NNN LEASED OFFICE INVESTMENT - SALEM, OREGON

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1 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR PROPERTY HIGHLIGHTS $5,400,000 Additional value in TI reimbursements Excellent location Rent roll under market PRESENTED BY: Jennifer Martin, CCIM Senior Advisor X 202 jennifer.martin@svn.com OR # Taylor Morin Associate Advisor X 203 taylor.morin@svn.com OR # All SVN Offices Independently Owned & Operated.

2 DISCLAIMER The material contained in this Offering Brochure is furnished solely for the purpose of considering the purchase of the property within and is not to be used for any other purpose. This information should not, under any circumstances, be photocopied or disclosed to any third party without the written consent of the SVN Advisor or Property Owner, or used for any purpose whatsoever other than to evaluate the possible purchase of the Property. The only party authorized to represent the Owner in connection with the sale of the Property is the SVN Advisor listed in this proposal, and no other person is authorized by the Owner to provide any information or to make any representations other than contained in this Offering Brochure. If the person receiving these materials does not choose to pursue a purchase of the Property, this Offering Brochure must be returned to the SVN Advisor. Neither the SVN Advisor nor the Owner make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied upon as a promise or representation as to the future representation of the Property. This Offering Brochure may include certain statements and estimates with respect to the Property. These Assumptions may or may not be proven to be correct, and there can be no assurance that such estimates will be achieved. Further, the SVN Advisor and the Owner disclaim any and all liability for representations or warranties, expressed or implied, contained in or omitted from this Offering Brochure, or any other written or oral communication transmitted or made available to the recipient. The recipient shall be entitled to rely solely on those representations and warranties that may be made to it in any final, fully executed and delivered Real Estate Purchase Agreement between it and Owner. The information contained herein is subject to change without notice and the recipient of these materials shall not look to Owner or the SVN Advisor nor any of their officers, employees, representatives, independent contractors or affiliates, for the accuracy or completeness thereof. Recipients of this Offering Brochure are advised and encouraged to conduct their own comprehensive review and analysis of the Property. This Offering Brochure is a solicitation of interest only and is not an offer to sell the Property. The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest to purchase the Property and expressly reserves the right, at its sole discretion, to terminate negotiations with any entity, for any reason, at any time with or without notice. The Owner shall have no legal commitment or obligation to any entity reviewing the Offering Brochure or making an offer to purchase the Property unless and until the Owner executes and delivers a signed Real Estate Purchase Agreement on terms acceptable to Owner, in Owner s sole discretion. By submitting an offer, a prospective purchaser will be deemed to have acknowledged the foregoing and agreed to release the Owner and the SVN Advisor from any liability with respect thereto. To the extent Owner or any agent of Owner corresponds with any prospective purchaser, any prospective purchaser should not rely on any such correspondence or statements as binding Owner. Only a fully executed Real Estate Purchase Agreement shall bind the property and each prospective purchaser proceeds at its own risk.

3 TABLE OF CONTENTS 1. PROPERTY INFORMATION 4 2. LOCATION INFORMATION FINANCIAL ANALYSIS DEMOGRAPHICS ADDITIONAL INFORMATION 23 All SVN Offices Independently Owned & Operated.

4 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR PROPERTY INFORMATION

5 SECTION 1 PROPERTY INFORMATION Executive Summary PROPERTY OVERVIEWVIEW Rare NNN leased office investment in Salem, Oregon. This offering provides the opportunity to acquire an over 85% occupied, 30,000+ square foot, two-story office building on 2.08 acres. Two new tenants secured in the last 90 days. Anchor tenant's leases have three and four and a half years remaining. MaPS Credit Union has been in the building since it was built in This property is priced well below replacement cost and provides significant upside upon turnover of some existing tenants. Landlord may be willing to provide a rent guaranty on the existing vacancy, which is also subject to a ROFR with Keller Williams Capital City. The owner has provided significant tenant improvements to the two most recent tenants (KW and Healing Den). Both are reimbursing those improvement costs over the initial term of their lease, which provides the new owner above-market returns for the first five years of the holding period. PROPERTY SUMMARY SALE PRICE: $5,400,000 CAP RATE: 8.05% NOI: $434,609 LOCATION OVERVIEWVIEW This property is strategically located along one of Salem's busiest arterials, Highway 22 also known as Mission Street. The property is located just over a mile from Interstate 5 in an area of thriving businesses, on a commuter route to downtown Salem. There are shopping and services in the immediate trade area. Property is located less than 1/2 mile to Salem Hospital. LOT SIZE: BUILDING SIZE: BUILDING CLASS: 2.08 Acres 30,194 SF B YEAR BUILT: 1978 RENOVATED: 2016 ZONING: MARKET: SUB MARKET: CROSS STREETS: IC Salem/Keizer Central Business District Mission 5

