Lynnwood, WA Confidential Offering Memorandum

Home , Everett Mall, Naval Station Everett, Port of Everett, Snohomish River

73 Units | Value-Add Opportunity | Lynnwood, WA

Confidential offering memorandum Contact information

ADVISORS DEBT AND FINANCE

Jordan Louie Scott Gilson Vice President Director +1 206 971 7007 +1 206 576 0037 [email protected] [email protected]

Corey Marx Managing Director +1 206 607 1726 [email protected] TABLE OF CONTENTS 04 Executive Summary

10 Submarket Overview

18 Regional Overview

28 Financial Overview

34 Rent Comparables

38 Sales Comparables

42 Transaction Guidelines Executive Summary THE OFFERING JLL has been retained as the exclusive advisor for the sale of Evergreen Grove Apartment Property Summary Homes, a 73-unit apartment community located in Lynnwood, Washington. Built in 1983 and 1984, Evergreen Grove represents a value-add opportunity for multifamily investors. Current management has updated select finishes offering investors an opportunity to complete NAME Evergreen Grove Apartment Homes renovations and realize further rent premiums. With units averaging approximately 1,060 ADDRESS 2709 Lincoln Way square feet, the property offers more space for less money when compared to Seattle’s Core. CITY, STATE, ZIP Lynnwood, WA 98087 Located in the desirable Seattle suburb of Lynnwood, Evergreen Grove benefits from a prime location relative to employers and the more than 805,000 residents in Snohomish County. YEAR BUILT 1983 and 1984 Accessibility is unmatched as the property sits adjacent to the intersection of Highway 525/ Interstate 405 and Highway 99. The property is approximately two miles from the current CONSTRUCTION Wood frame Ash Way Park & Ride and future Ash Way Link Light Rail Station. Currently the transit hub offers express bus service to Downtown Seattle and beyond. Once the light rail station is UNIT COUNT 73 apartment homes complete, it will offer a direct and traffic-free route to Downtown Seattle and Seattle-Tacoma AVERAGE UNIT SIZE 1,060 square feet International Airport. RESIDENTIAL SPACE 77,370 net rentable square feet Surrounded by quality amenities, the property sits just 3.6 miles from the Alderwood Mall, 2.2 miles from Harbour Pointe Shopping Center and within walking distance of Lake Stickney. FLOORPLANS One bedroom, two bedroom / two bath The property is also within the boundaries of the coveted Mukilteo School District, an added benefit for families. PARKING 159 surface stalls

JLL | 5 Everett

INVESTMENT HIGHLIGHTS 5 2 Snohomish Significant Value-Add Upside 99

Current ownership has completed selected capital improvements at Evergreen Mill Grove. Most units have been renovated to various spec levels which has Creek contributed to a noticeable increase in net rental income. Select upgrades were EVERGREEN Puget 522 applied to kitchens, baths and flooring. Upgraded in-unit features vary but Sound GROVE include appliances, sinks, countertops, cabinets and flooring. Other possible Lynnwood capital improvements include adding washers and dryers to all units (units are pre-plumbed), adding carports to the premises and upgrading the property’s 405 sport court.

522 Bothell

Diversified Employment Base Shoreline Within the City of Lynnwood and the surrounding northern suburbs is an expansive local employment market. Snohomish County ranks first in the state 5 for manufacturing jobs and second in the number of tech jobs. It also hosts the Kirkland highest concentration of engineers within Washington State. Its diverse and Redmond thriving job base of 292,600 includes aerospace, bio-technology, bio-medical 99 n o devices and advanced technology/manufacturing, in addition to healthcare t g n 520 and hospitals. Over 200 aerospace companies, including Boeing, are located in i h h s is a Snohomish County. Boeing acts as a local catalyst with a job multiplier of 3.5 to Elliott m W a Bellevue Sammamish Bay e m

4.0. Other notable local employers include Providence Regional Medical Center, k m

L S

Premera Blue Cross, Philips and the Fluke Corporation. SEATTLE e

k a

Mercer 90 L Island 405

Newcastle Issaquah 99

Renton

Seattle-Tacoma International 167 18 Airport

6 | Evergreen Grove 5 Kent Prime Access

Evergreen Grove’s suburban address is nearly equidistant to the cities of Seattle and Bellevue and slightly south of Everett. It is an attractive destination for newly hired employees coming to the Pacific Northwest for work and a high quality of life. Evergreen Grove is near desired public schools, as well as shopping and entertainment at the Harbour Pointe Shopping Cen- ter, the Alderwood Mall, Mill Creek Town Center and the Everett Mall. The property is conveniently located with immediately ingress/egress to High- way 525, which is connected to the northern terminus of Interstate 405 and Highway 99. The Ash Way Park & Ride is a short drive away and is also the planned site of the future Link Light Rail Station. Paine Field Airport, the region’s newest commercial airport is just two miles from Evergreen Grove and offers 24 daily departures to 11 destinations in the West and Mountain West regions. The airport provides greater convenience and shorter wait times for passenger travel.

Surging Population Between April 2017 and 2018, Snohomish County experienced a net in-migration of 15,720 people. The population has grown by more than 100,000 in the past ten years and now exceeds 805,000. This makes the resident count in Snohomish County larger than four states and the District of Columbia. Further growth is aided by increased job recruitment, ongoing office deliveries and the expansion of Bay Area tech giants into the Puget Sound Region. Millennials are also moving here at one of the fastest rates in the county, with the Seattle MSA listed as the nation’s top relocation destination. Regional Strength Employment throughout the Seattle MSA has outpaced the national average with 46,400 new jobs added in 2018 and unemployment at 3.5 percent. Firms such as Amazon, Microsoft, Facebook and Google offer high-paying positions and attract well-educated young processionals. Even with healthy wages, many are opting away from high-priced apartments in the urban cores of Seattle and Bellevue where rents average $2,140 and $2,313 per month, respectively. The result has been a ripple effect in the suburban market, with north-end communities becoming a destination of choice on the flight to affordability.

