offering memorandum pinewood terrace apartments · plex buildings. each apartment has a private...

OFFERING MEMOR ANDUM

44 Units • Salem, Oregon

www.hfore.com • (503) 241.5541

PINEWOOD TERRACE APARTMENTS

www.hfore.com • (503) 241.5541

2 HFO INVESTMENT REAL ESTATE

Pinewood Terrace Apartments is a 44-unit community of one-story bungalows in Salem, Oregon. The asset features two-bedroom, one-bathroom floor plans in duplex and four-plex buildings. Each apartment has a private enclosed patio and a large pantry/storage closet with washer/dryer hookups. The property features a centrally located, outdoor seasonal pool, and off-street parking.

Exceptional Salem location. Pinewood Terrace Apartments is less than ½ mile to Commercial Street and a plethora of retail services. Trader Joe’s, Walgreens, and Big 5 Sporting Goods are all found between Commercial Street and Sunnyside Road.

Salem leads the area in growth and income. The city of Salem is the state capital of Oregon and the seat for Marion county. Located equidistant between the cities of Portland and Eugene, the largest employer in Salem is the State of Oregon. The city of Salem experienced a 12.5% population growth between 2010 and 2019.

Continued rent growth. Pinewood Terrace Apartments’ rents currently average $1,042 per unit or $1.25 per sq ft. Leases signed in 2020 have averaged $1,055 per unit or $1.27 per sq ft, an increase of 1.27%

INVESTMENT SUMMARY

Greg [email protected](971) 717.6332

Adam Smith [email protected]

(971) 717-6345

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

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

2 Bedrooms 44 832 36,600 100.0%

Total / Averages 44 832 36,600 100.0%

ASSET SUMMARYProperty Pinewood Terrace Apartments

Location 860 Boone Road SE

City, State Salem, Oregon 97306

County Marion

Year Built 1971

Total Units 44

Approx NR Sq Ft +/- 36,600 sq ft

Avg Unit Size +/- 832 sq ft

Acreage 2.70 acres

Density 16.30 units per acre

PRICEPrice $5,500,000

Price per Unit $125,000

Price per Sq Ft $150

Cap Rate 5.63%

3PINEWOOD TERRACE APARTMENTS • 44 UNITS • SALEM, OR

Minto-Brown Island Park

LOCATION

SALEM

22

22

5

PINEWOOD TERRACE APARTMENTS

Salem Municipal Airport

Commercial St SE

Madrona Ave

SALEM, OR


LIFESTYLE CONVENIENCES AND EMPLOYERS

PINEWOOD TERRACE APARTMENTSCommercial St SE

Madrona Ave

Fairview Ave

Sunnyside Rd SE

Kuebler Blvd

Battle Creek Rd SE

Pringle Rd SELibert

y Rd S

12th St SE

14

710

8

121114

172124

272932

1615182225 26

28303336

23

313437 38 39 40

41

4243 44

454951

4746505256

62 63 65

66

64

53

5857

54

59

55

60 61

48

35

19 20

13

3

69

2

5

Umpqua BankVenti’s Cafe + TaphousePanera BreadCommercial Fairview Shopping MallACME CafeThe Triangle TavernStarbucksWilco Farm StoreColumbia BankBlue Diamond Pool GrillTrinity’s Quality Auto CareGreat Harvest Bread Co.Starbucks - Fred MeyerMomiji JapaneseTaco Bell U.S. BankChase BankU-Haul Neighborhood Dealer Burger KingSouth Salem Ace HardwareHong Kong HouseLa Hacienda RealKFCUrgent Care Clinic SouthDutch Bros CoffeeFirehouse Subs SE CommercialSELCO Community Credit UnionTup Tim Thai CuisineO’Reilly Auto PartsNorthern Lights Theatre PubStarbucksDonatello’s PizzaWells Fargo Bank

