Aladdin Townhomes

32-Unit, Multifamily Property in Tacoma, Washington $4,500,000

OFFERING MEMORANDUM Aladdin Townhomes

Table of Contents

1. Offering Summary

2. The Property • Property Overview • Property Highlights • Floor Plans • Site Aerial • Neighborhood Amenities • Regional Aerial

3. Financial Information • Scheduled Income • Expenses and Operating Data • Rent Comparables • Sales Comparables Exclusively offered by Tyler Stanek Arielle Dorman Dirk Stegeman 4. Market Overview Associate Vice President Associate Vice President Associate Vice President [email protected] [email protected] [email protected] • Pierce County Overview 253.722.1414 425.450.1100 253.722.1408 • Puget Sound Overview

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.

This Offering Memorandum contains confidential information pertaining to the property known as Aladdin Townhomes and is provided by Kidder Mathews for the sole purpose of evaluating recipient’s possible interest in acquiring the property.

Kiddermathews.com 01

Offering Summary

Aladdin Townhomes Offering Memorandum | Kidder Mathews 3 THE INVESTMENT OPPORTUNITY

TACOMA POSTED 10.6% RENT INCREASE (4TH HIGHEST IN NATION) FROM MARCH 2016-2017

NOT ENOUGH CONSTRUCTION (APARTMENT OR HOME) TO MEET POPULATION GROWTH

TACOMA AREA IS A BEDROOM COMMUNITY FOR ALASKA AIR, AMAZON, BOEING, COSTCO, EXPEDIA, EXPEDITORS, NORDSTROM, PACCAR, REI, STARBUCKS, AND WEYERHAUSER

CLOSE IN TACOMA / INTERSTATE 5 LOCATION

TACOMA AREA VACANCY AT 2.8%

VALUE ADD OPPORTUNITY AND RENT GROWTH THROUGH MODEST INTERIOR IMPROVEMENTS

Aladdin Townhomes Offering Memorandum | Kidder Mathews 4 Offering Summary

EXECUTIVE SUMMARY PROPERTY OVERVIEW As exclusive brokers for Aladdin Townhomes, we are pleased to offer for 9009, 9021, 9031 S Hosmer Address sale this 32 unit, town house style, multifamily property. One of Aladdin’s 1841 S 92nd St greatest attributes is its location relative to Interstate 5 for its ease of access to Tacoma, Joint Base Lewis-McChord (JBLM), Puyallup, and the # Units 32 Puget Sound metropolis. Occupancy 100% Aladdin Townhomes are located in close proximity to major retailers, distribution facilities, healthcare providers, and private and government Net Rentable SF 37,120 SF employers. The Tacoma Mall is 4 miles away and anchored by Nordstrom, Macy’s, JC Penney, and Sears. The main gate to JBLM, the largest military Year Built 1973 installation west of the Mississippi and the second largest employer in Parking 66 open spaces Washington State, is located 5 miles south. JBLM employs approximately sixty-six thousand military and civilian workers surrounding the base. Parking Ratio 1 unit: 2.06 spaces Tacoma CBD is located approximately 7 miles away and Seattle-Tacoma International Airport and Seattle CBD and are located 30 and 38 miles, 4530600110, 4530600120, 4530600130, respectively. Interstate 5 links the Puget Sound markets to Oregon and Parcel # 4530600140, 4530600150, 4530600160, 4530600171 California along with Canada and Mexico and it is critical to the region, state, and national economy. It is also the busiest roadway in Western Washington. AVG CURRENT FLOOR PLAN SIZE PRO FORMA RENT The Property 2 Bed / 1 Bath 900 SF $900 / $1.00 PSF $1,050 / $1.17 PSF Aladdin Townhomes consists of 31 town house style homes and one flat. (flat) The property’s has four residential buildings that are wood framed with 2 Bed / 1.5 Bath wood siding and mansard roofs. In 2017, the property was renovated 1,168 SF $1,050 / $0.90 PSF $1,250 / $1.07 PSF (townhouse) including the installation of new, double-pane, insulated vinyl windows and sliding glass doors, new roofs (on the steep portion of the mansard) and TOTAL / AVG 1,160 SF $1,035 / $0.89 PSF $1,244 / $1.07 PSF new paint on the building exterior.

