OFFERING MEMORANDUM INVESTMENT OVERVIEW PLAZA 116 MEDICAL OFFICE & RETAIL CENTER 11603 STATE AVENUE | MARYSVILLE, WA

EXCLUSIVELY LISTED BY Brian Mayer National Retail Group 206.826.5716 [email protected]

Offering Memorandum | Plaza 116 1 INVESTMENT OVERVIEW

Plaza 116, a 17,930 square foot medical office and retail The property is situated at the intersection of two center anchored by Providence Medical Group, is main arterials, State Avenue and SE 116th Street, which currently 92.6% occupied with 6 tenants. Providence generate traffic counts of 17,400 VPD and 21,800 VPD, Medical, a tenant since the property was built 20 years respectively. Moreover, the asset resides adjacent to an I-5 ago, recently expanded their premises and extended on/off ramp, providing easy and convenient accessibility their lease term early, showing their commitment to the and boasting traffic counts in excess of 117,000 VPD. site. The property benefits from two additional long- The trade area contains some of the largest national standing tenants, Papa John’s Pizza and Tokyo Teriyaki, retailers in the country, including Walmart, Home Depot, who have occupied the building since 2001 and 2002, Cabela’s, Fred Meyer, and Ross. Additionally, within respectively. Combined, these three tenants account for the immediate vicinity, there has been a tremendous 43% of the total GLA. The property has also experienced amount of retail and hospitality development in recent several recent lease renewals; along with the early lease months, including the construction of a Hilton and La extension by Providence, Tokyo Teriyaki signed a new Quinta Hotel (204 rooms total), as well as a new Chick- 7-year lease, and Another Best Childcare extended their fil-a, Popeye’s, Arby’s, Indigo Medical Clinic, and the lease by 5 years. Moreover, the asset offers minimal near- redevelopment of a new Dollar Tree & Harbor Freight term lease rollover, with only one lease expiring prior to anchored retail center. January 2021. An investor will also find significant near- term NOI growth upon the lease-up of the 1,333 square foot end-cap vacancy.

Offering Memorandum | Plaza 116 2 TERMS OF THE OFFERING

11603 STATE AVENUE MARYSVILLE, WA 98271 ADDRESS $4,080,000 PRICE 6.25% CAP RATE YEAR 1 6.86% CAP RATE YEAR 2 92.6% OCCUPANCY 17,930 SF GLA $227.55 PRICE/SF 1.29 ACRES LOT SIZE 1998 YEAR BUILT

Offering Memorandum | Plaza 116 3 INVESTMENTINVESTMENT OVERVIEW HIGHLIGHTS

STRONG MEDICAL ANCHOR SIGNIFICANT NEAR-TERM NOI GROWTH Anchored by one of the nation’s largest health systems, Providence Medical The 1,333 square foot, end-cap vacancy Group operates 51 hospitals and 973 provides for a $24,000 (approx.10%) clinics throughout the West Coast increase in annual net income upon and generated $24.43 Billion in total lease-up at market rents revenue (2018)

RECENT ANCHOR EXPANSION LIMITED NEAR-TERM ROLLOVER AND RENEWAL 911 Driving School, a tenant since 2011 In 2018, Providence nearly doubled its and making up only 8.9% of the GLA, footprint with an expansion into the is the only lease expiration prior to entire 2nd floor of the building, at the January 2021 same time extending its lease through 2022 PROMINENT RETAIL TRADE AREA LOYAL & LONGSTANDING TENANT BASE Shadow anchored by WinCo and Providence has occupied the building adjacent to Ross, Dollar Tree, Harbor since its construction in 1998; Papa Freight, PetSmart, Fred Meyer and John’s and Tokyo Teriyaki since 2001 many other major national retailers and 2002. Combined, this accounts for 43% of the total GLA with a tenure of 17 years or more HIGH TRAFFIC COUNTS & CONVENIENT ACCESSIBILITY RECENT LEASE RENEWALS Located at the intersection of State Another Best Childcare and Tokyo Ave (17,400 VPD) and SE 116th St NE Teriyaki recently exercised 5- and (21,800 VPD) and within .5 miles of the 7-year lease renewals, extending their I-5 on/off ramp lease through 2024. Coupled with Providence’s lease extension, this accounts for 50% of the GLA that renewed since 2017

