Bellevue CBD Land Development Opportunity OFFERING MEMORANDUM Table of Contents

FOR SALE Bellevue CBD Land Development Opportunity OFFERING MEMORANDUM Table of Contents

1. Executive Summary

• The Offering • Location Aerial

2. Property Description

• Property Profile • Bellevue CBD Zoning • Location Overview • Future Light Rail • Amenities Map

3. Market Overview

• Puget Sound Overall Market • Bellevue CBD Development Pipeline • Sale Comparables Offered by

Bob Conrad Kidder Mathews Kidder Mathews 500 108th Avenue NE, Ste 2400 [email protected] Bellevue, WA 98004 425.450.1152 kiddermathews.com Troy Gessel AGM Commercial Real Estate [email protected] 425.576.8700

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.

Kidder Mathews | Offering Memorandum 2 Executive Summary

THE OFFERING

Kidder Mathews and AGM, as exclusive advisors, are pleased to present the investment offering of four land parcels totaling PROPERTY OVERVIEW 31,718 gross square feet, located in one of the most sought after neighborhoods, Downtown Bellevue. The parcels are zoned DNTN-MU with three located in perimeter design sub district C Property Four (4) parcels in the Bellevue CBD and one parcel located in perimeter design sub district B. Address 138 107th Avenue NE 2,840 SF Retail Building The highest and best use of the property favors a residential development maximizing the current zoning which provides for 141 108th Avenue NE Land/Parking 200’ height limit (sub district C) and 90’ height limit (sub district B) and a Floor Area Ratio (FAR) of 5.0. 129 108th Avenue NE (Pending) Land/Parking Marketing Process 123 108th Avenue NE (Pending) 2,024 SF Retail Building Ownership will consider all offers to purchase all parcels or individually. Land Area 138 107th Avenue NE 7,932 SF

141 108th Avenue NE 7,932 SF

129 108th Avenue NE (Pending) 7,928 SF

123 108th Avenue NE (Pending) 7,926 SF

Pricing 138 107th Avenue NE $3,569,400 Total for 138 & 141 $7,138,800 ($450 / SF) 141 108th Avenue NE $3,569,400

129 108th Avenue NE (Pending) $3,567,600 Total for 129 & 123 $7,134,300 ($450 / SF) 123 108th Avenue NE (Pending) $3,566,700

Total Pricing for all Properties $14,273,100

Kidder Mathews | Offering Memorandum 3 LOCATION AERIAL

138 107TH AVE NE 141 108TH AVE NE

129 108TH AVE NE

108th Ave NE 107th Ave NE Ave 107th

123 108TH AVE NE

Kidder Mathews | Offering Memorandum 4 LOCATION AERIAL

NE 2nd St

141 108TH AVE NE 138 107TH AVE NE

129 108TH AVE NE

107th Ave NE Ave 107th 123 108TH AVE NE

106th Ave NE Ave 106th 108th Ave NE Ave 108th N

Kidder Mathews | Offering Memorandum 5 City of Bellevue Downtown Zoning and Design Districts Bellevue GIS Services

N E

V R-20 E 0 O 1 O

2 V

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Interiors V Bank DNTN-R 1

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P c Candies E P Imports Office: Alaska, S Upper Level: y o a e s Juarez Washington t Plaza i e h e Quadrant

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u e l s e a t u i l l h Courtyard e i t l Coffee r L h Salon c G B Tap Travel Services Northwest, Delta, a h Mutual a e a W t G Gallery T Tree of California Plaza H

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House Collection T Bank Management Doug Fox

Thai Cookery 0 NE 5TH ST Bank DNTNO-1 Grill The Galleria Relax The Corner Court City Back Store 1 Charles Schwab NE 8TH ST 1 NE 8TH ST R-20 Center NE 8TH ST First NED 8THN STTNO-2 Coco's Mutual Social Crate & Las Bellevue NE 8TH ST Nordstrom Men's NE 8TH ST

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PROPERTY PROFILE Bank of b e o o

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First y Sterling r s h s n s

