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OFFERING MEMORANDUM CLIFDEN APARTMENTS 12 Units - Portland, Oregon
OFFERING MEMOR ANDUM
CLIFDEN APARTMENTS12 Units - Portland, Oregon
Clifden Apartments is a boutique 12-unit community located in the St. Johns neighborhood of North Portland. The asset features one- and two-bedroom flats with off-street parking. Apartments are accessed by separate landings, and small green spaces surround the property.
Clifden Apartments is walking distance to the popular St. Johns retail corridor. St. Johns has become a destination entertainment area with historic movie theatres, microbrews and local restaurants in the shadow of the St. Johns Bridge. Cathedral Park, Safeway Grocery and New Seasons Market are short distances from Clifden Apartments.
Clifden Apartments has completed both interior and exterior updates. Since 2012, updates include new roofs, seal coat repair, and exterior paint. More than 67% of the units are updated to include new appliances, countertops and flooring.
Clifden Apartments’ rents currently average $1,106 per unit, or $1.53 per square ft. New leases are demonstrating the demand for housing in the St. Johns neighborhood, with 2018 leases averaging $1,192.
INVESTMENT OVERVIEW
PROPERTY HIGHLIGHTS• Near trendy St. Johns neighborhood
retail center
• Interior and exterior updates
• Off-street parking
• Greenspaces surround the property
2 HFO INVESTMENT REAL ESTATE
EXECUTIVE SUMMARYPRICE SUMMARYPrice $1,770,000
Price Per Unit $147,500
Per Square Foot $203
Scheduled Cap Rate 5.77%
Projected Cap Rate 6.30%
ASSET SUMMARYProperty Clifden Apartments
Address 8415 N Fessenden StreetPortland OR 97203
Total Units 12
Year Built 1967
Stories Two stories
Approx. NR Sq Ft 8,700
Average Sq Ft 725
Acreage 0.37
16.7%1 Bedroom
83.3%2 Bedroom
FOR MORE INFORMATION Rob Marton • [email protected]
Greg Frick • [email protected]
HFO Investment Real Estate2424 SE 11th Avenue, Portland, Oregon 97214www.hfore.com • (503) 241.5541 • Fax: (503) 241.5548
Brokers licensed in Oregon and Washington.
3CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
4 HFO INVESTMENT REAL ESTATE
N Willamette Blvd
N Polk
Ave
N Cha
rlesto
n Ave
N Ivanhoe St
N Willamette Blvd
N Terminal Rd
N Lombard St
N Lombard St
N Columbia Blvd
N Edison St
N Alta Ave
N Trumbull Ave
N Central St
N Smith St
N Fessenden St
N Crawford St
N Philadelphia Ave
St. Johns Bridge
N Lombard St
N Buc
hana
n Ave
N Reno Ave
WILLAMETTE RIVER
Cathedral Park
St Johns City Park
Pier Park
Clifden Apartments
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LOCATION
5CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
APARTMENT MARKETThe 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. The U.S. Census ranked Portland as having the 5th lowest vacancy rate in the nation at the end of 2017.
REIS reports 2017 Portland metro year-over-year rents grew 3.3%. Overall rents have increased every quarter since Q1 2010.
SKILLED WORKFORCE & STRONG EMPLOYMENT54% 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 February 2018 is 3.6%—its lowest level since 1995.
TOP 10 LISTSPortland 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)
DIVERSIFIED ECONOMYPortland 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. These companies enjoy 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 include Viewpoint, Jama Software, Thetus, Urban Airship, Acquia, Elemental Technologies, Act-On, Puppet Labs, The Clymb and Jive Software.
PORTLAND REGIONOregon’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.
PORTLAND METRO AREA
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DOWNTOWN ST. JOHNS
With a unique collection of boutique businesses, a vibrant farmers market, and a nationally recognized main street program, St. Johns is a walkable, urban neighborhood with a small-town vibe. It boasts two movie theaters, an array of coffee shops and restaurants, three supermarkets, a community center, a racquet center and funky Portland shops such as Vinyl Resting Place. Minutes from downtown Portland, it’s also a center for growth in the city of Portland.
7CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
ST. JOHNS (WEST)
1. 7-Eleven2. Subway3. Lombard Street Tattoo4. Baxter Auto Parts5. Rock N Roo Bottle Taproom6. St Johns Liquor Store7. Two Stroke Coffee Co8. Kazumi Sushi
9. Companion Pet Clinic10. ShantiOm Yoga11. Wishing Well12. The Sudra13. St Johns Racquet Center14. 87th and Meatballs15. Marie’s16. Moonshine Hair Studio
17. Blue Bird Tavern18. Crouchley Plumbing19. The Olive & Vine20. It’s a Dog’s Life Playcare/Boarding21. Anna Bannanas St Johns22. St Johns Twin Cinemas23. Therapy Stores, Inc24. RoM Shoes
25. Comic Cave PDX26. Proper Eats27. Slim’s Restaurant & Lounge28. Tienda Santa Cruz29. Thai Cottage30. Starbucks31. Farmers Insurance32. Burgerville
8
2
4
St Johns City Park
N Saint Louis Ave
Restaurants and Dining Shopping/Entertainment Lifestyle Services
9
33. Optimystical Studios - PDX34. Hoplandia35. St Johns Farmer’s Market36. Zimmer’s Grooming & Pet Store37. The Man’s Shop38. Patties Home Plate Cafe39. US Bank40. Portland City Police
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3
5
1
6
10
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27
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25
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3234
3335
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31
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3837
3628
40
N New York Ave
N Chicago Ave
N Baltimore Ave
N Alta Ave
N Ivanhoe St
N Lombard St
N Ivanhoe StN Syracuse St
N Willamette BlvdN Edison St
N Central St
N Leonard St
N Cha
rlesto
n Ave
N Lea
vitt A
ve
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ST. JOHNS (EAST)
44
4241 43
Restaurants and Dining Shopping/Entertainment Lifestyle Services
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41. Block Bikes PDX42. St Johns Coffee Roasters43. Bestow PDX44. Vinnie’s Pizza45. Girasole Restaurant and Bar46. Blue Moon Camera & Machine47. Plew’s Brews48. Circa Vintage PDX49. Salty Teacup
50. Sabatino Vintage Moped/Scooter51. SOMA Kombucha Speakeasy52. Johns Street Cafe53. Tre Bone Pet Supply54. Tulip Pastry Shop55. Signal Station Pizza 56. Portland Miracle Revival Church57. US Post Office
58. Wells Fargo Bank59. Starbucks60. Safeway61. The Fixin’ To62. McMenamins Theater & Pub63. Verizon Wireless64. Zen Nails65. Hustad Funeral Home
66. Bank of America67. Nature’s Pet Market68. 7-Eleven69. Jung Food70. Mama San Soul Shack71. Leisure Public House72. St Johns Deli73. Gabagool
51
45 4746
49
4850
5255
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60
53
57
5864
6559
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63
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6768 69
70
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76
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79
80
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74. Cotter Pin Gear75. St Johns Ace Hardware76. Oregonians Credit Union77. Madison Automotive78. Dollar Tree79. Grocery Outlet Bargain Market80. City Farm81. West Coast Fitness
N Jersey St
N Ivanhoe St
N Lombard St
N Central St
N Princeton St
N Tyle
r Ave
N Polk
Ave
N Rich
mond A
ve
N Willamette Blvd
N Kellogg St
N Jersey St
N Rich
mond
Ave
N Cha
rlesto
n Ave
N Joh
n Ave
N Osw
ego A
ve
N Lea
vitt A
ve
9CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
OPERATIONS ANALYSISCLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OREGON
Income Current Scheduled Rents Projected Operations Note
Scheduled Gross Rent $160,608 $13,384 $171,600 $14,300 1Less: Vacancy/Credit Loss ($8,030) ($669) -5.0% -$8,580 -$715 -5.0% 2
Net Rental Income $152,578 $12,715 $163,020 $13,585 Total Other Income $16,731 $1,394 $16,731 $1,394 3
Includes: Utility Billing (RUBs) $6,244 $520 56.9% $6,244 $520 56.9%Includes: Laundry $1,635 $136 $1,635 $136
Gross Operating Income $169,309 $14,109 $179,751 $14,979
Expenses Projected Operations Per Unit % GOI Projected Operations Per Unit % GOI
Real Estate Taxes $14,131 $1,178 8.3% $14,131 $1,178 7.9% 4
Insurance $2,724 $227 1.6% $2,724 $227 1.5%
Total Utilities $12,217 $1,018 7.2% $12,217 $1,018 6.8%
Fee Management $16,931 $1,411 10.0% $17,975 $1,498 10.0% 5
Landscaping $3,555 $296 2.1% $3,555 $296 2.0%
Maintenance/Repairs $12,298 $1,025 7.3% $12,298 $1,025 6.8% 6
Turnover $2,340 $195 1.4% $2,340 $195 1.3% 7
Reserves $3,000 $250 1.8% $3,000 $250 1.7% 8
Total Expenses ($67,196) ($68,240) Expenses per Unit ($5,600) ($5,687)
% of Gross Operating Income 40% 38%
Net Operating Income (NOI) $102,113 $111,511
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1. RENTS Rents are based on a September 2018 rent roll. Current scheduled rents average $1,115 per unit, or $1.54 per square foot. Approximately eight of the two-bedroom units have been updated, and rents for those apartments are $100 higher than classic units. The projected rents are based on rates achieved at Clifden Apartments for 2018 YTD. The projected rents average $1,192 per unit, or $1.64 per sq. ft.