The Market The hub of the Pierce County market consists of four cities: Tacoma, Lakewood, University Place and Puyallup/Fife. The Pierce County population is estimated at 831,928 for 2014. According to Puget Sound Regional Council, the population of Tacoma grew by 3,800 people or 1.9%

Aladdin Townhomes Offering Memorandum | Kidder Mathews 5 in 2016. The King County border is just 10 miles north, the largest county PROPERTY INFORMATION in Washington State with a population estimated at 2.08 Million in 2014. Price $4,500,000 ($140,625 / unit) According to rental firm RentCafe, Tacoma posted the fourth highest rent Current (Pro Forma) increase in the nation of 10.6% from March 2016 to March 2017, the full 5.82% / 7.43% Cap Rate article can be read at http://www.thenewstribune.com/news/business/ article143983299.html. Dupre + Scot report that south Tacoma’s market Current (Pro Forma) 2017 vacancy is 2.9% with 5 year average at 4.0 % and 29% rent growth $426,509 / ($503,972) Effective Gross Income since 2013.

Current (Pro Forma) $164,747 ($5,148) / unit / yr) / Local Economy Expenses with Reserves $169,497 ($5,297) / unit / yr) Aladdin Townhome’s location allows for easy access to a diversified array Net Rentable SF 37,120 SF of employment centers such as the Port of Tacoma, the Kent Valley’s ever- growing industrial market, Seattle-Tacoma Airport, Downtown Tacoma, Average Unit Size 1,160 SF JBLM, the rapidly expanding Fife/Puyallup industrial market, DuPont and the Fredrickson Industrial park. Notable companies and organizations Current Average Monthly $1,050 located within these employment centers include the Boeing Company Rent which has facilities in both Fredrickson and the Kent Valley, Weyerhaeuser, Current Average Rent / SF $0.90 REI, the University of Washington - Tacoma, MultiCare Health System, one of the largest healthcare providers in the Nation, Franciscan Health Overview The property consists of four, townhome style System, Amazon, and State Farm Insurance who over the last 2 years residential buildings on eight tax parcels. have hired an additional 1,400 individuals. Other major employers include public and private school systems, hospitals, and State, County and Apartment Home Range/oven, refrigerators/freezer, dishwashers, Municipal government organizations. Employment diversity provides a Amenities disposal, stacked washer/dryer, electric hot water tanks, baseboard heaters, blinds, and hedge against downturns and future job growth appears positive. A recent large decks or patios (30 of 32) with storage. study commissioned by the State Department of Transportation concluded that the planned completion of the State Route- 167 freeway from Puyallup Property Amenities Professionally installed and maintained to the Port of Tacoma will contribute to an additional 79,000 new jobs. landscaping, new double-pane, insulated vinyl Planning and design work for the freeway are in process and funding is a windows, new vinyl sliding glass doors with fresh priority agenda item. air vents, covered deck or patio, and on-site trash/recycling area. The Investment Opportunity Location Located in Tacoma, close to I-5 and major At 32 units, Aladdin Townhomes allows a multifamily owner the ability to employers located in Tacoma/Pierce County and increase their market presence and grow the operating income through Joint Base Lewis-McChord. management efficiencies by raising the balence of the rents from $0.87 psf to the current high value of $0.97 psf.

Aladdin Townhomes Offering Memorandum | Kidder Mathews 6 02

The Property

Property Overview Property Highlights Floor Plans SIte Aerial Neighborhood Amenities Regional Aerial

Aladdin Townhomes Offering Memorandum | Kidder Mathews 7 Aladdin Townhomes

PROPERTY OVERVIEW PROPERTY SUMMARY

Aladdin Townhomes is a 32-unit residential community located in Tacoma, 9009, 9021, 9031 S Hosmer Address Washington that underwent capital improvements over the last 6 months: 1841 S 92nd St new vinyl double pane windows and sliding doors, new mansard roofs, Number of Units 32 Units and new exterior building paint. The property has four, two-story residential buildings with enhanced sound proofing, large double-pane insulated Age 1973 windows, and mansard roofs. Number of Buildings Four, two-story residential buildings Community Amenities Wood frame construction with mansard roofs, and new, Aladdin Townhomes offer its residents a parking ratio over 2 stalls per unit Construction vinyl, double-pane, windows, and new sliding consisting of 56 open parking spaces and 10 carports. glass doors