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Admin. a a e z a a r a w t i u i

u Congregational Garage N

Savings b B B

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Upper Level: a m Yuen Lui

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c i o Church e C

R-10 V p Studio

S Financial Starbucks E Parking Windermere 520 Building Center A

Garage V Real EPasctcaart eBuilding Pepper Jack's H Restaurant A

Barnes & E

T AMPCO Parking Noble Books N

E System H

R-10 Farmer YM0 CA

E Starbucks Bradford N T

Day1 care Matt's Famous JCPenny Bellevue Towers Coffee V Chili Dogs E The Center 2 1

Parking Garage A

One V Bellevue 1 Learning H

First Mutual 1 Bank of Bellevue T

H Garden Bank City0 Hall

T Bellevue ASqmuaererica John Danz Building 1 Address Type Land Area Zoning Center 1 2 INCA Building

Oriental R-30 Fidelity 1

Key Skyline Bellevue 1

E Investments OLB

Rug Co. E Center Corporate

N Parking Garage

Parking Tower

N 400 Bldg.

Plaza Y Raymer Meydenbauer

Garage E E

A N

E Building Center

NE 4TH ST V N

W NE 4TH E Windermere

S A

Macys V

N E E 4TH ST E Real Estate

H NE 4TH ST

A V

T A

V 0 NE 6TH ST H Bellevue 0 Tran E sit Cente Blakemore Mondrian T r Ooba H

1 Mexican

L Bellevue DNT6 NO-2 DNTN-MU / Perimeter Mercedes Elliott GNallerEia 4TH SToToba's T N Grill E L California 0 Rock 6TH ST House Art Scan Cinemas 8 1 Bottom Chipotle E Specialist Tire & Service Decor Pizza 0 NE 4TH ST

Design 1 138 107th Avenue NE 2,840 SF Retail Building 7,932 SF & Jamba B Museum NNEE 6TH ST Carpet 4 GIA The Hines Bellevue Kitchen Gene Center 545 TH S Verizon Juice One Juarez T Design Subdistrict “C” US Tap Salon Escrow Nibbana Office Towers House Puget Capri NE 5TH ST Bank DNTNO-1 Grill The Galleria SummiTthai Cookery Hot Back Street City Lakeshore Learning Italian & Group Tower 333 Sound Yoga Frame & Art Key Bank Office Center Store Wallace International DNTNO-2 Coco's R-30 Social Las EneBregllyevue Bldg. Men's Foods Lotte Teriyaki Towers Properties ABC Margaritas E 200 Plaza Security Warehouse E

Parking Sterling N Builders

E N E Upper Level: Barber Spazzo's Admin.

E Garage Savings

E Bellevue N Abella Condos

Town & Country Mediterranean E N V

N E

Starbucks E Alvin Goldfarb, E Windermere 520 Building

Alteration Cleaners Webb Bldg. Grill A

Plaza 305 N

V V

E Pepper Jack's Country Wide Real Estate

Jeweler E (Top Floor) H A

Mist on Tan Restaurant Terri Nails Bellevue

A V T Beck Bldg. E Pet's Choice Home Loans E V H

DNTN-MU / Perimeter E 0 Auto House Inc.

R-30 E

V A Wells Fargo 1 JCPenny N

Premier A Bellevue Towers N H E 3RD PL V 2 The Hear USA Bonnell & Webb 1

E One A 1 PIP 141 108th Avenue NE Land/Parking 7,932 SF Auto Learning T Bellevue

DNTN-MU H

A Rogers Bank of First Mutual 1 Nordic Track H

Quizno's Bellevue N Garden Binyon 0

Y Salon Rivera Printing Bank City Hall Teriyaki Bowl T

Sports Fine Timepieces H V Classic Subs Fitness Center T America Nina's NE 3RD ST INCA Building Design Subdistrict “C” Family Eye Care Center 1

