives and Schwabe, Williamson & Wyatt.

MSA PORTLAND

2,500

3,300

3,500

3,300

3,300

2,500

6,600


OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OR

Income T6 Lease Rents Annualized Projected Operations NoteScheduled Gross Rent $826,195 $12,331 $826,195 $12,331 1

Less: Vacancy/Credit Loss -$41,310 -$617 -5.0% -$41,310 -$617 -5.0% 2

Net Rental Income $784,885 $11,715 $784,885 $11,715 Other Income $7,880 $118 $64,977 $970 3

Includes: Laundry $6,575 $98 $6,575 $98 Includes: Utility Billing (RUBs) $0 $0 0.0% $48,402 $722 65.0% Includes: Miscellaneous $1,305 $19 $10,000 $149

Gross Operating Income $792,765 $11,832 $849,862 $12,685 Expenses November 2019 TTM Per Unit % GOI Projected Operations Per Unit % GOI

Real Estate Taxes $38,807 $579 4.9% $76,682 $1,145 9.0% 4Insurance $9,813 $146 1.2% $35,000 $522 4.1% 5

Garbage $16,136 $241 2.0% $16,136 $241 1.9%

Sewer/Water $41,519 $620 5.2% $41,519 $620 4.9% Electric $15,664 $234 2.0% $15,664 $234 1.8% Gas $16,809 $251 2.1% $16,809 $251 2.0%

Total Utilities $90,128 $1,345 11.4% $90,128 $1,345 10.6%Administrative $13,442 $201 1.7% $13,442 $201 1.6% Fee Management $23,783 $355 3.0% $25,496 $381 3.0% 6 On-site Payroll $30,555 $456 3.9% $48,000 $716 5.6% 7Contracted Services $3,288 $49 0.4% $8,732 $130 1.0% Maintenance/Repairs $41,796 $624 5.3% $41,796 $624 4.9% Turnover $10,884 $162 1.4% $10,884 $162 1.3% Reserves $16,750 $250 2.1% $16,750 $250 2.0% 8

Total Expenses -$279,245 -$366,908 Expenses per Unit -$4,168 -$5,476% of Gross Operating Income 35.2% 43.2%

Net Operating Income (NOI) $513,520 $482,953


OPERATIONS ANALYSIS

1. RENTS The Brown Apartments has demonstrated consistent rent increases. Rents achieved on move-ins over the last six-months (T6) average $1,028 per unit, or $2.29 per unit. Currently, scheduled rents average $1,010 per unit or $2.25 per sq ft and T6 lease annualized demonstrate an increase of 1.5%. T6 leases are 7.7% higher than November 2019 TTM average rents.

2. VACANCY/CREDIT LOSS, CONCESSIONS, AND BAD DEBT

The historical operations do not include historical vacancy. Projected operations include a 5.0% vacancy rate based on lender underwriting requirements. Lenders consider the long-term nature of a property and its market location. Lenders typically underwrite to a 5.0% vacancy.

Approximately 24 units have signed leases in 2019 YTD resulting in an average 2.4% vacancy per month for the previous eleven (11) months.

RENT ROLL ANALYSIS: MARKET RENTS

Unit Type Unit Count

Square Feet

Lowest Achieved Rent

Highest Achieved Rent % Diff Average T6

Leases

Average T6 Leases Rent

per Sq Ft

Studio 50 395 $900 $995 10.6% $974 $2.47

1 Bedroom / 1 Bathroom 17 604 $1,050 $1,195 13.8% $1,185 $1.96

Totals / Averages 67 448 $975 $1,095 12.2% $1,028 $2.29

BROWN APARTMENTS • 67 UNITS • PORTLAND, OR


Actual Rents Studio One-Bedroom Total

$900 2 2

$925 4 4

$950 14 14

$975 17 17

$995 10 10

$1,050 2 2

$1,095 1 1

$1,100 1 1

$1,125 1 1

$1,150 2 2

$1,175 6 6

$1,195 2 2

Total * 47 15 62

* Occupied units only.

Studio One-Bedroom

Sche

duled

Rent

$1,000

$900

$1,050

$1,150

$1,100

$1,200

$1,250RENT RANGES BY UNIT TYPE

$950

Average Rent Maximum RentMinimum Rent

$850



3. OTHER INCOME The Brown Apartments’ other income is minimal for a property of this size. Communities the size of The Brown could generate up to $10,000 annually in additional revenue—not including laundry or utility RUBs. The table below estimates potential other income collections, which have been rounded up in the projected operations to cover lease termination fees.

