A 52-unit multi-family property in Tigard has sold for $10.85 million.

“T��� sale of York (Apartments) is the third disposition in a group of garden-style apartment properties that we acquired in the Portland region in 2019,” Max Sharkansky, managing partner at Trion Properties, stated in a news release. “When factored together, the sale of the three-asset portfolio generated an (Internal Rate of Return) of more than 29 percent.”

The other assets in the portfolio—The Parker and Aster Parc Townhomes—sold in May and July of 2022, respectively.

HFO Investment Real Estate handled the transaction. Rob Marton, partner, represented Trion in the sale, and Greg Frick, co-founder and partner, managed the process for the purchaser of the property. According to Washington County public records, the buyer is identified as 7580-7582 SW Hunziker St. Holdings LLC.

York Apartments is a 52-unit garden-style apartment complex with three studio units, 48 two-bedroom, one-bath units; and one four-bedroom, two-bathroom unit. The property is at 7582 SW Hunziker St. in Tigard.

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Seattle-based Security Properties has purchased the 168-unit Sienna Pointe Apartments in Bend for $49.5 million.

Portland-based commercial real estate brokerage firm HFO Investment Real Estate represented the seller, Bend Housing LLC, in the transaction.

The class B, low-density asset was built in 1991 and recently updated, according to HFO. Sienna Pointe is located at 1855 N.E. Lotus Drive, between Pilot Butte Neighborhood Park and St. Charles Medical Center.

HFO partner Rob Marton represented Bend Housing LLC, in the sale.

HFO previously brokered the sale of the property in 2016 for $23.75 million ($141,369 per unit). That was the highest per-unit sale price of a property in Bend at that time.

Nick Santangelo of CBRE Capital Markets’ Debt and Structured Finance in Portland secured $31.4 million in financing — a seven-year, fixed-rate, full-term, interest-only loan through CBRE Multifamily Capital — for Security Properties.

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A 52-unit apartment complex in Vancouver, Washington, recently was purchased for $11.46 million, brokerage HFO Investment Real Estate announced on Monday.

Core Properties West of Seattle bought Van Mall North, which is located at 9009 N.E. 54th St. The seller was Guardian Real Estate Services. Both parties were represented by HFO, a Portland-based brokerage.

Core Properties West had not previously invested in the Portland-Vancouver metro area, HFO stated.

“Investor demand for Vancouver apartments remains very high, especially considering the impacts of the ongoing pandemic on tenants,” HFO partner Tyler Johnson stated in a news release.

The property, completed in 1996, consists of one-, two- and three-bedroom units with an average size of 1,200 square feet. More than 75 percent of the units were updated prior to the sale, HFO stated.

Van Mall North was brought to market in June, when an eviction ban had been put in place by Washington Gov. Jay Inslee.

HFO’s Tyler Johnson, Rob Marton and Greg Frick represented the parties in the transaction.

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Oregon landlords filed a federal lawsuit late Monday seeking to strike down state and local eviction moratoriums, charging that the restrictions violate their constitutional rights.

The lawsuit was filed in U.S. District Court in Portland in the immediate aftermath of the Legislature’s approval of an extension of the statewide eviction moratorium.

Some landlords have not received rent payments since March, and large landlords have seen their revenues reduced. The latest state bill extends the ban on evictions until June 30, 2021.

John DiLorenzo, a Davis Wright Tremaine attorney who filed the lawsuit, said state leaders should deliver aid for landlords.

“What we really prefer is the alternative relief, and that is a proposal by the state as to how they’re going to compensate housing providers for serving as social service providers,” he said.

The property owners may be willing to consider dropping the lawsuit if lawmakers can loosen the purse strings for landlords, DiLorenzo said.

“We’ll look at it,” he said. “We’ll look at anything they’re willing to do.”

The lawsuit seeks to prohibit Gov. Kate Brown from enforcing the moratorium, and strike down the eviction ban as unconstitutional. It names Brown, Multnomah County and the city of Portland as defendants.

Brown, in a press conference on Tuesday, said stable housing is crucial during the COVID-19 crisis.

“No one should be turned out of their home or rental during a pandemic,” she said.

Eviction is a core issue for tenants’ rights activists, who have scored a string of political victories in recent years.

