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OFFERING MEMOR ANDUM23 Units • Pendleton, OregonTHE BROWN
2 HFO INVESTMENT REAL ESTATE
EXECUTIVE SUMMARYASSET SUMMARYLocation The Brown
City, State Pendleton, OR 97801
County Umatilla
Total Units 23
Year Built 1919
Approx. NR Sq Ft 19,900Average Unit Size 865 Sq. Ft.Acreage 0.174 acres
PRICE SUMMARYPrice $2,200,000
Price Per Unit* $72,032
Per Square Foot $111
Cap Rate 6.21%
Projected Cap Rate 7.07% *adjusted for commercial units
DETAILED UNIT MIXUnit Type Unit Count Average Sq Ft Total Sq Ft % of Total Units0 Bed / 1 Bath 1 500 500 4.3%1 Bed / 1 Bath 12 700 8,400 52.2%2 Bed / 1 Bath 10 1,100 11,000 43.5%Total / Averages 23 865 19,900 100.0%
TOURS AND INQUIRIES Adam Smith • [email protected]
Greg Frick • [email protected]
2424 SE 11th Avenue, Portland, Oregon 97214www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548
Please do not disturb tenants.
The Brown Building is a 23-unit multifamily property in Pendleton Oregon. The Brown was constructed in 1919 by the Fraternal Order of the Elks club, and served as a lodge for many years. The plumbing and electrical systems were replaced in the mid-80s and renovations to the façade began in 2006. Today, the property offers ground-floor retail consisting of Wheatland Insurance, the Umatilla County Special Library, and a Game King. The three-stories above consist of 23 apartments. The large, vintage units of this property make it one of the most appealing and attractive properties in downtown Pendleton.
Pendleton is most famous for the Pendleton Woolen Mills and the Pendleton Roundup Rodeo held each September. The city is the county seat of Umatilla County and has a population of 16,781.
The Brown Building apartments have provided reliable, steady income throughout the past 12 years under current ownership. Rents have increased year over year. There remains room for increased cash flow in operations through implementation of utility billbacks and charging a nominal amount for cable-TV, which is currently included with rent.
3THE BROWN • 23 UNITS • PENDLETON, OREGON
4 HFO INVESTMENT REAL ESTATE
5THE BROWN • 23 UNITS • PENDLETON, OREGON
6 HFO INVESTMENT REAL ESTATE
7THE BROWN • 23 UNITS • PENDLETON, OREGON
PENDLETON, OREGONLocated at the base of the Blue Mountains in Northeast Oregon, Pendleton straddles the beautiful Umatilla River. The city is home to multiple museums, including the Tamastklikt Cultural Institute featuring exhibits and videos detailing the impact of the Oregon Trail and pioneer settlement on native tribes.
Pendleton features an active convention center, a tribal gaming resort and an 18-hole championship golf course. The city is connected to Seattle, Portland, the Tri-Cities and Boise by multiple highways, and it offers the largest regional airport in northeast Oregon with multiple flights daily to Portland.
CITY HIGHLIGHTS
Pendleton consistently receives glowing reviews and rankings from the media.
Highlights: • 32 Restaurants• 85+ Local Businesses• 15 attractions• 9 Annual Events
Major Employers:
• Blue Mountain Community College
• Catholic Health Initiatives
• Good Shepherd Health Care System
• Pendleton School District
• Pendleton Woolen Mills
• Smith Frozen Foods
• St. Anthony Hospital
• Wildhorse Resort and Casino
PENDLETONPendleton (pop 16,781) is best known for its legendary Pendleton Round-up rodeo, its fine woolens, and leather craftsmanship.