Unit Amenities 4530600110, 4530600120, 4530600130, 4530600140, Parcel Number 4530600150, 4530600160, 4530600171 Each of the residences in Aladdin Townhomes were designed for efficiency. All apartments have new vinyl, double-pane insulated windows and sliding Land Area 1.67 AC / 74,052 SF glass doors. The kitchens come with a standard oven/range combination, refrigerator, dishwasher, and disposal. In addition, the units are equipped Density 19.16 units / acre with electric hot water heaters, balcony/patio with storage, stacked washer/dryer, and eight-foot ceilings. 2017 Levy Rate $16.07 per thousand

Utility Providers Power - Tacoma Public Utilities Sewer - Tacoma Public Utilities Water - Tacoma Public Utilities

AVG CURRENT FLOOR PLAN SIZE PRO FORMA RENT

2 Bed / 1 Bath 900 SF $900 / $1.00 PSF $1,050 / $1.17 PSF (flat)

2 Bed / 1.5 Bath 1,168 SF $1,050 / $0.89 PSF $1,250 / $1.07 PSF (townhouse)

Monthly Rent $33,455 $39,800

Total Scheduled Rent $401,460 $477,600

Aladdin Townhomes Offering Memorandum | Kidder Mathews 8 PROPERTY HIGHLIGHTS

Unit Amenities All kitchens are equipped with oven/range combination, refrigerator/freezer, dishwasher, garbage disposal

Stacked washer/dryer

Most apartment homes have 8-foot ceilings

Private decks or patios (30 of 32 units) with storage

Double-pane, insulated vinyl windows and sliding glass doors

Vinyl wood plank floors in approximately 20% of units

Community Amenities 56 stalls of open parking and 10 carports

On-site trash and recycling area

Close to Pierce Transit bus stop

Prime Pivot Point Location Minutes to Downtown Tacoma and next to Interstate-5 and Highway 512

Close proximity to major employers, retailers and health care providers

Major retailers include: Costco, Nordstrom, Fred Meyers, Walmart

Appeals to broad resident base due to Interstate 5 corridor location

Easy access to Pierce Transit stop (3 blocks) via Hosmer

Aladdin Townhomes Offering Memorandum | Kidder Mathews 9 FLOOR PLANS

CLICK HERE TO VIEW VIRTUAL TOUR

2 Bedroom / 1.5 Bath | 1,177 SF

Aladdin Townhomes Offering Memorandum | Kidder Mathews 10 SITE AERIAL

S 90th St

ALADDIN TOWNHOMES S Hosmer St

S 92nd St

Aladdin Townhomes Offering Memorandum | Kidder Mathews 11 NEIGHBORING AMENITIES

GIG HARBOR STADIUM HS PORT OF TACOMA TACOMA THEA FOSS WATERWAY

ST. JOSEPH ALLENMORE HOSPITAL TACOMA ART MUSEUM HOSPITAL & MUSEUM OF GLASS UW TACOMA

BELLARMINE LEMAY CAR MUSEUM FIFE PREP HS & TACOMA DOME

CHENEY STADIUM FIRCREST

TACOMA MALL

MT TAHOMA HS

PUYALLUP LAKEWOOD ALADDIN TOWNHOMES

LAKEWOOD LAKE STEILACOOM INDUSTRIAL PARK PIERCE COUNTY TRANSIT LAKEWOOD TOWNE CENTER

ST. CLAIR HOSPITAL

JBLM GRAVELLY LAKE MCCHORD AFB

Aladdin Townhomes Offering Memorandum | Kidder Mathews 12 REGIONAL AERIAL

PORT OF TACOMA FEDERAL WAY GIG HARBOR

DOWNTOWN TACOMA

FIRCREST SUMNER

UNIVERSITY PLACE TACOMA MALL

ALADDIN TOWNHOMES

PUYALLUP LAKEWOOD TOWNE CENTER STEILACOOM

LAKEWOOD

JBLM MCCHORD AFB

Aladdin Townhomes Offering Memorandum | Kidder Mathews 13 03

Financial Information

Scheduled Income Expenses and Operating Data Rent Comparables Sale Comparables

Aladdin Townhomes Offering Memorandum | Kidder Mathews 14 Financial Information SCHEDULED INCOME*