JLL | 7 PROPERTY DESCRIPTION Property Details The units at Evergreen Grove have several different finish levels with varying elements such as appliances, sinks, countertops and cabinets. Flooring consists of vinyl plank and carpeting. Currently, washers and dryers are not standard in any units even though units are pre-plumbed.

It is recommended that the new ownership renovate all units to a premium spec level consistent with the current premium renovation scope at the property. This includes stainless appliances, undermount sinks, hard surface countertops, soft-close cabinets and vinyl plank flooring. We would also recommend adding washers and dryers in all units. Combined, this can generate an estimated renovation premium of $250. Furthermore, adding carports and updating the sport court would yield even more rental income for investors.

CLASSIC UNIT PREMIUM UNIT

LIGHT RENOVATION CLASSIC UNIT PREMIUM UNIT PREMIUM UNIT

8 | Evergreen Grove PROPERTY DESCRIPTION Construction Specifications

PLUMBING Copper with water shut-offs in each unit

ROOFS Pitched asphalt single roofs Building D WINDOWS Double-pane aluminum-frame

WASHERS AND DRYERS Pre-plumbed

FIREPLACES Blocked, flues capped

DECKS / PATIOS All units Building C Building F Building B Building A Building E

LINCOLN A

JLL | 9 Submarket Overview CITY OF LYNNWOOD Downtown Everett The City of Lynnwood is home to over 38,000 residents. Puget Sound Located in Snohomish County at the convergence of Interstate 5 and Interstate 405, Lynnwood is approximately Paine Field Airport 20 miles north of Seattle and Bellevue and four miles south of Everett’s Boeing locations. Residents and businesses are drawn to the area due not only to its central location, but also the prime working and living environments the city has created. 99 EVERGREEN The residential areas of Lynnwood, which make up the GROVE majority of the city, are close to transportation options. 525 Views are plentiful and range from Martha Lake and the Puget Sound to neighboring Whidbey Island and the Ash Way Park-and-Ride mountains beyond.

With a favorable tax structure and an abundance of Class A office space, Lynnwood boasts a thriving and welcoming business climate. The daytime population easily reaches 5 up to 150,000 as workers flood the marketplace. The local landscape is dotted with aerospace and healthcare firms as well as a core of bio-science, information technology and professional service corporations.

Often deemed the “crossroads community” due to its location at the intersection of major freeways, Lynnwood Alderwood Mall has an additional prominence within the regional landscape, serving as a bedroom community to nearby urban employment centers with world-renowned corporations. It is also considered the financial and 405 retail hub of south Snohomish County and the northern gateway into the Seattle MSA.

JLL | 11 LOCAL AMENITIES Retail and lifestyle amenities are key elements within Lynnwood. The Alderwood Recreation Mall, Snohomish County’s foremost shopping destination, is located within Lynnwood city limits. It regularly draws shoppers from near and far. This unique Lynnwood adventures and activities are diverse and plentiful. Available year round, shopping venue encompasses 1.3 million square feet, includes a traditional indoor the newly renovated Recreation and Aquatic Center is equipped with a recreational mall and features two open-air sections known as The Village and The Terraces. pool including water slides, lazy river and water playground. There is a sauna, hot The Alderwood Mall is anchored by Macy’s, Nordstrom, REI, H&M and Zara, as well tub and warm water therapy pool, as well as a cardio/weight room and fitness as a 16-screen high-tech theater. studio. Lynnwood also has a municipal golf course, 22 city parks, public tennis and basketball courts, and softball and soccer fields that regularly host league and Just beyond the Lynnwood borders, but less than five miles from the property, is intercity play. the Mill Creek Town Center. Known for its award-winning, open-air design, Mill Creek Town Center has over 70 merchants nestled among nature trails and creeks. Another The seasonal Lynnwood farmer’s market operates on Thursdays, while indoor events popular shopping center among Lynnwood residents is the Everett Mall. The venue are hosted at the nearby Lynnwood Convention Center. Additional local attractions features over 75 shops and services and recently completed a redevelopment and include, but are not limited to, indoor golf centers, bowling alleys and skating rinks – re-merchandising program. Key tenants of the Everett Mall include Sears, Regal all contributing to the well-rounded quality of life available to local residents. Cinemas, LA Fitness, Burlington Coat Factory, Ulta Beauty and Old Navy. Additional big box retailers are nearby, as well as an assortment of shopping centers inclusive of Newberry Square, Golde Creek Plaza and Mill Creek Plaza.

