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OFFERING MEMOR ANDUM44 Units • Portland, Oregon

HANCOCK EAST

2 HFO INVESTMENT REAL ESTATE

INVESTMENT SUMMARY

Hancock East is a 44-unit garden style community on the east side of Portland. The property has a community pool and each unit includes a patio or balcony.

With rents currently averaging $1,073 per unit or $0.98 per sq ft., Hancock East’s comfortable units and outstanding location make the property an especially attractive value-add investment opportunity.

Hancock East is located near significant retail outlets and a transportation corridor connected to major employment centers in Gresham and Portland. Hancock East is a 12-minute walk from the Max Blue Line and conveniently located in between the Portland and Gresham border. Just up the street are the Gateway Green and Knott City Parks.

Just a 5-minute walk to the south is the Gateway Shopping Center complete with retailers such as Fred Meyer, Home Depot, Starbucks, and Chase. And just south of the Gateway Shopping Center is Mall 205, home to Target, 24 Hour Fitness, Big Lots, and many more. Hancock East’s location, combined with the potential to continue to increase rents makes this property attractive to all investors.

ASSET SUMMARYProperty Hancock East

Location 10325 NE Hancock Street

City, State Portland, OR 97220

County Multnomah

Total Units 44

Year Built 1967

Approx. NR Sq Ft 48,800Average Unit Size 1,100 Sq. Ft.

PRICE SUMMARYPrice $6,250,000

Price Per Unit $142,045

Per Square Foot $128

Cap Rate 5.44%

Projected Cap Rate 6.27%

DETAILED UNIT MIXUnit Type Unit Count Average Sq Ft Total Sq Ft % of Total Units1 Bed / 1 Bath 8 1,000 8,000 18.2%2 Bed / 2 Bath 28 1,100 30,800 63.6%3 Bed / 2 Bath 8 1,200 9,600 18.2%Total / Averages 44 1,100 48,400 100%

TOURS AND INQUIRIES Todd Tully • [email protected] Greg Frick • [email protected] 2424 SE 11th Avenue, Portland, Oregon 97214www.hfore.com • (503) 241.5541

Please do not disturb tenants.

3HANCOCK EAST • 44 UNITS • PORTLAND, OREGON

• Every unit at Hancock East has both A/C and heat via a Packaged Terminal Air Conditioner (PTAC) unit.


LOCATION

84205

Hancock East

NE 10

2nd A

ve

NE 99

th Av

e

NE Weidler St

NE Glisan St

E Burnside St NE 12

2nd A

ve

NE 8

2nd A

ve

NE Halsey St

Gateway Shopping

Center & Transit Station

Rocky Butte Park

Rose City Golf Course

LIFESTYLE CONVENIENCESHancock East is conveniently located near the intersection of Interstates 84 and 205. These transportation corridors connect northeast Portland to the greater metro area and to Vancouver, Washington. Employment centers found in Portland, Gresham and Vancouver are easily accessed via the interstates or the MAX light rail found at the Gateway Transit center just 1.3 miles away.

GATEWAY SHOPPING AND TRANSIT CENTERThe Gateway Shopping Center is less than 1.5 miles away and features numerous lifestyle conveniences:

• Fred Meyer

• Kohl’s

• WinCo Foods

• Office Depot

• Ross Dress for Less

• Applebee’s Grill & Bar

• Providence Medical Group

• The Oregon Clinic

• Gateway Medical Pharmacy


TOP AREA EMPLOYERS

20,000 area employees 12,400 area employees 12,000 area employees

11,250 area employees



Intel is the area’s largest private employer. Recently, following a five year, $6 billion expansion, the company unveiled vast, long-term plans for future growth.

Kaiser has 35 medical facilities, 18 dental offices and 1,400 doctors in the Pacific Northwest. It employs more than 10,000 in the Portland metro region and serves 11.8 million members nationally. Kaiser is headquartered in Oakland, California.

In 2019 Nike wraps up a $1 billion expansion of its Beaverton world headquarters. The company added 1.3 million square feet of office space and parking for 3,300 vehicles.

Legacy is a locally-owned nonprofit based in Portland, Oregon. It is the only health system covering the Portland/Vancouver area south to Salem with multiple hospitals and a hospital dedicated to exclusively serving children.

With nearly 50,000 students, Portland Public Schools is Oregon’s largest district. Portland is currently in the midst of a massive voter-approved high school and middle school reconstruction and modernization program.