APPROXIMATE CURRENT CURRENT PRO FORMA PROFORMA UNIT TYPE # OF UNITS / AVERAGE SF AVERAGE RENTS RENTS / SF RENTS RENTS / SF 2 Bed / 1 Bath (Flat) 1 900 $900 $1.00 $1,050 $1.17 2 Bed / 1.5 Bath (TH) 31 1,168 $1,050 $0.90 $1,250 $1.07

Total / Avgs 32 1,160 $1,045 $0.90 $1,244 $1.07 Monthly Rent $33,455 $39,800 TOTAL SCHEDULED RENT $401,460 $477,600

*CURRENT RENTS BASED ON NOVEMBER 2017 RENT ROLL ANNUALIZED WITH PRO FORMA RENTS REFLECTING CURRENT MARKET RENTS.

YTD ANNUALIZED OTHER INCOME PRO FORMA JAN - NOV 2017 Utility Reimbursment $33,840 $38,996 Late/NSF Fees $1,244 $1,281 Screening Fees $1,789 $2,613 Pet Fees $218 $177 Month to Month Premium $709 $618 Forfeit Deposit $3,893 $4,713 Bad Debt Recovery $2,180 $265 Garage Rental $131 $0 Miscellaneous $1,118 $1,589

Total Other Income $45,122 $50,252 Notes OTHER INCOME - PRO FORMA: This income based on YTD annualized (Jan - Nov 2017) with a 3% annual growth, except utility reimbursement estimated at 95% consumption OTHER INCOME - YTD ANNUALIZED (JAN - NOV 2017): Utility reimbursement - Based on November 2017 billing for utility reimbursement, annualized

Aladdin Townhomes Offering Memorandum | Kidder Mathews 15 EXPENSES

YTD ANNUALIZED PRO FORMA JAN - NOV 2017 Wages / Salaries / Benefits / Taxes $16,420 $16,420 Repairs/Maintenance/TO $16,272 $16,272 Landscaping $14,576 $14,576 Utilities $41,049 $41,049 Marketing $1,176 $1,176 Administrative $10,432 $10,432 Insurance $7,619 $7,619 Management Fee $16,211 $16,211 Property Taxes $34,592 $34,592 TOTAL EXPENSES $158,347 $163,097 Reserves ($200 / unit) $6,400 $6,400 TOTAL EXPENSES W/ RESERVES $164,747 $169,497 Expenses Per Unit w/ Reserves $5,148 $5,297 Expenses Per SF w/ Reserves $4.44 $4.57

Notes EXPENSES - PRO FORMA: Based on current YTD annualized (Jan - Nov 2017) with a 3% annual growth. PROPERTY TAX: Based on 2017 county assessors rate.

Aladdin Townhomes Offering Memorandum | Kidder Mathews 16 ANNUALIZED OPERATING DATA

2017 YTD PRO FORMA ANNUALIZED (EXPENSES)

Scheduled Gross Rent $401,460 $477,600

Vacancy/Model ($20,073) 5.00% ($23,880)

Rent Booked $381,387 $453,720

Effective Gross Rent $381,387 $453,720

Utility Reimbursment $33,840 $38,996

Late/NSF Fees $1,244 $1,281

Screening Fees $1,789 $2,613

Pet Fees $218 $177

Month to Month Premium $709 $618

Forfeit Deposit $3,893 $4,713

Bad Debt Recovery $2,180 $265

Garage $131 $0

Miscellaneous $1,118 $1,589

Effective Gross Income $426,509 $503,972

Total Operating Expenses Before Reserves ($158,347) ($163,097)

NET OPERATING INCOME $268,162 $340,875

Less Reserves @ $200/unit ($6,400) ($6,400)

NOI AFTER RESERVES $261,762 $334,475

Aladdin Townhomes Offering Memorandum | Kidder Mathews 17 RECENT RENT COMPARABLES

