SANTANA COURT APARTMENTS - LoopNet · Santana Court is a 70-unit apartment community adjacent to Oregon State University’s campus in Corvallis, Oregon. The asset is directly south

OFFERING MEMOR ANDUM

SANTANA COURT APARTMENTS70 Units - Corvallis, Oregon

ASSET SUMMARYProperty Santana Court ApartmentsLocation 2610 - 2620 Western Boulevard

Corvallis, Oregon 97333

County BentonTotal Units 70Year Built 1975Stories 2 storiesApproximate Sq Ft 47,400Average Unit Sq Ft 677Acres 2.2Acres 2.20

PRICINGPrice $8,500,000

Per Unit $121,429

Per Bedroom $90,426

Per Sq Ft $179

Cap Rate 5.67%

INVESTMENT SUMMARY

FOR MORE INFORMATION Greg Frick • [email protected] Rob Marton • [email protected] Jack Stephens • [email protected] Fehrenbacher • [email protected] Tully • [email protected] Cross • [email protected]

2424 SE 11th Avenue, Portland, Oregon 97214www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548

Brokers licensed in Oregon.

2 HFO INVESTMENT REAL ESTATE

Santana Court is a 70-unit apartment community adjacent to Oregon State University’s campus in Corvallis, Oregon. The asset is directly south of the university’s Reser Stadium and offers immediate access to U.S. Route 20, the Corvallis-Newport Highway. Santana Court has completed extensive exterior improvements including an entire envelope replacement, along with numerous interior updates such as carpet and cabinet replacement. Residents are offered diverse floor plans to choose from including studio, one- and two-bedroom flats, and two-bedroom townhomes. Residents can take advantage of secured bike storage, on-site laundry and off-street parking.

Santana Court has demonstrated consistent rent growth and maintained a high historical occupancy. Current rents average $960 per unit, or $1.51 per square foot. Current rents have experienced an increase of 6.5% over 2016 average rents. Santana Court is expected to benefit from continued rent growth due to the guaranteed renter pool found at OSU. Investors will benefit from the extensive improvements as most of the major mechanical systems have been updated. Santana Court is an attractive asset with a strong, in-demand Corvallis location and is an exceptional investment opportunity.

DETAILED UNIT MIXUnit Type Unit Count Average Sq Ft Approx. NR Sq Ft % of Total Units

0 Bedroom / 1 Bathroom Studio 20 421 8,410 28.6%

1 Bedroom / 1 Bathroom Flat 26 502 13,044 37.1%

2 Bedroom / 1.5 Bathroom Townhome 12 889 10,670 17.1%

2 Bedroom / 1 Bathroom Flat 12 1,040 12,475 17.1%

Totals / Averages 70 637 44,599 100.0%

INVESTMENT SUMMARY

PROPERTY HIGHLIGHTS• Diverse unit mix

• Significant interior and exterior improvements

• On-site laundry facilities

• On-site parking and secured bicycle storage

• Adjacent to Oregon State University campus

37.1%

1 Bedroom / 1 Bathroom Flat

28.6%

Studio

17.1%

2 Bedroom / 1 Bathroom Flat

17.1%

2 Bedroom / 1.5 Bathroom TH

3SANTANA COURT APARTMENTS • 70 UNITS • CORVALLIS, OR

RECENTLY COMPLETED UPDATESSantana Court has completed extensive exterior updates.

• Complete exterior paint in 2010

• New blacktop in 2009 and a new sealcoat in 2016

• Updated landscaping in 2013 and the addition of a pet relief area

• New exterior signage and lighting

• Updated laundry room including new machines


INTERIOR UPDATESSince 2008, Santana Court has been implementing interior improvements including:

• Laminate plank flooring

• New lighting and paint

• New kitchen cabinets and counter tops

• New kitchen appliances


CORVALLIS

BACKGROUNDCorvallis is recognized as one of the best small college towns in the country. The city’s economic opportunities and community atmosphere are directly tied to the presence of Oregon State University. Located 85 miles south of Portland, Corvallis is bordered by the Willamette River and the Oregon Coast Range. Its name is derived from words meaning “Heart of the Valley,” its motto is “Enhancing Community Livability,” –a testament to its position as a friendly, inclusive community in an outdoor paradise.

