Value-Add Community in Seattle

Home , Boeing Renton Factory, Westfield Southcenter

OFFERING MEMORANDUM VALUE-ADD COMMUNITY INSEATTLE MSA Investment Sales Team Financing Team Giovanni Napoli Ray Allen Senior Managing Director First Vice President SEATTLE OFFICE SEATTLE OFFICE Office: 206.826.5675 Office: 206.826.5678 Cell: 206.214.8715 Cell: 206.890.6853 [email protected] [email protected] Philip Assouad Seth Heikkila Senior Managing Director Vice President SEATTLE OFFICE SEATTLE OFFICE Office: 206.826.5676 Office: 206.826.5680 Cell: 206.941.4400 Cell: 206.854.9083 [email protected] [email protected] Ryan Dinius First Vice President SEATTLE OFFICE Office: 206.826.5674 Cell: 425.623.5616 [email protected] Sidney Warsinske Vice President SEATTLE OFFICE Office: 206.826.5672 Cell: 415.233.1289 [email protected]

TerraTukwilaOffering.com TABLE OF CONTENTS

01 EXECUTIVE SUMMARY 02 PROPERTY DESCRIPTION 03 LOCATION OVERVIEW 04 FINANCIAL ANALYSIS 05 COMPARABLES 06 PUGET SOUND OVERVIEW 4

01 EXECUTIVE SUMMARY Parking Ratio Zoning Lot Size Assessor’s Parcel No(s). Residential NRSF Year Built Number ofUnits 6206 S153rdStreet|Tukwila, WA 98188 Terra Tukwila 1 : LDR 140,884 SF(3.23acres) 359700-0341 359700-0346, & 359700-0350, ±51,825 1949 (single-familyresidence) 1966 (24 units) 1980 (30units) 54 +1single-familyresidence

Terra Tukwila is not only well positioned to realize immediate rent THE upside, but the property’s location and differentiating characteristics should benefit an incoming investor for the long term as well. OFFERING Centralized Location: The NW Multifamily Group of Institutional Light Rail, Major Property Advisors has been retained as the exclusive listing team for Terra Tukwila, Employment Hubs a 55-unit multifamily community equally Puget Sound’s largest mall, Westfield Southcenter, is less than one mile accessible to the two most vibrant cities from Terra Tukwila and offers high-end retailers such as Apple, Ben in the Pacific Northwest: Seattle and Bridge Jewelers, Lululemon, Michael Kors, Microsoft, and Nordstrom. Bellevue. The Tukwila Light Rail station is less than two miles from Terra Tukwila, linking passengers from Sea-Tac Airport to downtown Seattle, Capitol Hill, and University of Washington. A bus stop steps from Terra Tukwila Low-maintenance, pride of ownership takes residents to the Light Rail station via the RapidRide bus service. asset in one of the top multifamily By 2023, light rail will have service from Roosevelt, Northgate, and Lyn- investment markets in the nation. nwood to the north and downtown Bellevue and Redmond to the east. Ridership on light rail saw almost 5 million more passengers in 2017 compared to 2016, boasting the largest transit growth in the country. Terra Tukwila is a low-density community consisting of nine sepa- Additionally, the Sounder Commuter Train station is only five minutes rate buildings on over three acres of lush, meticulously maintained from Terra Tukwila with access into downtown Seattle and Tacoma. grounds. All but one building are one and two-story structures. The single-story fourplex buildings front South 153rd Street and feature With direct access to State Routes 99 and 509 as well as Interstates 5 direct-access attached garages. All buildings consist of pitched roofs, and 405, residents can easily travel to the region’s major employment double-pane vinyl windows and private balconies/patios. hubs that include:

Terra Tukwila features spacious floor plans averaging ±929 square feet Boeing’s Renton Factory 5 miles east with 70% of the unit mix consisting of two- and three-bedroom homes. Southport 700,000 SF Class-A office 5 miles east Residents enjoy the property’s tranquil neighborhood and lush setting yet they have the convenience of being close to major regional shop- Downtown Seattle 13 miles north ping, transportation, and employment centers. Downtown Bellevue 13 miles northeast Recently rebranded, The Terra Tukwila Apartments consist of 54 res- Pioneer Square Tech Hub 12 miles north idential units with an additional single-family residence. The Com- Sea-Tac International Airport 4 miles west munity has recently benefitted from significant capital upgrades and now offers an incoming investor proven renovation premiums on a Kent Valley 3 miles south straight-forward value-add investment strategy through management 5 upside and interior renovation potential. There are over 1.2 million jobs in King County which are comprised of Fortune 500 companies such as Alaska Airlines, Amazon, Apple, Boeing, Facebook, Google, Microsoft, Nordstrom, Starbucks, and Weyerhaeuser, all of which are within minutes of Terra Tukwila. In addition, Kent Valley’s 120 million square feet of flex and industrial space make it the nation’s fourth largest industrial hub in the country. Terra Tukwila’s centralized location and multiple transit options provide easy and quick accessibility to these major employers.

Investment Strategy: Value-Add Opportunity

Current ownership has meticulously maintained Terra Tukwila while executing a renovation plan throughout the community. Classic homes feature original wood or European white cabinets with white laminate countertops, white or bisque appliance packages, carpet and vinyl flooring, and wood trim throughout. All homes have been retrofitted with in-unit washer / dryers while the current residents remained in their homes. An incoming investor now has the ability to increase rents for those residents to new market rents reflecting these upgrades. RENOVATED KITCHEN Approximately half of the unit interiors have been renovated with new countertops, white shaker cabinetry and brushed nickel hardware stainless steel appliance packages, upgraded lighting and plumbing fixtures, fresh paint, and vinyl plank flooring throughout. An incoming investor has the opportunity to finish the interior renovations at the property and raise remaining classic rents to market, which have been proven at the property. Suggested interior unit renovations include:

zz Paint existing cabinet boxes white and Install new cabinet faces zz Replace countertops with new solid-surface or quartz countertops zz Add new stainless steel appliances zz Upgrade lighting and plumbing fixtures, install all new six-panel doors zz Upgrade flooring with vinyl plank floors in the wet areas and new plush carpeting in the living areas and bedrooms zz Install USB outlets

Dollars spent on interior unit renovations quickly lead to the bottom line and will allow Terra Tukwila to com- pete with newer construction and recently renovated communities. Similar nearby communities are achiev- ing rental premiums of $200 to $250 per month on renovated homes. Additional upside is available for an 6 incoming investor if they choose to subdivide and the sell the single-family residence separately from the rest CLASSIC KITCHEN of the community as well. In addition to the rental upside and economic drivers, Terra Tukwila’s differentiating characteristics and location will separate itself from competing properties. The Puget Sound region has been experiencing record growth over the past decade and shows little signs of slowing as the technology, e-commerce, and internet industries that have led much of the growth continue to expand. Amazon alone expects to have room to accommodate 85,000 in Seattle and Bellevue by 2023.

As more residents move to the area to fill these high-paying jobs, King County has seen its population increased by 243,435 in the past eight years. Both rental rates and housing prices have risen in sync with the population, driving many to move outside the cities cores and into "first ring" markets, such as Tukwila, which is experiencing better rent and population growth compared to other cities due to its affordability, close proximity to major employment hubs, and multiple mass transit options such as Light Rail and the Sounder Commuter Train.

