HFF EXCLUSIVE MULTI-HOUSING INVESTMENT OFFERING

S T I N S O N

2000 CONSTRUCTION, 93 UNITS • EVERETT, WA Th S T I N S O N THES T STINSONI N S O N

ADDRESS 133 124 th Street SE, Everett, WA 98208

NO. OF UNITS 93 homes

AVG. UNIT SIZE ±841 sq. ft.

YEAR COMPLETED 2000

CONSTRUCTION Wood frame, garden-style

PARKING 130 open surface stalls; 28 carports, 28 detached RENOVATED KITCHEN garages, 186 total stalls (2.0:1 ratio)

SITE ACREAGE ±4.15 acres (±22.4 du/ac) The Stinson (“Property”) is a 93-unit value-add apartment community located less than 10 minutes from ’s Everett Factory, the largest manufacturing facility in the world, and ACHIEVED APARTMENT RENT* $1,242 ($1.48/sq. ft.) the state’s largest economic driver. The property’s desirable location within Everett provides immediate accessibility to major thoroughfares and regional retail amenities. APARTMENT OCCUPANCY* 95.7% The Stinson was constructed in 2000, and received interior, exterior, and common area upgrades starting in 2015. The *Per rent roll dated 12/29/16 upgraded building exteriors and common areas included a modern resident clubhouse, fitness center, outdoor pool area and dog run, as well as exterior paint, signage, and landscaping. Interior renovations have been completed on roughly 55% (51 units) of the property, leaving roughly 45% (42 units) un-renovated. These upgrades have created an appealing contemporary vibe within the community, which distinguishes The Stinson from other properties within the submarket.

The property’s recent performance is evidence of its favorable position within the rental market, as effective rents have increased by a staggering 14.5% year-to-date. Strong market fundamentals in the Everett submarket, coupled with the property’s exceptional performance, makes the offering of The Stinson a rare opportunity to acquire an asset with further upside potential, at a discount to current replacement costs.

OUTDOOR POOL

2 S T I N S O N Value-Add Opportunity

PROVEN VALUE-ADD BUSINESS PLAN UNIT MIX 1x1 2x1 2x2 Aggregate ...with additional upside No. units 32 units 25 unit 36 units 93 units The Stinson presents an exceptional opportunity for a new investor to realize rent premiums through a continued value-add renovation program. Beginning in 2015, the % Total 34% 27% 39% 100% property underwent a comprehensive exterior and clubhouse remodel. With these Total rentable SF (±) 22,976 SF 22,025 SF 33,228 SF 78,229 SF renovations, current ownership has also instituted upgrades on interiors upon turnover. To date, renovations have been completed on roughly 55% (51 units) of the Per unit SF (±) 718 SF 881 SF 923 SF 841 SF property, and these units have obtained substantial rental premiums that are upwards Avg achieved rent $1,087 $1,261 $1,365 $1,242 of $165 (13.2%) over their respective previously achieved rents. The scope of interior upgrades consisted of the installation of new appliances, flooring, countertops, and PSF $1.51 $1.43 $1.48 $1.48 cabinet doors, as well as lighting and plumbing fixtures. Per rent roll dated 12/29/2016

PROXIMATE TO STATE’S LARGEST ECONOMIC DRIVER

The Boeing Company, founded and based in , WA, is one of the largest global aircraft manufacturers, the second-largest defense contractor in the world, and the largest exporter in the United States by dollar value. The company conducts the majority of its business operations in the Seattle MSA, where it serves as the state of Washington’s largest economic driver, with an economic impact estimated at over $70 billion, and employing approximately 80,000 people statewide.

The Boeing Everett Factory employs roughly 39,000 people, and is the primary assembly facility for the , 767, 777 and 787 Dreamliner.

The company’s Everett factory is located approximately two miles west of the property, and can be reached in less than 10 minutes via 128th Street SE or Interstate 5.

