BEAVERTON, OR - Trion Properties, a private equity commercial real estate firm that specializes in value-add multifamily investments along the west coast, has acquired Hidden Villas, a 61-unit, value-add apartment community in the Portland submarket of Beaverton, Oregon, bringing its multifamily portfolio in the area to a total of 215 units.
“Beaverton is on the cusp of tremendous economic growth, making it an attractive market for multifamily investors,” says Max Sharkansky, Managing Partner of Trion Properties. “The region’s rapid job growth, mass transit options, and high quality of life are driving resident demand for well-located multifamily communities near major employers in the area.”
Sharkansky explains that the Portland metro, also known as the “Silicon Forest,” is one of the most dynamic tech employment markets in the Pacific Northwest, and is home to a cluster of high-tech companies, including Intel, the largest for-profit employer in the state with over 17,000 employees. In addition, the Portland metro has also established itself as the sports apparel capital of the nation, with brands such as Nike and Columbia Sportswear taking up residence here.
“Nike is currently undergoing a 3.2 million square-foot, $380 million expansion of its headquarters which is set for completion in 2018, adding thousands of new jobs in the next few years,” continues Sharkansky. “This influx in new jobs, coupled with the property’s central location will further drive resident demand, resulting in stabilized cash flow and strong operating income for the asset over time. Nike is located 1.8 miles from the apartment community, and Tektronix, an electronic equipment manufacturing firm, is located just 1.3 miles from the property as well.”
At nearly full occupancy, Hidden Villas has strong in-place cash flow with tremendous upside potential, according to Sharkansky, who adds that the property presents an opportunity to capture rent growth upon lease rollover.
“By repositioning and rebranding this asset through strategic renovations, we plan to bring rents up to market-value in order to optimize the property’s value-add potential, thereby increasing our internal rate of return,” Sharkanksy confirms.
Trion Properties plans to implement a full exterior renovation which includes fresh paint and landscaping, as well as extensive interior upgrades to each unit, including new vinyl wood plank flooring, modern cabinetry, high-end finishes, and remodeling of the fireplaces.
Built in 1968, the property includes two separate parcels, a 56-unit apartment community known as Hidden Villas and an additional five-unit property adjacent to the main Farmington Road. The acquisition of these five units facing the street will enable Trion to increase the property’s frontage and visibility along the main highway.
The acquisition of Hidden Villas is the firm’s fourth acquisition in the area and comes on the heels of another recent investment in the Portland metro, Tigardville Apartments, a distressed, 36-unit garden-style asset located in Tigard, Oregon, which Trion had purchased for a total consideration of $3.8 million.
With rents below market-value, the unoptimized property presented a strong opportunity for deep value creation. Located just outside the city of Portland, one of the fastest rent growth regions in the nation, Tigardville presented a lucrative opportunity to perform extensive renovations and cosmetic upgrades in order to bring rents up to market and generate significant returns within a short-term hold period, according to Sharkansky.
“Overall, both of these acquisitions are well-aligned with our strategy of targeting value-add assets with strong upside potential in supply-constrained markets,” affirms Sharkansky. “We recognized the potential of the Portland metro early on, and plan to capitalize on the continued growth of the region by strategically expanding our portfolio in this market.”
Hidden Villas is located at 14620 SW Farmington Road in Beaverton, Oregon. It was acquired from a private family investor for approximately $7 million. Acquisition financing was arranged by Continental Funding Group through Intervest Bank with a loan-to-value of 70 percent. Liz Tilbury and Ben Murphy of Tilbury Ferguson Investment Real Estate, Inc. represented both the buyer and the seller in this transaction.