7 EXECUTIVE HIGHLIGHTS Value-add opportunity with proven renovation strategy

Partially renovated in 2019

Low density garden community with two- and three-story buildings

Buildings include six fourplexes with direct-acces attached garages

Meticulously maintained grounds on over three acres of land

Oversized floorplans averaging ±919 square feet

70% of units are two- and three-bedroom homes

Proven renovation premiums of $200 - $300 per month

In-unit washer/dryers have been added in each home

Recently re-striped parking lot

Ample parking available

Within one mile of Westfield Southcenter; largest mall in the states with numerous shopping, dining, and entertainment options

Within two miles of the Tukwila Light Rail station and Sounder Train Station, linking passengers to downtown Seattle

Within 15 minutes of major employment centers in Seattle and Bellevue CBD’s, Pioneer Square tech hub, Renton, Southport, Seatac, and Kent Valley

8 Value-Add Opportunity with Proven Renovation Premiums 9 Lush landscaping with serene park-like setting Low-density community on over three acres COMMUNITY Pitched roofs and double-pane vinyl windows Wood-burning fireplaces in all homes & APARTMENT Private balconies in select homes In-unit washer / dryers in every unit HOME Ample amount of storage on site

Attached direct-access garage parking available AMENITIES on select homes

10 11 BELLEVUE - OVER 150,000 JOBS SEATTLE CBD - OVER 315,000 JOBS 90

99 MERCER ISLAND LINK LIGHT RAIL

LAKE WASHINGTON World HQ

WEST SEATTLE

World HQ

LINCOLN PARK SOUTHPORT MIXED-USE SOUNDER DEVELOPMENT TRAIN LINE 700,000 SF Class-A PUGET Office Space SOUND

12,000 Jobs SALMON CREEK RAVINE PARK

SEATAC INTERNATIONAL AIRPORT 87,300 direct jobs with average salary of $73,500 RENTON

BURIEN

KENT VALLEY BURIEN TOWN SQUARE 120M SF INDUSTRIAL/ FLEX SPACE 5-Acre Master LINK LIGHT RAIL Planned Community Southcenter Largest Mall in WA

Fulfillment Center: 1M SF 12 DES MOINES CREEK BUSINESS PARK (1.6M SF): FAA, K-2 SPORTS, 490,000 SF AMERISOURCE BERGEN HQ Expansion STRONG REGIONAL EMPLOYERS Downtown Seattle 20 minutes north: over 315,000 jobs

5.74 million square feet of office space under construction in Seattle CBD; 64% pre-leased

Over 100 tech companies with engineering offices in Seattle, compared to 39 in 2012

Amazon’s world headquarters in Seattle currently expanding to nearly 14 million SF by 2020: capacity for 55,000 employees

Google currently beginning to occupy their new 954,000 square foot South Lake Union campus; capacity for 6,200 new employees

Facebook is rapidly expanding in South Lake Union; Seattle footprint of 1.4 million square feet

South Lake Union has become a leading technology, e-commerce, cloud computing, and life science hub nationally

Boeing’s Renton location 10 minutes east on the shores of Lake Washington: 12,000 employees

Southport in Renton located within 20 minutes: South King County’s largest new development with 700,000 square feet Class-A office space, Hyatt Regency hotel, shopping, and dining

Kent Valley within 10 miles: 4th largest distribution center in the U.S. with over 120 million square feet

Amazon’s 1 million square foot distribution facility in Kent eight minutes south: supports over 2,500 jobs

Des Moines Creek Business Park 20 minutes south: 1.6 million square feet, over 6,000 jobs from FAA, K-2 Sports, and Amerisource Bergen

Alaska Airlines corporate headquarters 20 minutes south; currently expanding to 128,000 square feet for a total campus size of 490,000 square feet

SeaTac International Airport within eight minutes: third fastest growing airport in the U.S.

SeaTac International Airport supports over 87,300 jobs with an average salary of $73,500

13 PROPERTY DETAILS

Property Details Property Terra Tukwila 6206 S 153rd Street Address Tukwila, WA 98188 Number of Units 54 + 1 single-family residence Residential RNSF ±51,825 1980 (30 units) Year Built 1966 (24 units) 1949 (single-family residence) 359700-0350, 359700-0346, & Assessor’s Parcel No(s). 359700-0341 Lot Size 140,884 SF (3.23 acres) Zoning LDR

Construction Specifications No. of Buildings Nine (9) No. of Floors Two (2) and three (3) Structure Wood frame PROPERTY DESCRIPTION PROPERTY

Roof Pitched, shingle Siding Marblecrete, brick, wood 02

14 Unit Mix Summary

Unit Type # of Units Size Current Market Rent One Bedroom / One Bathroom 17 735 $1,571 Two Bedroom / One Bathroom 15 949 $1,708 Two Bedroom / One Bathroom, with Garage 12 1,200 $1,985 Two Bedroom / One and One Half Bathroom 6 915 $1,774 Two Bedroom / One and One Half Bathroom (Townhouse) 4 975 $1,849 Four Bedroom / Two Bathroom (House) 1 1,300 $2,335 Total / Average 55 ±942 $1,755

15 EXTERIOR PHOTOS

16 17 18 CLASSIC UNIT INTERIOR PHOTOS

19 RENOVATED UNIT INTERIOR PHOTS

20 21 22

03 LOCATION OVERVIEW is locatedinTukwila, onlyonemile from Terra Tukwila. Westfieldtional Airport. Southcenter, Washington State’s largest mall, confluence ofrivers, freeways, railroads, andSeattle-Tacoma Interna workers andconsumerstothecitydaily, thrives withthe andindustry huboftheNorthwest. Alarge commercialtransportation centerdraws alleasilyaccessible.Incorporatedin1908, itisthe rail, andseaports 405 andSea-Tac Trucking, InternationalAirport. publictransportation, Tukwila isconveniently located attheconvergence ofInterstates5and are quietresidential neighborhoodsinwhichTerra Tukwila islocated. centrally located to major employment centers andcommerce hubs 20,000 peopleandapproximately 45,000 jobs.Nestledinthehillsand Located 15minutessouthofdowntown Seattle,Tukwila ishometoover TUKWILA - RENTON Renton, just northeast of Tukwila, is located at the south shores of Lake Washington. Renton has been revitalizing itself with a series of public and private projects. These include a new transit center, several community events centers, a 614,000 square-foot urban shopping village, the $200 million expansion of UW–Valley Medical Center, and a state-of-the-art, 200,000 square foot NFL training facility for the Super Bowl XLVIII Champion Seattle Seahawks. Renton’s accessible location and pro-business climate has attract- ed employers to relocate and expand within the city limits, making it home to over 44,000 jobs. While Renton’s largest employer is still Boeing, it accounts for just 32% of the city’s jobs, as compared to 59% in 1990. Renton has successfully courted large employers over the years to create a diverse economy. These employers include Valley Medical, Providence Health Systems, Paccar, game maker Wizards of the Coast, software publishers Topics Entertainment and Parallels, the Federal Reserve Bank, and IKEA.

23 SOUTHPORT 5 Southport is Renton’s newest development located along the south shores of Lake Washington between Boeing and Gene Coulon Park. Puget Sound Energy’s Shuffleton Steam Plant was decommissioned years ago Lake Washington and demolished in 2001 to make way for the new 17.1-acre Southport development which will feature almost 715,000 square feet of Class A office space located in three, nine-story towers, a newly opened 347- room Hyatt Regency Hotel, 30,000 square feet of boutique shops and four restaurants, and a waterfront special events site all located along a lakefront promenade with shore-to-shore views of Lake Washington and the Seattle skyline. SECO Development broke ground in January 2016 on the office towers which are scheduled to open later this year. The developer is targeting technology tenants to create "the next South Lake Union” at Southport, which is expected to bring in 3,500 jobs. Future plans offer the ability to expand to five million square feet of office space. Residents of Terra Tukwila will be within 15 minutes of the new development offering multiple Class-A employers.

zz $350M Development zz 30,000 SF of retail space zz 17.1 acres with a lakefront promenade and views zz Four restaurants of Lake Washington and the Seattle skyline zz 3,500 jobs expected zz Three nine-story towers zz Future expansion plans with 715,000 SF of Class A office space zz 15-minute drive from RedHill Pines zz 347-room Hyatt Regency hotel 167

VIEW TOWARDS SEATTLE FROM SOUTHPORT

24 25 Major Nearby King County Employers

648,000 $177.9B 227,000 $22.4B 153,027 $101.1B Total Employees Annual Revenue Total Employees Annual Revenue Total Employees Annual Revenue

142,875 $110.4B Total Employees Annual Revenue

26 53,700 $136.8B 52,195 $43.3B 28,000 $23.5B Total Employees Annual Revenue Total Employees Annual Revenue Total Employees Annual Revenue

27,742 $40.7B 21,680 $8.3B 8,900 $670M Total Employees Annual Revenue Total Employees Annual Revenue Total Employees Annual Revenue