“We know the COVID-19 pandemic is only worsened by evictions at this time, and the stories we are hearing from tenants make it clear the financial struggles and harassment they are facing are not going to resolve themselves,” Kim McCarty, executive director of Community Alliance of Tenants, stated via email. “Right now, eviction is a public-health issue. This is another frivolous lawsuit from special interests that undermines the public good.”

Landlords are feeling more pain now than during the spring, said Greg Frick, a partner at HFO Investment Real Estate in Portland. He is not a party to the lawsuit.

“It’s getting progressively worse,” he said. “It depends on the project. Some property owners are 25-30 percent in arrears. We have others who are doing better.”

The lawsuit comes from individual landlords and is backed by the industry group More Housing Now.

One plaintiff, Moe Farhoud, owns about 1,200 rental units in Oregon, including in Portland and Multnomah County. His tenants owe more than $1 million in back rent, the lawsuit alleges.

Brown issued the first statewide eviction moratorium on March 22. A June bill extended and streamlined eviction moratoriums statewide after Multnomah County and Portland enacted their own bans.

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Multifamily building owners are watching and waiting to see if normal market conditions hold up amid a surge of unemployment during the coronavirus crisis.

So far, so good. The number of tenants missing April’s rent payment was fewer than many landlords had feared, brokers said.

Kidder Mathews recently conducted a survey covering nearly 400 properties totaling more than 10,000 apartments, mostly in the Portland-metro area. The survey results, which have not yet been released, found only about 9.5 percent of tenants failed to pay rent for April, said Clay Newton, executive vice president for Kidder Mathews in Portland.

HFO Investment Real Estate has also researched nonpayment rates and found similar data. Most properties in April had 8 percent to 15 percent renter nonpayment rates, said Greg Frick, partner at the Portland brokerage. The rate of tenants not paying seemed to vary widely by building, he said.

“Some buildings were lower, (but) we had some buildings that were 25, 30 percent,” Frick said. “We’re trying to figure out what’s driving that. Is it location? Is it demographic? It seems like it’s all over the map.”

Most landlords are in a position to take a financial hit for a month, brokers said. But it could be a much bigger issue if a larger percentage of renters – 30 or 40 percent – cannot pay their May rents.

“Everybody’s kind of bracing for what’s May going to look like,” Frick said.

Unemployment has surged in Oregon and around the nation since much of the service industry shut down in mid-March to slow the spread of COVID-19. Oregonians have filed 297,000 initial jobless claims since mid-March, according to the Oregon Employment Department. Before the crisis began, claims were running at about 5,000 a week.

Oregon’s 3.3 percent unemployment rate for March is expected to shoot much higher.

Landlords are working with tenants – in some cases reducing rents. Frick said he’s asking landlords: “Have you thought about where your break-even is as far as expenses?”

“It’s about how do I operate now in this new world we live in and be able to do what we need to do,” he said.

Deals for multifamily properties are still going through, but lenders are increasingly cautious, Newton said.

“It looks different now,” he said. “Buyers and sellers are trying to figure out how to make (deals) work if they can. We’ve seen some of those transactions go away. We’ve seen some of those transactions be renegotiated.”

Some banks say they’re focused on small-business loans and don’t have the bandwidth to underwrite property transactions right now, Newton said. Others are asking for larger down payments or requiring greater holdbacks on commercial loans.

“We haven’t seen a lot of canceling loans,” he said. “What we have seen is moving the terms of the loans to places where it might not be tolerable (for borrowers).”

Frick said he’s advising multifamily buyers and sellers to hold tight if they can.

“We’re waiting to see what the capital markets do,” he said. “You’re better off waiting 30 days (and) seeing what shakes out.”

There are no signs of panic among building owners yet, Frick said.

“We’re not hearing of fire sales or anything like that,” he said.

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Multifamily brokers are tracking a downturn in sales volume in the Portland-metro area to see if it’s merely a dip from the historic highs of last year, or the portentous start of a more serious downturn.

Multifamily sales volume in the city of Portland fell 14.7 percent for the year through May to $82.3 million, according to RMLS, a listing service. In the wider, five-county Portland-metro area, sales were down 9.7 percent to $123.5 million.

“T���re seems to be a little bit of a slowdown,” said Greg Frick, a partner at HFO Investment Real Estate.

The multifamily landscape has changed dramatically in the past year. Regulatory changes in Portland and statewide have brought rent caps and tenant protections that limit evictions. Also, state legislators passed a bill that enables developers to build duplexes, triplexes and other middle housing types throughout residential zones in Oregon cities.