H E 5 A Christian Oriental Fidelity Insurance

E UPS Store Sushi

6 SaloSnkyline A Kennedy's Investments 1

0 Adjustor Virginia Mason Science Civica N Rug Co. 1

Yama 0

V Cigar Bound

W Lamp & Shade 400 Bldg. Tower

1 Reading

Becks 1 H 1 Pinnacle Bell Center Pacific Inn

A Check Masters Bellevue E NE 4TH ST Rosie's Room Office 0

w 1

T E LawrencNeE 4TH ST Tailoring

Too V

o Nextel NE 4TH ST Apartments NE 4T 2 H the Florist H ST U Commons Virginia Mason

R June Salon

T A-Z Pharmacy

V Small Wonders Blakemore Mondrian Offices Physical Therapy DNTNO-2 NE 1 0 4TH ST

k Bakker's Dry Cleaning & Medical Supply Mercedes Elliott Daycare Center E House R&R H

r Roger's

Specialist Tire & Service Chipotle Decor NE 4TH S

0 T E Kohana H Bonney-Watson Bellevue & Jamba N L Carpet E 4 T a Adult Toys The Auto TH S 1 Juice GIA Hines Bellevue T T Verizon One Mongolian N

Fireplace Shop 4 L

Boardwalk Shoe Repair t

P Salon

Escrow NE 2 r Arby's 6 NODffic Pe TLowers Puget

Grill Sea Capri Summit 1 E

L Hot Museum Quality Framing Dimensions Gallery Back Street p Lakeshore Learning 129 108th Avenue NE DNTN-MU / Perimeter 0 Group DNTNOLB Italian & Tower 333 Sound Key Bank 1 Taco Yoga Frame & Art Office m Store Wallace E

Wisbeck & I

P 1 Jennifers Nails Daly's Paint & Stain Garden International Cascade Energy Amazon H R-30 d Foods BldgFr.aser Creations Diamond Banque Towers Properties Lotte Teriyaki n o ABC Time N E Land/Parking 7,928 SF The Framery Gallery 200 Plaza t

Unique Design e Rest. T

Gallery u Christmas Seastar Architects Jewelry & Loan r Builders N Grill E Upper Level: Barber Savings Spazzo's Odegard

T A Jewelers E Bellevue 0 House Abella Condos Progressive Auto Ins. E

Town & Country Mediterranean E N Bellevue

N E

(Pending) Ballet Arts Design Subdistrict “C” Alvin Goldfarb, Rest. E

Alteration Cleaners Webb Bldg. Grill 1 Bank Plaza 305 Betts,N Austin, George

V V Apts E Country Wide

Jeweler E (Top Floor)

Terri Nails Mist on Tan Bellevue 1 Windermere Real Estate A V Beck Bldg. E Pet's Choice Home Loans E Center V A Auto House Inc. E

R-30 E

V T NE 2N A Wells Fargo D ST N Premier A N H E S 3RD PL V Hear USA Bonnell & Webb

D E

PIP N NE 2N Auto T

DNTN-MU D H S E 2 T Rogers A Nordic Track H

Quizno's N Binyon 0 E Y Salon Rivera Printing NE 2ND ST Washington Teriyaki Bowl T

Sports N Fine Timepieces H V Classic Subs Fitness Center T NE Nina's NE 3RD ST Family Eye Care 21 ND

