BARTELL DRUGS | 9600 15TH AVE SW | , WA.

BARTELLDRUGSWHITECENTER.COM 2

Affiliated Business Disclosure Additional information and an opportunity to inspect the Property CBRE, Inc. operates within a global family of companies with many will be made available to interested and qualified prospective subsidiaries and/or related entities (each an “Affiliate”) engaging in a purchasers. In this Memorandum, certain documents, including broad range of commercial real estate businesses including, but not leases and other materials, are described in summary form. These limited to, brokerage services, property and facilities management, summaries do not purport to be complete nor necessarily accurate valuation, investment fund management and development. At times descriptions of the full agreements referenced. Interested parties different Affiliates may represent various clients with competing are expected to review all such summaries and other documents interests in the same transaction. For example, this Memorandum of whatever nature independently and not rely on the contents of may be received by our Affiliates, including CBRE Investors, Inc. or this Memorandum in any manner. Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the Neither the Owner or CBRE, Inc, nor any of their respective directors, “Property”) may submit an offer to purchase the Property and may officers, Affiliates or representatives make any representation or be the successful bidder for the Property. You hereby acknowledge warranty, expressed or implied, as to the accuracy or completeness that possibility and agree that neither CBRE, Inc. nor any involved of this Memorandum or any of its contents, and no legal Affiliate will have any obligation to disclose to you the involvement of commitment or obligation shall arise by reason of your receipt of any Affiliate in the sale or purchase of the Property. In all instances, this Memorandum or use of its contents; and you are to rely solely however, CBRE, Inc. will act in the best interest of the client(s) it on your investigations and inspections of the Property in evaluating represents in the transaction described in this Memorandum and a possible purchase of the real property. will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or The Owner expressly reserved the right, at its sole discretion, to prospective offeror, but rather will conduct its business in a manner reject any or all expressions of interest or offers to purchase the consistent with the law and any fiduciary duties owed to the client(s) Property, and/or to terminate discussions with any entity at any it represents in the transaction described in this Memorandum. time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or Confidentiality Agreement obligation to any entity reviewing this Memorandum or making an This is a confidential Memorandum intended solely for your limited offer to purchase the Property unless and until written agreement(s) use and benefit in determining whether you desire to express further for the purchase of the Property have been fully executed, delivered interest in the acquisition of the Property. and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state By receipt of this Memorandum, you agree that this Memorandum of affairs of the Property or the owner of the Property (the “Owner”), and its contents are of a confidential nature, that you will hold and to be all-inclusive or to contain all or part of the information which treat it in the strictest confidence and that you will not disclose prospective investors may require to evaluate a purchase of real this Memorandum or any of its contents to any other entity without property. All financial projections and information are provided for the prior written authorization of the Owner or CBRE, Inc. You also general reference purposes only and are based on assumptions agree that you will not use this Memorandum or any of its contents relating to the general economy, market conditions, competition in any manner detrimental to the interest of the Owner or CBRE, and other factors beyond the control of the Owner and CBRE, Inc. Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All If after reviewing this Memorandum, you have no further interest in references to acreages, square footages, and other measurements purchasing the Property, kindly return this Memorandum to CBRE, are approximations. Inc. TABLE OF CONTENTS

01 THE INVESTMENT

02 THE LOCATION

03 THE PROPERTY

04 THE TENANT

05 THE COMPETITIVE SET

DINO A. CHRISTOPHILIS DANIEL TIBEAU PARKER KSIDAKIS Senior Vice President Associate Associate +1 206 292 6152 +1 206 292 6052 +1 206 292 6158 [email protected] [email protected] [email protected] 3 4 THE INVESTMENT

Downtown Seattle

BARTELL DRUGS “Absolute Net” Lease with Zero Landlord Responsibilities The lease requires zero landlord obligations with the tenant List Price $5,142,000 responsible for all operating costs, including taxes, insurance, maintenance, mechanical systems (HVAC, plumbing, electrical), Price Per SF $412.02 and exterior cleaning. Further, the tenant is responsible for all long-term capital items and structural elements including the roof, foundation, exterior walls, and parking areas. There will be NOI $257,400 no landlord costs or obligations throughout the term of the lease.