BENTON COUNTYCorvallis is located in Benton County, which is located between Salem and Eugene, west of I-5 . The population of the Corvallis Metropolitan Area (which includes Albany and Lebanon, located in Linn County) increased by 4.8% between 2010 and 2016. The City of Corvallis had an estimated population of 57,110 people in 2016. With only 43.7% of housing units in Corvallis owner-occupied, and a median age of 26.6, Corvallis is a vibrant city of youthful renters, many associated with OSU.

EDUCATION & EMPLOYMENTCorvallis is a very educated city, with 59.7% of residents having achieved a bachelor’s degree or higher. The top employment sectors in Corvallis are manufacturing, professional/business services, education, and health services. Its largest employer is OSU, which employs 10,430 residents. Samaritan Health Services and the Hewlett-Packard Company are the area’s two other top employers, with 2,632 and 1,550 employees, respectively. Other significant employers include the Corvallis Clinic, the Corvallis School District, and the City of Corvallis.

BUSINESS DEVELOPMENTCorvallis has made a strong effort to attract top businesses to the area, offering tax incentives through its Enterprise Zone program. Three of the current Enterprise Zones include South Corvallis, Sunset Research Park, and the Hewlett-Packard Campus. The tax incentives are effective for three years, and are reserved for companies that develop previously unused land.

OREGON STATE UNIVERSITY


CORVALLIS

RESER STADIUMOREGON STATE UNIVERSITYOregon State University, founded in 1868, is home to 11 colleges, 15 agricultural experiment stations, and 35 county extension offices. As of 2017, it has $441 million in external research funding. The university boasts 31,476 students, making it Oregon’s largest university. 83% of students are undergraduates, while 15% are graduate students. Forbes ranks Corvallis as the #4 college town in the nation. As of 2016, the school’s endowment was $482.5 million. Oregon’s State strong engineering and science programs have made Corvallis the #4 most innovative tech hub in the nation, according to the website NerdWallet. OSU is the only university in Oregon with Carnegie Classifications for Highest Research Activity and Community Engagement, and is one of two land, sea, space, and sun grant institutions in the US. Oregon State is an NCAA Division 1 school, and part of the Pac-12 conference. The “Beaver Nation” of OSU athletics fans are enthusiastic supporters of the school’s teams, and the rivalry between the OSU Beavers and Oregon Ducks dates back to 1894, making it one of the oldest college rivalries in the nation. The average age of an OSU student is 23, and 17% of undergraduates live in college housing.

PARKS & RECREATIONThe city’s Parks and Recreation Department oversees 2,000 acres of public green spaces, including parks, hiking trails, fields, and playgrounds. Corvallis and its surrounding area boast over 60 miles of hiking and biking trails, with beautiful vistas of mountains, waterfalls, and covered bridges. The City of Corvallis has been recognized by the League of American Bicyclists as a Gold Level Bicycle Friendly Community, and by SmartAsset as the 3rd most fitness-friendly American city for 2015. According to the 2016 American Community Survey, Benton County has the largest percentage of bike commuters in the nation, at 9.1%.


OREGON STATE UNIVERSITYOregon State University is located ninety miles south of Portland in Corvallis, voted America’s safest city in 2008 and 2011. OSU is the state’s leading public research university (based on external research funding) and has Oregon’s largest total enrollment.

Founded in 1856, OSU was the state’s first school devoted to primary and preparatory education. The school offered its first college-level courses in 1865. OSU’s modern-day name was adopted in 1961, by an order from then-governor Mark O. Hatfield.

Its 15 colleges and multiple extension offices serve a student body of over 30,000—a diverse group that comes from all 50 states and 80 different countries.

OSU offers over 200 undergraduate degree programs and 80 graduate degree programs—30 of which are offered online through the university’s E-Campus, founded in 2002.

OSU has received national recognition for the quality of its programs in such fields as conservation biology, agricultural sciences, nuclear engineering, forestry, fisheries and wildlife management, community health, pharmacy, and zoology.

Over 300 clubs and activities are available to OSU’s student body, including student government, sports, community service, social and environmental awareness, Greek life, theater, and music.