Offering Memorandum | Plaza 116 4 INVESTMENT OVERVIEW

17,400 VPD

STATE AVE

DAIRY QUEEN

116TH ST NE

21,800 VPD

Offering Memorandum | Plaza 116 5 INVESTMENT OVERVIEW

116TH ST NE DAIRY QUEEN

21,800 VPD

STATE AVE

17,400 VPD

Offering Memorandum | Plaza 116 6 RETAIL TRADE MAP

SEATTLE PREMIUM OUTLETS

McDONALD’S

STATE AVE MARSHALL ELEMENTARY SCHOOL

PLAZA 116

Offering Memorandum | Plaza 116 7 REGIONAL AERIAL

DRIVE TIMES 15 MINUTES WHIDBEY TO EVERETT ISLAND

45 MINUTES MARYSVILLE TO SEATTLE EVERETT

PUGET SOUND

SEATTLE

Offering Memorandum | Plaza 116 8 SITE PLAN Existing Businesses 116th St SE (17,400 VPD)

TERIYAKI & WOK

AVAILABLE PRO NAILS

TOKYO

ANOTHER BEST CHILDCARE

3,185 1,398 7,530 SF 1,917 975 1,592 1,333 SF SF (2 FLOORS) SF SF SF SF

Offering Memorandum | Plaza 116 9 RENT ROLL

LEASE DATES ANNUAL % BLDG RENT/ TOTAL RENT/ LEASE RENTAL RENEWAL TENANT NAME SF COMM. EXP. SHARE SF RENT/MO. YEAR TYPE INCREASES OPTIONS Available 1,333 7.4% Papa John's 1,917 10.7% 1/2/01 2/28/21 $20.90 $3,338 $40,056 NNN Flat Rent 2 x 5 Years Pro Nails 975 5.4% 9/9/09 6/30/22 $16.32 $1,326 $15,912 NNN 2% Annually None 911 Driving School 1,592 8.9% 1/1/11 12/31/20 $17.92 $2,378 $28,531 NNN 2% Annually 4 x 5 Years Another Best Childcare 3,185 17.8% 4/20/09 4/30/24 $16.00 $4,247 $50,964 NNN 2% Annually 1 x 5 Years Tokyo Teriyaki & Wok 1,398 7.8% 12/26/02 6/30/24 $16.65 $1,939 $23,272 NNN 2% Annually None Providence Health 4,400 24.5% 11/8/99 9/30/22 $20.67 $7,578 $90,940 NNN 2.75% Annually None Providence Health 3,130 17.5% 10/1/18 9/30/22 $6.17 $1,608 $19,296 NNN 2.75% Annually None Total 17,930 $15.00 $22,414 $268,971

Notes: Suite H & G: Currently Tenant pays a 5% admin fee in lieu of a Management Fee, however, Lease does not preclude a Management Fee from being charged and reimbursed Suite H Rent abated for month of September 2020

Offering Memorandum | Plaza 116 10 MAJOR TENANT OVERVIEWS

PROVIDENCE MEDICAL GROUP A comprehensive health care organization serving 51 hospitals, PAPA JOHN’S 973 clinics and 119,000 caregivers/ With over 5,300 locations in 45 employees in six states, Providence countries, Papa John’s is the 4th Medical Group contains more than largest pizza delivery restaurant 1,600 physicians who are among chain in the United States. Papa the nation’s leading experts in heart John’s began operations in 1984 in services, cancer care, brain & spine Jeffersonville, Indiana and is now treatment and other specialties. a publicly traded company (NYSE: Founded in the mid 1800’s, Providence PZZA) with over 18,000 employees is now one of the largest health and $1.57 Billion in total revenue systems in the United States with (2018). over $24 Billion in revenue and $27.43 Billion in total assets (fiscal year 2018).