6 SECTION 1 PROPERTY INFORMATION Tenant Profiles Marion & Polk Schools Credit Union Following the passage of the Federal Credit Union Act, Salem Public School Teachers Credit Union was founded November 18, 1935, and the first annual meeting was held December 4 that same year. Each of the 17 members present paid $5 for one share in the credit union, a minimum share deposit requirement that is still in place today. With rapidly expanding membership, Marion-Polk Teachers Credit Union moved several times from 1935 to By 1976, membership reached 6,166 and the Board approved a third name change in July 1976 through a Name Your Credit Union contest. Marion & Polk Schools Credit Union more precisely described the growing field of membership. In 1977 alone, 1000 members joined and office space again became inadequate.the Board of Directors began plans to construct a new building at 1900 Hines Street SE. In December 1977, ground was broken for a new 26,000 square foot building. The branch opened in November 1978 and remains a vital part of our branch structure today. TENANT HIGHLIGHTS MaPS enjoys a fantastic reputation in the markets it serves, actively participates in the Salem Area Chamber of Commerce, SEDCOR and sponsors many community events. MaPS also has branches in many local high schools and provides financial education in our community. Original building owner Current t lease through 8/31/2019 6

7 SECTION 1 PROPERTY INFORMATION Tenant Profiles Keller Williams Capital City Keller Williams Capital City is one of four Oregon KW franchises owned by Craig Reger and Chris Suarez. Their Oregon offices average 200 agents per location and the three seasoned locations rank in the top 10 in Oregon for all residential real estate brands. In addition to working for KW International as the regional director for Northern California and Hawaii-granting franchises for that region, Craig is the Operating Principal in Salem. Chris, his business partner in Salem, is the CEO of the PDX Property Group at Keller Williams in Portland, a highly-specialized, top producing team in the metro-area market. Both Craig and Chris have demonstrated the ability to generate business and find success selling real estate and they hope to bring that level of business acumen to the agents at KWCC. TENANT HIGHLIGHTS Brand new five year r lease ROFR on any current t or new vacancy Over 45 agents 7

8 SECTION 1 PROPERTY INFORMATION Additional Photos 8

9 SECTION 1 PROPERTY INFORMATION Tenant Profiles The Healing Den Of Salem Welcome to The Healing Den of Salem where we are committed to helping you heal and rejuvenate your body, mind, and skin using the latest advances in LED Light Therapy in a soothing environment. This technology is not new and has been featured on the Extra show to give your body proven pain relief as well as providing amazing benefits for skin improvement and anti-aging. As the newest tenant at 1940 Hines Street SE, in Salem, Oregon, we feature the area s only State of the Art New Aura LED Light Therapy Bed. This bed is designed for treatment of your entire body and face, unlike some of the high end spas that only treat one area for less time and at a higher cost. Our goal is simple to make it a relaxing, rejuvenating experience with your health and best interests in mind.in each session, you will experience not only the light therapy but the benefits of the Himalayan Salt Lamp and the sounds of pure vibration therapy. Proven research has now found that these three components combined have not only improved the body's ability to free itself from pain, but improved skin clarity and anti-aging. 9