Top retail supports the live/work/play lifestyle

Alderwood Mall Lynnwood Recreation Center

12 | Evergreen Grove Everett Mall Paine Field Airport 5 99

EVERGREEN Future Light Rail GROVE Mariner Mill Creek Town Center

Future Light Rail Ash Way Alderwood Mall ASH WAY Mill Creek Plaza

164TH ST SW

525

99 Golde Creek Plaza Future Light Rail West Alderwood Mall

Future Light Rail Lynnwood City Center 5 405

JLL | 13 Everett Everett

SR 526/ Evergreen SW Everett Industrial Center SR 99/Airport Rd FUTURE LIGHT RAIL Mariner The City of Lynnwood is actively working to accommodate an expanding population, Ash Way employment growth and new attractions. Sound Transit is also bringing a new light rail line West Alderwood to the municipality. The ongoing Lynnwood Link Extension will extend passenger rail service EVERGREEN Lynnwood to the Lynnwood City Center by 2023. When light rail opens within Lynnwood, residents will City Center GROVE Canyon Park be able to rapidly travel to the University of Washington, Downtown Seattle and Sea-Tac Mountlake Terrace International Airport regardless of weather or traffic. Projected ridership is 63,000 to 74,000 Lake Kenmore Bothell Shoreline North/185th Forest Woodinville each weekday and travel time to downtown Seattle will be 28 minutes. Park Shoreline South/145th The northern continuation of the light rail extension is known as the Everett Link Extension. Brickyard NE 130th This will add another six stations and stretch over 16 miles from Lynnwood into downtown Northgate Kingsgate/Totem Lake Everett. The Everett Link Extension includes a new light rail station at Mariner Park & Ride, less Kirkland NE 85th Downtown Redmond than two miles from the property. Construction is set to begin in 2030 with the extension and Ballard Roosevelt SE Redmond Interbay U District Mariner Station open for service in 2036. Smith Cove South Redmond Technology Center University of Kirkland Seattle Center Washington Overlake Village South Lake Union Bel-Red/130th Denny Capitol Hill Spring District/120th Wilburton Seattle Westlake Bellevue Downtown University Street Bellevue East Main Pioneer Square Midtown International District/Chinatown South Bellevue Richards Rd & King Street Judkins Mercer Stadium Park Island Eastgate Alaska Mount Junction n e O Beacon Baker Lakemont lo dg D va ri O A el S Hill D Columbia City S Graham St Issaquah NE 44th Othello

Rainier Beach

Tukwila/ S Boeing Access Rd International Blvd South Renton Burien

SeaTac/Airport

Angle Lake

Kent/DesMoines

S 272nd

Federal Way Existing Light Rail Station Future Light Rail Station South Future Bus Rapid Transit Federal Way

14 | Evergreen Grove RESIDENT PROFILE

ESRI’s top tapestry groups for Lynnwood show a residential base that includes a high proportion of young workers and families, which corresponds to the 4.69 vacancy rate Low vacancy is enhanced by strong in-migration reported for Lynnwood by Yardi Matrix. Over three-quarters of the population within the immediate vicinity of Evergreen and healthy household incomes Grove are grouped in to three life modes: Enterprising Professionals (52.3 percent), Bright Young Professionals (13.7 percent) and Boomburbs (12.5 percent).

Enterprising Professionals Enterprising Professionals are considered well- educated and primarily employed in science, technology, engineering and mathematics (STEM) occupations. Moving up the corporate ladder with healthy incomes, Enterprising Professionals prefer to stay mobile and therefore have a tendency to choose apartment living.

Bright Young Professionals Bright Young Professionals typically reside in communities adjacent to major cities, with a majority living in multifamily housing. Employment is high amongst Bright Young Professionals who trend toward white-collar jobs.

Boomburbs Boomburbs are trading up to suburban housing with a jump on career progression and financial planning. This cohort is willing to commute to work for more affordable housing and larger floorplans.

JLL | 15 LOCAL EMPLOYMENT

The Lynnwood area is not only an attractive residential enclave, but also offers Hospitals and healthcare providers are additionally prevalent in Snohomish County. tremendous employment opportunities. Snohomish County, home to the City of Providence Regional Medical Center, Premera Blue Cross, The Everett Clinic and Lynnwood, has been adding new jobs at an average rate of 6,000 per year for a total Swedish Edmonds Hospital are listed among its top employers. Furthermore, job count of 292,600. Snohomish County has additionally become a targeted location Snohomish County has the highest concentration of engineers in the state, working for a diverse mix of employers with a substantial number of workers. T-Mobile has across multiple industries. This is advanced in part by Naval Station Everett, a carrier an engineering center, Amgen has a research facility and Zumiez has their corporate base, which provides close to 1,000 well-trained employment candidates each year. headquarters here. Additionally, Google and AT&T have customer service centers. The county is also designated by the state as the center of the medical device industry in Notably, Snohomish County has become a “gateway to the world,” as proclaimed by Washington. Two significant companies in the ultrasound space, Philips and Sonosite, County Executive Dave Somers. This coincides with the March 2019 opening of Paine have headquarters in Snohomish County. Field in Everett to commercial aviation traffic. Now “Seattle’s other airport,” Paine Field offers 24 daily flights on Alaska and United Airlines. With less traffic than Seattle- Compared with other Washington State counties, Snohomish County ranks first in the Tacoma International Airport, Paine Field Airport typically offers shorter wait times for concentration of manufacturing jobs and second in the number of tech jobs. It has parking, ticker counters and security lines. It also includes tourist destinations such as also made a name for itself as a home to approximately 200 aerospace employers who the Future of Flight Aviation Center and Boeing assembly tours. In total, the airport is choose to locate near Boeing to serve as company suppliers. Boeing is the world’s estimated to generate 65,000 direct and indirect jobs. largest aerospace company and currently employs over 35,000 people locally. Boeing also owns and occupies the largest building in the world by volume at 4.3 million Of additional note is Snohomish County’s population surge, which has created a square feet. The company is said to be worth $13 billion to Washington residents and residential base that is larger than four states and the District of Columbia. Net in- creates a local job multiplier of 3.5 to 4.0. migration totaled 15,720 people between April 2017 and 2018, with the number of residents growing by more than 100,000 over the past ten years. The population of Snohomish County now exceeds 805,000, as reported by the Washington State Office of Financial Management. #1 for manufacturing jobs