911 DRIVING SCHOOL 911 Driving School is a national franchise operating physical locations ANOTHER BEST CHILDCARE in six states and online driving lessons Another Best Childcare & Learning in all 50 states. Founded by a police Center is a regional childcare facility officer, 911 Driving School is uniquely with three locations in Marysville and positioned in that its instructors Everett. Established in 1989, Another are all police offers, firefighters or Best Childcare offers before and after EMT’s. It offers a variety of driver school programs with education education courses, including new curriculums catered to children teen driving courses, teen & adult skill between the ages of 1 and 12 years old. enhancement courses, corporate fleet training programs and specialized law enforcement driver training courses.

Offering Memorandum | Plaza 116 11 OPERATING STATEMENT

INCOME YEAR 1 PER SF YEAR 2 PER SF NOTES Scheduled Base Rental Income 263,273 14.68 299,123 16.68 Expense Reimbursement Income CAM 39,315 2.19 44,298 2.47 Insurance 4,818 0.27 5,430 0.30 Real Estate Taxes 24,393 1.36 27,488 1.53 Management Fees 12,200 0.68 12,800 0.71 Total Reimbursement Income $80,726 90.1% $4.50 $90,016 98.1% $5.02

Potential Gross Revenue 343,999 19.19 391,119 21.81 General Vacancy 0 0.00 (19,556) 5.0% (1.09) Effective Gross Revenue $343,999 $19.19 $371,563 $20.72

OPERATING EXPENSES YEAR 1 PER SF YEAR 2 PER SF NOTES Common Area Maintenance (CAM) Water / Sewer 5,640 0.31 5,752 0.32 [1] Garbage 13,874 0.77 14,152 0.79 [1] Electricity 990 0.06 1,010 0.06 [1] Sweeping 3,702 0.21 3,776 0.21 [1] Day Porter 2,761 0.15 2,816 0.16 [1] Landscaping 4,039 0.23 4,120 0.23 [1] Non-Contract Landscaping 2,951 0.16 3,010 0.17 [1] Repairs & Maintenance 4,936 0.28 5,035 0.28 [1] HVAC 2,228 0.12 2,273 0.13 [1] Fire & Safety 1,405 0.08 1,433 0.08 [1] Pest Control 906 0.05 924 0.05 [1] Insurance 5,323 0.30 5,430 0.30 [1] Real Estate Taxes 26,949 1.50 27,488 1.53 [2] Management Fee 12,200 3.5% 0.68 12,900 3.5% 0.72 [3] Reserves 1,739 0.10 1,729 0.10 [4] Total Expenses $89,643 $5.00 $91,847 $5.12 Expenses as % of EGR 26.1% 24.7% Net Operating Income $254,357 $14.19 $279,717 $15.60

* Year 1 Based on foward 12 months beginning March 2020 1. Based on 2020 Budget. Year 2 assumes 2% increase 3. Based on 3.5% Effective Gross Income * Year 3 Based on forward 12 months beginning March 2021 2. Based on 2019 Tax Assessment. Year 2 assumes 4. Based on $0.10 per square foot and assumes vacant suite is leased at $18/sf/yr + NNN 2% increase Offering Memorandum | Plaza 116 12 LOCATION OVERVIEW

its composite wings, is forecast to add 8,000 new jobs and bring new firms to the local supply chain. and the supply chain community have achieved a position of dominance through collaboration. Snohomish County is home to an aerospace industry represented by over 200 firms and 38,000 workers. 46% of all aerospace workers in the state are employed in Snohomish County. The supply chain, with 600 suppliers statewide, supports Boeing as well as Airbus, Bombardier, Comac, Embraer, Sukoi, and MitsubishiGlobal Center for Aerospace and Advanced Manufacturing ABOUT SNOHOMISH COUNTY The third-largest county in Washington, Snohomish Snohomish County is home to Boeing Commercial County has an estimated population of 818,700 Airplanes, their new $1 billion Composite Wing Center, residents. Major economic drivers are derived from the and 200+ companies that help produce 747, 767, 777/X, county’s focus on manufacturing. 20% of the workforce and 787 aircraft. Key companies in Snohomish County is associated with manufacturing (twice the State include Crane, Korry Electronics, MTorres, Collins average). The Boeing Company operates its commercial Aerospace, Senior plc, Panasonic and Safran. production facility at in Everett, and employs over 35,000 people; making it the largest employer in Snohomish County. The Boeing supply chain is represented by approximately 200 companies, and 46% of all aerospace workers in the state are employed in Snohomish County.