27 SEATTLE CBD EMPLOYERS & PIONEER SQUARE TECH HUB Residents of Terra Tukwila are within ten miles of F5 Networks is moving their corporate headquar- Seattle’s Central Business District (CBD). The CBD is ters to a new 516,000 square foot skyscraper at the the Pacific Northwest’s largest employment center corner of Fifth and Marion this summer. Expedia is which accounts for over 315,000 jobs. Major em- currently underway with improvements on their fu- ployers comprising the CBD job market include Am- ture Seattle waterfront headquarters which is also azon, Bank of America, CenturyLink, Chase, Cobalt, slated to open in 2019. Expedia’s new campus will Dendreon, DocuSign, EA Sports, Facebook, Getty bring an estimated 5,000 jobs to the city once open. Images, Google, Kaiser Permanente, King County, Pioneer Square is located just south of the CBD and Microsoft, Nordstrom, Oracle, Onvia, Port of Se- has one of the largest concentrations of historic attle, Russell Investments, Safeco Insurance, Star- buildings in the nation. These buildings are being bucks, Swedish Medical Center, Twitter, University repurposed as office space with large companies of Washington, Virginia Mason, Vulcan, Washington such as Weyerhaeuser and Avalara recently moving State, Wells Fargo, and Zillow. into this up-and-coming employment hub. Several In addition, companies such as Alibaba, Apple, start-up companies choose to lease space in Pio- HBO, Dropbox, and Payscale have opened up offic- neer Square due to the more affordable lease rates es in and around the Seattle CBD. and its superior regional transportation options. Companies such as Blue Nile, HTC, Hulu, Intel, Pay- scale, and Rover.com are located in Pioneer Square.

28 Pioneer Square 1.4M SF in SLU by 2021 with Capacity for 14M SF 9,200+ employees World HQ 520

954,000 SF 6,200 new employees

Elliott Bay

N 29 AMAZON STILL GROWING IN SEATTLE

Founded by Jeff Bezos in 1994, Amazon is the global Additionally, Amazon is the eighth largest employer leader in e-commerce and cloud computing with in the United States. Amazon’s world headquarters annual revenues of $177.9 billion and 647,500 glob- is in Seattle where the company has more than al employees. Amazon’s cloud computing services 45,000 employees and plans to add about 10,000 are among the largest in the world. In 2015, Amazon more workers by the end of 2020. Amazon con- surpassed Walmart as the most valuable retailer tinues to expand in Seattle with nearly 14 million in the U.S. by market capitalization. Amazon is the square feet of leased and owned real estate cur- 30 largest internet company in the world and the sec- rently occupied or under construction. ond most valuable public company in the world. 25 minutes from property

55,000 employees in Seattle by 2020

14M SF in Seattle currently owned, occupied, or under construction

Additional 2.4M sf in office space under construction in seattle:

24- and 8-story buildings at 2200 7th Avenue (850,000 SF) 17-story tower at 2205 7th Avenue (388,000 SF) 37- and 7-story buildings at 2100 7th Avenue (1.1M sf)

Construction to complete in 2020 &

2021 31 BAY AREA TECH EXPANDING IN SEATTLE 7,500 $40.7B Facebook Puget Sound Employees Annual Revenue

Facebook, the multi-billion dollar online social Using industry averages of 150 square feet per networking service based out of Menlo, California, employee, Facebook would have capacity for over is the largest American owned IPO in history. The 9,200 employees in SLU by 2021. company has occupied space in Seattle since 2010 With new confirmed and anticipated leases on the where is employs mostly programmers. Eastside as well, Facebook would have approx- Since 2015, Facebook has been rapidly expanding imately four million square feet of space, which in SLU and is now the second-largest office tenant would make it the region’s fourth-largest occupier behind Amazon. The company’s SLU footprint con- of space behind Amazon, Microsoft, and Boeing. sists of nearly 1.4 million square feet.

FACEBOOK'S SLU FOOTPRINT OF 1.4M SF BY 2021

3,400 $136.8B Google Puget Sound Employees Annual Revenue

Google currently employs 3,400 people between The first phase totals 607,000 square feet is current- its Seattle, Kirkland, and Bothell offices, making ly in lease-up and has capacity for 3,500 Googlers the Puget Sound the company’s third largest en- working on their new cloud computing division. gineering location in the U.S. Google’s presence The second phase, totaling 347,000 square feet in the Puget Sound region began in 2004, where will be delivered in 2021. Once complete, the new it currently leases 190,000 square feet of space in campus could hold anywhere from 4,500 to 6,200 Seattle’s Fremont neighborhood. Google employees. The company is currently expanding in the South Lake Union neighborhood to a new 954,000 square foot campus, which will occupy three city blocks.

32 GOOGLE’S 954,000 SF SLU CAMPUS 20 minutes from the property

2,500 Puget Sound Employees by 2023

$265.6B Annual Revenue

Apple Founded in 1976 by Steve Jobs and based out of The company currently employs 500 people in Cupertino, California, Apple is an American multi- downtown Seattle at the One Union skyscraper and national company considered one of the “Big Four” has recently announced plans to add an additional technology giants, joining the ranks of Amazon, 2,000 jobs by 2023. The company has stated that Google, and Facebook. Apple is well known for its Seattle will become a key engineering hub for Apple size and revenues. Its worldwide annual revenue with new positions distributed across many special- totaled $265 billion for the 2018 fiscal year. Apple is ty engineering fields, including hardware, software the world's largest technology company by revenue technology, and services. Apple leased all of the and one of the world's most valuable companies. 333 Dexter building in South Lake Union which is In August 2018, Apple became the first public U.S. currently wrapping up construction. With a total of company to be valued at over $1 trillion. 630,000 square feet, Apple’s new lease will provide enough space for 4,200 employees. The announce- Apple has been steadily growing its presence in ment caps a year of continued job creation for Ap- Seattle over the past five years. In 2017, Apple con- ple. The company added 6,000 jobs to its American firmed that its Seattle engineering hub is focused workforce in 2018 and now employs 90,000 people in on artificial intelligence and machine learning, tech- all 50 states. In January, Apple said it was on track to nologies that power the likes of Siri and advanced 33 create 20,000 jobs in the U.S. by 2023. APPLE’S NEW 333 DEXTER LEASE WITH 630,000 SF facial recognition software. Seattle-tacoma International Airport

Owned and operated by the Port of Seattle, Seattle-Tacoma International Airport is SeaTac’s largest employer. The airport’s on-site activities directly supported 87,300 jobs in 2018, with $3.6 billion in total compensation. The average annual wage for these jobs is $73,500. Sea-Tac is one of the fastest growing airports in the country, going from the 17th busiest airport in the country in 2014 to the 8th busiest airport in 2018. With an increased business presence, local population growth, more disposable income, and tourism, Sea-Tac Airport saw a record number of passengers in 2018 with an estimated 49.8 million passengers, with a 6.8% increase since 2017. Since 2008, the airport has been on an upward growth trend and the Port of Seattle expects the trend to continue into the foreseeable future. As such, the Port of Seattle has planned to spend $3.2 billion in modernization and expansion projects at the airport through 2022 to accommodate for this further growth. Current capital improvements include a new international arrivals facility which is expected to open in 2020 and will expand the airport’s ability to meet demand for access to and from international destinations.

34 Economic Activity in Sea-tac Airport Economic Drivers South King County Driven by Sea-Tac International Airport Largest airport in the region; eighth busiest airport in the U.S.