#2 for tech jobs

16 | Evergreen Grove 2018 Snohomish County Top Employers Employees The Boeing Company 35,000 Providence Regional Medical Center 4,906 5 Edmonds School District 3,616 The Tulalip Tribes 3,500 Washington State Govt 3,000 Naval Station Everett 2,900 EVERETT The Everett Clinic 2,871 Snohomish County Government 2,759 2 Everett School District 2,443 Premera Blue Cross 2,200 Albertsons/Safeway 2,177 EVERGREEN U.S. Federal Govt 2,100 GROVE Mukilteo School District 2,020 99 Philips 2,000 Swedish Medical Center - Edmonds 1,850 5 Campus 2 Edmonds Community College 1,635 Fred Meyer 1,351 Puget Sound Mill Creek Marysville School District 1,341 City of Everett 1,225 Fluke Corporation 1,200 9

Edmonds Lynnwood 5 522 405

99 Mountlake Terrace

Bothell

JLL | 17 Regional Overview SEATTLE | BELLEVUE | EVERETT

The greater Puget Sound Region (PSR), with its strategic location and thriving economy, is the commercial force of the Pacific Northwest. The PSR or Seattle Metropolitan Statistical Area (MSA) generally refers to the Seattle-Tacoma-Bellevue locale, but is often broken down further to divide the MSA into Tacoma and Seattle-Bellevue-Everett. These combined areas have the largest concentration of population north of San Francisco and west of Chicago.

Together, the Seattle MSA is the economic, cultural and advanced technology hub of the Pacific Northwest. Known as the Silicon Valley of the Northwest, it is the number one region in the country for technology/STEM growth. This area is also one of the most dynamic real estate investment markets in the country. It benefits from a combination of strict land use planning, topographical constraints on supply, and employment growth that consistently ranks above the national average. Favorable “renter” demographics, positive job numbers, strong population projections and a low 3.5 percent unemployment rate, together with high barriers for entry in homeownership, also position the PSR as a strategic market for multifamily investment gains.

Economic leader with enviable indicators for continued growth

JLL | 19 Mount Rainier Downtown Seattle Redmond Puget Sound Eastside Seattle CBD Downtown Bellevue Facebook Apple Lake Washington Google Microsoft Amazon T-Mobile Future Light Rail 5

405 Alderwood Mall

Future Light Rail

5 99

Future Light Rail 525

Northpointe Shopping Center 164TH ST SW EVERGREEN GROVE

20 | Evergreen Grove CITY OF SEATTLE

The City of Seattle encompasses 84 square miles and is bordered by the Puget Sound on the west and Lake Washington on the east. Seattle is the second fastest growing large city in the country, according to recent data from the U.S. Census Bureau. It is the nation’s most sought-after destination for career-oriented professionals and Forbes’ #1 best place for business and careers.

The proof behind Seattle’s high rankings is evident all around the city. Seattle’s flourishing, multifaceted economy is home to some of the world’s most respected companies and organizations. The city has an enviable mix of business sectors from the rapidly growing global health and life sciences, to on-line and traditional retailers, to the impassioned world of digital gaming. Notable firms such as Amazon, Facebook, Google, Twitter, the Bill & Melinda Gates Foundation, Adobe, Tableau, Zulily, Nordstrom, Starbucks, Russell Investments and Fred Hutchinson Cancer Research Center are just a few that call Seattle home. This counterbalance between traditional, established companies and cutting edge, up-coming businesses creates the perfect atmosphere for continued economic and job growth.

#1 place for business and careers

JLL | 21 SEATTLE EMPLOYMENT

Downtown Seattle has seen a job growth of 39 percent since 2010. Roughly 30 new jobs were added per day between 2010 and 2018 for a total employment count that now exceeds 300,000. Estimates by the Puget Sound Regional Council indicate that downtown alone has more jobs than any other city in the region and double the number of its nearest competitor. Leading Seattle employers with ongoing large-scale expansions include Amazon, Facebook, Google, Apple and Expedia. Amazon in particular has been the strongest influencer in Seattle’s office market as it continues to grow its presence locally. In June 2017, it beat out Costco and became the state’s largest public company. In September 2018, Amazon joined Apple as the only publicly traded U.S. companies to reach $1 trillion in market value. Amazon’s current staff in Seattle is estimated at 45,000 but growing to over 85,000 employees and 14 million square feet by 2022 in Seattle alone.

Facebook is another large office occupier that is growing its Seattle workforce to 5,500 employees with the opening of the Arbor Blocks in the coming months. Meanwhile, Google is opening new Seattle offices in Q3 2019, which will provide space for a staff of approximately 4,400. Google has also pre-leased another to-be-constructed building. The 12-story tower is expected to be completed in 2021 and hold approximately 1,000 employees.

Spanning 40 acres, Expedia will open a new Seattle main campus/world headquarters in late 2019 and transfer a staff of 4,500 from its current location in Bellevue. The company is expected to begin construction on an additional 600,000 square foot building that will open in 2020 and provide space for another 2,000 to 3,000 employees.

Growing headcounts at Amazon, Facebook, Google and Expedia

22 | Evergreen Grove OFFICE GROWTH

The completion of new buildings has increased downtown Seattle’s office market to more than 54 million square feet. Notably, in the last eight years, 87 percent of office construction in Seattle occurred downtown. According to data provided by the Downtown Seattle Association, in 2017, downtown Seattle experienced more office construction than any other CBD in the country.

Downtown’s deliveries have leased up quickly with over 5.0 million square feet absorbed in the last three years. Increased demand comes from 91 active requirements for 4.4 million square feet of space. The office pipeline currently includes 5.8 million square feet under construction. This equates to space for an estimated 35,000 employees and creates demand for approximately 10,000 apartment units. 61 percent of the pipeline is preleased and interest in what is available remains high.