OREGON STATE UNIVERSITY


NW King Blvd

NW 29th St

NE 2nd st

NW Walnut Blvd

NW Grant Ave

NW Monroe Ave

NW Harrison Blvd

Corvallis Market Center

CorvallisHigh School

Trysting Tree Golf Club

Corvallis Country Club

Pioneer Park

Timberhill Park

Brandis City Park

Crystal Lake Sports Fields and Kendall Natural Area

Good Samaritan Regional Medical Center

34

99W 20

NW Circle Blvd

LIFESTYLE CONVENIENCES

Santana Court Apartments


RENT COMPARABLES

NW Grant Ave

NW Garfield Ave

NW Harrison Blvd

SW Country Club Dr

SW 53rd St

SW 35th St

NW 2nd St

NW Van Buren Ave

SE Peoria Rd

SE Stahlbush Rd

NW Lincoln Ave

SE Crystal Lake Dr

NW W

alnut

Blvd

NW Witham Hill Dr

Riviera Apartments

La Gaviota Apartments

Oak Park ApartmentsShadow Hills Apartments

The Centurion

99W

34

34

20

20

Santana Court Apartments

The Arcade Apartments


RENT COMPARABLES

S 1

Unit type Units Sq Ft Rent Rent/Sq Ft2 BED / 1 BATH 22 900 $1,198 $1.33

Average 22 900 $1,198 $1.33

Unit type Units Sq Ft Rent Rent/Sq Ft0 BED / 1 BATH 20 485 $755 $1.56

1 BED / 1 BATH 26 620 $914 $1.47

2 BED / 1 BATH 12 1,050 $1,170 $1.11

2 BED / 1.5 BATH 12 895 $1,156 $1.29

Average 70 702 $954 $1.36

THE ARCADE APARTMENTS440 NW 23rd Street, Corvallis, ORTotal Units: 22 Avg Sq ft: 900Year Built: 1969 Avg Rent: $1,198

Avg Rent/Sq ft: $1.33

SANTANA COURT APARTMENTS2610-2620 SW Western Boulevard, Corvallis, ORTotal Units: 70 Avg Sq ft: 702Year Built: 1975 Avg Rent: $954



RENT COMPARABLES


2 BED / 2 BATH 18 1,000 $1,225 $1.23

Average 72 813 $963 $1.18

2

SHADOW HILLS APARTMENTS2740 SW Western Boulevard, Corvallis, ORTotal Units: 72 Avg Sq ft: 813Year Built: 2004 Avg Rent: $963


3


1 BED / 1 BATH 35 699 $975 $1.40

2 BED / 1 BATH 41 887 $1,250 $1.41

2 BED / 2 BATH 14 967 $1,320 $1.37

Average 101 780 $1,108 $1.42

OAK PARK APARTMENTS754-1322 SW 26th Street, Corvallis, ORTotal Units: 101 Avg Sq ft: 780Year Built: 1984 Avg Rent: $1,108



RENT COMPARABLES


Average 26 465 $675 $1.45

4

THE CENTURION2740 SW Western Boulevard, Corvallis, ORTotal Units: 26 Avg Sq ft: 465Year Built: 1978 Avg Rent: $675


5


Average 32 810 $925 $1.14

LA GAVIOTA APARTMENTS750-780 NW 25th Street, Corvallis, ORTotal Units: 32 Avg Sq ft: 810Year Built: 1965 Avg Rent: $925



RENT COMPARABLES


2 BED / 1 BATH 23 728 $900 $1.24

Average 53 656 $850 $1.30

6

RIVIERA APARTMENTS825-827 NW 23rd Street, Corvallis, ORTotal Units: 53 Avg Sq ft: 656Year Built: 1960 Avg Rent: $850



OPERATIONS ANALYSISPROJECTED OPERATIONS

Income 2016 YE September 2017 YTD Annualized Projected Operations Note

Scheduled Gross Rent $743,229 $770,282 $842,563 $12,037 1Less: Concessions ($1,180) -0.2% ($800) -0.1% $0 $0 0.0%Less: Vacancy/Credit Loss $0 0.0% $0 0.0% -$42,128 -$602 -5.0% 2