H ST E 5 Fatburger-- A Christian Insurance T

E UPS Store Sushi

6 Washington Salon A Kennedy's 1

0 Adjustor Virginia Mason Mutual Science Civica N 1

Yama 0

V Cigar Bound

W Lamp & Shade

1 Reading

Becks 1 H 1 Pinnacle Bell Center Pacific Inn

BaA ja Fresh Check Masters Bellevue E Mutual Rosie's Room Office 0

w 1

T E Pacific FirstL aPwrelnace za Tailoring

Bellevue Pawn 1

Too V

o Nextel Apartments

Upper Level: H the Florist N U Commons 2nd Street E 2NVirDginia Mason A

1 Plaza R June Salon ST T A-Z Pharmacy X-Change

V Small Wonders DNTN-MU Bank of Offices Physical Therapy

Alexandria Investment Pacific Tower 1 0

k Bakker's Dry Cleaning & Medical Supply Daycare Center E R&R H

r Bellevue Roger's 0

Jurisco E

Bonney-Watson Kohana Bellevue H Apartments L T

a Adult Toys Auto

1 T

N Washington Mongolian N

s Greg's Fireplace Shop 4

DNTN-OB L

123 108th Avenue NE DNTN-MU / Perimeter Boardwalk Shoe Repair t

P Salon

NE 2 r Arby's 6 ND PL

E o Bellevue Plaza Grill Pacific First Sea 1

Greenlake Cycle E. E. Robbins E L

Museum Quality Framing Dimensions Gallery p Mutual 0 DNTNOLB

1 Taco m E

1 Wisbeck & I

P 1 Lower Level: Upper Level: Jennifers Nails Health CDalulyb's Paint & Stain Garden Cascade Allied Mortgage Amazon H 2,024 SF Retail BuildingS 7,926 SF Bellevue Creations d Fraser Diamond Banque

n o Time N The Framery Gallery t

Unique Design e Rest. T

Gallery u Christmas T Embroidery Mediterranean Chantanee Seastar Architects Jewelry & Loan r E Grill Savings Odegard Jewelers T A Byblos Deli Quiltworks 0 House Progressive Auto Ins. S Kitchen Ballet Arts RTeost.ys 'R Us E Bellevue Azteca (Pending) Design Subdistrict “B” Family 1

Bellevue Way Bank Betts, Austin, George N Hairacy T V Apts

Casa D's Taqueria 1 Cleaners Hair Masters Center Jimmy John's Pacific Tower Sushi Star Windermere Real Estate Thai Rest. Salon A ST LaNndE 2ND ST Excalibur Y Gourmet Sandwiches Cleaners ND NE 2ND S Atrium E 2 T NE Washington NE 2ND ST Plaza Apartments NE 1S Boyd's Tree of Life E NE 2ND ST T ST A Fatburger-- Washington E

N Mutual Building

N Against The E E NE 1ST ST of Bellevue Great Clips Baja Fresh Mutual

Pacific First Plaza First St. N W Bellevue Office Pawn

E Upper Level: NE

Borgata 2

N 2nd Street N

Albasha E D Fitness N Eleme n Ptslaza X-Change ST

E DNTN-MU Bank of Mamasan Alexandria Investment Pacific Tower Celebration

Beads & E Cafe V Bellevue

Apts. E Jurisco Depot Apartments

N V

N Washington E

E Greg's DNTN-OB Beyond E Mark Allen Gift

Deli...of Europe V E E A GMreenlake iCnycle E. E. Robbins Bellevue Plaza Pacific First U Mutual

Kathryn A t Salon 1 V

Liquor & Health Club E

N S Baskets Bellevue Allied Mortgage Lower Level: Upper Level:

i N V Dental

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H E 1 This data is a geographic representation derived from the

T S

6 City of Bellevue Geographic Information System. The City Perimeter Design Districts Zoning Design DiSsEt r2iNcDt SsT 0

L of Bellevue does not guarantee that the information R-20 1

1 R-10 P Adopted October 1985 1 provided herein is accurate or complete. This information is O Single Family Subdistrict A provided on an "as is" basis and disclaims all warranties, Ordinance 4268 express or implied, including but not limited to warranties of Multi Family Subdistrict B merchantability, fitness for a particular purpose and non- Legend infringement. Any commercial use or sale of the information Core Design District and data provided herein, or portions thereof, is prohibited Office Subdistrict C without express written authorization by the City of Adopted August 1981 Bellevue. The City of Bellevue is not responsible for any Commercial Downtown Core damages arising from the use of this data. Users should Amended November 1986 verify the information before making project commitments. Medical Institution Downtown Subarea Ordinance 3723 This data is a geographic representation derived from the Zoning Design Districts Perimeter Design Districts 48,000 City of Bellevue Geographic Information System. The City Buildings Feet of Bellevue does not guarantee that the information Adopted October 1985 Sources provided herein is accurate or complete. This information is Single Family Subdistrict A City of Bellevue provided on an "as is" basis and disclaims all warranties, Date: 11 /1 4 /20 1O1 rdinanceF ile4 Na2me:6 V:\p8cd\arcgis\cbd_colorzon_28x40.mxd express or implied, including but not limited to warITr aDenptairetmsen tof Multi Family Subdistrict B merchantability, fitness for a particular purpose and non- infringement. Any commercial use or sale of the information Core Design District and data provided herein, or portions thereof, is prohibited Office Subdistrict C without express written authorization by the City of Adopted August 1981 Bellevue. The City of Bellevue is not responsible for any Commercial Downtown Core damages arising from the use of this data. Users should Amended November 1Kidder986 Mathews | Offering Memorandum 6 verify the information before making project commitments. Medical Institution Downtown Subarea Ordinance 3723 48,000 Buildings Feet Sources City of Bellevue