JLL | 23 CITY OF BELLEVUE

Bellevue is recognized as an international business center hosting a “who’s who” of powerhouse firms and more than 150,000 workers. It is additionally known as a regional shopping destination featuring premium retailers, specialty shops, sought-after brands, popular restaurants, a 3-D IMAX cinema, bowling, billiards and upscale nightclubs. Tens of millions visit each year and enjoy the hundreds of offerings found at The Shops at The Bravern, The Bellevue Collection and Bellevue Connection.

Bellevue’s skyline has expanded to 9.7 million square feet and almost all of it is now occupied. Large tech-based corporations located here include Microsoft, Amazon, Expedia, Facebook, Salesforce and eBay. The list of notable companies in the Central Business District extends to Valve, Pokemon, WeWork, VoiceBox Technologies, BitTitan, Epic Games, Samsung, PACCAR, Puget Sound Energy, Concur and Bungie, among others.

While Expedia is moving its headquarters to Seattle in 2019, it is retaining a significant amount of space in Bellevue’s Central Business District to accommodate its workforce. Facebook and Google are also furthering their local presence by expanding into the Bellevue CBD with 195,000 square feet of newly leased space. At the same time, Amazon’s recent activity in Bellevue will result in an Eastside footprint that is well over one million square feet. Its Bellevue operations are spread among multiple existing highrises and includes a future office tower. Articles from local publications also suggest that Amazon is in the running to purchase a large development site in the core of Bellevue. Overall, it is estimated that Amazon could expand to 3.9 million square feet in Bellevue with space for more than 25,000 employees in the near future. This size is on par with Amazon’s HQ2 to be built in the D.C. area

9.7 million SF of office space in downtown Bellevue, with a skyline that doubled in size

24 | Evergreen Grove I-90 CORRIDOR

The I-90 corridor hosts a strong base of firms in the technology, telecommunications, and aerospace sectors. This includes T-Mobile, Microsoft, Verizon, Siemens, Infosys, HTC, and Boeing. T-Mobile, whose headquarters sits at the intersection of I-90 and I-405, is the fastest growing wireless company in America with 1.65 million net customer additions in Q1 2019. This marks 24 straight quarters of adding more than 1 million customers. T-Mobile has a reported headcount of 6,200 along the I-90 corridor and is planning a $160 million overall / renovation of its Bellevue headquarters. The company renewed the lease for its headquarters in spring 2018, which includes approximately 900,000 square feet of office space, and announced a new lease of 88,000 more square feet along the I-90 corridor at the Sunset Corporate Campus. T-Mobile is the country's fastest growing wireless company with 6,200 employees in its I-90 offices 520 CORRIDOR Microsoft headquarters rendering (news.microsoft.com) Nearby within Bellevue’s 520 Corridor is an area known as the Spring District, which will host the upcoming headquarters for Recreational Equipment, Inc., commonly known as REI. REI purchased about eight acres in the Spring District in October 2017 for $49 million. The company will move its 1,400 employees from the South Puget Sound to its new Bellevue location upon completion in 2020. Facebook has also pre-leased 311,000 square feet in the Spring District Block 16 – set to deliver in Q1 2020.

Microsoft’s main campus/world headquarters sits along the 520 Corridor in the neighboring city of Redmond. Over 38,000 full-time employees work at Microsoft offices within Redmond. It is estimated that 6.8 jobs are created for every one Microsoft employee.

Microsoft is redeveloping its main campus in Redmond over the next five to seven years, investing billions of dollars to add 18 new buildings, replace 12 current buildings and create 2.5 million square feet of new office space. The redevelopment program will also modernize 6.7 million square feet of existing offices. Upon completion, Microsoft’s 500-acre campus will offer space for 8,000 new employees.

JLL | 25 CITY OF EVERETT

The City of Everett is situated to the north of Evergreen Grove. It is the largest city in Snohomish County and serves as the county seat. The City of Everett was established in 1891 and has evolved from a bustling mill town into a thriving commercial center. Port Gardner Bay, Puget Sound and the Snohomish River surround the city with more than 50 miles of fresh and saltwater shoreline.

The city supports a robust manufacturing core, state-of-the-art naval station and continued expansion of its high-tech industry hub. Everett is home to the largest public marina on the West Coast and is best known for hosting Boeing and the world’s largest building, a Boeing assembly plant.

Key Employers 200 aerospace companies headlined Several of the largest employers located specifically within the City of Everett include: Boeing, Naval Station Everett, Providence Regional Medical Center, by Boeing and Paine Field Intermec (bar code manufacturing) and Fluke Corporation (electronic testing equipment).

Boeing’s Everett operations include aircraft fabrication and production, as well as product development. This includes maintenance of the largest manufacturing building in the world, which is utilized for 747, 767, 777 and 787 airplane productions. 35,000 are employed by Boeing in Snohomish County with an average annual pay of $99,157. Research also shows that 3.5 to 4.0 local jobs are created for each Boeing employee (the multiplier effect). Boeing’s Everett productions are located in the Paine Field submarket, only three miles from Evergreen Grove.

Further employment comes from deep-water seaport facilities with world- wide shipping connections. This includes the Port of Everett, which is the fifth largest port on the West Coast based on U.S. Customs export values. Container, break bulk and barge facilities are available with on-dock rail to expedite multi-modal freight. Importantly, the Port of Everett handles 100 percent of the imported assemblies for the Boeing 747, 767 and 777 aircraft. Also noteworthy is Naval Station Everett, currently home to approximately 6,000 military and civilian employees. It is one of four naval stations in the Northwest and located ten miles from Evergreen Grove.