Net Rental Income $742,049 $769,482 $800,434 $11,435Other Income $34,786 $47,653 $47,653 $681

Includes: Utility Billing (RUBs) $16,072 59.0% $17,039 61.4% $17,039 $243 61.4% 3 Plus: Laundry $3,766 $6,639 $6,639 $95

Gross Operating Income $776,836 $817,135 $848,087 $12,116

Expenses 2016 YE % GOI September 2017 YTD Annualized

% GOI Projected Operations Per Unit % GOI

Real Estate Taxes $53,668 $53,676 $55,029 $786 6.5% 4

Insurance $13,107 $11,136 $11,136 $159 1.3%Garbage $9,341 $10,009 $10,009 $143 1.2%Sewer/Water $17,878 $17,731 $17,731 $253 2.1%Electric $4,911 $5,094 $5,094 $73 0.6%Cable Internet $23,020 $22,710 $22,710 $324 2.7%

Total Utilities $55,150 $55,544 $55,544 $793 6.5% 5

Administrative $54,627 $25,525 $18,927 $270 2.2% 6

Fee Management $31,067 4.0% $32,717 4.0% $33,923 $485 4.0% 7

Consulting Fee $15,533 2.0% $30,383 3.7% $0 $0 0.0% 8

On-site Payroll $57,867 7.4% $53,781 6.6% $53,781 $768 6.3%

Landscaping $17,274 $11,153 $11,153 $159 1.3%

Maintenance/Repairs $4,126 $16,434 $16,434 $235 1.9%

Turnover $33,075 $46,564 $46,564 $665 5.5%

Reserves $17,500 $17,500 $17,500 $250 2.1% 9

Total Expenses ($352,993) ($354,413) ($319,992) ($4,571) -37.7%

Expenses per Unit ($5,043) ($5,063) ($4,571)

% of Gross Operating Income 45% 43% 38%

Net Operating Income (NOI) $423,842 $462,722 $528,095


2016 YE September 2017 YTD Annualized

Current Scheduled Rents$840

$900

$880

$860

$920

$940

$980

$960

Aver

age R

ents

HISTORICAL RENT TRENDS

$885

$920

$960

1. RENTS Current scheduled rents at the Santana Court Apartments average $960 per unit, or $1.51 per square foot. Rents have trended positively over both 2016 and 2017 YTD average rents. Current scheduled rents are 7.8% per unit higher than 2016 YE average rents, and average 4.5% higher than September 2017 YTD annualized average rents. It is assumed rents will continue to trend upward. Rents are projected at a market average of $1,003 per unit, or $1.57 per square foot. The market rents are based on the increase achieved over the 2017 YTD average rents.

OPERATIONS ANALYSIS


OPERATIONS ANALYSISRENT ROLL ANALYSIS: SCHEDULED RENTS

Unit Type Unit Count Square Feet Lowest Achieved Rent

Highest Achieved Rent % Diff Avg Scheduled

RentAvg Scheduled Rent per Sq Ft

0 Bedroom / 1 Bathroom Studio 20 421 $555 $885 59.5% $787 $1.871 Bedroom / 1 Bathroom Flat 26 502 $585 $940 60.7% $879 $1.752 Bedroom / 1.5 Bathroom TH 12 889 $1,170 $1,220 4.3% $1,185 $1.332 Bedroom / 1 Bathroom Flat 12 1,040 $1,180 $1,230 4.2% $1,198 $1.15Totals / Averages 70 637 $873 $1,069 32.2% $960 $1.51

RENT ROLL ANALYSIS: MARKET RENTS

Unit Type Unit Count Square Feet Avg Scheduled Rent

Avg Scheduled Rent per Sq Ft

Average Market Rent

Average Market Rent per Sq Ft % Change

0 Bedroom / 1 Bathroom Studio 20 421 $787 $1.87 $822 $1.96 4.5%1 Bedroom / 1 Bathroom Flat 26 502 $879 $1.75 $919 $1.83 4.5%2 Bedroom / 1.5 Bathroom TH 12 889 $1,185 $1.33 $1,238 $1.39 4.5%2 Bedroom / 1 Bathroom Flat 12 1,040 $1,198 $1.15 $1,252 $1.20 4.5%Totals / Averages 70 637 $960 $1.51 $1,003 $1.57 4.5%

2. VACANCY AND CREDIT LOSS

The operating statements do not include a vacancy factor. Based on the location of the asset and the student demographic, it is assumed vacancy is low for the majority of the school year while the university is in session. Based on turnover, the property experiences higher vacancy in June and July when students are moving. The Santana Court Apartments is analyzed using a market rate vacancy of 5.0%, which represents an average for the entire year.