AEROSPACE CAPITAL OF NORTH AMERICA Boeing Commercial is our major employer and has been designing and assembling aircraft in the region since 1916 - over 100 years. Every type of commercial airplane produced by Boeing takes flight from here. The 747, 767 (including the KC46A Tanker), 777/x and 787 are all delivered from the Everett plant (on cover), the largest building in the world by volume. The 777X, with

Offering Memorandum | Silverdale Automotive Center 13 LOCATION OVERVIEW

SNOHOMISH COUNTY SIGNIFICANT EMPLOYERS

DESIGNATED BY THE STATE AS THE CENTER OF ITS MEDICAL DEVICE INDUSTRY Two international leaders in ultrasound, and Fujifilm Sonosite, have headquarters and manufacturing here. In addition to devices, our life science cluster includes biopharmaceutical firms AGC Biologics, Seattle Genetics and Juno Therapeutics. Providence Regional Medical Center Everett gives access to clinical trial opportunities at facilities throughout their 50 hospital system.

SNOHOMISH COUNTY ATTRACTS TECH & CREATIVE COMPANIES Fluke Corporation (and its Fortune 500 parent, ) have their headquarters and operations here, as do Zumiez (retail/clothing), Premera Blue Cross (insurance), and (toys). T-Mobile, Google, Amazon and AT&T all have a significant presence as well. Microsoft, Expedia, Facebook, Nintendo, Big Fish Games and Apple are in the region.

Offering Memorandum | Plaza 116 14 LOCATION OVERVIEW

ABOUT MARYSVILLE Situated 35 miles north of Seattle and 6 miles north of climate with no city B&O tax, and will benefit from Everett, Marysville has an estimated population of 69,779 significant job growth with the creation of the 4,000-acre residents. Marysville has experienced rapid growth in Cascade Industrial Center. The former agriculture land recent years with a 14.39% population growth between was recently rezoned to promote development of clean- 2010 and 2019. It is one of fastest growing cities in the tech, aerospace and other industrial and manufacturing nation with an average population growth rate of 2.27% uses. Within the next 40 years, job growth in this area is since 2015. Marysville also has a very favorable business expected to increase by over 300%.

Above: Vector Development Co. has begun construction of MI-5 Business Park in Marysville — a $32 million, a 247,000-square-foot facility for distribution and manufacturing tenants, situated in the 4,000-acre Cascade Industrial Center

Offering Memorandum | Plaza 116 15 DEMOGRAPHICS

POPULATION 1 Mile 3 Miles 5 Miles 5 MILES 2023 Projection 9,223 45,214 94,763 2018 Estimate 8,899 43,315 88,530 2010 Census 7,824 39,180 80,400 2000 Census 7,088 34,241 64,678 3 MILES INCOME Average $88,392 $81,871 $86,116 Median $79,767 $71,619 $75,623 Per Capita $30,923 $30,037 $30,853

HOUSEHOLDS 1 MILE 2023 Projection 3,254 16,804 34,378 2018 Estimate 3,074 15,818 31,597 2010 Census 2,675 14,197 28,460 2000 Census 2,476 12,289 22,703 POPULATION AGE Under 20 25.19% 26.40% 27.24% 20 to 34 Years 22.02% 21.75% 20.47% 35 to 39 Years 6.45% 6.80% 7.03% 40 to 49 Years 12.37% 12.54% 13.25% 50 to 64 Years 21.06% 19.12% 19.51% Age 65+ 12.90% 13.39% 12.52% Median Age 37.06 36.30 36.39