10 SECTION 1 PROPERTY INFORMATION Additional Photos 10

11 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR LOCATION INFORMATION

12 SECTION 2 LOCATION INFORMATION Location Maps 12

13 SECTION 2 LOCATION INFORMATION Satellite Map 13

14 SECTION 2 LOCATION INFORMATION Floor Plans 14

15 SECTION 2 LOCATION INFORMATION Floor Plans 15

16 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR FINANCIAL ANALYSIS

17 SECTION 3 FINANCIAL ANALYSIS Financial Summary INVESTMENT OVERVIEWVIEW PROFORMA Price $5,400,000 Price per SF $ CAP Rate 8.1% Cash-on-Cash Return (yr 1) % Total Return (yr 1) $285,044 Debt Coverage Ratio 1.82 OPERATING DATA PROFORMA Gross Scheduled Income $479,529 Other Income $75,260 Total Scheduled Income $554,789 Vacancy Cost $23,976 Gross Income $554,789 Operating Expenses $120,180 Net Operating Income $434,609 Pre-Tax Cash Flow $195,182 FINANCING DATA PROFORMA Down Payment $1,620,000 Loan Amount $3,780,000 Debt Service $239,427 Debt Service Monthly $19,952 Principal Reduction (yr 1) $89,862 Financing shown based on a 25 year amortization with 25% down payment. 17

18 SECTION 3 FINANCIAL ANALYSIS Income & Expenses INCOME SUMMARY PROFORMAORMA Potential Rental Income $479,529 Reimbursed TIA $75,260 GROSS INCOME $554,789 EXPENSE SUMMARY PROFORMAORMA Property Taxes $40,539 Insurance (hazard and flood) $3,341 Utilities $53,000 Janitorial $4,400 Repairs and Maintenance $3,000 Landscaping $3,600 Management (3%) $12,300 GROSS EXPENSES $120,180 NET OPERATING INCOME $434,609 18

19 SECTION 3 FINANCIAL ANALYSIS Rent Roll TENANT NAME UNIT NUMBER UNIT SIZE (SF) LEASE END ANNUALAL RENT % OF BUILDING Design Point 140 2,093 6/30/2017 $30, MaPS Credit Union 100 8,195 8/31/2019 $164, Grace and Truth Ministries Bsmt 4,600 4/30/2017 $26, Healing Den 110 1,148 2/1/2019 $27, Keller Williams Capital City 2nd Floor 8,026 12/31/2020 $139, Z-Vantage 190 1,493 8/31/2018 $27, Vacant ,237 $63, Healing Den TI Reimbursement 1 2/1/2019 $25, KW Capital City TI Reimbursement 1 12/31/2020 $50, Totals/Averages 29,794 $554,789 MaPS rent set to increase by CPI on September 1, KWCC rent shown is averaged over remaining term due to lower starting effective rent. 19

20 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR DEMOGRAPHICS

21 SECTION 4 DEMOGRAPHICS Demographics Report 1 MILE 5 MILES 10 MILES Total households 4,305 90, ,868 Total persons per hh Average hh income $43,886 $54,980 $59,229 Average house value $163,984 $208,282 $226,240 1 MILE 5 MILES 10 MILES Total population 9, , ,072 Median age Median age (male) Median age (female) * Demographic data derived from 2010 US Census 21

22 SECTION 4 DEMOGRAPHICS Demographics Map 1 Mile 5 Miles 10 Miles Total Population 9, , ,072 Population Density 3,168 3,079 1,079 Median Age Median Age (Male) Median Age (Female) Total Households 4,305 90, ,868 # of Persons Per HH Average HH Income $43,886 $54,980 $59,229 Average House Value $163,984 $208,282 $226,240 * Demographic data derived from 2010 US Census 22