26 | Evergreen Grove JLL | 27 Financial Analysis APARTMENT INCOME SUMMARY

IN-PLACE RENTS JLL RENOVATED MARKET RENTS TYPE UNITS AVG. UNIT SF TOTAL SF IN-PLACE RENTS IN-PLACE RENT/SF JLL MARKET RENT JLL MARKET RENT/SF

One Bedroom Small 1 780 780 $1,390 $1.78 $1,425 $1.83

One Bedroom Large 15 850 12,750 $1,251 $1.47 $1,475 $1.74

Two Bedroom / Two Bath 57 1,120 63,840 $1,412 $1.26 $1,670 $1.49

Total / Weighted Average 73 1,060 77,370 $1,378 $1.30 $1,627 $1.53

JLL | 29 OPERATING STATEMENT RENOVATED PER UNIT % PRO FORMA YR 1

OPERATING REVENUE Potential Market Rent $1,424,880 $19,519 (Loss to Lease) / Gain to Lease $0 $0 0.00% Gross Potential Rent $1,424,880 $19,519

Vacancy ($71,244) -$976 -5.00% Non-Revenue Units $0 $0 0.00% Collection Loss / Bad Debt ($3,562) -$49 -0.25% Total Economic Loss ($74,806) -$1,025 -5.25%

Net Rental Income $1,350,074 $18,494

Parking $43,800 $600 Pet Rent $6,570 $90 Utility Reimbursement $93,075 $1,275 Miscellaneous Income $29,200 $400 Total Other Income $172,645 $2,365

Effective Gross Income $1,522,719 $20,859

OPERATING EXPENSES Payroll & Benefits $70,875 $971 Utilities $109,500 $1,500 Repairs & Maintenance / Turnover $32,850 $450 Leasing & Marketing $18,250 $250 Landscaping & Contract Services $25,550 $350 Administrative $18,250 $250 Management Fee $45,682 $626 3.00% Insurance $20,075 $275 Real Estate Taxes $104,785 $1,435 Total Operating Expenses $445,816 $6,107

Replacement Reserves $18,250 $250

Net Operating Income $1,058,653

Expenses and Reserves Per Unit $6,357 Expense Ratio 29.28%

30 | Evergreen Grove CASH FLOW PROJECTIONS RENOVATED YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 PRO FORMA YR 1 OPERATING REVENUE Potential Market Rate Rent $1,424,880 $1,489,000 $1,548,560 $1,602,759 $1,650,842 $1,700,367 $1,751,378 % Growth 4.50% 4.00% 3.50% 3.00% 3.00% 3.00% (Loss to Lease) / Gain to Lease $0 $0 $0 $0 $0 $0 $0 % of Gross Potential Rent 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Gross Potential Rent $1,424,880 $1,489,000 $1,548,560 $1,602,759 $1,650,842 $1,700,367 $1,751,378 % Growth 4.50% 4.00% 3.50% 3.00% 3.00% 3.00% Vacancy -$71,244 -$74,450 -$77,428 -$80,138 -$82,542 -$85,018 -$87,569 % of Gross Potential Rent -5.00% -5.00% -5.00% -5.00% -5.00% -5.00% -5.00% Collection Loss / Bad Debt -$3,562 -$3,722 -$3,871 -$4,007 -$4,127 -$4,251 -$4,378 % of Gross Potential Rent -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% Total Economic Loss -$74,806 -$78,172 -$81,299 -$84,145 -$86,669 -$89,269 -$91,947 % of Gross Potential Rent -5.25% -5.25% -5.25% -5.25% -5.25% -5.25% -5.25% Net Rental Income $1,350,074 $1,410,827 $1,467,260 $1,518,614 $1,564,173 $1,611,098 $1,659,431 Parking $43,800 $45,114 $46,467 $47,861 $49,297 $50,776 $52,299 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Pet Rent $6,570 $6,767 $6,970 $7,179 $7,395 $7,616 $7,845 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Utility Reimbursement $93,075 $95,867 $98,743 $101,706 $104,757 $107,899 $111,136 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Miscellaneous Income $29,200 $30,076 $30,978 $31,908 $32,865 $33,851 $34,866 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Total Other Income $172,645 $177,824 $183,159 $188,654 $194,313 $200,143 $206,147 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Effective Gross Income $1,522,719 $1,588,651 $1,650,419 $1,707,268 $1,758,486 $1,811,241 $1,865,578 OPERATING EXPENSES Utilities $109,500 $112,785 $116,169 $119,654 $123,243 $126,941 $130,749 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Repairs & Maintenance / Turnover $32,850 $33,836 $34,851 $35,896 $36,973 $38,082 $39,225 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Leasing & Marketing $18,250 $18,798 $19,361 $19,942 $20,541 $21,157 $21,791 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Landscaping & Contract Services $25,550 $26,317 $27,106 $27,919 $28,757 $29,619 $30,508 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Administrative $18,250 $18,798 $19,361 $19,942 $20,541 $21,157 $21,791 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee $45,682 $47,660 $49,513 $51,218 $52,755 $54,337 $55,967 % of Effective Gross Income 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Insurance $20,075 $20,677 $21,298 $21,936 $22,595 $23,272 $23,971 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Real Estate Taxes $104,785 $107,928 $111,166 $114,501 $117,936 $121,474 $125,118 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Total Operating Expenses $445,816 $459,798 $474,015 $488,456 $503,110 $518,203 $533,749 % Growth 3.14% 3.09% 3.05% 3.00% 3.00% 3.00% Replacement Reserves $18,250 $18,798 $19,361 $19,942 $20,541 $21,157 $21,791 % Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Net Operating Income $1,058,653 $1,110,056 $1,157,042 $1,198,870 $1,234,836 $1,271,881 $1,310,038 Expenses and Reserves Per Unit $6,357 $6,556 $6,759 $6,964 $7,173 $7,388 $7,610 JLL | 31 Expense Ratio 29.28% 28.94% 28.72% 28.61% 28.61% 28.61% 28.61% NOTES TO PRO FORMA The Evergreen Grove Apartments represent a unique repositioning and Additional Income value-add opportunity. Investors are encouraged to review the Pro Parking: The property contains 159 surface parking stalls. There is currently no Forma and then contact the JLL Seattle Multifamily Team to discuss charge for these stalls. As part of a renovation, investors can construct carport specifics of the value-add opportunity. structures to increase cash flow. We assume that an investor builds 73 carports (a 1:1 ratio to units) and rents them for $50 per month. This results in total parking income of $43,800 ($600 per unit). We surveyed the surrounding market and Apartment Income comparable properties are charging the following monthly amounts for carports: Potential Market Rate Rent: The Pro Forma assumes average renovated PROPERTY CARPORT RATE rents of $1,627 ($1.53 per square foot) across the 73 units at the Evergreen Grove Apartment Homes. Our renovated rents are based on what management LATITUDE $40 for one, $50 for the second is current achieving at the property as well as the renovated asking rents at comparable properties. The Pro Forma also assumes that as part of a renovation, an investor will add washers and dryers to all units. Please note that the units are SERRA VISTA $50 pre-plumbed. WOODCREEK $50 Loss to Lease: The Pro Forma assumes no loss to lease.