Low Rental Rate, Recent Lease Renewal Cap Rate 5.01% with Rent Escalations 9600 15th Ave SW The original lease term was scheduled from 2006 through 2021, Address Seattle, WA 98106 with seven 5-year renewal options. In 2017, the tenant agreed to exercise the first 5-year renewal option early in exchange for Building Size 12,480 SF a reduced rent. Therefore, the lease expiration was extended from October 2021 to October 2026, while the original rent of $264,000/year was reduced to the current rent of $257,400/year. Occupancy 100% Based on the new lease terms, the existing rent of $257,400/year will increase to $269,100/year in November 2021. The existing Site Size 32,168 SF lease rate of $20.63/sf is substantially lower than most other stand-alone drug stores in the region. Investors can benefit from 1980 / Building expanded the stability of a low rental rate and extended lease term, while Year Built long-term yields will be maximized with the scheduled 4.55% and renovated in 2001 rent increase in 2021. Parcel Number 320380-0005

Parking 32 open spaces

Parking Ratio 2.56:1

CB-SO, Community Business Zoning - Special Overlay

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Close-In Seattle Location with Explosive Submarket Growth Located only 7 miles south of , the White Center neighborhood has directly benefited from the enormous growth in the region. Population density continues to push outward from the core to the areas such as White Center. The most notable project is the 100-acre Greenbridge Master-Planned Community, located only 4 blocks from the subject. Started in 2006, the project will add over 1,000 housing units when completed. Over 75% of this project has been completed to date, with an additional 111 units currently under construction by a private developer. The project offers a combination of “for-rent” and “for-sale” housing options surrounding a new community center, library, and 56,000 square feet of commercial/retail uses. The project has transformed the area and elevated White Center to among the fastest growing submarkets in South Seattle.

Family-Owned, Regional Drugstore Chain - Oldest in the Nation, Since 1890 Bartell Drugs is touted as the oldest family-owned drugstore chain in the country. Founded in 1890, the company has expanded to over 68 locations in markets surrounding the Seattle MSA. Operating with minimal corporate debt, the company has strategically chosen to dominate the , rather than expand into other markets with a less established demand base. Most recent reports show increasing store sales and store expansion financed by internal funds, rather than new debt. The company is continually adapting to consumer demand, introducing drive-thru stations, 1-hour pharmacy delivery through Amazon Prime, and most notably, partnering with Kaiser Permanente to offer in-store health clinics with on-site medical staff, called CareClinic. Most new Bartell Drugs stores offer these new business lines and select older-format stores are retrofitted to accommodate. The subject location is well-configured to accommodate a drive-thru terminal and an in-store health clinic. BARTELL DRUGS

$465 MILLION Fiscal Year 2017 Revenue 3.33% Year-over-Year Revenue Growth 68 Store Locations

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200+ UNITS Multiple sites (under construction)

Westwood Village 400,000 SF Target & QFC- anchored THE

Unicorn Two Bar 22,000 SF LOCATION (Under Construction) BARTELL Starbucks & DRUGS Popeyes Chicken (Built 2018)

39 UNITS DubSea Apartments 39 Units (Built 2017) Downtown Downtown Seattle Bellevue

80 Units under construction (Materra at Greenbridge)

1,000+ UNITS Greenbridge Master Planned Community (Built 2007-2019)

31 single-family homes under construction (Windrose)

284 UNITS Seola Gardens Master Planned Community (Built 2007-2014)

298 UNITS Southside Apartments 298 Units (Built 2018) 9 10 HIGH-GROWTH SUBMARKET

Westwood VIllage 28 Apartment 32 Apartment 32 Apartment Shopping Center Units Units Units