23 FOR SALE OFFICE NNN LEASED OFFICE INVESTMENT - SALEM, OREGON 1900 Hines Street SE Salem, OR ADDITIONAL INFORMATION

24 SECTION 5 ADDITIONAL INFORMATION Additional Photos 24

25 SECTION 5 ADDITIONAL INFORMATION Additional Photos 25

26 SECTION 5 ADDITIONAL INFORMATION City Information Salem, OR Salem is the capital of the U.S. state of Oregon, and the county seat of Marion County. It is located in the center of the Willamette Valley alongside the Willamette River, which runs north through the city. The river forms the boundary between Marion and Polk counties, and the city neighborhood of West Salem is in Polk County. Salem was founded in 1842, became the capital of the Oregon Territory in 1851, and was incorporated in Salem had a estimated population of 160,614 in 2013, making it the second largest city in the state behind Portland. Salem is less than an hour driving distance away from Portland. Salem is the principal city of the Salem Metropolitan Statistical Area, a metropolitan area that covers Marion and Polk counties and had a combined population of 390,738 at the 2010 census. A 2013 estimate placed the metropolitan population at 400,408, the state's second largest. City Highlights 4/2015 Unemployment Rate of 5.5% Top Employers: State of Oregon, Salem-Keizer School Districe and Salem Health The city is home to Willamette University, Corban University, and Chemeketa Community College. The State of Oregon is the largest public employer in the city, and Salem Health is the largest private employer. Transportation includes public transit from Salem-Keizer Transit,Amtrak service, and non-commercial air travel at McNary Field. Major roads include Interstate 5, Oregon Route 99E, and Oregon Route 22, which connects West Salem across the Willamette River via the Marion Street and Center Street bridges. 26