In 2017 voters approved $790 million in taxes to rebuild one middle school and three high schools.

Fred Meyer offers one-stop shopping at 133 department stores in four western states.

18,286 area employeesProvidence is a non-profit network of hospitals, health plans, physicians, clinics and related services. It operates in Alaska, Washington, Oregon, Montana and California. It was originally founded by the Sisters of Providence in Montreal Quebec in 1843.


Oregon Health Sciences University (OHSU) leads the way in government-funded healthcare — and secures numerous grants for the advancement of health sciences. OHSU recently acquired a $1 billion gift for cancer research.

Grants from the National Institutes of Health have held steady from around $184 million in 2011 to $219 million in 2017.


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. The U.S. Census Bureau pegged Portland’s Q3 2018 vacancy rate at 4.5% and the U.S. average at 7.1%.

REIS forecast 2018 Portland metro year-over-year rents growth at 3.0% and the Multifamily NW Apartment Report survey proved average October 2017-18 year-over-year rent growth at 3.3%.

SKILLED WORKFORCE & STRONG EMPLOYMENTIn a 2018 WalletHub report comparing 150 of the largest U.S. metros, Portland is listed as the 15th most educated city in America. More than half of Multnomah County workers have a college degree, well ahead of the national average of 38.5%.

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. Data indicates the area added 31,000 jobs in 2016, 28,000 jobs in 2017, and 29,000 in 2018.

TOP 10 LISTS

Portland consistently receives glowing reviews and rankings from the media.

2018 lists include: • #1 Restaurant City of the Year (Bon Appetit)

• #1 Best Foodie City in America (Wallethub & Travelpulse) #6 (Jetsetter)

• #3 Healthiest City in the U.S. (Active.com)

• #4 Best City for Biking (Fast Company)

• #5 Best Bike City in America (Bicycling Magazine)

• #5 Fittest Cities in America (American College of Sports Medicine)

• #6 Best Place to Live in the U.S. (CNBC/U.S. News)

• #9 Top City for Entrepreneurs and Start-Ups (Business.org) #23 (CNBC)

• #10 Greenest City in America (Newsweek)

• #10 Most Entrepreneurial State (Amazon.com)

• #15 Most Educated City in America (Wallethub)

• #19 Best Large City in America, 59th best city in the World (Best Cities.org)

DIVERSIFIED ECONOMYPortland is home to the headquarters of Fortune 500 companies Nike and Lithia Motors. Fortune 1000 companies headquartered here include Columbia Sportswear, Greenbrier Cos. and Portland General Electric. Fortune 500 companies based outside Oregon with major operations here are Precision Castparts and Intel.

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 have 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, and The Clymb.

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 SNAPSHOT


GOVERNMENTThe U.S. Federal Government is Portland metro’s overall largest employer, with 20,500 workers. The State of Oregon gives employment to an additional 14,000 residents.

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

With over 19,300 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 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 2019 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 1,200 employees, and a new 70,000 SF outpost of Under Armour. Under Armour has moved 100 employees into an iconic former YMCA.

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 17,543 employees, and The Oregon Health Sciences University (OHSU), with 16,200 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 $182.7 million in 2016.

MANUFACTURINGIn trucking and transportation, Daimler Trucks—with nearly 3,000 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 MARKET SNAPSHOTMAJOR EMPLOYERS


OPERATIONS ANALYSISIncome Current Scheduled Rents Projected Operations Note

Scheduled Gross Rent $566,623 $12,878 $624,000 $14,182 1Less: Vacancy/Credit Loss ($28,331) ($644) -5.0% ($31,200) ($709) -5.0% 2

Net Rental Income $538,292 $12,234 $592,800 $13,473 Other Income $43,095 $979 $43,095 $979 3

Includes: Utility Billing (RUBs) $40,040 $910 59.1% $40,040 $910 59.1% Includes: Miscellaneous $3,056 $69 $3,056 $69

Gross Operating Income $581,387 $13,213 $635,895 $14,452

Expenses Projected Operations

Per Unit % GOI Projected Operations

Per Unit % GOI

Real Estate Taxes $53,439 $1,215 9.2% $53,439 $1,215 8.4% 4Insurance $4,298 $98 0.7% $4,298 $98 0.7%Total Utilities $73,954 $1,681 12.7% $73,954 $1,681 11.6% Fee Management $23,255 $529 4.0% $25,436 $578 4.0%On-site Payroll $35,000 $795 6.0% $35,000 $795 5.5%Landscaping $12,000 $273 2.1% $12,000 $273 1.9% Maintenance/Repairs $19,800 $450 3.4% $19,800 $450 3.1%