Sea-Tac Airport is the third fastest growing airport in the country

Located only five miles from Terra Tukwila

The airport supports 87,300 direct jobs with $3.6 billion in direct compensation

Average annual wage at Sea-Tac Airport is $73,500

More than 40% of airport employees live in South King County communities, including Des 87,300 $73,500 Moines, Federal Way, Kent, SeaTac, and Tukwila Direct Jobs Average Airport Salary Sea-Tac Airport is the primary gateway to Washington and the Pacific Northwest

Over half of all Fortune 500 companies are located within 10 miles of a hub airport, nationally

Sea-Tac Airport is home to more than 360 businesses, ranging from passenger airlines to ground transportation, and air cargo

$16.3 billion regional economic impact with 172,000 indirect jobs and $565 million in state and local taxes $3.6 BILLION $22.5 BILLION Sea-Tac Airport directly supported a total of $22.5 billion in economic activity in 2018 Total Direct Compensation Business Revenue The Port of Seattle is forecasted to spend $3.2 billion between 2017 and 2022 on airport capital improvements including a new international arrivals facility, modernizations projects, and doubling retail and dining amenities

$16.3 BILLION $19 MILLION Regional Economic Impact Local Taxes

35 Employment Spotlight: N SEA-TAC INTERNATIONAL AIRPORT Boeing 8,900 Jobs Boeing Renton Boeing in Kent Boeing’s Renton facility is 15 minutes east of Terra Tukwila, located on Boeing is the largest employer in Kent, which is home to over 5,000 the shores of Lake Washington. The Renton facility employs 12,000 employees and three of the aerospace giant’s six major business divi- workers and continues to ramp up production year after year. Boeing sions including Boeing Commercial Airplanes, Boeing Capital Corpo- was also awarded the Navy’s Multi-mission Maritime Aircraft contract ration, the Shared Services Group, and the Boeing Space Center which VASHON ISLAND and will build what is projected to be 300 of the new submarine hunt- developed the world’s first lunar rover. In 2018, Boeing announced ers at the Renton plant. they would be moving 1,400 jobs to their Kent location starting in 2019.

MAURY ISLAND

PUGET SOUND

COMMENCEMENT BAY

12,400 Jobs 36 RENTON BURIEN

SEA-TAC 405 Kent valley INTERNATIONAL AIRPORT industrial hub: 120 million sf 1,400 NEW JOBS IN 2019 Kent Valley is the premier industrial center of the West 5 Coast, and the third-largest warehouse and distribution center in the United States with over 110 million square feet DES MOINES of industrial and flex space.

KENT The Valley spreads from Renton/Tukwila to the north and Sumner/Algona to the south. Its central location to two of the strongest ports on the West Coast, the Port of Tacoma and Port of Seattle, easy access to major freeways and Sea-Tac Aiport, as well as the accessibility to the Burlington Northern and Union 516 Pacific rail lines, is what has made Kent Valley an industrial powerhouse. zz Third largest container hub in the nation BELLEVUE NEARLY zz Over 21,000 manufacturing jobs are supported locally 200,000 JOBS zz Extension transportation network nearby continues FEDERAL WAY to attract companies to the region 167

KENT VALLEY 120M SF INDUSTRIAL/ FLEX SPACE

AUBURN 18

SUMNER Valley Medical Center Highlights Oldest and largest public hospital in Washington State

$1 billion in annual revenues

Employs over 2,200 including over 600 physicians

Increased staff by 6% since 2010

Serves over 600,000 South King County residents

Completed $200 million expansion in 2010

Joined University of Washington (UW) Medicine network in 2012

#1 in Joint Replacement in Washington State, and recipient of Joint Replacement Excellence UW Medicine Award by HealthGrades (2013 - 2015) Valley Medical Center #1 in Washington State for Overall Orthopedic Services by HealthGrades (2011 - 2014)

Valley Medical Center (VMC) is the largest nonprofit healthcare provider between Seattle and Tacoma, Top 5% nationally for Spine Surgery (2012 - 2015), and recipient of Spine Surgery Excellence serving over 600,000 residents in South King County and generating $1 billion in annual revenues. VMC Award by HealthGrades (2011 - 2015) has been ranked number one in Washington for joint replacement surgery for four consecutive years, “Gold Seal for Stroke” form the Joint Commission on Accreditation of is number one in overall orthopedics, and among the top five percent in the nation for spine surgery. Healthcare Organizations Modern Healthcare magazine named VMC a “Best Place to Work in Healthcare” and placed the center in the top 10 nationally. Modern Healthcare Magazine “Best Place to Work” in the nation four years straight (2008 - 2011) In 2010, VMC completed a three-phase, $200 million expansion which includes a new family birth center, an expanded surgical wing, and a seven-story emergency department facility. Due to this expan- Washington State Hospital Association “Safe Care in Action” award (2013) sion, the hospital is able to serve over 100,000 patients a year and continues to increase its full-time 321-bed acute care hospital and clinic network staff of 2,207. Since 2010, VMC has increased staffing by over 6%. The center is expanding its alliances, recently partnering with Seattle Cancer Care Alliance and becoming part of the UW Medicine System Medical, surgical, and 24-hour emergency care offered in 2012. UW Medicine already shares ownership and governance of UW Medical Center, Harborview Medical Center, Children’s Hospital, and Fred Hutchinson Cancer Research Center. Level III Trauma Center

38 The Landing Southcenter Mall

The biggest development project to hit South King County is the $300 Located in Tukwila, Westfield Southcenter is the largest shopping center in both million mixed-use urban shopping village called The Landing, located Washington and the Pacific Northwest. The shopping center is owned by The in Renton which opened in 2009. With more than 600,000 square feet of retail space, including shops, restau- Westfield Group and is anchored by JC Penney, Macy’s, Nordstrom, and Sears. rants and a movie theater, The Landing is the 10th largest shopping center in the Puget Sound. In 2006, a $240 million renovation and expansion added 400,000 square feet and two parking garages to Tenants at The Landing include Target, Staples, Starbucks, PetSmart, Marshalls, Fry’s Electronics, Lowes, L.A. the mall. Today, there are over 230 specialty stores, 1,700,000 square feet of retail space, and a 16 screen AMC Fitness, Valley Medical, Boeing Credit Union, Dick’s Sporting Goods, and Regal Cinemas. There are a number cinema, which includes an IMAX theater. Southcenter’s annual 14.7 million shoppers and sales per square foot of boutique retailers and dining establishments, including Five Guys Burgers and Fries, Vino at The Landing, make it one of the most successful retail outlets in the region. Thai 65, and Macho Burrito. 39 36 LAKE WASHINGTON 3 405 5

12 22 23 11 34 10 40 18 21 24 22 25 16 16 19 20 29 2 13 17 27 24 28 14 18 20 26 19 17 23 22 21 35 29 900 7

39 15

3 2 30 10 16 32 169 4 31 13 9 33 4 14 15 1 8 6 37 518 2 38 9 405 1 1

2 2 99 6 1 3 7 16 7 3 515 4 5 3 5 7 6 8 9

1 10 11 5 8 12 N 40 4 5 6 13 AMENITIES MAP

EAT + DRINK EAT + DRINK SHOPPING ENTERTAINMENT 1. Marwa Restaurant 27. Gyro House 1. Westfield Southcenter 1. Bullwinkle’s 2. Bahama Breeze 28. Wingstop 2. Walgreens 2. iFLY Seattle 3. The Cheesecake Factory 29. Ezell’s Famous Chicken 3. Bed Bath & Beyond 3. ACME Bowling 4. L & L Hawaiian Barbecue 30. El Torito 4. REI 4. Regal Cinemas 12 5. Stanford’s 31. Pabla Indian Cuisine 5. Dollar Tree 5. Skykart Indoor Racing 6. Jimmy Mac’s Roadhouse 32. Sahara Cafe Somali Cuisine 6. Kohl’s 6. Regal Cinemas 13 7. Qdoba 33. Juba Restaurant & Cafe 7. Target 7. Renton IKEA Performing Arts Center 8. Old Saigon 34. Lake Thai Cuisine 8. Nordstrom Rack 8. Starfire Sports 9. Galliano’s Cucina 35. Angel City Deli 9. Pier 1 Imports 9. Tukwila Family Fun Center 10. Salaama Restaurant 36. Pizzeria Pulcinella 10. Old Navy 10. Hyatt Regency 11. Tea Palace 37. Genki Sushi 11. Costco 12. Peyrassol Cafe 38. Southern Grill 12. IKEA TRANSPORTATION 13. Torero’s Mexican Restaurant 39. Friendz Cafe 13. Fred Meyer 1. Sea-Tac International Airport 14. WildFin American Grill 40. Water’s Table 14. Walmart 2. Renton Municipal Airport 15. Ma Prang Thai 15. Sam’s Club 3. Tukwila Park & Ride 16. Papaya Viet Cafe PARKS / RECREATION 16. Safeway 17. The Rock Wood Fire Pizza 1. Tukwila Park 17. Dicks Sporting Goods MASS TRANSIT 18. Five Guys 2. Foster Golf Links 18. The Landing Light Rail Station 19. Katie J’s Bar & Grill 3. Lakeridge Park 19. Fry’s Electronics 20. Thai on Highlands 4. North SeaTac Park 20. Pet Smart Sounder Train Station 21. The Brick Pub and Grill 5. Tukwila Pond Park 21. Staples 22. Saigon Sunset 6. Crystal Springs Park 22. Marshalls 23. Vino at the Landing 7. Crestview Park 23. Cost Plus World Market 24. Top Pot Doughnuts 24. Lowes 25. Mucho Burrito 26. Trenchers Kitchen & Tap

41 KENT VALLEY 120M SF INDUSTRIAL / FLEX Headquarters SPACE

Distribution Center Renton SOUNDER TRAIN BOEING TENNIS CLUB

1M SF Fulfillment Center LAKE WASHINGTON Headquarters

ANGLE LAKE LIGHT RAIL STATION

Southport Development WESTFIELD SOUTHCENTER 700,000 SF Class A Office Largest Mall in Washington SEA-TAC AIRPORT 3rd fastest growing airport in the U.S.