27 INITIAL AGENCY DISCLOSURE PAMPHLET - INFORMATION FOR REAL ESTATE BROKERS AND PRINCIPAL BROKERS A licensed real estate broker or principal real estate broker is required to give a copy of an Initial Agency Disclosure Pamphlet to each consumer the broker will represent. The pamphlet describes the legal relationship between a broker and the consumer when the broker acts as the consumer s agent. Real estate brokers and principal real estate brokers have legal obligations, called affirmative duties, to both buyers and sellers in a real estate transaction. Oregon Revised Statute (ORS) lists the affirmative duties of a licensed real estate broker or principal real estate broker acting as a seller s agent. The affirmative duties of a broker or principal broker acting as a buyer s agent are found in ORS ORS (1) allows a real estate licensee to represent both the seller and the buyer in a real estate transaction under a disclosed limited agency agreement, provided there is full disclosure of the relationship under the agreement. Oregon Administrative Rules (OAR), adopted by the Oregon Real Estate Agency, provide the form and content of the disclosures and the related pamphlet. OAR is set forth below for the convenience of licensees. The Agency has provided a sample Initial Agency Disclosure Pamphlet after the broken line that meets the requirements of OAR Initial Agency Disclosure Pamphlet (1) For purposes of this rule, at first contact means at the time the agent has sufficient contact information about a person to be able to provide an initial agency disclosure pamphlet to that person. Contact with a person includes, but is not limited to contacts in person, by telephone, over the Internet, by electronic mail, or by similar methods. (2) An agent shall provide a copy of the initial agency disclosure pamphlet, which complies with section (5) of this rule, at first contact with: (a) A prospective party to a real property transaction; or (b) An unrepresented party seeking representation during the course of a real property transaction. (3) An agent must provide the initial agency disclosure pamphlet in a written format by electronic mail, over the Internet, by USPS mail, facsimile, hand delivery or similar delivery method. (4) An agent need not provide a copy of the initial agency disclosure pamphlet to a party who has, or may be reasonably assumed to have, received a copy of the pamphlet from another agent. (5) The initial agency disclosure pamphlet must contain: (a) The following information, directed to the consumer: (A) A licensed real estate broker or principal broker must give a copy of the initial agency disclosure pamphlet at first contact with a prospective party to a real property transaction or at first contact with an unrepresented party seeking representation during the course of a real property transaction. (B) A licensed real estate broker or principal broker need not provide a copy of the initial agency disclosure pamphlet to a party who has, or may be reasonably assumed to have, received a copy of the pamphlet from another broker. (C) The pamphlet describes the legal relationship between a broker and a consumer when the broker acts as the consumer s agent; and (D) The pamphlet is informational only and may not be construed to be evidence of intent to create an agency relationship, as provided in ORS (b) A general definition of an agency relationship and the three real estate agency relationships of seller s agent, a buyer s agent and a disclosed limited agent. (c) The definition of confidential information in ORS (d) The affirmative duties and responsibilities of a seller s agent under ORS (e) The affirmative duties and responsibilities of a buyer s agent under ORS (f) The affirmative duties and responsibilities of a disclosed limited agent who represents both the buyer and the seller in a transaction under ORS (g) The following statement to the consumer, Whether you are a buyer or seller, you cannot make a licensee your agent without the licensee s knowledge and consent, and an agent cannot make you a client without your knowledge and consent. (6) The Real Estate Agency will make available a sample of an initial agency disclosure pamphlet that complies with section (5) of this rule on the Agency s website SAMPLE INITIAL AGENCY DISCLOSURE PAMPHLET Consumers: This pamphlet describes the legal obligations of Oregon real estate licensees to consumers. Real estate brokers and principal real estate brokers are required to provide this information to you when they first contact you. A licensed real estate broker or principal broker need not provide the pamphlet to a party who has, or may be reasonably assumed to have, received a copy of the pamphlet from another broker. This pamphlet is informational only. Neither the pamphlet nor its delivery to you may be interpreted as evidence of intent to create an agency relationship between you and a broker or a principal broker. Real Estate Agency Relationships An agency relationship is a voluntary legal relationship in which a licensed real estate broker or principal broker (the agent ) agrees to act on behalf of a buyer or a seller (the client ) in a real estate transaction. Oregon law provides for three types of agency relationships between real estate agents and their clients: Seller s Agent -- Represents the seller only. Buyer s Agent -- Represents the buyer only. Disclosed Limited Agent -- Represents both the buyer and seller, or multiple buyers who want to purchase the same property. This can be done only with the written permission of all clients. The actual agency relationships between the seller, buyer and their agents in a real estate transaction must be acknowledged at the time an offer to purchase is made. Please read this pamphlet carefully before entering into an agency relationship with a real estate agent. Definition of Confidential Information Generally, licensees must maintain confidential information about their clients. Confidential information is information communicated to a real estate licensee or the licensee s agent by the buyer or seller of one to four residential units regarding the real property transaction, including but not limited to price, terms, financial qualifications or motivation to buy or sell. Confidential information does not mean information that: (1) The buyer instructs the licensee or the licensee s agent to disclose about the buyer to the seller, or the seller instructs the licensee or the licensee s agent to disclose about the seller to the buyer; and (2) The licensee or the licensee s agent knows or should know failure to disclose would constitute fraudulent representation. Duties and Responsibilities of a Seller s Agent Under a written listing agreement to sell property, an agent represents only the seller unless the seller agrees in writing to allow the agent to also represent the buyer. An agent who represents only the seller owes the following affirmative duties to the seller, the other parties and the other parties agents involved in a real estate transaction: (1) To deal honestly