Turnover $8,800 $200 1.5% $8,800 $200 1.4% 5Reserves $11,000 $250 1.9% $11,000 $250 1.7% 6

Total Expenses ($241,547) ($243,727) Expenses per Unit ($5,490) ($5,539)% of Gross Operating Income 41.5% 38.3%

Net Operating Income (NOI) $339,841 $392,168


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

1 Bedroom / 1 Bathroom 8 1,000 $925 $1,035 11.9% $949 $0.95

2 Bedroom / 2 Bathroom 28 1,100 $1,030 $1,200 16.5% $1,076 $0.98

3 Bedroom / 2 Bathroom 8 1,200 $1,130 $1,270 12.4% $1,188 $0.99

Totals / Averages 44 1,100 $1,028 $1,168 13.6% $1,073 $0.98

RENT ROLL ANALYSIS: MARKET RENTS

Unit Type Unit Count

Square Feet

Average Scheduled Rents

Average Scheduled Rents per Sq Ft

Average Market Rents

Average Market Rents

per Sq Ft% Change

1 Bedroom / 1 Bathroom 8 1,000 $949 $0.95 $1,000 $1.00 5.1%

2 Bedroom / 2 Bathroom 28 1,100 $1,076 $0.98 $1,200 $1.09 10.4%

3 Bedroom / 2 Bathroom 8 1,200 $1,188 $0.99 $1,300 $1.08 8.6%

Totals / Averages 44 1,100 $1,073 $0.98 $1,182 $1.07 9.2%

1. RENTS Hancock East’s current rents average $1,073 per unit, or $0.98 per sq ft. Projected rents are based off of the highest achieved rents at Hancock East as well as comparable nearby properties.

OPERATIONS ANALYSISINCOME


2. VACANCY 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 the market in which it is located. The property historically operated at less than 3% vacancy. Lenders typically underwrite to 5.0% vacancy.

3. OTHER INCOME Hancock East is expected to generate $43,095 in Other Income by the end of 2019. The Other Income includes damages, and cleaning fees, late fees, administrative fees, and utility charges (RUBs).

• RUBs. Utility charges (RUBs) account for more than 90% of Other Income, totalling $40,040. The collections show, on average, a monthly charge to residents of $75, which covers approximately 60% of the water, sewer, and garbage expense.

OPERATIONS ANALYSIS


EXPENSESHancock East’s professional management reflects market-rate operations with minimally adjusted expenses. The following expenses impact overall operations.

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 October 15. Projected operations include current taxes for the 2018-2019 property tax year. Hancock East’s taxes increased 3.6% over 2017-2018. 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 by November 1 each year receive a 3.0% discount. The gross property taxes for Hancock East for the 2018-2019 tax year total $55,092. After deducting the 3.0% discount, net property taxes total $53,439 This amount is reflected in projected operations.

5. MANAGEMENT FEE The historical management fee for Hancock East is above market rate and is assumed to include costs associated with the current owner. The management fee has been adjusted to 4.0% of GOI and on-site payroll adjusted to 6.0% of GOI, which represents standard independent, third-party management costs for properties in the metro area similar to Hancock East.

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 $11,000 total.

TAX HISTORY

Tax Year2017/2018 2018/2019

Account #

R318869 53,094 55,092

Total 53,094 55,092

% Change 3.63%

OPERATIONS ANALYSIS


OFFER TERMSQUESTIONS & TOUR REQUESTS:

Please do not disturb tenants.

All tours and inquiries regarding Hancock East are to be directed to HFO Investment Real Estate at (503) 241.5541.

Todd Tully • [email protected]

Greg Frick • [email protected]

Jack Stephens • [email protected]

Tyson Cross • [email protected]

Lee Fehrenbacher • [email protected]

Adam Smith • [email protected]

Khari Gates • [email protected]

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 SUMMARYProperty Hancock East

Location 10325 NE Hancock Street

City, State Portland, OR 97220

Total Units 44

Year Built 1967

Average Unit Size 1,100 Sq. Ft.

PRICE SUMMARYPrice $6,250,000

Price Per Unit $142,045

Per Square Foot $128

Cap Rate 5.44%

Projected Cap Rate 6.27%


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.

hancock east - images1.loopnet.com€¦ · just up the street are the gateway green and knott city...

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