Meanwhile, thousands of multifamily units have come to market. Some leasing agents have offered concessions such as a month’s free rent for new tenants to help stabilize the properties.

Rents have flatlined. June marked the third consecutive month of declining average rents in Portland, according to Apartment List. Rents slipped 0.1 percent from May, but were still up 0.4 percent compared to a year previous.

In contrast, the nine other Oregon cities tracked by Apartment List saw rent increases.

Investors may be reacting to a flood of similar apartment buildings on the market, brokers said.

“Right now, probably the toughest thing to move is new construction under 60 to 70 units in the city of Portland,” said Steve Morris, principal broker at SMI Commercial Real Estate. “T���re’s just a lot of that out there.”

Meanwhile, rents and corresponding multifamily sale prices have grown so much in recent years that there’s a sense there isn’t much room for growth remaining in this economic cycle.

“Portland pricing has come pretty far, pretty fast, and people are wondering what the upside is going to be,” Morris said.

Portland should see more sales as new buildings stabilize, or reach nearly full occupancy, Frick said. The first quarter tends to be slow, and newly opened buildings will push some sales into fall or winter as tenants move in and make the buildings attractive to buyers, he said.

“I think we’ll see velocity pick up,” he said.

Tertiary markets outside of the metro area, including Salem and Corvallis, are doing well, brokers said. Camas, Washington, had the metro area’s largest multifamily sale in the first quarter, with Trio Pointe, a 240-unit building, going to Goldman Sachs for $58 million, or $232 per square foot, according to Rider Levett Bucknall.

Regulations have changed the formula for some multifamily investments. Gov. Kate Brown in February signed a bill that caps rent increases at 7 percent plus inflation annually. The law has an exception for buildings younger than 15 years old. That has made flips of older multifamily properties less attractive for investors, brokers said.

Still, investors have money to spend for the right opportunity.

“On the investment side, there’s still a lot of capital looking for yield,” Frick said.

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Multifamily investors are looking anew at underserved midsize markets in the Willamette Valley.

In Salem and Corvallis, in particular, strong rent growth, low vacancy rates and growing populations are driving sales of multifamily properties and some sizable new development projects.

It’s a natural outgrowth of the long economic expansion, said Greg Frick, co-founder and partner of Portland brokerage HFO Investment Real Estate. Portland and Eugene saw waves of multifamily investment in recent years. Now, it’s smaller cities’ turn to attract capital.

“Investment dollars are really trying to get down there,” said Frick, who added that he frequently hears from investors interested in the mid-Willamette Valley.” You’re just seeing capital looking for investments and having to expand their horizons.”

Two major multifamily projects are under construction in Corvallis, where Oregon State University has driven growth. Enrollment at OSU reached 30,986 in fall 2018, up from 20,320 students a decade earlier.

Gilbane Development, based in Rhode Island, is building a 228-unit multifamily complex called Sierra next to the campus. The project is in a mixed-use industrial zone, and includes small storage structures to satisfy zoning requirements. The site, known as Washington Yards, was home to a feed store and a fruit company.

“T���y had to have a minimum square footage of industrial use, which they satisfied with those (storage units),” said Jared Voice, a senior planner with the city of Corvallis.

Construction of Sierra began recently.

Gilbane Development Director Andrew Ang said he was not authorized to speak on behalf of the company.

The other large project under construction in Corvallis is Witham Oaks from Corvue Holdings, a Chicago-based developer. The 292-unit complex is also student-focused; it’s scheduled to open in the fall, Voice said. Townhomes would follow in a second phase.

Otak Inc. of Portland designed the Witham Oaks master plan and also provided project management, civil engineering and landscape architecture services. The public improvements have been completed, and construction of the residential buildings is under way.

“It’s really going up quick,” said Brian Fleener, Otak’s director of architecture.

Witham Oaks comprises 29 buildings. Units have four bedrooms each. Every bedroom has its own bathroom, but the four units share a kitchen and living room.

Corvue took over the development from Campus Crest after buying several of the latter company’s properties.

Corvue did not respond to messages seeking comment.

A proposal from a local group to build a 125-unit multifamily development in the Timberhill area of Northwest Corvallis has not moved forward.

Deals in Corvallis typically show strong occupancy rates and rent growth, but survey data on the city’s multifamily market is scarce, Frick said.