Date: 11/14/2011 File Name: V:\pcd\arcgis\cbd_colorzon_28x40.mxd IT Department BELLEVUE CBD LAND PRICING

Height Limit - Price No. Property Size Sale Date Zoning Max FAR Max NRA Pricing / FAR Total Value Comments Office Per Foot

Walters Site Three existing retail buildings with short term leases, 1 Las Margaritas 57,952 June, 2013 DNTN0-1 300' 8.00 463,616 $66.87 $31,000,000 $534.93 $200,000 NOI. Site purchased for future development, 427 108th Ave NE most likely multi-family or hotel

Developer has applied for permits to construct 437,000 sf Trammell Crow 2 72,833 October, 2013 DNTN0-2 250' 6.00 437,000 $54.92 $24,000,000 $329.52 office building plus first floor retail. Building will have above Wasatch Site and below ground parking.

International funds, 4-5 residential towers planned. Church Site 3 64,708 January, 2014 DNTN0-1 300' 8.00 517,664 $57.95 $30,000,000 $463.62 NE 8th & 108th Ave NE

Purchased by Schnitzer for office development. Currently Bank of America Site 4th 4 38,454 December, 2013 DNTN0-1 300' 8.00 307,632 $45.51 $14,000,000 $364.07 under construction. and 106th Ave NE

Purchased by FANA, owner of Keybank Building. Holding Goldsmith Property 305 5 34,369 June, 2014 DNTN0-1 250' 8.00 206,214 $65.47 $13,500,000 $392.80 for future development 108th Ave NE

Purchased by NIU Enterprises - purchaser of Las Margaritas Silver Cloud Site 555 6 30,142 September, 2014 DNTN0-1 300' 8.00 241,136 $65.11 $15,700,000 $520.87 site - adjacent to the south 108th Ave NE

Buyer owns adjacent land. 4-5 residential towers planned. Beacon Site 7 125,017 January, 2015 DNTN0-1 300' 8.00 1,000,136 $45.89 $45,900,000 $367.15 106th NE 8th

Purchased by Bosa Deveopment. Planned 20 Story Condo Bates Site 8 52,259 September, 2015 DNTN-MU 200' 5.00 261,295 $87.25 $22,800,000 $436.29 Development. 10429 NE 2nd St

Aquiring adjacent land to existing holding. Planned office, Tri State Building 9 47,254 December, 2015 DNTN0-2 250' 6.00 283,524 $75.83 $21,500,000 $454.99 residential and potential hotel development. 350 106th Ave NE

Kidder Mathews | Offering Memorandum 7 BELLEVUE CBD DEMOGRAPHICS

1 Mile 3 Mile 5 Mile 1 Mile 3 Mile 5 Mile

Population: Growth 2010 - 2015 39.83% 19.21% 16.37%

2020 Projectiont 25,991 100,270 278,103 Owner Occupied 4,059 20,515 63,877

2015 Estimate 22,960 90,895 252,693 Renter Occupied 8,598 19,832 42,439

2010 Census 16,662 77,072 216,990 2015 Avg Household Income $109,970 $124,057 $128,905

Growth 2015-2020 13.20% 10.31% 10.06% 2015 Med Household Income $87,434 $94,371 $100,762

Growth 2010-2015 37.80% 17.94% 16.45% 2015 Households by Household Inc:

2015 Population Hispanic Origin 1,236 6,125 14,904 <$25,000 1,722 4,776 11,159

2015 Population by Race: $25,000 - $50,000 1,765 5,746 14,720

White 14,623 61,976 174,802 $50,000 - $75,000 1,983 5,642 13,714

Black 679 2,233 10,561 $75,000 - $100,000 1,724 5,173 13,200

Am. Indian & Alaskan 76 376 1,123 $100,000 - $125,000 1,747 4,522 11,985

Asian 6,760 22,794 55,783 $125,000 - $150,000 1,157 3,451 9,297

Hawaiian & Pacific Island 47 167 520 $150,000 - $200,000 905 3,604 12,100

Other 774 3,350 9,904 $200,000+ 1,652 7,431 20,142

U.S. Armed Forces 43 138 183

Households:

2020 Projection 14,371 44,630 117,083

2015 Estimate 12,657 40,347 106,316

2010 Census 9,052 33,846 91,358

Growth 2015 - 2020 13.54% 10.62% 10.13%

Kidder Mathews | Offering Memorandum 8 LOCATION AERIAL

NE 2nd St 129 108TH AVE NE 141 108TH AVE NE 108th Ave NE

123 108TH AVE NE

107th Ave NE

138 107TH AVE NE

Main St

Kidder Mathews | Offering Memorandum 9 FUTURE LIGHT RAIL

NE 12th St

NE 8th St 116th Ave NE Bellevue Way NE Bellevue Way

108th Ave NE NE 4th St

Downtown Park

Lake Washington SUBJECT Main St

FUTURE LIGHT RAIL N DEVELOPMENT

Kidder Mathews | Offering Memorandum 10 Market Information

PUGET SOUND REGION the second largest city center in Washington and based on per capita income is the sixth wealthiest of 522 communities in the state. As job availability and The Puget Sound region boast a highly diverse economy, anchored by stable retail growth take place housing demand has increased substantially. There industries including, technology, biotechnology, aerospace, education and are currently 7,079 apartments in 20+ unit complexes in the Bellevue CBD with manufacturing and distribution. Over 36,000 jobs were added during 2015 930 units scheduled for delivery in 2016. in the Seattle MSA (Seattle/Eastside/Everett) which is an annualized growth rate of 2.46%. Current unemployment rate projected to be 5.0%, with nearly With Bellevue’s immediate proximity to Redmond, home of Microsoft, and 25,000 jobs added since YE 2015 (Q1 2016). direct freeway access to Seattle via Interstate 90 and State Route 520. Bellevue is now home to the headquarters of many small and large businesses. BELLEVUE CBD Adding to Bellevue’s accessibility is the expansion of the SoundTransit Light The Bellevue CBD is one of the strongest submarkets, not only on the Rail, expected to be completed by 2023, the Light Rail will run through Eastside, but in the entire Puget Sound. Bellevue is a city recognized for its downtown Bellevue to the surrounding cities of Seattle, Redmond and south to great talent, vibrant city center, booming economy and desirable location for Tacoma. The $3.7 billion project has a rider projection of about 50,000 rider per work and play. Downtown Bellevue is undergoing rapid change, it’s currently day by 2030.

Kidder Mathews | Offering Memorandum 11 E

A NE 24th St H

3 CLDE HILL 1

AMENITIES MAP

Close to it all, Belle-View Office Park is within minutes of countless amenities including restaurants, bars and retailers. 120th Ave NE 84th Ave NE 92nd Ave NE 100th Ave NE 108th Ave NE 112th Ave NE Bellevue Way NE EAT / DRINK LIFESTYLE PARKING / TRANSPORTATION