PROPERTY ADDRESS AVG UNIT SF # OF UNITS YEAR BUILT AVG RENT RENT / SF Aladdin Townhomes 9009 S Hosmer, Tacoma 1177 32 1973 $1,023 $0.88

Notch 8 9210 S Hosmer St, Tacoma 765 126 1986 $1,147 $1.50 The Woodmark 2425 S 96th St, Tacoma 750 168 1976 $929 $1.24 Altitude 104 2201 104th St S, Tacoma 759 120 1989 $1,146 $1.51 Ainsworth Court 10610 16th Ave Ct S, Tacoma 1120 8 1985 $1,349 $1.20 Valley Vista 6830 Tacoma Mall Blvd, Tacoma 852 108 1987 $1,205 $1.41 AVERAGE 849 106 1985 $1,155 $1.37

SALE COMPARABLES

SALE SALE PRICE PRICE # OF YEAR CAP PROPERTY ADDRESS DATE PRICE / UNIT / SF UNITS BUILT RATE Aladdin Townhomes 9009 S Hosmer, Tacoma TBD $4,600,000 $143,750 $124 32 1972 5.6%

Majestic Firs 6111 88th St SW, Lakewood Apr-17 $1,670,000 $119,286 $162 14 1971 5.8% Oliver Apartments 420 Wheeler St S, Tacoma Jun-17 $5,300,000 $110,417 $129 48 1968 5.7% Shasta Apartments 1545 Fawcett Ave, Tacoma Apr-17 $1,320,000 $132,000 $251 10 1919 4.9%

Wapato Creek Village 2335 58th Ave E, Fife Mar-17 $12,850,000 $110,775 $159 116 1980 3.3% Rainier View Townhouses 5106 Parker Rd E, Sumner Jan-16 $1,320,002 $94,286 $163 14 1979 5.5% Valley Vista 6830 Tacoma Mall Blvd, Tacoma Oct-16 $11,400,000 $105,556 $123 108 1987 5.75% Vanessa View Estates 5608 112th Street E, Puyallup Jul-17 $7,404,634 $205,684 $137 36 2002 5% AVERAGE $125,429 $161 49 1972 5.14%

Aladdin Townhomes Offering Memorandum | Kidder Mathews 18 04

Market Overview

Pierce County Overview Puget Sound Overview

Aladdin Townhomes Offering Memorandum | Kidder Mathews 19 Market Overview PIERCE COUNTY OVERVIEW

In addition to being the home of the second largest city in Washington, States. JBLM employs over 40,000 active, National Guard and Army Tacoma, Pierce County has been one of the fastest growing counties in the Reserve service members, and approximately 15,000 civilian workers. state of Washington since the 1960’s, and has consistently exceeded the The base supports 60,000 family members and nearly 30,000 retirees state’s overall rate of growth. Pierce County supports manufacturers such living within 50 miles, 65% of whom live in Pierce County. JBLM has a as Boeing, Milgard Manufacturing, James Hardie Building Products, Toray significant impact on the economy of Pierce County, providing a stable Composites (America), Inc., and Medallion Foods. Recreational Equipment, base of customers for retail trade, as well as providing a talented pool of Inc. (REI), Whirlpool, and Costco also have major distribution centers here. trained workers who are transitioning out of the military and into the local State Farm Insurance has a regional headquarters in Pierce County, and workforce. innovation thrives at the research divisions of Intel and Madigan Army Port of Tacoma Medical. The Port of Tacoma is an independent seaport located on more than 2,400 The majority of population increase has been due to the migration of acres of land that are used for shipping terminal activity, warehousing, people into the County. This continued migration is the result of Pierce distributing and manufacturing. The port plays the largest international County’s relatively stable economy and exceptional quality of life. The low- trade role in the Pacific Northwest handling between nine and thirteen cost living, award-winning education, and lifestyle opportunities combined million tons of cargo and more than $25 billion in commerce. Major with the area’s competitive cost of doing business, create an outstanding imports include automobiles, electronics, and toys; major exports include environment for businesses and residents to work, play, and live. grain, forest products, and agricultural products. Based on tonnage, the port’s largest export is grain (corn and soybeans) which comes into the Economy port by rail from the Midwest. Two words best describe the business climate found in Pierce County’s economy: emerging opportunity. In part, this is because of the county’s In 2015, the Port of Tacoma’s top trading partner, based on two-way strategic location at the mid-point between the major metropolitan areas of trade value, was China / Hong Kong. China / Hong Kong was also the the central Puget Sound to the north, and Portland, Oregon to the south. top partner ranked by volume imported and value imported. Japan was The presence of the military exerts a stabilizing influence on the Pierce the top partner ranked by volume exported and value exported. The County economy and employs nearly 57,000 residents of Pierce County. top commodities exported, by value, were cereals and grains. The top commodities imported, by value, were vehicles and parts, followed by In the last several years, the county has noticed quite a dramatic shift in industrial machinery and electronics. the regional diversification of its workforce. Professional services rank as one of the leading components of industry. These include a solid anchor of The port is among the top ten largest container ports in North America. Intel, multiple web design firms, and legal and consulting companies. Containers hold everything from computers and lawn furniture, to apples and frozen meat. More than 70 percent of the containers imported through Impacts of Joint Base Lewis-McChord the port move by rail to markets in the Midwest and East Coast. The port is served by the BNSF Railway and Union Pacific railroads. Shortline rail Pierce County is home to Joint Base Lewis-McChord (JBLM), the largest service is provided by Tacoma Rail, which is owned by the City of Tacoma. military installation on the West Coast, and the 4th largest in the United