2. VACANCY, CONCESSIONS, AND BAD DEBT/RECOVERY
Clifden Apartments experienced above-market vacancy due to the renovations at the property. The projected operations stabilized the vacancy at 5.0%.
3. OTHER INCOME Other Income includes administrative fees, month-to-month income, pet fees, and utility charges (RUBs). For the previous 12 months, other income totaled $16,731.
a. RUBs were implemented at Clifden Apartments in 2016. RUBs were added on lease renewals throughout the year into 2017 operations. The RUBs implementation is now complete. RUBs charges average $44 per unit per month, capturing 56.9% of water, sewer and garbage utility costs.
b. Common area laundry services are available to residents at Clifden Apartments. The laundry generated $1,635 over the previous 12 months.
OPERATIONS ANALYSISCLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OREGON
RENT ROLL ANALYSIS: MARKET RENTS
Unit Type Unit Count
Square Feet
Average Scheduled
Rents
Average Scheduled
Rents per Sq Ft
Average Market Rent
Average Market Rent
per Sq Ft
% Change
1 Bedroom / 1 Bathroom 2 600 $1,000 $1.67 $1,025 $1.71 2.4%2 Bedroom / 1 Bathroom 10 750 $1,138 $1.52 $1,225 $1.63 7.1%Totals / Averages 12 725 $1,115 $1.54 $1,192 $1.64 6.4%
11CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. Property tax values for the 2018-2019 tax year were published in October. 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 before November 15th each year receive a 3.0% discount. Most investors take advantage of this discount.
The 2018-2019 gross property taxes for Clifden Apartments total $14,568,. The net property taxes for the 2018-2019 tax year, after the 3% discount, total $14,131 and are included in the projected operations.
5. MANAGEMENT FEE The management fee includes administration, advertising and payroll costs. Clifden Apartments is owner-managed and the historical management fee includes compensation for the current ownership. The management fee has been adjusted to reflect costs for a property that is managed by an independent, third-party management company.
6. REPAIR & MAINTENANCE (R&M)
R&M has been adjusted for one-time expenses associated with the on-going renovations and additional capital costs.
7. TURNOVER Turnover has been adjusted for capital costs and assumes a turnover rate of 30%. The projected expense of $2,300 covers make-ready processes and cleaning only.
8. 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.
OPERATIONS ANALYSISCLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OREGON
12 HFO INVESTMENT REAL ESTATE
CLIFDEN APARTMENTS12 UNITS • PORTLAND, OREGON
PRICE SUMMARYPrice $1,770,000
Price Per Unit $147,500
Per Square Foot $203
Scheduled Cap Rate 5.77%
Projected Cap Rate 6.30%
ASSET SUMMARYProperty Clifden Apartments
Address 8415 N Fessenden StreetPortland OR 97203
Total Units 12
Year Built 1967
Average Sq Ft 721
TOURS AND INQUIRIES Please do not disturb tenants.
All tours and inquiries regarding the Clifden Apartments are to be directed to HFO Investment Real Estate at (503) 241.5541.
Rob Marton • [email protected]
Greg Frick • [email protected]
Jack Stephens • [email protected]
Tyson Cross • [email protected]
Lee Fehrenbacher • [email protected]
Todd Tully • [email protected]
Adam Smith • [email protected]
Brokers licensed in Oregon and Washington.
13CLIFDEN APARTMENTS • 12 UNITS • PORTLAND, OR
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. ©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.