1 Seastar Restaurant & Raw Bar 1 Red Door Spa 1 Diamond Parking Services

2 Tap House Grill 2 Bellevue Regional Library 2 Ampco System Parking

3 Daniel’s Broiler 3 Bellevue City Hall 3 Central Parking System

4 John Howie Steak 4 Overlake Hospital 4 Bellevue Square Valet 10 Medical Center Group Health 5 Bis On Main 5 5 Pacific Plaza Garage Bellevue Medical Center N 2 E 24 6 Cheesecake Factory 6 Meydenbauer Center 1 st Rock Bottom Restaurant SHOPPING S 4 5 7 7 Bellevue Arts Museum t H & Brewery 9 19 1 Bellevue Square 25 8 McCormick & Schmick’s 8 Meydenbauer Park 10 3 2 Lincoln Square 9 Maggiano’s Little Italy 9 17 3 1 7 9 Performing Arts Center NE 8th Ave NE 8th Ave 17 26 Bel Red Rd 3 Nordstrom Bellevue Square 10 PF Chang’sNE China 8th Bistro Ave 10 Overlake Children’s Hospital 3 12 9 23 6 4 17 27 18 4 The Bravern 9 12 11 8 22 10 Melting Pot Restaurant 11 Bellevue High School Lake Washington Blvd 8 4 5 10 1 2 11 5 Macy’s Bellevue Square 13 13 11 12 Ruth’s Chris Steak House 12 Bellevue 7 20 15BELLEVUE 12 28 Barnes & Noble Suare 1 Mall 6 14 5 14 6 6 Louis Vuitton E 15 21 13 16 7 2 29 Wild Ginger 13 Bellevue Club r 15 7 16 CBD 19 7 Michael Kors 4 4 14 Palomino NE 4th St 3 14 24 Hour Fitness 18 8 Apple Store 20 15 Pearl Bar & Dining N 15 LA Fitness E 9 Crate & Barrel 16 520 Bar & Grill 16 Gene Juarez Salon & Spa Overlake D 1 21 10 Jimmy Choo 11 17 Joey 17 David Barton Gym 14 5 30 11 Neiman Marcus 12 18 Purple Cafe & Wine Bar 2 HOTELS 12 Hermes 19 Andiamo 16 Main St 6 1 Bellevue Hilton 13 Sur La Table 116th Ave SE 20 Earl’s 5 SUBJECT 2 Hotel Bellevue 22 14 David Lawrence 8 118th Ave SE Bellevue Way SE 21 El Gaucho 3 Residence Inn Bellevue 112th Ave SE 15 Tiffany & Co. 22 Blue Martini 4 La Residence Suite Hotel The Parlor Billiards & 16 David Lawrence 23 Lake Washington Blvd SE Comedy Club 5 The Westin Bellevue 17 Whole Foods 24 Three Pigs BBQ 1 6 Sheraton Bellevue Hotel 18 Bartell Drugs 25 ILoveSushi 7 Courtyard by Marriott LAE 19 Uwajimaya 26 Pumphouse 8 Red Lion Hotel 2 20 Best Buy 27 Chick-Fil-A WASHINGTON 9 Ramada 11 13 21 Home Depot 28 Taco Del Mar 10 Hyatt Regency Bellevue 22 Lexus of Bellevue 29 Starbucks 11 Coast Bellevue Hotel 3 30 Popinjays Cafe 12 Accommodations Plus