SEATAC LIGHT RAIL STATION

RAINIER BEACH LIGHT RAIL STATION

Burien Town Square 5-Acre Master Planned Community BOEING FIELD

SEAHURST PARK N

42 SOUTHCENTER MALL

N 43 44

04 FINANCIAL ANALYSIS FLOOR PLANS One Bedroom / One Bathroom

Unit Type # of Units Size Market Rent 1 BR / 1 BA North 7 700 $1,521 1 BR / 1 BA North (Reno) 4 700 $1,521 1 BR / 1 BA + Den 5 800 $1,663 1 BR / 1 BA + Den (Reno Model) 1 800 $1,663 Total 17 12,500 $26,709 Average 735 $1,571 Average Rent Per SF $2.14

Two Bedroom / One Bathroom

Unit Type # of Units Size Market Rent 2 BR / 1 BA North 2 865 $1,668 2 BR / 1 BA North (Reno) 1 865 $1,668 2 BR / 1 BA Fourplex 7 970 $1,718 2 BR / 1 BA Fourplex (Reno) 5 970 $1,718 Total 15 14,235 $25,620 Average 949 $1,708 Average Rent Per SF $1.80

45 Two Bedroom / One Bathroom, with Garage

Unit Type # of Units Size Market Rent 2 BR / 1 BA Fourplex w/ Garage 6 1,200 $1,985 2 BR / 1 BA Fourplex w/ Garage (Reno) 6 1,200 $1,985 Total 12 14,400 $23,820 Average 1,200 $1,985 Average Rent Per SF $1.65

Two Bedroom / One and One Half Bathroom

Unit Type # of Units Size Market Rent 2 BR / 1.5 BA 5 915 $1,774 2 BR / 1.5 BA (Reno) 1 915 $1,774 Total 6 5,490 $10,644 Average 915 $1,774 Average Rent Per SF $1.94

46 Two Bedroom / One and One Half Bathroom Townhouse

Unit Type # of Units Size Market Rent 2 BR / 1.5 BA (Townhouse) 4 975 $1,849 Total 4 3,900 $7,396 Average 975 $1,849 Average Rent Per SF $1.90

Four Bedroom / Two Bathroom (House)

Unit Type # of Units Size Market Rent 4 BR / 2 BA with W/D 1 1,300 $2,335 Total 1 1,300 $2,335 Average 1,300 $2,335 Average Rent Per SF $1.80

47 YEAR 1 PRO FORMA OPERATIONS INCOME Rent $1,158,288 Vacancy (4.00%) ($46,332) Bad Debt (0.25%) ($2,896) Other Income $97,140 Effective Gross Income $1,206,201

EXPENSES Real Estate Taxes $126,234 Insurance $13,680 Utilities $74,785 Contract Services $13,750 Repairs & Maintenance $20,014 Advertising $9,600 Payroll $96,800 Management Fee (3.00%) $36,186 Administrative $12,550 Replacement Reserves $16,500 Total Expenses (Including RR) $7,638/Unit $420,099 Net Operating Income $786,102

48 49 Income

Gross Potential Rent Pro forma rents are based on current market rents at Terra Tukwila. The market rents were established on com- parative market rents at nearby competing properties. See pages 56 - 61 for rent comparables. The total Gross Potential Rent in Year 1 is $1,158,288 or $96,524 per month. This equates to $1,755 per unit and $1.86 per square foot. September 2019 in-place rents for occupied units and market rents for vacant units equates to $1,436 per unit or $1.52 per square foot. Vacancy & Economic Loss Vacancy and collection loss are projected to be 4.25%. This is based on market surveys completed in surrounding area for similar communities. CoStar shows a market vacancy of 3.5% for Tukwila. Other Income Factoring the amount of income producing amenities at the property, Other Income is underwritten as $1,766 per unit (See Table Below):

Other Income Notes Non-Refundable $6,600 $300 Non-Refundable Fee x 40% Turnover Damages & Cleaning $6,490 $295 Average Damages x 40% Turnover ($100 Late Fees x 3 Units x 12/mo) + ($50/mo NSF Late Fees & Insufficient Funds $4,200 x 12/mo) Month-to-Month Fees $2,400 $1,700 x 3 Terminations Per Year $101,678/yr x 92.5% Reimbursement Rate through Lease Termination Fees $5,100 metering and RUBs $74,000/yr x 87.5% Reimbursement Rate through Utility Reimbursement $64,750 metering and RUBs ($300 Non-Refundable x 11 Units) + ($25/mo x 10 Units Pet Rent / Pet Fees $4,800 x 12/mo) Miscellaneous Income $2,800 Based on Market Total Other Income $97,140

50 Expenses Advertising Based on pro forma annual expense which includes internet advertising, signage, referral fees, and resident Real Estate Taxes appreciation activities totaling $9,600 ($175/unit). We have underwritten taxes based on the current King County levy rate of 0.0112333 with an estimated in- Payroll creased assessment over 2019. Real estate taxes in King County are appraised on a four- to six-year cycle, with Based on pro forma annual expense of $96,800 or $1,760/unit (See Table Below): taxes assessed annually and payable in April and October. Real estate taxes are not typically increased sub- stantially immediately following the sale of a property. The Assessor’s office is required to use three methods of valuation to establish the Assessor’s value and cannot rely solely on the previous sale price. Buyers should Payroll Breakdown seek the advice of a real estate tax consultant. On-Site Manager (0.7) $35,000 Property Insurance Maintenance Technician (0.7) $35,000 Based on trailing 12 month expense of $13,680 ($249/unit), which is consistent with industry standards. Bonus Incentives $6,500 Payroll Taxes, Workmans Comp, Benefits (29%) $20,300 Utilities Total $96,800 Based on pro forma annual expense of $74,785 which includes electricity at $8,000; natural gas at $6,000; water and sewer at $55,000; trash removal at $5,785 which equates to $1,360/unit. Management Fee Landscaping (contract services) Management Fee equal to 3.00% of the Year 1 Effective Gross Income ($641/unit). This is a competitive rate for Based on trailing 12 month expense of $11,400 ($207/unit) which includes a contracted landscaping service and third party property management companies in the Puget Sound region for apartment communities of similar seasonal color package. size and vintage. Fire Systems (contract services) Administrative Based on pro forma annual expense of $1,150. Based on pro forma annual expense of $12,550 ($228/unit). This category includes costs associated with maintaining and operating the leasing office, such as office supplies, office equipment, telephones, dues and sub- Extermination (Contract services) scriptions, postage, processing applications, licenses and permits, employee education and training, and legal Based on pro forma annual expense of $1,200. and professional services. Repairs & Maintenance / Unit Turnover Replacement reserves This includes R&M expenses associated with maintaining the interior and exterior of the property, the building Based on industry standard of $16,500 ($300/unit). systems, and common areas. Also included are maintenance costs associated with maintaining the plumbing, electrical, and HVAC systems, appliances, and unit turnover costs. Repairs & Maintenance of $20,014 ($364/ unit) is based on industry standards for properties of similar size and vintage.