3. UTILITY CHARGES (RUBS)

The Santana Court Apartments charges residents for utilities. The total utility expense has been adjusted to include the internet cost. The RUBs collections totaled $17,039 for the September 2017 YTD annualized operations, an average $21 per month per unit and a capture rate of 33.8% of the total utility expense.

OCCUPANCY AND TURNOVER

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Average

Occupancy 100% 100% 100% 95% 100% 64% 91% 91% 100% 100% 100% 100% 100% 100% 100% 100% 100% 64% 73% 94% 94%

Turnover 0 0 0 1 0 8 2 1 0 0 0 0 0 0 0 0 0 9 4 1 12


4. PROPERTY TAXES The table below summarizes Santana Court’s property tax values. Property tax values for the 2017/2018 tax year were published October 15 and taxes increased 2.47% over the previous year. 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 net property taxes for Santana Court for the 2017/2018 tax year total $56,731. With the 3.0% discount, net property taxes total $55,029 which are reflected in the operations analysis.

5. UTILITIES The utilities for the Santana Court Apartments have been adjusted to include the wireless internet cost as a utility.

6. ADMINISTRATIVE The administrative costs were adjusted for costs associated with the current ownership including $4,947.86 in LLC accounting costs incurred in the 2017 YTD operations.

7. MANAGEMENT FEE The management fee reflects the average 4.0% charge found in 2016 and September 2017 YTD annualized operations.

8. CONSULTING FEE The consulting fee in 2016 is applicable to the current ownership and the improvements completed at the property. The consulting fee is not found in the 2017 YTD annualized operations and is not reflected in projected operations.

9. REPLACEMENT RESERVES Replacement reserves are required by most lenders and are estimated at $250 per unit, or $5,500 annually.

PROPERTY TAX HISTORY

Tax Year2014/2015 2015/2016 2016/2017 2017/2018

Account #

369185 $132 $115 $101 $92

037134 $327 $320 $330 $314

134365 $12,644 $12,978 $13,259 $13,315

272942 $20,496 $21,037 $20,749 $21,585

246672 $20,344 $20,882 $20,889 $21,425

Total $53,942 $55,332 $55,327 $56,731

% Change 5.22% 2.51% -0.01% 2.47%

OPERATIONS ANALYSIS


SANTANA COURT APARTMENTSPRICINGPrice $8,500,000

Per Unit $121,429

Per Bedroom $90,426

Per Sq Ft $191

Cap Rate 5.8%

Avg Unit Size 677 sq ft

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.

2424 SE 11th Ave • Portland, OR 97214 • www.hfore.comPhone: (503) 241.5541 • Fax: (503) 241.5548

TOURS AND INQUIRIES

Please do not disturb tenants.

All tours and inquiries regarding Santana Court are to be directed to HFO Investment Real Estate at (503) 241.5541

Greg Frick • [email protected] Rob Marton • [email protected] Jack Stephens • [email protected] Fehrenbacher • [email protected] Tully • [email protected] Cross • [email protected] SUMMARY

Property Santana Court Apartments

Location 2610 - 2620 Western BoulevardCorvallis, Oregon 97333

County Benton

Total Units 70

Year Built 1975

Stories 2 stories

Approximate Sq Ft 47,400

Average Unit Sq Ft 677

Acres 2.2

Acres 2.20


Investment Real Estate

Passion • Collaboration • Specialization2424 SE 11th Ave • Portland, OR 97214

www.hfore.com • (503) 241.5541

Documents

SANTANA COURT APARTMENTS - LoopNet · Santana Court is a 70-unit apartment community adjacent to Oregon State University’s campus in Corvallis, Oregon. The asset is directly south