PENDLETON SNAPSHOT
8 HFO INVESTMENT REAL ESTATE
9THE BROWN • 23 UNITS • PENDLETON, OREGON
OPERATIONS ANALYSISIncome Current Scheduled Rents Projected Operations Note
Scheduled Gross Rent $217,800 $9,470 $239,100 $10,396 1Less: Vacancy/Credit Loss -$10,890 -$473 -5.0% -$11,955 -$520 -5.0% 2
Net Rental Income $206,910 $8,996 $227,145 $9,876 Other Income $5,895 $256 $11,957 $520 3
Includes: Utility Billing (RUBs) $0 $0 0% $6,062 $264 25% Includes: Miscellaneous $5,895 $256 $5,895 $256
Commercial Income Scheduled Rent Per Unit % GOI Projected Rent Per Unit % GOI
Base Rent $46,800 $46,800
Less: Vacancy/Credit Loss -$8,419 -$8,419
Effective Annual Income $33,677 $33,677
Gross Operating Income $246,482 $10,717 $272,779 $11,860
Expenses Projected Operations
Per Unit % GOI Projected Operations
Per Unit % GOI
Real Estate Taxes $17,605 $765 7.1% $17,605 $765 6.5% 4Insurance $7,650 $333 3.1% $7,650 $333 2.8%Total Utilities $35,318 $1,536 14.3% $35,318 $1,536 12.9% Fee Management $15,960 $694 7.5% $17,933 $780 7.5% 5Maintenance/Repairs $17,250 $750 7.0% $17,250 $750 6.3%Turnover $5,750 $250 2.3% $5,750 $250 2.1%Reserves $5,750 $250 2.3% $5,750 $250 2.1% 6
Total Expenses -$109,905 -$111,877 Expenses per Unit -$4,778 -$4,864% of Gross Operating Income -45% -41%
Net Operating Income (NOI) $136,577 $160,901
10 HFO INVESTMENT REAL ESTATE
OPERATIONS ANALYSIS1. RENTS Rents are based on a December 2018 rent roll. Current scheduled rents average $789 per unit, or $0.91 per
sq ft. The projected rents are based on highest achieved lease rates in 2018 & 2019. Projected rents average $845 or $0.98 per sq ft - a 6.4% increase in rent.
2. VACANCY The projected operations include a market-rate vacancy of 5.0%.
3. OTHER INCOME Other Income includes resident utility billbacks, administrative, laundry, and other miscellaneous charges.
• RUBs. The Brown currently does not charge for resident utility billbacks, (RUBs). A new owner could implement utility billbacks, with residents projected to be charged an average $22 per unit per month for water, sewer, and garbage expenses. The property is individually metered for electric.
4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. 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. Property tax values for the 2018-2019 tax year are published October 15, and The Brown’s property taxes increased 2.38% over the 2017-2018 taxes and total $18,150. The Brown’s projected operations include the net property taxes for the 2018-2019 tax year which include the 3.0% discount for early payment and total $17,605.
5. FEE MANAGEMENT The management fee is inclusive of all administrative, payroll, and advertising expenses associated with the property. It is projected to total 7.5% of GOI.
6. RESERVES Lenders require reserves be set aside to address future capital costs associated with any property as it ages. The projected operations include reserves of $250 per unit or $5,750 annually.
Type Units Count Avg Sq FtAverage Scheduled
RentsScheduled Rents per
Sqft Projected Rents Projected Rents per Sq Ft
0 Bedroom / 1 Bathroom 1 500 $595 $1.19 $625 $1.25
1 Bedroom / 1 Bathroom 12 700 $712 $1.02 $775 $1.11
2 Bedroom / 1 Bathroom 10 1,100 $901 $0.82 $950 $0.86
Total / Average 23 865 $789 $0.91 $845 $0.98
11THE BROWN • 23 UNITS • PENDLETON, OREGON
OFFER TERMS
QUESTIONS & TOUR REQUESTS:
All tours and inquiries regarding The Brown are to be directed to HFO Investment Real Estate at (503) 241.5541. Please do not disturb tenants.
Adam Smith • [email protected]
Greg Frick • [email protected]
Jack Stephens • [email protected]
Lee Fehrenbacher • [email protected]
Rand Hoffman • [email protected]
Todd Tully • [email protected]
Khari Gates • [email protected]
HFO Investment Real Estate 2424 SE 11th AvenuePortland, Oregon 97214
www.hfore.com(503) 241.5541Fax: (503) 241.5548
ASSET SUMMARYLocation 110 SW Court Avenue
City, State Pendleton, OR 97801
Total Units 23
PRICE SUMMARYPrice $2,200,000
Price Per Unit* $72,032
Per Square Foot $111
Cap Rate 6.21%
Projected Cap Rate 7.07% *adjusted for commercial units
12 HFO INVESTMENT REAL ESTATE
13THE BROWN • 23 UNITS • PENDLETON, OREGON
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. ©2019 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.