Corvallis has historically had a high barrier of entry for new construction, with annexations requiring voters’ approval since 1977, according to the Corvallis Gazette-Times. A state law limiting cities’ ability to vote on annexations was challenged by Corvallis and Philomath, and the Oregon Court of Appeals is expected to issue a ruling in the case in coming weeks.

In Salem, vacancy rates have hovered near 4 percent with 4 percent annual rent growth, according to Multifamily NW‘s fall 2018 report. The trade group for landlords will release its spring 2019 report on Monday.

Prices show some appetite for new multifamily product in Salem. A newly built 56-unit apartment building in Salem sold for $166,071 per unit last year. On average, Salem multifamily buildings sold for $95,426 per unit.

More supply is coming. Koz Development of Snohomish, Washington, plans to build a 146-unit multifamily project at 260 State St., a vacant lot in downtown Salem. The building will have small, affordable rental units targeted at 20-somethings.

The project is in the late stages of development, and the team is on track to break ground in late May or early June, said Cathy Reines, Koz’s president and CEO.

The project is backed by local capital investors in Salem, Reines said.

Koz had initially considered a small grocery store as a possible use for the building’s ground-floor retail space, but the developers are reconsidering that concept, Reines said. The average age of tenants in Koz buildings is 26.

“As we’ve talked to younger residents, they’re ordering their groceries online and having them delivered,” Reines said. “We’re starting to challenge ourselves whether a market makes sense given who we believe the resident will be.”

Investors have taken notice of signs of life in downtown Salem, including projects to revitalize historic buildings and the pending purchase of the former Nordstrom building. The department store closed in April 2018.

“It just seems to be more vibrant than it has been historically,” Frick said of Salem. “And I think you’re seeing that across the board with some of these tertiary markets.”

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Commissioner Jo Ann Hardesty has ordered Portland Fire & Rescue to delay enforcing a requirement for unreinforced masonry buildings to display a warning placard.

Hardesty, who oversees the fire bureau, announced the move Thursday.

“No one is interested in putting our residents at risk, but we need to look at ways to better support businesses and nonprofits in seismically upgrading their buildings,” Hardesty said in a prepared statement. “A placard is a Band-Aid for a much larger problem. Until we have better support in place, especially in the form of funding assistance for these projects, I want placarding enforcement on hold for businesses and nonprofit organizations.”

Multifamily property owners and leaders of many of Portland’s historically black churches had criticized the ordinance, saying it does nothing to help them perform seismic retrofits. Such projects can cost millions of dollars for large buildings.

The placarding requirement is scheduled to take effect March 1 for commercial businesses. Nonprofit groups have until November 2020.

Hardesty’s order puts on hold a major policy initiative of Mayor Ted Wheeler. In a prepared statement issued Friday, he noted the requirement remains on the books.

“I stand by City Council’s decision to pass an ordinance requiring the placement of placarding on unreinforced masonry buildings,” Wheeler stated. “We voted to take a small but important step to be transparent about identifying buildings that are at risk in an earthquake. These signs share basic information to the public about the safety of a building.”

Wheeler noted “the requirement to put earthquake warning signs is still the law. I will continue to work with Commissioner Hardesty and building owners to ensure the safety of all Portlanders.”

During a heated battle last year, the City Council struggled to settle on a policy that would encourage building owners to seismically strengthen vulnerable buildings. A city inventory identified 1,631 unreinforced masonry buildings, mostly in close-in historic neighborhoods.

Former Commissioner Dan Saltzman and others had pushed for requiring building owners to perform retrofits.

Multifamily landlords have advocated for financial incentives to conduct retrofits. The placarding policy makes little sense as public policy, said Greg Frick, founder and partner at HFO Investment Real Estate.

“It’s an example of the city rushing in with something that looks good that doesn’t solve the problem,” he said.

Geologists have said Western Oregon is overdue for a potentially devastating Cascadia subduction quake. Worldwide, unreinforced masonry buildings have proved to be dangerous in earthquakes.

The text of the required placards reads: “This is an Unreinforced Masonry Building. Unreinforced Masonry Buildings may be unsafe in an event of a Major Earthquake.”

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The 172-unit Binford Garden Townhomes in Portland’s Rose City Park neighborhood has sold for $30.8 million.

HFO Investment Real Estate handled the sale on behalf of both the buyer (an out-of-state investment firm) and the seller (an Oregon-based family). The identities of those parties were not disclosed by HFO; however, public records show the complex has been under the ownership of American Condominium Homes Inc., a corporation registered with the state of Oregon since 1970. State records show that corporation’s registering agent, president and secretary are all members of the Popma family.