8 Townhouse Units 66-Apartment Units Self-Storage Facility 4-Stories 8 Townhouse SW Roxbury Street Units

BARTELL DRUGS City of Seattle Unincorporated King County

Pro-Business Policies in White Center, Just Blossoming Restaurant-Bar Scene Outside of Seattle Jurisdiction and Taxation Accompanies Improving Demographics Bartell Drugs – White Center is located on the south side of Roxbury White Center is quickly becoming a cultural, commercial, and Street, just outside of Seattle city limits in Unincorporated King County. recreational destination in the south-end of Seattle, famous for its This location offers several unique economic and legal attributes. restaurants, shoppes, and overall sense of community. Spurred by the Specifically, the property IS NOT subject to Seattle’s $15.45/hour tremendous increases in population density, the downtown core of minimum wage requirement, and Seattle’s much publicized White Center located along 15th and 16th Avenue has exploded with “Soda Tax” which imposes a 1.75 cent/ounce tax on sugar-heavy dozens of new restaurants and bars catering to the new inhabitants in drinks, including soda. These initiatives increase operating costs, and the area. The neighborhood caters primarily to local businesses such thereby increase prices to customers. Bartell Drugs – White Center has as the recently announced 21,000 square foot Unicorn Bar, currently directly benefitted relative to the nearby competitors, including the being retrofitted from a former church located along 16th Avenue. Walgreens located across the street in Seattle, with lower prices and The neighborhood offers an eclectic array of new eating and drinking more favorable operating costs. As Seattle continues to levy additional options including high-end BBQ, artisanal pizza & pie, and authentic requirements on business and real estate, Bartell Drugs – White Center tamales & salsa. National retailers have also relocated businesses to the will to hold a competitive advantage in the market. area, including the newly constructed Starbucks and Popeyes Chicken located two blocks south on 16th Avenue. WHITE CENTER OVERVIEW White Center is a community located in Unincorporated King County between the cities of Seattle to the north and Burien to the south. Throughout the years, White Center voters have continually rejected annexation plans presented by Seattle and Burien to incorporate the area. Today, the area continues with a strong sense of community and a diversity not commonly found in the Puget Sound region.

Historically, White Center was known for the collection of World War II era work-force housing units, known as Park Lake Homes. Beginning in the mid-2000s, the King County Housing Authority approved more than $250 million to replace the aging housing with more than 1,300 new “for-rent” and “for-sale” housing units built between the Greenbridge and Seola Gardens housing communities. As of 2018, over 90% of these projects have been completed offering housing to more than 3,000 new residents and families. The final phase of these developments are currently being constructed by a private developer, Conner Homes, in two new communities called Materra at Greenbridge and Windrose, consisting of 111 new single-family and townhouses units. In the past 5-10 years, the demographics of the area have been radically improved while the community has flourished with new businesses. As the Seattle area continues to grow, White Center is competitively positioned to capture more than its fair share of new residents given its proximity to downtown Seattle, affordable housing options, burgeoning commercial district, and strong sense of community.

1,000+ UNITS Greenbridge Master Planned Community (Built 2007-2019)

BARTELL DRUGS

11 12 CITY OF SEATTLE 5 MIN 10 MIN 15 MIN DEMOGRAPHICS Place of Work

2018 Businesses 1,160 5,079 12,253

2018 Employees 11,115 59,650 170,817 $76,714 MEDIAN INCOME Population (HOUSEHOLD)

2018 Population - Current Year Estimate 43,253 131,919 263,590

2023 Population - Five Year Projection 46,377 141,248 282,251 2.06 Population Growth HOUSEHOLD SIZE (AVERAGE) 2010-2018 Annual Population Growth Rate 1.47% 1.47% 1.38%

2018-2023 Annual Population Growth Rate 1.40% 1.38% 1.38%

Average Income 37.3 2018 Average Household Income $81,819 $90,155 $91,695 MEDIAN AGE