Vacancy: The Pro Forma assumes vacancy of 5.0%, which is in-line with current TRILLIUM $50 submarket vacancy. The Pro Forma assumes that 30% of the units have a pet. Based on a Non-Revenue Units: Currently, the property uses one unit as a manager’s office. Pet Rent: Based on the size of the property, we assume that a roaming manager would market pet rent of $25 per pet, per month, this equates to total pet rent income of service the property, therefore removing the need for an office. $6,570 ($90 per unit). The Pro Forma assumes that management contracts Collection Loss / Bad Debt: The Pro Forma assumes bad debt losses equal to Utility Reimbursement: 0.25% of gross potential rent, which is in-line with comparable properties in the a third-party service to bill back tenants for utilities. Based on market utility submarket. bill back equal to 85% of the total utility bills, this results in total utility reimbursement of $93,075 ($1,275 per unit).

Miscellaneous Income: The Pro Forma assumes miscellaneous income of $29,200 ($400 per unit), which is in-line with comparable properties in the submarket.

32 | Evergreen Grove NOTES TO PRO FORMA Operating Expenses Payroll & Benefits: The Pro Forma assumes market payroll and benefit expense Management Fee: The Pro Forma assumes a management fee equal to 3.0% of $70,875 ($971 per unit), which based on the following employees: of effective gross income, which is in-line with what a competitive third-party manager would charge to manage a property of this size and income level. SALARY ALLOCATION PLUS POSITION SALARY ALLOCATION TAXES, BENEFITS AND BONUS Insurance: The Pro Forma assumes insurance expense of $20,075 ($275 per unit), ASSISTANT MANAGER which is in-line with insurance expense at comparable properties. $27,500 $37,125 (PART-TIME) Real Estate Taxes: The Pro Forma assumes the actual 2020 assessed value MAINTENANCE $25,000 $33,750 ($10,576,000) multiplied by the 2019 millage rate ($9.51912) plus all fees. This (PART-TIME) results in total real estate taxes of $104,785 ($1,435 per unit).

TOTAL (2) $52,500 $70,875 Replacement Reserves: The Pro Forma assumes the replacement reserves of $18,250 ($250 per unit).

Utilities: The Pro Forma assumes utility expense of $109,500 ($1,500 per unit), which is based on utility expenses at comparable properties.

Repairs & Maintenances / Turnover: The Pro Forma assumes repairs and maintenance / turnover expense of $32,850 ($450 per unit), which is in-line with repairs and maintenance / turnover expenses at comparable properties.

Leasing & Marketing: The Pro Forma assumes leasing and marketing expense of $18,250 ($250 per unit), which is in-line leasing and marketing expenses at comparable properties.

Landscaping / Contract Services: The Pro Forma assumes landscaping and contract services expense of $25,550 ($350 per unit), which is in-line with landscaping and contract services expenses at comparable properties.

Administrative: The Pro Forma assumes administrative expense of $18,250 ($250 per unit), which is in-line with administrative expenses at comparable properties.

JLL | 33 Rent Comparables COMPETITIVE SET

PROPERTY ADDRESS YEAR BUILT UNITS AVG SF OWNER MANAGER

EVERGREEN GROVE 2709 Lincoln Way, Golden Qifang Owner Lynnwood, WA 98087 1983-1984 73 1,060 Holdings LP Managed

14014 Admiralty Way, Williams Williams SERENE VILLAGE 1987 121 800 Lynnwood, WA 98037 Investments Investments

15517 40th Ave W, Epic Asset SERRA VISTA 1990 138 873 John Stephanus Lynnwood, WA 98087 Management

12907 E Gibson Rd, Friedkin Realty LATITUDE 1986 108 786 AMC Everett, WA 98204 Group

3520 156th St, Owner CRESTVIEW VILLA 1986 52 863 Raymond Maclean Lynnwood, WA 98037 Managed

14611 Admiralty Way, RISE Properties Thrive WOODCREEK 2000 164 1,016 Lynnwood, WA 98037 Trust Communities

Pacific 4902 148th St SW, TRILLIUM 2015 90 819 Development Pinnacle Edmonds, WA 98026 Partners

JLL | 35 Untitled map

Rent.xlsx

Serene Village Serra Vista Latitude Crestview Villa Woodcreek Trillium 3 EVERGREEN GROVE

