Oregon Multifamily Buy During COVID Requires Conservative Projections

GRESHAM, OR—Los Angeles-based Gelt Inc., a real estate investment and asset management firm, purchased the 228-unit Powell Valley Apartment Homes approximately four years ago. In its second Gresham buy, Gelt recently acquired Silverwood Apartments, a 164-unit property located at 4777 SW 11th St. for $30 million.

“Acquiring Silverwood Apartments during the COVID-19 crisis required us to be much more conservative with our projections for this asset,” said Jeff Harris, partner with Gelt. “However, as a function of the good basis we bought the property for, a strategic business plan to capture significant value-add upside and a desirable interest rate, we were able to forecast overall returns that met our desired yield requirements.”

During the next few years, Gelt plans on making upgrades to the unit interiors to include new vinyl plank flooring, stainless steel appliances, new cabinet faces, backsplash, ceiling fans and other cosmetic improvements. The firm will also rebrand the asset, create new signage, paint the exterior of the building, and refresh the pool and playground areas.

Built in 1991, the garden-style community is situated on slightly less than 9 acres and includes 32 buildings. It is comprised of 159 two-bedroom units, three one-bedroom units and two three-bedroom units. The property features a pool, playground, walking/biking trails and a picnic area.

​“We are cautiously navigating this new economic environment, but we continue to have confidence in favorable multifamily fundamentals over the long term in markets with job and population growth,” said Josh Satin, director of acquisitions with Gelt. “Over the next 12 months we are looking to acquire $250 million in assets.”

Tyler Johnson, Rob Marton and Greg Frick of HFO represented Gelt, as well as the seller, a private individual who owned the property for more than 25 years.

“This property represents a rare 100% value-add opportunity in the highly desirable Gresham market,” said Johnson.

Bordering the eastern edge of Portland, Gresham is Oregon’s fourth-largest city and has a growing population of more than 110,500. The greater Portland area has a well-educated and skilled workforce, affordable high quality of life and a low cost of doing business. It 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.

“Gelt is seeking out opportunities to grow our multifamily portfolio in the Portland area in addition to other major Western US markets,” Harris tells GlobeSt.com. “Prior to the COVID-19 crisis, a significant portion of the Millennial demographic was choosing to delay homeownership. Now even more, we see this trend continuing, given these uncertain times. With all that being said, we anticipate strong renter demand continuing in this sector and are committed to enhancing suburban communities that will attract residents seeking quality living in an amenity-rich environment.”

Sizable price reductions in West region markets are taking down US rent production as a whole, as significantly negative figures also register in the Bay Area metros, most of Southern California and Portland, according to a study by RealPage.