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

Dairy QueenMcDonald’sVCA Salem Animal HospitalFirst Tech Federal Credit UnionWashman Car WashLos Arcos Mexican GrillWaterWoodyArby’sMOD PizzaKeyBankSouth Salem GoodwillMaps Credit UnionCherry City CenterThe Original Pancake HouseJack in the BoxSouth Salem DMVBottleDrop Redemption CenterPhysiq FitnessWillamette Mist Car WashHabaneros Mexican FoodChattyshackArby’sShari’s Cafe and PiesTaj Indian Grocery & SweetsMcDonald’sApplebee’s Grill + BarDollar TreeLes Schwab Tire CenterNAPA Auto PartsChase BankBurger KingPlanet FitnessCarl’s Jr

41

51

39

49

59

63

35

45

55

43

53

37

47

57

42

52

40

50

60

64

61

65

62

66

36

46

56

34

44

54

38

48

58

Commercial Fairview Shopping Mall

Oak Tree Pharmacy

South Village City Park

Morningside City Park

WoodmanseePark

Hilfiker Shopping Center


RENTAL TRENDSThe Multifamily NW Spring 2020 apartment market survey of 13,038 apartment units reported that Salem and the surrounding vicinity showed a 3.7% vacancy rate, down from 4.62% the year before. Rents per square foot were up slightly from 2018 – the area reported average rent rates of $1.29 per square foot.

EMPLOYMENT

Salem is the capital city of the state of Oregon, and the county seat of Marion County. It is located between Portland metro area and the city of Eugene, along the I-5 corridor. Salem’s metro area includes Marion and Polk counties.

SALEM, OREGON

The largest employer is the State of Oregon

In August of 2017, Amazon announced it would open a $90 million, 1 million square foot facility in the Mill Creek Corporate Center in Salem. The center opened in 2019, and as of May 2020 employed around 1,000 workers. Amazon was attracted to the area in part because of the Enterprise Zone initiative, which provides three years of property tax breaks for the site. In 2018, Amazon announced it would adopt a $15 per hour minimum wage.

Salem also has a burgeoning beer industry. In the Fall of 2017, three new breweries opened in the city. Xicha Brewing opened the first Latin American brewery in Salem, and local breweries Bine Valley and Ratchet Brewery are also opened their doors at that time.

In addition to large corporations, universities, hospitals and public-sector employment, smaller businesses make up most of the Salem area’s employment picture. In March, prior to the pandemic-related recession, Salem’s unemployment rate was 4.1%.

Government Jobs

24.5% Account for metro-area employment

Education and Health

17%Retail Trade

11%Professional Services

3.9%

Other major employment fields


ECONOMIC DEVELOPMENTThriving businesses abound in Salem. The city’s Strategic Economic Development Corporation (SEDCOR) is the lead economic development agency for Marion and Polk Counties. This private, nonprofit membership organization’s mission is to enhance and diversify the Mid-Willamette Valley area’s economy. In its 2018 annual report, SEDCOR reported that it stimulated over $25 million in new investment, and assisted with retention and creation of 497 jobs.

POPULATIONAccording to the US Census, the Salem metro area’s population increased by 11% between 2010 and 2019, growing from 390,738 to 433,903. The city of Salem itself saw a population increase of 12.5% over that same period. Salem’s owner-occupied housing rate is 46.7%, and median household income as of 2018 was $53,619.

RECREATIONSalem’s recreational attractions include its riverfront carousel and its vintage Enchanted Village theme park, plus water-based activities along the Willamette River, including kayaking, boating fishing and water-skiing. Oregon’s history can be seen via the state capitol building, Willamette Mission State Park and the Historic Deepwood Estate.