1 MAP KEY

Subject Evergreen Grove

1 Serene Village 5 2 Serra Vista 6 3 Latitude

4 Crestview Villa

5 Woodcreek 2 4 5 Trillium

36 | Evergreen Grove RENTAL ANALYSIS

RENOVATED RENT COMPARABLES - ONE BEDROOM $1,600 Rent Comparables - One Bedroom NAME AVG. SF RENT RENT/SF $1,550 Serra Vista (W+D) Serra Vista (W+D) 750 $1,550 $2.07 Woodcreek (W+D) $1,500 Trillium (W+D) Woodcreek (W+D) 796 $1,530 $1.92 $1,600 Rent Comparables - One Bedroom Evergreen Grove (Pro Forma, W+D) $1,450 Trillium (W+D) 656 $1,500 $2.29 $1,550 Serra Vista (W+D) Woodcreek (W+D)

t $1,400 Latitude (W+D) Evergreen Grove (Pro Forma, W+D) 850 $1,475 $1.74 n $1,500 Trillium (W+D) e R $1,350 Evergreen Grove (Pro Forma, W+D) Latitude (W+D) 659 $1,399 $2.12 $1,450 Crestview Villa (No W+D) 790 $1,300 $1.65 $1,300 Serene Village (No W+D) Crestview Villa (No W+D) t $1,400 Latitude (W+D) n e

R $1,250 Evergreen Grove (In-Place, No W+D) Serene Village (No W+D) 660 $1,295 $1.96 $1,350 $1,200 Evergreen Grove (In-Place, No W+D) 850 $1,251 $1.47 $1,300 Crestview Villa (No W+D) 600 650 Serene Villag70e0 (No W+D) 750 800 850 900 Square Feet W+D: Washer & Dryer $1,250 Evergreen Grove (In-Place, No W+D)

$1,200 600 650 700 750 800 850 900 $2,000 Rent ComparablesS q-uaTrew Feeot Bedroom / Two Bath

$1,900 Serra Vista (W+D) RENOVATED RENT COMPARABLES - TWO BEDROOM / TWO BATH Trillium (W+D) $2,000 Rent Comparables - Two Bedroom / Two Bath NAME AVG. SF RENT RENT/SF $1,800 Woodcreek (W+D)

Serra Vista (W+D) 934 $1,900 $2.03 $1,900 Serra Vista (W+D) Latitude (W+D) t $1,700 Trillium (W+D) n

e Evergreen Grove (Pro Forma, W+D)

Trillium (W+D) 965 $1,865 $1.93 R $1,800 Serene Village (W+D) Woodcreek (W+D) Woodcreek (W+D) 1,055 $1,805 $1.71 $1,600 Crestview Villa (W+D) Latitude (W+D) t $1,700

Latitude (W+D) 891 $1,705 $1.91 n

e $1,500 Evergreen Grove (Pro Forma, W+D) R Evergreen Grove (Pro Forma, W+D) 1,120 $1,670 $1.49 Serene Village (W+D) $1,600 Crestview Villa (W+D) Evergreen Grove (In-Place, No W+D) $1,400 Serene Village (W+D) 876 $1,625 $1.86 850 900 950 1,000 1,050 1,100 1,150 $1,500 Square Feet Crestview Villa (W+D) 1,000 $1,600 $1.60 Evergreen Grove (In-Place, No W+D) Evergreen Grove (In-Place, No W+D) 1,120 $1,412 $1.26 $1,400 850 900 950 1,000 1,050 1,100 1,150 W+D: Washer & Dryer Square Feet

JLL | 37 Sales Comparables SALES COMPARABLES

PROPERTY ADDRESS BUILT UNITS AVG SF SALE DATE TOTAL PRICE PRICE / UNIT PRICE / SF

16604 48th Ave W, NOVELA 1989 100 946 Aug-18 $24,625,000 $246,250 $260 Lynnwood, WA 98037

16626 6th Ave W, MARTHA LAKE 1991 155 855 Sep-17 $34,800,000 $224,516 $263 Lynnwood, WA 98037

4428 176th St SW, TERRA AT 1984 32 1,100 Jan-19 $7,612,500 $237,891 $216 MEADOWDALE Lynnwood, WA 98037

605 Center Rd, BEACON AT 1990 132 850 Apr-19 $29,000,000 $219,697 $258 CENTER Everett, WA 98204

4702 176th St SW, DUET 1969 120 867 Oct-17 $24,000,000 $200,000 $231 Lynnwood, WA 98037

JLL | 39 Untitled map

Sales.xlsx

Novela Martha Lake Terra at Meadowdale Beacon at Center Duet 4

EVERGREEN GROVE

MAP KEY

Subject Evergreen Grove

1 Novela

2 Martha Lake

Terra at Meadow- 3 dale

4 Beacon at Center 1 2 5 Duet

5 3

40 | Evergreen Grove JLL | 41 Transaction Guidelines OFFERING PROCEDURE

The offering of Evergreen Grove is being conducted exclusively by JLL. All questions and inquiries should be addressed to the JLL representatives listed herein.

The JLL team will be available to assist prospective investors with their review of the offering. This includes on-site inspections of the property and tours of the market area.

Investors will receive advanced notification of the bid deadline via email. Offers should include, at a minimum, the following:

• The purchase price and closing date

• The source of capital, both equity and debt, for the transaction

• The amount of earnest money deposit

• A detailed schedule of the due diligence and requisite approval process

• A description of assumptions utilized for the offer

TERMS & CONDITIONS

Copyright Jones Lang LaSalle IP, Inc. 2019. This publication is the sole property of Jones Lang LaSalle (JLL) and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of JLL. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. JLL does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. Jones Lang LaSalle Americas, Inc. License #01223413.

JLL | 43 Contact information

ADVISORS DEBT AND FINANCE

Jordan Louie Scott Gilson Vice President Director +1 206 971 7007 +1 206 576 0037 [email protected] [email protected]

Corey Marx Managing Director +1 206 607 1726 [email protected]