Offering Memorandum | Plaza 116 16 INVESTMENTCONFIDENTIALITY OVERVIEW & DISCLAIMER

The information contained in the following Offering Memorandum is proprietary and any purchase. This Marketing Brochure is not a substitute for your thorough due strictly confidential. It is intended to be reviewed only by the party receiving it from diligence investigation of this investment opportunity. Marcus & Millichap expressly Marcus & Millichap and should not be made available to any other person or entity denies any obligation to conduct a due diligence examination of this Property for without the written consent of Marcus & Millichap. This Offering Memorandum has Buyer. been prepared to provide summary, unverified informationto prospective purchasers, and to establish only a preliminary level of interestin the subject property. The Any projections, opinions, assumptions or estimates used in this Marketing Brochure information contained herein is not a substitute for a thorough due diligence are for example only and do not represent the current or future performance of this investigation. Marcus & Millichap has not madeany investigation, and makes no property. 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 The value of a net leased property to you depends on factors that should beevaluated square footage of the property and improvements, the presence or absence of by you and your tax, financial and legal advisors. Buyer and Buyer’s tax, financial, contaminating substances, PCB’s or asbestos, the compliance with State and Federal legal, and construction advisors should conduct a careful, independentinvestigation regulations, the physical condition of the improvements thereon, or the financial of any net leased property to determine to your satisfaction with the suitability of condition or business prospects of any tenant, or any tenant’s plans or intentions to the property for your needs. continue its occupancy of the subject property. The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; Like all real estate investments, this investment carries significant risks. Buyer and however, Marcus & Millichap has not verified, and will not verify, any of the information Buyer’s legal and financial advisors must request and carefully review alllegal and contained herein, nor has Marcus & Millichap conducted any investigation regarding financial documents related to the property and tenant. While the tenant’s past these matters and makes no warranty or representation whatsoever regarding the performance at this or other locations is an important consideration, it is not a accuracy or completeness of the information provided. All potential buyers must guarantee of future success. take appropriate measures to verify all of the information set forth herein. Similarly, the lease rate for some properties, including newly-constructed facilities or NON-ENDORSEMENT NOTICE newly-acquired locations, may be set based on a tenant’s pro-jectedsales with little or no record of actual performance, or comparable rents for the area. Returns are Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial not guaranteed; the tenant and any guaran-tors may fail to pay the lease rent or tenant or lessee identified in this marketing package. The presence of any property taxes, or may fail to comply with other material terms of the lease; cash corporation’s logo or name is not intended to indicate or imply affiliation with, or flow may be interrupted in part or in whole due to market, economic, environmental sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or other conditions. Regardless of tenant history and lease guarantees, Buyer is or subsidiaries, or any agent, product, service, or commercial listing of Marcus & responsible for conducting his/her own investigation of all matters affecting the Millichap, and is solely included for the purpose ofproviding tenant lessee information intrinsic value of the property and thevalue of any long-term lease, including the about this listing to prospective customers. likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with NET-LEASED DISCLAIMER a potential replacement tenant considering the location of the property, and Buyer’s Marcus & Millichap hereby advises all prospective purchasers of Net Leased property legal ability to make alternate use of the property. as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will By accepting this Offering Memorandum you agree to release Marcus & Millichap not verify any of this information, nor has Marcus & Millichap conducted any Real Estate Investment Services and hold it harmless from any kind of claim, cost, investigation regarding these matters. Marcus & Millichap makes no guarantee, expense, or liability arising out of your investigation and/or purchase of this net warranty or representation whatsoever about the accuracy or completeness of any leased property. information provided.

As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing

ACTIVITY ID: Z0110313

Offering Memorandum | Plaza 116 17 OFFERING MEMORANDUM PLAZA 116 MEDICAL OFFICE & RETAIL CENTER 11603 STATE AVENUE | MARYSVILLE, WA

EXCLUSIVELY LISTED BY Brian Mayer National Retail Group 206.826.5716 [email protected]