51 Alaire Waterford at the Lakes Grammercy 1 510 Stevens Avenue, Renton 2 23605 62nd Avenue S, Kent 3 17425 120th Lane SE, Renton

Date Sold 10/04/18 Date Sold 06/03/18 Date Sold 12/21/18 Sale Price $97,500,000 Sale Price $83,200,000 Sale Price $87,150,000 Price/Unit $273,109 Price/Unit $241,860 Price/Unit $228,141 Price/SF $254.30 Price/SF $265.21 Price/SF $247.59 Units 357 Units 344 Units 382 Year Built 1988 Year Built 1990 Year Built 1980 SALES COMPARABLES SALES

52 05 405 RENTON 1 BURIEN TUKWILA

5 SEATAC 3 4

Puget Sound 2 167 KENT 5

53 The Becket Bryson Square 4 17333 121st Lane SE, Renton 5 24006 108th Place SE, Kent

Date Sold 06/15/18 Date Sold 06/10/19 Sale Price $58,700,000 Sale Price $43,250,000 Price/Unit $225,769 Price/Unit $218,434 Price/SF $256.61 Price/SF $246.47 Units 260 Units 198 Year Built 1989 Year Built 1988 SALES COMPARABLES SALES

54 05 405 RENTON 1 BURIEN TUKWILA

5 SEATAC 3 4

Puget Sound 2 167 KENT 5

55 Foster Greens Discovery Landing 1 13865 Interurban Avenue S, Tukwila 2 15405 Des Moines Memorial Drive, Burien

# of Units 104 # of Units 146 Year Built 1989 Year Built 1987 Occupancy 95% (95% leased) Occupancy 97% (98% leased) Deposit $450 ($250 refundable) Deposit $700 ($200 refundable) $400 ($200 refundable) $350 ($150 refundable) Pets Pets $20/mo. pet rent $20/mo. pet rent

Unit Type Units SF Market Rent Avg Rent $/SF Unit Type Units SF Market Rent Avg Rent $/SF 1 BR / 1 BA 24 716 $1,585 - $1,650 $1,618 $2.26 1 BR / 1 BA 12 566 $1,410 - $1,455 $1,433 $2.53 1 BR / 1 BA 7 840 $1,650 - $1,675 $1,663 $1.98 1 BR / 1 BA 28 736 $1,535 - $1,585 $1,560 $2.12 2 BR / 1 BA 24 864 $1,780 - $1,810 $1,795 $2.08 2 BR / 1 BA 26 920 $1,710 - $1,765 $1,738 $1.89 2 BR / 2 BA 24 888 $1,855 - $1,875 $1,865 $2.10 2 BR / 2 BA 56 1,042 $1,875 - $1,940 $1,908 $1.83 2 BR / 2 BA 24 1,000 $1,890 - $1,945 $1,918 $1.92 3 BR / 2 BA 24 1,178 $2,255 - $2,313 $2,284 $1.94 2 BR / 2 BA 1 1,125 $2,010 $2,010 $1.79 Total / Average 146 945 $1,833 $1.94 Total / Average 104 868 $1,792 $2.06 RENT COMPARABLES

56 05 5

RENTON 1 3 4

BURIEN

TUKWILA 405 2 5

SEATAC

57 Alaire Plum Tree Park 3 510 Stevens Avenue SW, Renton 4 200 SW 5th Place, Renton

# of Units 357 # of Units Year Built 1988 Year Built Occupancy 95% (95% leased) Occupancy 97% (98% leased) Deposit $600 ($300 refundable) Deposit $250 refundable $500 ($250 refundable) $400 ($200 refundable) Pets Pets $15/mo. pet rent $20/mo. pet rent

Unit Type Units SF Market Rent Avg Rent $/SF Unit Type Units SF Market Rent Avg Rent $/SF 1 BR / 1 BA 16 620 $1,569 $1,569 $2.53 1 BR / 1 BA 35 620 $1,585 - $1,630 $1,608 $2.59 2 BR / 1 BA 10 873 $1,790 $1,790 $2.05 1 BR / 1 BA 35 680 $1,650 - $1,685 $1,668 $2.45 2 BR / 1 BA 9 1,030 $1,900 $1,900 $1.84 2 BR / 1 BA 24 896 $1,825 - $1,875 $1,850 $2.06 2 BR / 2 BA 32 930 $1,850 $1,850 $1.99 2 BR / 2 BA 102 1,003 $1,905 - $1,945 $1,925 $1.92 2 BR / 2 BA 33 1,021 $1,879 - $1,919 $1,899 $1.86 Total / Average 196 864 $1,813 $2.10 2 BR / 2 BA 24 1,030 $1,879 - $1,919 $1,899 $1.84 2 BR / 2 BA 96 1,030 $1,879 - $1,919 $1,899 $1.84 3 BR / 2 BA 64 1,217 $2,250 - $2,395 $2,323 $1.91 3 BR / 2 BA 64 1,243 $2,250 - $2,395 $2,323 $1.87 3 BR / 2 BA 9 1,245 $2,250 - $2,395 $2,323 $1.87 Total / Average 357 1,075 $2,039 $1.90 RENT COMPARABLES

58 05 5

RENTON 1 3 4

BURIEN

TUKWILA 405 2 5

SEATAC

59 Boulevard at South Station 5 4708 Southcenter Boulevard, Tukwila

# of Units 210 Year Built 1979 Occupancy 95% (95% leased) Deposit $500 refundable $400 ($150 refundable) Pets $35/mo. pet rent

Unit Type Units SF Market Rent Avg Rent $/SF Studio (No W/D) 38 425 $1,310 - $1,365 $1,338 $3.15 1 BR / 1 BA (No W/D) 84 625 $1,485 - $1,515 $1,500 $2.40 2 BR / 1 BA (No W/D) 48 825 $1,705 - $1,725 $1,715 $2.08 2 BR / 1 BA 40 1,050 $1,765 - $1,810 $1,788 $1.70 Total / Average 210 715 $1,575 $2.20 RENT COMPARABLES

60 05 5

RENTON 1 3 4

BURIEN

TUKWILA 405 2 5

SEATAC

61 62

06 PUGET SOUND OVERVIEW other comparable metropolitan areas. economic growth beyond thelevels of biotechnology firms,whichwillsupport dynamic clustersofhightechnologyand other traditional industriescoupledwith aerospace, transport, tourism,and diverse economicbaseisanchored by entrepreneurship. Seattle’s increasingly culture ofinnovation, competition,and top-tier educationalinstitutionsand new peopleandbusinesseswithits metropolis thatcontinuallyattracts Metropolitan Seattleisavibrant REGION SOUND PUGET SEATTLE/ The Seattle area, the nation’s 13th largest metropolitan area, is known for its strong business climate as well as its skilled workforce. Several factors con- tribute to the region’s thriving business community, from the prevailing entrepreneurial spirit to the education levels of its workforce. Innovative companies attract high-quality workers who typically pos- sess a high level of education. This well-educated talent flows to economic centers, such as Seattle, for well-paying jobs as well as for the quality of life. Quality The Census Bureau recently announced that Se- attle is one of the top ten best-educated cities in of Life America; 61.7 percent of all Seattle adults 25 and If you could live anywhere and an outdoor lifestyle older hold bachelor’s degrees or better. Next in matters to you, then you couldn’t pick a better place the rankings are Austin, Boston, San Francisco, San to be than the Greater Seattle Area. There are very Jose, and Washington, D.C. The median household few places where one can go skiing after work on income in the Greater Seattle Area is 38 percent Friday evening and then wake up and go sailing or higher than the national median, and the Seattle play golf on Saturday morning. The region is simply MSA ranked 9th of markets nationwide in 2018 for an incredible place to live as well as to do business. per capita income. Contributing factors to the region’s economic prosperity include a successful, Greater Seattle Area highly entrepreneurial business sector and consis- Seattle is the largest city in the four-county metro- tent population growth. politan area known as the Puget Sound region. The area’s other major metropolitan cities are Bellevue, Tacoma, Everett, and Bremerton. Surrounding these are growing cities that include Kirkland, Redmond, Kent, Renton, Bothell, and Issaquah. Climate The temperate climate lets residents and visitors enjoy the outdoors year-round. High temperatures in July average just 76 degrees, while low temperatures drop below freezing an average of only 15 days per year. Rain does fall in Puget Sound and that is why the region’s vegetation is always a lush green. However, it rarely rains heavily and the total average rainfall is 38 inches, less than New York City 63 or Miami. Outdoor Activities Culture Sports The area’s natural beauty and mild climate encourage year-round ac- Art and culture are also “driving” forces in the region. There are 40 Professional sports teams include major league football, baseball, tivities such as hiking in the Olympic or Cascade Mountains, kayaking museums, 53 performing arts centers and, at last count, 140 theatre soccer, hockey, and lacrosse. In addition, there is thoroughbred on Lake Union, or cycling on any of the many rails-to-trails paths. companies. racing, a professional rugby team, and the University of Washington Huskies to cheer on. 64 Demographics