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INSTANT ACCESSIBILITY TO MAJOR THOROUGHFARES

The Stinson offers convenient transportation access to North Seattle’s primary vehicular arterials, providing a short commute to numerous employment hubs in the CENTRALLY LOCATED NEAR SEVERAL RETAIL DESTINATIONS area. There are over 7,000,000 sq. ft. of retail space within a 3-mile radius of the property, INTERSTATE 5 (0.1 miles) With the nearest on-ramp located 0.25 miles from the including six grocers. Additionally, and Alderwood Mall, two of the largest property, residents are able to instantly connect to Interstate 5, the West Coast’s retail centers in the North Seattle MSA, are located along Interstate 5 to the North and primary transportation route with over 175,000 daily travelers. Via Interstate 5, South. Downtown Seattle can be reached in approximately 30 minutes. EVERETT MALL (1.5 miles) Everett’s main shopping attraction is located directly north INTERSTATE 405 (0.3 miles) The Interstate 405/Interstate 5 interchange is roughly 3.5 of the property. The ±700,000 sq. ft. mall features over 100 major retailers including; miles south of the property. Via Interstate 405, residents can reach the large Macy’s, Best Buy, Sears, Old Navy, Toys R’ Us, ULTA, as well as an LA Fitness and Regal employment hubs of Bothell, Kirkland, Redmond, and Bellevue, in under 30 minutes. Cinemas.

SOUND TRANSIT (3 blocks) A Sound Transit Park & Ride station is located 3 blocks ALDERWOOD MALL (4.0 miles) Alderwood Mall is a ±1,500,000 sq. ft. regional southwest of the property, allowing for convenient access into Downtown Seattle and shopping mall that comprises both a traditional enclosed mall, and two open-air areas; other neighboring suburbs. Additionally, a Microsoft Connector stop is located within a The Village and The Terraces. With over 200 stores, Alderwood Mall is the second half-mile of the property on 132nd Street SE. largest mall in the Seattle MSA.

SNOHOMISH COUNTY INTERURBAN TRAIL The Snohomish County Interurban Trail is a joint project between Snohomish County, Everett, and Lynnwood, which abuts The Stinson’s eastern edge, giving residents direct access. Bike riders, walkers, joggers, and others enjoy traveling the 18.8 miles of paved surface that connects to nearby amenities, including both Everett Mall and Alderwood.

NEW $54B LIGHT RAIL EXPANSION APPROVED

In November 2016, voters approved a plan for a Sound Transit Line Expansion, named ST3, which includes a Link Light Rail extension into Everett. The new 116-mile regional light rail system will be five times larger than it is today, and Everett/Mukilteo-area residents would gain access to major job and housing centers throughout the MSA.

The project includes six new stations in the Everett area, including a stop with added parking at Mariner Park & Ride on 128th Street, within walking distance of The Stinson.

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EVERETT FACTORY WORLD’S LARGEST BUILDING PUGET ±, SERVICE MEMBERS ± , EMPLOYEES ±, EMPLOYEES SOUND

±, EMPLOYEES

99

EVERETT MALL ±K SF RETAIL CORRIDOR ±750K SF

MARINER HIGH SCHOOL

THE STINSON apartment homes

PARK & RIDE ±175,000 DAILY INTERURBAN TRAIL 5 FUTURE LIGHT RAIL EXPANSION SEATTLE CBD ±, EMPLOYEES ±  MINUTES 128TH STREET SW

MEDICAL CENTER N

5 S T I N S O N Seattle-Tacoma-Bellevue

TOP PERFORMING STATE & LOCAL ECONOMY The state of Washington and the Seattle MSA № 1 № 1 continue to be recognized nationally as top places for investment. Drivers include employer CITY FOR TECH JOB GROWTH FOR STEM GROWTH expansion, wage growth, and private sector job 12.0% from 2013–2015 7.6% from 2013–2015 creation.

A flourishing economy, coupled with the in- migration of young, talented renters, has led the Seattle MSA to be one of the best performing apartment markets in the country. Washington State

№ 1 № 1 ECONOMY IN NATION JOB & WAGE GROWTH Business Insider 2016 ADP Index 2016

6 S T I N S O N Multi-Housing Market Among the Best

№ 1 № 2 № 7 FASTEST GROWING BIG CITY IN THE U.S. MARKET FOR REAL ESTATE INVESTMENT BEST PERFORMING MSA Census 2014 ULI & PwC Axiometrics Dec 2016

4.8% 4.6% 5.1% ANNUAL EFFECTIVE RENT GROWTH ANNUAL REVENUE GROWTH CURRENT VACANCY RATE 270 bps above national average 270 bps above national average 30 bps below national average Axiometrics Dec 2016 Axiometrics Dec 2016 Axiometrics Dec 2016

9 S T I N S O N

HISTORICAL RENTS VS. OCCUPANCY Property Average Monthly Rent Occupancy $1,400 105%