• RUBs. A few of The Brown Apartments’ competitors are charging residents for utilities (RUBs). An investor may implement RUBs charges to align with the Portland market. The projected RUBs collections are based on charges found at comparable properties and would cover water, sewer, garbage, and gas (heat). Stabilized RUBs charges could generate more than $48,402 of income annually. The average cost to residents would be $60 monthly per unit. This charge covers approximately 65% of water, sewer, garbage and gas expenses.

Other Income Estimates Administrative Fees Application Fees Late Fees/ NSF/

Non-Compliance Pet Premium Annual Total

Total Units 67 % of Units 30% 35% 40% Expected # of Units 20.10 23.45 26.80 Charge Per Unit 1.50 1.00 1.00 Fees $45.00 $25 $25

Annual Total $1,357 $586 $8,040 $9,983Annual Per Unit $20 $9 $120 $149



OPERATIONS ANALYSISBROWN APARTMENTS • 67 UNITS • PORTLAND, OREXPENSESThe Brown Apartments’ operating expenses include limited property taxes due to the historical tax abatement that expires in 2023. The property insurance is also limited as the current owner does not have earthquake coverage. Expenses have been adjusted to include earthquake insurance coverage and for fully assessed property taxes. Unless noted below, operating expenses were created utilizing November 2019 TTM operations.

4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. Property tax values were released October 15 for the 2019-2020 tax year. The current historical tax abatement places the property taxes for the Brown at $40,008 for the 2019-2020 tax year.

The Brown Apartments currently has a historical tax abatement that expires in 2023 and cannot be renewed. The following table includes tax comparables for similar vintage properties. Based on the tax comparables and properties with related average unit sizes to the Brown Apartments. The projected taxes, should they be fully assessed today, are estimated at approximately $1,145 per unit, or $2.55 per sq ft.

5. INSURANCE Property insurance has been adjusted to include earthquake insurance due to the building’s unreinforced masonry construction. The projected cost for insurance is $522 per unit or $35,000 annually.

6. FEE MANAGEMENT Projected operations include a management fee of 3.0% of GOI, which reflects typical management costs for assets like The Brown Apartments in the Portland metro area.

TAX HISTORYTax Year 2017/2018 2018/2019 2019/2020Account #

R246743 $39,212 $39,760 $40,008

Total $39,212 $39,760 $40,008

% Change 5.22% 1.38% 0.62%

Property Units Year Built 2019 Taxes Per Unit per Sq Ft Average

Chelsea Court Apartments 32 1925 $31,740 $992 $2.31 430

Amber Court Apartments 39 1926 $41,600 $1,067 $2.24 477

Chapman Court 38 1926 $39,289 $1,034 $2.08 497

Marcella 46 1926 $54,984 $1,195 $2.27 527

Average 39 1926 $41,904 $1,072 $2.22 483


7. PAYROLL Payroll has been adjusted to reflect third-party management. The payroll cost is for administration only and assumed a ¾ time for an on-site manager and additional leasing back up.

8. RESERVES Lenders require reserves to be set aside to address future capital costs associated with any property as it ages. The projected operations include reserves of $250 per unit.



2424 SE 11th Avenue • Portland, OR 97214www.hfore.com • Phone: (503) 241.5541

QUESTIONS & TOUR REQUESTS:

All inquiries, questions, or tour requests are to be directed to HFO Investment Real Estate at (503) 241.5541.

Please do not disturb the residents.

Rob Marton • [email protected] Greg Frick • [email protected] Jack Stephens • [email protected] Lee Fehrenbacher • [email protected] Smith • [email protected] Tully • [email protected] Gates • [email protected] Rand Hoffman • [email protected]

HFO Investment Real Estate 2424 SE 11th AvenuePortland, Oregon 97214

www.hfore.com(503) 241.5541Fax: (503) 241.5548

Brokers licensed in the States of Oregon and Washington.

OFFER TERMSPRICING Price $10,000,000

Per Unit $149,254

Per Sq Ft $333

Cap Rate 4.83%

Avg Unit Size 448 sq ft

ASSET SUMMARY

Property Brown Apartments

Address 807 SW 14th AvenuePortland, OR 97205

County Multnomah

Year Built 1915

Total Units 67

Approx NR Sq Ft 30,018 sq ft

Avg Unit Size Sq Ft 448 sq ft


Brown Apartments

Lincoln High School

Providence Park


HFO Investment Real Estate

2424 SE 11th Avenue • Portland, OR 97214www.hfore.com • 503.241.5541

Passion • Collaboration • Specialization

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. ©2020 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.

Documents

• (503) 241 · of Portland’s newest retail districts. Portland’s living room, Pioneer Court House Square, Portland State University urban campus and the Northwest District,