Population Buying Income Workforce Job Growth The region consists of approximately 4,134,600 The Seattle-Tacoma-Bellevue metropolitan area Approximately 62 percent of the population is in the Puget Sound has added over 342,000 payroll jobs (2018, Puget Sound Regional Council) residents in (MSA) is clearly the economic engine of Washing- prime workforce age of 20 - 64. Puget Sound resi- since 2010 and it is expected to continue to out- King, Snohomish, Pierce, and Kitsap counties. The ton State. The MSA ranks 15th among 383 mar- dents are among the most highly educated in the pace the nation for the next several years. In 2018, current figure represents a 12.02% increase over the kets nationwide in terms of median household nation, with 42 percent having at least a bachelor’s the region added 58,400 jobs, and 40,800 jobs 2010 Census. Positive population growth in the re- income. The median household income in the degree or higher and 16 percent holding a graduate are forecasted for 2019. The Puget Sound Regional gion is expected to continue through the end of the Greater Seattle Area is 36 percent higher than the or professional degree. Council projects another 158,225 total payroll jobs forecast period The Puget Sound Regional Council national median. to be added between 2020 - 2025. is estimating the area’s population to be 4,823,243 in 2030, a 16.6 percent increase.

65 Education

Washington State is home to six public four-year colleges and universities, 46 public community and technical colleges, and 32 private colleges, universities, career, and vocational schools.

University of Washington Seattle University Bastyr The University of Washington is Seattle University is a Jesuit universi- Bastyr University, located in Ken- among the top higher learning insti- ty situated on 50 acres in Seattle’s more, Washington, is one of the tutions in the nation, ranking No. 10 First Hill and Capitol Hill neighborhoods. The school was founded in world’s leading academic centers for advancing knowledge in the natu- globally and No. 2 among U.S. public 1891 and is the largest independent university in the Pacific Northwest. ral health sciences. A 40-year pioneer in natural medicine, Bastyr con- institutions by U.S. News & World Report. Nearly 50 different graduate The university has a total enrollment of 7,291 students of which 65 per- tinues to be in the forefront of developing the model for 21st century and professional programs and specialties at the University of Wash- cent are undergraduates. Seattle University employs approximately medicine. Bastyr’s academic and research programs have received in- ington are among the top 10 in the nation. UW is also the top public 650 faculty and staff. Each year, Seattle University has a regional eco- ternational recognition for pioneering work in science-based natural university in the nation for receiving federal support in research and nomic impact approaching $525 million. medicine. The 51-acre campus in Kenmore was joined in September training. In 2018, U.S. News & World Report ranked UW School of Med- 2012 by a sister campus in San Diego, California. Bastyr University Cali- The U.S. News rankings consistently place Seattle University among the icine as No. 3 in the nation for primary care education. The graduate fornia became the first and only accredited naturopathic medicine in- top universities in the West that offer a full range of masters and under- program in computer science ranks sixth and the graduate program for stitution in California. graduate programs. In 2018, Seattle University was ranked number two computer engineering was tied for ninth. Nearly three-fourths of the in the Northwest. 66 University’s graduates remain in the state. Economy LIFE SCIENCES

Key Industry Sectors

While the greater Seattle economy includes a broad range of companies, local business and civic leaders have identified key innovative, knowledgebased Industries that drive our economy and are critical to the region’s current and future prosperity.

INFORMATION TECHNOLOGY INTERACTIVE MEDIA

22,000 69,830 WORKERS employed by the WORKERS Clean Technology Industry in Washington State

AEROSPACE CLEAN TECHNOLOGY 67 Information Technology Many of the most well-known names in the software and information technology industry are located in the Greater Seattle Area. The established companies include Amazon, Expedia, Facebook, Google, Microsoft, Nin- tendo, T-Mobile, and several others. The strong base of businesses has created the largest employment cluster in the region, supporting over 199,445 jobs, 2.4 times the national average. The Greater Seattle Area has several world-leading strengths in the IT sector. The State of Washington is the largest employer of software publishing workers in the US. Additionally, Wash- ington ranks first in the country in the creation of new software companies. Microsoft is the third largest employer in Washington State behind Boeing and Joint Base Lewis-McChord. In addition to the 50,294 employees in the region in 2018, the company historically has had an estimated 3.4 implied employment multiplier. As a result, the company currently supports over 170,000 indirect jobs in the area. Microsoft has also greatly im- pacted the region through next generation companies. Since Microsoft’s founding over 250 companies have been spun off through investment/development or from former Microsoft employees. Amazon has continued its strong employment growth within Seattle as well. Over the last five years, Amazon has created more than 125 jobs in the US every day. Amazon currently has over 250,000 full time employees in the U.S alone and a total of 647,500 full and part time employees globally. The company currently employs and over 51,000 employees in Washington with 45,000 in Seattle alone at their corporate headquarters. The rich and deep pool of talent has led other industry leading IT companies such as Facebook and Google to identify the area as an important location for growth. In the Greater Seattle Area, Google has a complex of new buildings in Kirkland, offices in the Fremont neighborhood of Seattle, and an office building in Bothell with a current employment count of 3,000. The tech company has been rapidly growing in the area with new and expanded offices in Seattle, Bellevue, and Kirkland. With current and planned office space, Google could have enough space to house up to 9,000 employees in the Puget Sound. Expedia, a global online travel booking company founded as a division of Microsoft in 1996, has its headquarters in the Puget Sound Region. In April 2015, Expedia announced it will be moving its headquarters to a newly acquired 40-acre waterfront campus on Seattle’s Elliott Bay. Expedia is completing an extensive renovation of the campus and plans to move in fall 2019. Expedia currently has 4,500 employees at their Bellevue location but its new headquarters has enough space for 5,000 workers.

68 Aerospace The Puget Sound region has a proud history and a strong future as a leader in the aerospace industry. In 2017, aerospace supported more than 92,110 jobs in the state and includes over 1,400 companies, making the area the largest commercial aviation center in the country and generating $69.9 billion in economic activity throughout the state of Washington. The largest employer in the state is The Boeing Company, with over 69,830 workers in Washington. Their main factory is located in Everett, which is 25 minutes north of Downtown Seattle. The Everett factory produces Boeing’s 747s, 767s, 777s, the new 787 Dreamliner airplanes, and the refueling tankers for the Air Force. The tanker deal, which Boeing started delivering in January 2019, is worth an estimated $40 billion and supports an estimated 50,000 U.S. jobs, of which 11,000 are in Washington State. In Renton, just 15 minutes south of Downtown Seattle, is Boeing’s 737 factory, which is the world’s most successful commercial airliner in terms of airplanes sold. Boeing continues to increase production on the popular 737, ramping up production from 48 planes per month in 2017 to 52 per month in 2018. The new fuel efficient 737MAX has received over 4,700 firm orders with its first deliveries in May 2017. Boeing delivered a record 806 airplanes in 2018 and Boeing has over 5,800 firm orders for commercial airlin- ers, which is enough for eight years of production.