SALEM, OREGON


8 HFO INVESTMENT REAL ESTATE8 HFO INVESTMENT REAL ESTATE

12 HFO INVESTMENT REAL ESTATE12 HFO INVESTMENT REAL ESTATE

ASSET OVERVIEW

CONSTRUCTION SUMMARY

Year Built 1971

No. Of Buildings 12 Residential Buildings

Stories 1 story

Construction Type Wood frame on slab

Foundation Concrete

Roofing Composition Shingle

Windows Double-pane vinyl

Laundry Service In-unit, wash and dryer hookups

Heating Baseboard

SITE SUMMARY

City Salem

County Marion County

Tax Account No. R593499

Bedroom

Private Patio

Bedroom

Living Room

Kitchen

Bath

Floor Plan2 Bedroom • 1 Bathroom


OPERATIONS ANALYSISPINEWOOD TERRACE APARTMENTS • 44 UNITS • SALEM, OR

Income July 2020 TTM Projected Operations Note

Scheduled Gross Rent $534,112 $12,139 $547,708 $12,448 1Less: Vacancy/Credit Loss -$28,583 -$650 -5.4% -$27,385 -$622 -5.0% 2Less: Concessions -$1,563 -$36 -0.3% -$2,739 -$62 -0.5% 2Less: Bad Debt/Recovery -$3,102 -$70 -0.6% -$2,739 -$62 -0.5% 2Less: Model -$11,970 -$272 -2.2% $0 $0 0.0% 3

Net Rental Income $488,895 $11,111 $514,846 $11,701 Other Income $42,286 $961 $42,286 $961 4

Includes: Utility Billing (RUBs) $32,254 $733 86.4% $32,254 $733 86.4% Includes: Miscellaneous $10,032 $228 $10,032 $228

Gross Operating Income $531,181 $12,072 $557,132 $12,662

Expenses July 2020 TTM Per Unit % GOI Projected Operations Per Unit % GOI

Real Estate Taxes $39,544 $899 7.4% $39,149 $890 7.0% 5

Insurance $8,498 $193 1.6% $8,498 $193 1.5%

Total Utilities $45,141 $1,026 8.5% $45,141 $1,026 8.1%

Administrative $10,267 $233 1.9% $10,267 $233 1.8%

Advertising $6,477 $147 1.2% $6,477 $147 1.2%

Fee Management $21,247 $483 4.0% $19,500 $443 3.5% 6

On-site Payroll $70,930 $1,612 13.4% $70,930 $1,612 12.7%

Landscaping $10,400 $236 2.0% $10,400 $236 1.9%

Maintenance/Repairs $19,222 $437 3.6% $19,222 $437 3.5%

Turnover $5,731 $130 1.1% $5,731 $130 1.0%

Reserves $11,000 $250 2.1% $11,000 $250 2.0% 7

Total Expenses -$248,457 -$246,315

Expenses per Unit -$5,647 -$5,598

% of Gross Operating Income 46.8% 44.2%

Net Operating Income (NOI) $282,724 $310,817


1. RENTS Pinewood Terrace Apartments’ current rents average $1,037 per unit or $1.25 per sq ft. Current scheduled rents average 2.5% higher than July 2020 TTM average rents.

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

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 its market. Lenders typically underwrite to 5.0% vacancy in the Salem metro area.

Economic loss for Pinewood Terrace Apartments includes an additional 1.0% for concessions and bad debt.

3. LEASING OFFICE/MODEL Pinewood Terrace Apartments has one unit that is currently utilized by management as a leasing office. The leasing office is shared by other properties. The unit is a fully functioning apartment and can be easily converted to a rental. It is assumed a new owner will not maintain a model unit and this economic loss has been removed.

4. OTHER INCOME Pinewood Terrace Apartments generated $42,286 in Other Income over the previous 12 months. The Other Income includes administrative fees and utility charges.

• Utility charges (RUBs). Residents are charged an average of $61 per unit, and RUBs collections cover approximately 86% of total water/sewer and garbage costs.