Kidder Mathews | Offering Memorandum 12 SE 12th St

1 Bob Conrad Senior Vice President, Partner [email protected] 425.450.1152

Troy Gessel AGM Commercial Real Estate [email protected] 425.576.8700

kiddermathews.com

Kidder Mathews | Offering Memorandum 13 LOCATION AERIAL

106th Ave NE

SUBJECT 107th Ave NE

SUBJECT

Main St NE 2nd Ave Ave 2nd NE

108th Ave NE

Kidder Mathews | Offering Memorandum 14 Market Overview

PUGET SOUND OVERALL MARKET Bellevue. Overall, the Seattle market is one of the strongest in the nation and is expected to continue to see vacancy decline and rental rates increase over the Investment, leasing, and construction all gained momentum in the 2015 near- to mid-term, at least. second quarter. Responding to the very healthy economy and the resulting tenant activity, institutional capital continues to flow into the region’s office EASTSIDE REVIEW market. Starting off the second quarter, Gaw Capital announced that it is Statistically the Eastside market had a good second quarter, absorbing about buying Columbia Center for $725 million from Beacon Properties. The sale 87,300 s.f. and nudging the vacancy rate down to 6.89%, the lowest of the has not closed yet, but the estimated capitalization rate below 5% shows submarket clusters. Trammell Crow’s 929 Tower topped out and a third office the competition for quality core assets in one of the nation’s top five office tower started; Schnitzer West’s Centre 425. A partnership between UW, markets. While the quarterly absorption figures are small, the quarter saw Microsoft and the Tsinghua University of China signed a 100,000 s.f. preleasing a continuation of the leasing activity and ground will be made up as those of the first proposed office building in the new Spring District neighborhood leases commence in the next few months. Two new office buildings were at the northeast corner of the CBD. Construction is expected to start in mid- delivered in the second quarter, and five others got started. There are now 22 2016. There are a few clouds behind these positive items: the loss of the MG2 buildings underway in the region.The majority are in Seattle where 69% of the (formerly Mulvanny G2) headquarters, the planned move of Expedia to Seattle 17 projects have been pre-leased, compared with 2% of the three started in

SEATTLE OFFICE MARKET SUMMARY

OFFICE MARKET DIRECT VACANCY YTD NET ABSORPTION

Downtown Seattle 10.29% 492,310 SF

Eastside 6.89% 87,300 SF South King County 11.90% 35,041 SF Snohomish County 8.70% 405,902 SF Pierce County 9.6% 40,161 SF

Kidder Mathews | Offering Memorandum 15 by 2018, and the sublease offer by Microsoft of about 166,000 s.f. in the Vacant Space/Vacancy Rate Bravern project. These spaces are not yet empty, and the vacancy in the 9.2 Even though there has been a tremendous amount of leasing activity in first million s.f. Bellevue CBD was 7.9%, up nominally from 7.7% last quarter. The two quarters of 2015, the regional vacancy rate recorded a small blip, up 13 availability rate more than doubled to 24.5% with the addition of the three basis points (bps) this quarter to 8.91%. This is a result of recently completed towers under construction and the Microsoft sublease space. While there is buildings being added to the inventory before many of the recent leases no panic yet, adding these spaces to the pending delivery of 1.5 million s.f. of have commenced. Absorption across the region was just 55,384 s.f. in the new space over the next two years will require nearly 2.5 million s.f. of leasing. second quarter, but the expectation is that absorption will pick up quickly Market participants point to some large tenants looking in the Eastside, but and the vacancy rate will decrease significantly in the next two quarters. there may be more choices than 100,000+ s.f. requirements. This is supported by the quarter’s 37 bps drop in the availability rate, an The increase in actual vacant space, plus space scheduled for delivery soon, early indicator of space being spoken for, even if the lease has not formally has taken some of the momentum out of the rental rate increases in the started. The vacancy rate increased in the Seattle market due mainly to new Bellevue CBD. The large users that had driven the big increases over the past construction. The Eastside market saw the largest increase, partially due to three years now have multiple choices. Outside of the Bellevue CBD, the stalwart tenant Microsoft’s contracting out of leased space following last other Eastside submarkets are finally picking up some steam. Vacancy rates year’s reduction of about 2,000 jobs in the region. South King County and the in those submarkets range from a low of 2.6% in the 520 Corridor to 7.0% in Northend had net negative absorption of over 75,000 s.f., as those markets the Suburban Bellevue submarket. The Eastside market and specifically the continue their halting vacancy reduction. The forecast is for the vacancy rate Bellevue CBD will be tested over the next three years. It is expected that a few to decrease, most significantly in Seattle, as large signed leases begin to major tenants will be stepping up to fill some of the large blocks of space now commence over the next few quarters. available. Long-term prospects of the Eastside and the CBD are very positive with strong interest from both tenants and investors.

MARKET FORECAST

CURRENT PROJECTION

Vacancy 8.91%

Construction 9.5 M SF

Rental Rate Varies*

Absorption 55,384 SF

*By submarket

Kidder Mathews | Offering Memorandum 16