69 Life Sciences Anchored by highly respected research institutions such as the Fred Hutchinson Cancer Research Center, Allen Institute, University of Washington and Pacific Northwest National Laboratory, the sector employs nearly 36,000 researchers and support staff at nearly 170 organizations. With a current endowment of $50.7 billion, the Bill and Melinda Gates Foundation is a major supporter of the area’s life science companies. Recent funding helped the University of Washington move the Departments of Genome Sciences and Bioengineering into a new, shared facility and helped establish a Department of Global Health. The Foundation opened its campus at 500 5th Avenue N in June 2011. The reported cost of the first phase of construction, which includes the two boomerang-shaped office buildings, is $500 million. The Foundation currently employs 1,541 staff with the capacity for another 500 in their planned third campus phase. The South Lake Union biotechnology area, near both the Foundation and the University, houses, The Fred Hutchinson Cancer Research Center, the Institute for Systems Biology, the Pacific Northwest National Labora- tory (Seattle office), the Allen Institute, the Pacific Northwest Research Institute, Seattle Children’s, PATH, and the Benaroya Research Institute at Virginia Mason. The distinct healthcare industry which includes hospitals, healthcare products and services, training, and research, accounts for over 16,500 jobs in the City of Seattle. Collaboration among professionals in healthcare, life sciences, and information technology has led to advances in bioinformatics and health informatics.

70 Interactive Media The Puget Sound is an undisputed global leader in Interactive Media development and has the largest con- centration of interactive media companies in the United States. Starting with Cyan’s PC games of the nineties, Myst and Riven, to Valve’s Half Life and Bungie’s Halo trilogy, the history of the area is strong. With Microsoft, Nintendo, and RealNetworks in the region along with over 400 noteworthy game-technology companies, the Greater Seattle Area can claim to be one of the top three game-development centers in the world. Industry leaders such as Warner Bros. Interactive, Gas Powered Games, NCSoft, and Sony Online Entertain- ment have offices here. Over the last few years, an industry task force gathered and collaborated with public and private sector leaders to develop the Washington Interactive Media Program — the first of its kind in the nation. The program is designed to promote, nurture, and grow the video game industry in the area. There are currently over 23,000 jobs at Greater Seattle Area companies or divisions wholly devoted to games today and the industry in this region is growing at over 30 percent each year.

Clean Technology The greater Seattle region has a storied history of entrepreneurship, is home to companies with world chang- ing technologies, and has an “unmatched culture of commitment to the environment”. As a result, the area is an exceptional location for emerging clean technology companies involved in clean energy, green building, and environmental technologies. Statewide, the clean technology industry accounted for more nearly 22,000 jobs in the sectors of energy efficiency, renewable energy, reducing pollution, and pollution cleanup. The sectors of wind, solar, biomass, wave/tidal, and geothermal energy currently employ more than 18,500. Washington State has long supported clean technology and has the largest coordinated hydroelectric system in the world, providing 90 percent of the state’s electrical power.

The Washington CleanTech Alliance was established in 2007 to take full advantage of the opportunities pre- 71 sented by this emerging sector and to ensure Washington’s continued leadership. Truck transportation in Washington is made possible by over 3,700 interstate trucking companies, including Transportation common carrier and contract companies. The State ranks among the top 10 states in general freight tonnage carried by trucks intrastate. King County has a well-developed transportation system which provide links to all parts of the country and All regional communities are accessible from Seattle over an efficient, well-planned freeway system. The aver- world. Seattle’s port is closer to the main trading partners in Asia than any other major U.S. port and the re- age commute time between Seattle and outlying cities and suburbs is 23 minutes (non-peak) and 45 minutes gion’s distribution networks move goods efficiently inland. (peak drive time). The region’s highway network is anchored by three main highways: U.S. Interstate 5 which The region’s multi-modal transportation system includes two transcontinental railroads, nationwide trucking runs north-to-south from Vancouver, British Columbia to San Diego, California. Interstate 90 runs west-to- capacity, three interstate highways, a ferry system, a world-class port, light rail service, and an international east connecting Seattle with New York, and Interstate 405 (Washington) is a 30-mile stretch of freeway that airport. bypasses Seattle east of Lake Washington. I-405 runs from Lynnwood in the north to Tukwila. The Burlington Northern Santa Fe (BNSF) and Union Pacific Southern Pacific (UPSP) railroad serve the Greater Nearly 25 million passengers rode on the Washington State Department of Transportation’s Ferry System in 72 Seattle Area. Both railroads have spur lines that span the area, making it possible to deliver almost any type of 2018, the highest level since 2002. Washington State Ferry System is the largest in the country and the fourth load. In the Puget Sound region and across the state, there are over 3,000 miles of operable track. largest in the world. The fleet has 23 ferries operating out of 20 terminals and operates on ten routes. Link Light Rail Sound Transit operates two light rail service lines within western Washington: the Central Link which currently travels between South King County, SeaTac Airport, downtown Seattle, the University of Washington, and Tacoma Link which has stops throughout the city of Tacoma. Both lines operate every day of the week, and also on holidays. Annual ridership on Link Light Rail has grown year over year since it first began operation in 2009, and Link annual ridership currently exceeds 24.4 million passengers with a majority on the Central Link. In 2016, voters approved Sound Transit 3, a 25-year mass transit expansion that will total 116 miles of track with 70 stops around the Puget Sound region once complete. Sounder Train The Sounder commuter rail line began its service line across western Washington in 2000. The train operates Monday through Friday during peak commuting hours and on some Saturdays and Sundays for travel to and from Seahawks and Sounders games at CenturyLink Field and Mariners games at T-Mobile Park. Over the last year, ridership has increased 5% to reach 4.6 million passengers, doubling operating level in the last 10 years. The Sounder train has two current lines and 12 stations. The South Line has stops in Lakewood, Tacoma, Puy- allup, Sumner, Auburn, Kent, Tukwila, and Seattle; the North Line operates between Everett and Seattle with stops in Mukilteo and Edmonds. Port of Seattle The Port of Seattle has world-class facilities and relative proximity to Asia; the port is the fastest route for cargo to and from America’s heartland. The transit time from port cities in Asia to Seattle is eight days, which is 30 hours less than through Southern California ports. The Seattle-Tacoma-Everett port region is the fourth largest container complex in the country. The region’s ports serve not only the Pacific Northwest but also the Midwest, East Coast, and Canada. In 2018, 49.8 million passengers and more than 432,315 metric tons of air cargo passed though SeaTac airport. Passenger levels increased six percent from 2017 and the volume ranked the airport as the 8th busiest in the U.S. because of the state’s strategic geographic location, SeaTac is one to two hours of flying time closer to Pa- cific Asia than Southern California airports. In addition, trans-polar routing enables SeaTac to rival East Coast cities like New York in flight times to European capitals.

73 74 CONFIDENTIALITY & DISCLAIMER

The information contained in this Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Institutional Property Advisors, a Division of Marcus & Millichap (“IPA”) and should not be made available to any other person or entity without the written consent of IPA. This Offering Memorandum has been prepared to provide summary, unverified information to prospective purchas- ers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. IPA and Marcus & Millichap have not made any investigation, and make no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, IPA and Marcus & Millichap have not verified, and will not verify, any of the information contained herein, nor has IPA or Marcus & Millichap conducted any investigation regarding these matters and they make no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Seller retains all rights and discretion to determine the offer and acceptance process including but not limited to the right to accept or reject any offer in its sole and absolute discretion. Seller shall only be bound by duly exe- cuted and enforceable agreements entered into, if any. ALL MATTERS PRIVILEGED AND CONFIDENTIAL.

Non-Endorsement Notice Institutional Property Advisors, a Division of Marcus & Millichap (“IPA”) is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of IPA or Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of IPA or Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR IPA ADVISOR FOR MORE DETAILS. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express 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. Institutional Property Advisors, IPA, and Marcus & Millichap are service marks of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

75 Investment Sales Team Financing Team Giovanni Napoli Ray Allen Senior Managing Director First Vice President SEATTLE OFFICE SEATTLE OFFICE Office: 206.826.5675 Office: 206.826.5678 Cell: 206.214.8715 Cell: 206.890.6853 [email protected] [email protected] Philip Assouad Seth Heikkila Senior Managing Director Vice President SEATTLE OFFICE SEATTLE OFFICE Office: 206.826.5676 Office: 206.826.5680 Cell: 206.941.4400 Cell: 206.854.9083 [email protected] [email protected] Ryan Dinius First Vice President SEATTLE OFFICE Office: 206.826.5674 Cell: 425.623.5616 [email protected] Sidney Warsinske Vice President SEATTLE OFFICE Office: 206.826.5672 Cell: 415.233.1289 [email protected]

TerraTukwilaOffering.com