RENT ROLL ANALYSIS: SCHEDULED RENTS

Unit Type Unit Count Square Feet Lowest Achieved Rent

Highest Achieved Rent % Diff Average

Scheduled RentAverage

Scheduled Rent per Sq Ft

2 Bedroom / 1 Bathroom 40 830 $980 $1,100 12.2% $1,036 $1.25

2 Bedroom / 1 Bathroom 4 850 $1,020 $1,068 4.7% $1,054 $1.24

Totals / Averages 44 832 $1,000 $1,084 8.5% $1,037 $1.25



830 Sq Ft 850 Sq Ft

Sche

dule

d Re

nt

Average Rent Maximum RentMinimum Rent

$950

$1,050

$1,030

$1,010

$990

$970

$1,090

$1,070

$1,110

$1,230

CURRENT SCHEDULED RENT RANGERENT VARIATION

Current Rent 830 sq ft 850 sq ft$980 4

$990 2

$993 1

$1,010 2

$1,011 1

$1,015 1

$1,020 1 1

$1,025 3

$1,030 1

$1,035 1

$1,040 1

$1,045 1

$1,050 6

$1,055 3

$1,063 1 1

$1,065 5 1

$1,068 1 1

$1,075 2

$1,100 1

Total 38 4



HISTORICAL INCOME TRENDS

$46,000

$45,500

$45,00098.0%

100.0%

$44,500

$43,50090.0%

92.0%

94.0%

96.0%

$43,000

$44,000

$42,500 86.0%

88.0%

84.0%$42,000

102.0%

Sche

dule

d Re

nt

Occu

panc

y

Dec 2019 Jan 2020Nov 2019Oct 2019 Jul 2020Apr 2020Feb 2020Aug 2019 Jun 2020May 2020Mar 2020Sept 2019

Scheduled Rent Occupancy



-8.00%

-5.00%

-4.00%

-7.00%

-6.00%

-1.00%

-2.00%

-3.00%

0%

-9.00%

Vaca

ncy

RENT TRENDS

Scheduled RentsJuly 2020 T6-Month Annualized

July 2020 T3-Month Annualized

July 2020 TTM$995

$1,015

$1,005

$1,000

$1,040

$1,035

$1,030

$1,025

$1,020

$1,010

Aver

age L

ease

Ren

t

$1,012

$1,026

$1,035$1,037



EXPENSESPinewood Terrace Apartments’ costs are based on July 2020 trailing 12-month (TTM) operations, and the asset is managed by a regional third-party professional management company. Unless otherwise noted below, operations are actuals.

5. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. Property tax values for each tax year are published on October 15. Projected operations include current taxes for the 2019/2020 property tax year.

In Oregon, property taxes are not reassessed on sale and are limited to a 3.0% annual increase at the state level. The gross property taxes for Pinewood Terrace Apartments total $40,360. Property taxes paid before November 15th each year receive a 3.0% discount. Most owners take advantage of this discount, and the projected operations reflect the net property taxes of $39,149.

6. FEE MANAGEMENT The fee management is based on income and a percentage of GOI. The management fee reflects current collections (GOI) and had been adjusted to a market rate of 3.5%.

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

TAX HISTORY

Tax Year2018/2019 2019/2020

Account #

593499 $39,842 $40,360

Total $39,842 $40,360

% Change 9.75% 1.28%

OPERATIONS ANALYSISOPERATIONS ANALYSISPINEWOOD TERRACE APARTMENTS • 44 UNITS • SALEM, OR


OFFER TERMS

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.

Greg Frick • [email protected]

Adam Smith • [email protected]

Rob Marton • [email protected]

Tyler johnson • [email protected]

Jack Stephens • [email protected]

Lee Fehrenbacher • [email protected]

Todd Tully • [email protected]

Peyton King • [email protected]

Steve Wendt • [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.

ASSET SUMMARYPrice $5,500,000

Price per Unit $125,000

Price per Sq Ft $150

Cap Rate 5.63%

ASSET SUMMARYProperty Pinewood Terrace Apartments

Location 860 Boone Road SE

City, State Salem, Oregon 97306

Year Built 1971

Total Units 30

Avg Unit Size +/- 832 sq ft

Avg Rent $1,037

Avg Rent Per Sq Ft $1.25

PINEWOOD TERRACE APARTMENTS • 44 UNITS • SALEM, 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. ©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.

offering memorandum pinewood terrace apartments · plex buildings. each apartment has a private...

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