Aladdin Townhomes Offering Memorandum | Kidder Mathews 20 U.S. Oil and Refining operates an oil refinery in the Port of Tacoma. Oil tankers bring crude oil, which is refined into a variety of products, including JP-8 jet fuel for McChord Field Air Force Base. Port activities are related to more than 43,000 jobs in Pierce County, and 113,000 jobs in Washington State.

Recreation Opportunities Puget Sound bays and outlets offer an abundance of year-round outdoor recreational activities such as sailing, fishing, canoeing, diving, and kayaking. Numerous trails for biking and hiking are conveniently located 120 miles away at Mt. St. Helens, at Mt. Rainier which is 81 miles away, and 74 miles away at Ocean Shores. PGA level golf courses and many other fine public and private courses are also around the area. Entertainment attractions include several of the Northwest’s largest gaming casinos.

Art and Culture

Pierce County is home to some of the most active communities in Washington. Puyallup is home to numerous fairs, festivals, museums, galleries, and antique districts. Artists and performers showcase their talents through live theater at Broadway Center for the Performing Arts, Northwest Sinfonietta, Tacoma Art Museum, Tacoma Opera, and The Tacoma Symphony Orchestra.

Health Care Hub

Pierce County is home to six top-notch full-service hospitals, Good Samaritan Hospital and Rehab Center, Madigan Army Medical Center, St. Joseph Medical Center, Saint Clare Hospital, St. Anthony Hospital and Tacoma General Allenmore Hospital. The area’s health care hub has hundreds of clinical trials underway and a medical community committed to research and collaboration with local universities and other research institutions. Numerous specialized medical clinics are located throughout the region.

Aladdin Townhomes Offering Memorandum | Kidder Mathews 21 Education TOP EMPLOYERS The quality of education in Pierce County is a major draw to the South RANK COMPANIES EMPLOYEES Puget Sound area. Pierce County students consistently show educational 1 Joint Base Lewis-McChord 57,120 attainment levels exceeding both state and national averages. Thirty-five 2 Local Public School Districts (K-12) 13,408 percent of Pierce County residents typically hold bachelor or graduate degrees, and more than ninety percent attain a high school or GED 3 Multicare Health System 8,247 diploma. Pierce County students also consistently achieve SAT scores 4 State of Washington 6,844 above state and national averages. 5 Franciscan Health System 6,099 6 Pierce County Government 3,001 PACIFIC LUTHERAN UNIVERSITY 7 Fred Meyer 2,560 Pacific Lutheran University is a private institution that was founded in 8 City of Tacoma 2,138 1890. It has a total undergraduate enrollment of 3,195 students. Pacific 9 State Farm Insurance 2,050 Lutheran University’s ranking in the 2017 edition of Best Colleges in 10 Emerald Queen Casino 2,026 Regional Universities (West), was fifteenth. 11 Boeing 1,750