and in good faith; (2) To present all written offers, notices and other communications to and from the parties in a timely manner without regard to whether the property is subject to a contract for sale or the buyer is already a party to a contract to purchase; and (3) To disclose material facts known by the agent and not apparent or readily ascertainable to a party. A seller s agent owes the seller the following affirmative duties: (1) To exercise reasonable care and diligence; (2) To account in a timely manner for money and property received from or on behalf of the seller; (3) To be loyal to the seller by not taking action that is adverse or detrimental to the seller s interest in a transaction; (4) To disclose in a timely manner to the seller any conflict of interest, existing or contemplated; (5) To advise the seller to seek expert advice on matters related to the transaction that are beyond the agent s expertise; (6) To maintain confidential information from or about the seller except under subpoena or court order, even after termination of the agency relationship; and (7) Unless agreed otherwise in writing, to make a continuous, good faith effort to find a buyer for the property, except that a seller s agent is not required to seek additional offers to purchase the property while the property is subject to a contract for sale. None of these affirmative duties of an agent may be waived, except (7). The affirmative duty listed in (7) can only be waived by written agreement between seller and agent. Under Oregon law, a seller s agent may show properties owned by another seller to a prospective buyer and may list competing properties for sale without breaching any affirmative duty to the seller. Unless agreed to in writing, an agent has no duty to investigate matters that are outside the scope of the agent s expertise, including but not limited to investigation of the condition of property, the legal status of the title or the seller s past conformance with law. Duties and Responsibilities of a Buyer s Agent An agent, other than the seller s agent, may agree to act as the buyer s agent only. The buyer s agent is not representing the seller, even if the buyer s agent is receiving compensation for services rendered, either in full or in part, from the seller or through the seller s agent. An agent who represents only the buyer owes the following affirmative duties to the buyer, the other parties and the other parties agents involved in a real estate transaction: (1) To deal honestly and in good faith; (2) To present all written offers, notices and other communications to and from the parties in a timely manner without regard to whether the property is subject to a contract for sale or the buyer is already a party to a contract to purchase; and (3) To disclose material facts known by the agent and not apparent or readily ascertainable to a party. A buyer s agent owes the buyer the following affirmative duties: (1) To exercise reasonable care and diligence; (2) To account in a timely manner for money and property received from or on behalf of the buyer; (3) To be loyal to the buyer by not taking action that is adverse or detrimental to the buyer s interest in a transaction; (4) To disclose in a timely manner to the buyer any conflict of interest, existing or contemplated; (5) To advise the buyer to seek expert advice on matters related to the transaction that are beyond the agent s expertise; (6) To maintain confidential information from or about the buyer except under subpoena or court order, even after termination of the agency relationship; and (7) Unless agreed otherwise in writing, to make a continuous, good faith effort to find property for the buyer, except that a buyer s agent is not required to seek additional properties for the buyer while the buyer is subject to a contract for purchase. None of these affirmative duties of an agent may be waived, except (7). The affirmative duty listed in (7) can only be waived by written agreement between buyer and agent. Under Oregon law, a buyer s agent may show properties in which the buyer is interested to other prospective buyers without breaching an affirmative duty to the buyer. Unless agreed to in writing, an agent has no duty to investigate matters that are outside the scope of the agent s expertise, including but not limited to investigation of the condition of property, the legal status of the title or the seller s past conformance with law. Duties and Responsibilities of an Agent Who Represents More than One Client in a Transaction One agent may represent both the seller and the buyer in the same transaction, or multiple buyers who want to purchase the same property, only under a written Disclosed Limited Agency Agreement signed by the seller and buyer(s). Disclosed Limited Agents have the following duties to their clients: (1) To the seller, the duties listed above for a seller s agent; (2) To the buyer, the duties listed above for a buyer s agent; and (3) To both buyer and seller, except with express written permission of the respective person, the duty not to disclose to the other person: (a) That the seller will accept a price lower or terms less favorable than the listing price or terms; (b) That the buyer will pay a price greater or terms more favorable than the offering price or terms; or (c) Confidential information as defined above. Unless agreed to in writing, an agent has no duty to investigate matters that are outside the scope of the agent s expertise. When different agents associated with the same principal broker (a real estate licensee who supervises other agents) establish agency relationships with different parties to the same transaction, only the principal broker will act as a Disclosed Limited Agent for both the buyer and seller. The other agents continue to represent only the party with whom the agents have already established an agency relationship unless all parties agree otherwise in writing. The principal real estate broker and the real estate licensees representing either seller or buyer shall owe the following duties to the seller and buyer: (1) To disclose a conflict of interest in writing to all parties; (2) To take no action that is adverse or detrimental to either party s interest in the transaction; and (3) To obey the lawful instructions of both parties. No matter whom they represent, an agent must disclose information the agent knows or should know that failure to disclose would constitute fraudulent misrepresentation. You are encouraged to discuss the above information with the licensee delivering this pamphlet to you. If you intend for that licensee, or any other Oregon real estate licensee, to represent you as a Seller s Agent, Buyer s Agent, or Disclosed Limited Agent, you should have a specific discussion with the agent about the nature and scope of the agency relationship. Whether you are a buyer or seller, you cannot make a licensee your agent without the licensee s knowledge and consent, and an agent cannot make you a client without your knowledge and consent. Revised 9/9/2013