2023 Average Household Income $94,652 $104,530 $106,234

Median Income

2018 Median Household Income $63,528 $65,930 $66,228 63.4% BACHELORS 2023 Median Household Income $74,301 $77,427 $77,984 OR HIGHER

Housing Value

2018 Median Value of Owner Occ. Housing Units $345,249 $368,907 $382,327 $554,389 $399,730 $445,423 $464,984 2018 Average Value of Owner Occ. Housing Units HOME VALUE (MEDIAN) TOP EMPLOYERS SEATTLE

Boeing Co. 64,300

Amazon 45,000

Microsoft Corp. 43,031

University of 30,200

Providence Health & Services 17,553

Wal-Mart Stores Inc 16,000

Fred Meyer Stores 15,500

Starbucks Corp. 11,239

Swedish Health Services 10,758

Costco Wholesale Corp. 9,264

Nordstrom Inc. 8,982

Alaska Air Group Inc. 7,403

13 14

Downtown Seattle

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509 5 BARTELL DRUGS

99 405

599 DISTANCE TO DOWNTOWN SEATTLE 5 MILES

DISTANCE TO TACOMA 18 MILES

DISTANCE TO BELLEVUE 9 MILES

15 16 THE PROPERTY

BARTELL DRUGS Infill Long-Term Redevelopment Succesful Operations Since 1980 with Complete Store Site with Flexible Zoning and Renovation In 2006 Unlimited Height Requirements The property was originally constructed as a build-to-suit for Bartell Drugs in 1980, marking almost 40 years of ongoing operations at this location. The property was As an infill location with desirable proximity to operated by the company until 2006, when the property sold to a private investor as downtown Seattle, investors should consider the a sale-leaseback with a new lease term. Prior to signing the new lease in 2006, the long-term redevelopment potential for the site. store underwent a complete remodel to modernize the building façade, interior, The ‘Community Business’ zone allows for a wide parking areas, and some mechanical systems. variety of commercial, residential, and mixed-uses. The ‘Special District Overlay’ allows for unlimited height limits at the southerly portion of the site and 30’ foot height limits at the northerly portion of the property. As the property is located outside SITE PLAN of Seattle jurisdiction, the Mandatory Housing Affordability (MHA) requirements will not apply, and developers can circumvent affordable units and avoid the mandatory contributions to the housing fund. Given the high traffic counts along Roxbury Street and the rapidly expanding popularity of the SW ROXBURY ST area, the subject would be an excellent candidate for future mixed-use development.

Opportunity For Drive-Thru Addition Following Store Expansion In 2001 In 2001, the tenant expanded the building by 2,730 square feet along the southerly wall. At the time, the exterior façade was also renovated and the exterior design improved. With the increased size, the expansion allows for the potential addition of a drive-thru kiosk located along the southerly building wall. Further, the additional area can also accommodate Bartell Drugs’ in-store walk-in clinic operated by Kaiser Permanente called, CareClinic. 15TH AVENUE SW 15TH AVENUE SW 14TH AVENUE 15TH AVENUE SW 15TH AVENUE SW 14TH AVENUE Over 40% of Bartell Drugs in the region offer a drive-thru window, and over 20% offer CareClinic facilities. The subject is uniquely positioned to accommodate these additions.

17 BARTELL DRUGS SEATTLE | WASHINGTON

DINO A. CHRISTOPHILIS Senior Vice President +1 206 292 6152 [email protected]

DANIEL TIBEAU Associate +1 206 292 6052 [email protected]

© 2018 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. Any projections, opinions, or estimates are subject to uncertainty. The information may not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated PARKER KSIDAKIS or related companies in the United States and other countries. All other marks displayed on this document are Associate the property of their respective owners. Photos herein are the property of their respective owners and use of these +1 206 292 6158 images without the express written consent of the owner is prohibited. PMStudio_December 2018 [email protected]