UNIVERSITY OF PUGET SOUND 12 Safeway Stores 1,512 13 Tacoma Public Utilities 1,417 University of Puget Sound is a private institution that was founded in 14 Walmart 1,287 1888. It has a total undergraduate enrollment of 2,651. University of 15 U.S. Postal Service 1,214 Puget Sound’s ranking in the 2017 edition of Best Colleges is National 16 Costco 1,205 Liberal Arts Colleges, was seventieth. 17 Puyallup Tribe of Indians 1,099 PIERCE COLLEGE 18 Milgard Manufacturing, Inc 1,061 19 Comcast Cable 1,046 Pierce College is designated an institutional member of Service members 20 Longshore Labor Union 1,026 Opportunity Colleges (SOC), a group of more than 1,700 colleges and 21 Pierce Transit 884 universities providing voluntary postsecondary education to members of the military throughout the world. Pierce College provides education 22 Pierce College 830 programs at Joint Base Lewis-McChord. These programs are specifically 23 Target 772 designed to serve the needs of active-duty military personnel, their 24 Group Health Cooperative 742 family members, VA benefit recipients, and civilians in the community. 25 Home Depot 706 Located on two campuses in Pierce County, current student enrollment is 26 Amazon 700 approximately 23,855. 27 University of Puget Sound 693 28 Tacoma Community College 688 29 Sears Roebuck 672 30 Davita 660 TOTAL 123,457

Aladdin Townhomes Offering Memorandum | Kidder Mathews 22 PUGET SOUND OVERVIEW the end of the forecast period. The Puget Sound Regional Council is estimating the area’s population to be 4,513,589 in 2030, an 14.4 percent Greater Seattle Area increase.

Seattle is the largest city in the four-county metropolitan area known The Seattle-Tacoma-Bellevue metropolitan area (MSA) is clearly the as the Puget Sound region. The area’s other major metropolitan cities economic engine of Washington State. The MSA ranks 13th among 362 include Bellevue, Tacoma, Everett, and Bremerton. Surrounding these are markets nationwide in terms of effective buying income (EBI or after-tax, growing cities that include Kirkland, Redmond, Kent, Renton, Bothell, and discretionary spending power). The median household EBI in the Greater Issaquah. Seattle Area is 20 percent higher than the national median.

Climate Approximately 56 percent of the population is in the prime workforce age of 25-64. Residents are among the most highly educated in the nation, The temperate climate lets residents and visitors enjoy the outdoors with more than 35 percent having at least a bachelor’s degree and one- year-round. High temperatures in July average just 75 degrees, while low third of those holding a graduate or professional degree. temperature drop below freezing an average of only 15 days per year. The rainfall keeps the region’s vegetation a lush green, however, it rarely rains Long-term forecasts call for the Greater Seattle area to resume its historic heavily and the total average rainfall is 35 inches, less than New York City strong growth patterns. The Puget Sound Regional Council expects the or Miami. area to add approximately 855,000 new jobs by 2040.

Outdoor Activities, Culture, Sports The Seattle area’s natural beauty and mild climate encourage year-round activities such as hiking in the Olympic or Cascade Mountains, kayaking on Lake Union, or cycling on any of the many rails-to-trails paths.

Art and culture are also driving forces in the region. There are 34 museums, 30 performing arts centers, and—at last count—at least 29 professional theatre companies.

Professional sports teams include major league football and baseball as well as soccer and hockey. The region’s professional football club, The Seattle Sounders FC, won the MLS Cup in 2016. In addition, there is thoroughbred racing, minor league baseball, and the University of Washington Huskies to cheer on.

Demographics The region consists of approximately 3,944,507 (2015, U.S. Census Bureau) residents in King, Snohomish, Pierce, and Kitsap counties. The current figure represents a 6.6 percent increase over the 2010 Census. Positive population growth in the region is expected to continue through

Aladdin Townhomes Offering Memorandum | Kidder Mathews 23 Education Washington State is home to six public four-year colleges and universities, 34 public community and technical colleges, and more than 300 private colleges, universities, career, and vocational schools.