Performance $1,350 100% $1,300

$1,250 95%

HISTORICAL ASKING & ACHIEVED RENTS $1,200

90% Unit renovations, coupled with extremely tight rental conditions in Everett/Mukilteo $1,150 submarket have led The Stinson to achieve an annual rent increase of 14.5%, with $1,100 aggregate rents rising by approximately $165 per unit ($0.20/SF) since December 2015. 85%

Even in light of these notable rent increases, the property’s economic occupancy has $1,050 also performed exceptionally well, remaining above 96.0% for the last seven

consecutive months, with an average of 98.2%. $1,000 80% Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Financial Occupancy Asking Rent Achieved Rent

TRAILING-3 MONTH NET RENTAL INCOME TRAILING-3 NRI ANNUALIZED 27.1% Increase since December 2015 As a result of the combination of healthy economic occupancy and positively trending $1,400,000 rents, The Stinson displays an impressive acceleration of annualized average trailing-3 27.1% Increase Since Dec. 2015 month net rental income (NRI). The property’s average trailing-3 month net rental income has increased 27.1% since December 2015. This trend is expected to continue as $1,350,000 units at the property are renovated upon turnover. $1,300,000

$1,250,000

$1,200,000

$1,150,000

$1,100,000 * Economic occupancy exceeds 100% in select months due to timing of accounting periods for ending delinquent

rent and ending prepaid rent $1,050,000

$1,000,000 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 T-3 NRI Annualized Linear (T-3 NRI Annualized) 8 S T I N S O N

PLAYGROUND

9 S T I N S O N

Value-Add Program

Beginning in 2015, current ownership conducted renovations on unit interiors, as well as a complete exterior and common area remodel, totaling in excess of one million dollars. To date, 51 units (55%) have received interior renovations, leaving 42 units (45%) to be completed. Although unit renovations have been well-received, it is evident that there is room for further rent growth on renovated units, as the property has operated at an average 98.2% occupancy rate over the last seven months.

UNIT RENOVATIONS # UNITS % ACHIEVED RENT ACHIEVED RENT $/SF Renovated 51 55% $1,275 $1.52 Non-renovated 42 45% $1,210 $1.43 Total/Variance 93 100% $65 (5.4%) $0.09 (6.2%)

Per rent roll dated 12/29/2016

While unit renovations have contributed to the property’s impressive 14.5% annual rent growth, recent leases on renovated units have achieved an average increase that is virtually identical to renewals on non-renovated units. The relative performance of the two unit types over the last six months indicates that ownership has the opportunity to become much more aggressive on asking rents for renovated units.

180-DAY RENEWALS # OF LEASES AVG. SQ. FT. AVG. ACHIEVED RENT VARIANCE % VARIANCE Renovated (new leases) 31 820 $1,271 ($1.58 PSF) $168 13.2% Non-renovated (renewals) 24 856 $1,242 ($1.47 PSF) $165 13.3% Total/Variance 55 $29 ($0.11 PSF) $3.0 -0.01%

Per rent roll dated 12/29/2016

COMPARABLE PROPERTY ANALYSIS Property Beacon at Center Units 132 Avg. Unit Size (±) 850 SF Avg. Asking Rent $1,500 Avg. Asking Rent per Sq. Ft. $1.76

10 BEACON AT CENTER S T I N S O N

By continuing the in-place value-add program and becoming more aggressive, a new investor stands to capture significant rent growth in the short term. Additionally, extensive exterior and common area upgrades has positioned a new investor for long-term revenue growth.

Interior Upgrades Exterior & Common Area Upgrades

» Wood-look flooring in kitchen and » Complete remodel of resident bathrooms clubhouse and leasing office

» New carpeting » Modernized fitness center

» Black appliances » Resurfaced pool and spa deck with modern furniture » Added range-mounted microwaves » Repainted and restriped parking areas » Resurfaced countertops » Siding repairs and exterior paint » Painted cabinet faces » Landscape beautification » Modern plumbing and lighting fixtures » Signage and exterior lighting » Curved shower rods » Repaved sidewalks » USB charging ports » Dog run

» Play structure

» Drainage and irrigation improvements

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INVESTMENT ADVISORS

CHRIS ROSS Director 425.533.1954 [email protected]

IRA VIRDEN Managing Director 503.417.5587 [email protected]

For underwriting questions, please contact:

ANTHONY PALLADINO Real Estate Analyst 503.265.5095 PLAYGROUND [email protected]

DEAN FERRIS Real Estate Analyst 503.224.7788 [email protected]

800 5th Avenue, Suite 4100 Seattle, WA 98104

FITNESS CENTER