Binford Garden Townhomes were built in 1949 at 6905 N.E. Hancock St., near the Rose City Golf Course. Approximately 80 percent of the units are two-story townhomes with an average floor space of roughly 1,050 square feet. The 172 units span 9.7 acres in 18 residential buildings and one common area building.

In a press release, HFO Investment Real Estate said that after 35 years of owner management, it was time to “strategically position the property.

“Some of Binford Garden’s mechanical systems were original with limited updating, and the property was self-managed,” according to HFO.

“This type of property is very rare for the Portland-metro area and the Pacific Northwest,” HFO partner Greg Frick stated. “No land sites of a similar size have been available this close to downtown Portland. A community with a density of seventeen units per acre could never profitably be built today.”

Binford Garden’s landscaping is “particularly remarkable,” Frick added, noting that each apartment features large windows with views of private courtyards.

The new owner plans to renovate the property and then remarket it as more upscale, Frick stated.

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Portland’s City Council is due to consider on Wednesday whether to allocate $400,000 toward creating a citywide rental registration system while also extending protections for renters.

The registration system, once active, could give policymakers unprecedented data on rents, evictions, vacancies and more. It also could lay the groundwork for future housing regulations.

Spending for the registration system is tucked into legislation commissioners will consider that would also make permanent the city’s year-old renter relocation ordinance and eliminate an exemption for landlords who rent only one unit.

City officials said they need better data to tackle the ongoing housing crisis and to gauge whether new policies such as the relocation ordinance are working.

“T���re just is not a lot of data on the rental-level market,” said Michael Cox, spokesman for Mayor Ted Wheeler.

Policymakers have much more data on the single-family housing market, where every home sale and county appraisal is recorded and made publicly available. Data for rentals is often limited to surveys of various qualities.

“We have been asking for this rental registration for a very long time,” said Jamey Duhamel, policy director for Commissioner Chloe Eudaly, who has championed protections for renters. “We’re happy to see it is in development.”

It is not clear what data the registry would collect. That’s to be decided later, and groups such as the city’s Rental Services Commission are likely to weigh in.

“Our office certainly hopes it collects data that includes the rent, that includes copies of the leases, information that allows us to dig a little deeper in the rental market,” Duhamel said.

Skeptics of the City Council’s push for housing regulations said it looks like more of the same policies that are likely to restrict housing supply.

“To me, it sounds like the first steps of the city administration looking to implement rent control,” said Gerard Mildner, a Portland State University professor of real estate finance.

Duhamel said rent control isn’t possible until the Oregon Legislature removes a statewide ban. Mildner expressed skepticism that a rental registry would benefit the city.

“Given their inability to fix potholes, given their inability to keep the streets clean, given their inability to manage the homeless problem, what gives them the confidence they can manage a database of rents?” he said.

Mildner even raised the prospect of Metro stepping in, saying the city has essentially reduced the availability of land for housing through its inclusionary housing regulations.

“My feeling at this point is Metro needs to put a stop to this nonsense,” he said. “This policy on the part of the city is really choking off the housing we desperately need.”

The measure to be considered Wednesday would also eliminate an exemption to the relocation ordinance for single-unit landlords. The ordinance requires payment to tenants when they’re forced to move because of a rent increase of 10 percent or more, or are evicted without cause.

Duhamel said the exemption had left an estimated 24,000 tenants without protection from sudden rent increases or eviction.

“It is in fact the single-unit owner who rents to probably the most vulnerable tenants in the city,” she said. “We feel it is an absolute imperative that we remove that exemption.”

Being subject to the relocation ordinance could cause some landlords to give up renting their properties, said Greg Frick, partner at HFO Investment Real Estate.

“It’s going to drive some people out of the rental business, which causes scarcity, which drives rents up,” he said.

John DiLorenzo, a lobbyist for a group that represents landlords, said regulating single-unit landlords would hurt average people saving for their retirements.

“That’s a lot to impose on a person who made the investment to augment their pension security,” he said. “This is not the province of the well-to-do. It’s the province of the person who wants to get ahead. We have an amazing number of postal clerks who have rentals, and the common person who has rentals.”

The City Council is due to consider the relocation ordinance changes at 3 p.m. on Wednesday.

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