The University of Washington continues to gain increased national recognition. According to the America’s Best Colleges, U.S. News & World Report in 2016, the UW was ranked 54 among all national universities, tied with Ohio State University-Columbus. The U.S. News 2016 graduate school rankings show many of the UW’s graduate programs among the best in the nation. The medical school ranked first among all schools in the country for primary care and the School of Nursing also retained its top ranking for the 30th year. Overall the UW School of Medicine ranked twelfth among research medical schools and first among public medical schools. The graduate program in computer science ranked sixth and the spur lines that span the area, making it possible to deliver almost any type college of education graduate program was ninth. of load. Outside of Puget Sound and across the state, there are over 4,000 Seattle University is a Jesuit university situated on 48 acres in Seattle’s miles of operable track. First Hill and Capitol Hill neighborhoods. The school was founded in 1891 Truck transportation in Washington is made possible by over 3,700 and is the largest independent university in the Pacific Northwest. The interstate trucking companies, including common carrier and contract university has a total enrollment of 7,400 students of which 63 percent are companies. The State ranks among the top 10 states in general freight undergraduates. Seattle University employs 1,400 faculty and staff. The tonnage carried by trucks intrastate. The competition results in favorable U.S. News 2014 rankings place Seattle University eighth among the top negotiated freight rates. universities in the West that offer a full range of masters and undergraduate programs. All regional communities are accessible from Seattle over an efficient, well-planned freeway system. The average commute between Seattle Transportation and outlying cities and suburbs is 23 minutes (non-peak) and 45 minutes King County has a well-developed transportation system which provides (peak). The region’s highway network is anchored by three main highways: links to all parts of the country and world. Seattle’s port is closer to the U.S. Interstate 5 which runs north-to-south from Vancouver, British main trading partners in Asia than any other major U.S. port and the Columbia to San Diego, California region’s distribution networks move goods efficiently inland. Interstate 90 which runs west-to-east connecting Seattle with New York The region’s multi-modal transportation system includes two transcontinental railroads, nationwide trucking capacity, three interstate Interstate 405 (Washington) is a 30-mile stretch of freeway that bypasses highways, a ferry system, a world-class port, and an international airport. Seattle east of Lake Washington. I-405 runs from Lynnwood in the north to Tukwila in the south. The Burlington Northern Santa Fe (BNSF) and Unions Pacific Southern Pacific (UPSP) railroad serve the greater Seattle area. Both railroads have

Aladdin Townhomes Offering Memorandum | Kidder Mathews 24 hours of flying time closer to Pacific Asia than Southern California airports. In addition, trans-polar routing enables Sea-Tac to rival East Coast cities like New York in flight times to European capitals.

Economy While the greater Seattle economy includes a broad range of companies, local business and civic leaders have identified key innovative, knowledge- based industries that drive our economy and are critical to the region’s current and future prosperity.

Aerospace Clean Technology Information Technology Over 23 million passengers annually ride the Washington State Department of Transportation’s Ferry System, the largest in the country and the third Interactive Media Life Sciences largest in the world. This system transports over 10 million vehicles a year, more than any ferry system in the world. The fleet has 20 auto-passenger Aerospace ferries and two passenger-only ferries. The DOT operates 20 terminals and The Puget Sound region has a proud history and a strong future as a operates on nine routes. leader in the aerospace industry. In 2013, aerospace supported more than 136,100 jobs (over 8,000 engineers) in the region and includes over 650 The Port of Seattle has world-class facilities and relative proximity to Asia; companies, making the area the largest commercial aviation center in the the port is the fastest route for cargo to and from America’s heartland. The country. transit time from port cities in Asia to Seattle is eight days, which is 30 hours less than through Southern California ports. The Seattle-Tacoma- The largest employer is Boeing Commercial Airplanes which is Everett port region is the third largest container complex in the country, headquartered in Renton about 15 minutes south of Downtown Seattle. smaller only than New York / New Jersey and Los Angeles / Long Beach. The region is home to final assembly operations for the 737, 747, 767, It is the 8th largest US port in 2014 in terms of TEU’s and cargo activity 777, and 787 aircraft. In March, 2016 Boeing had 80,000 employees in the supports more than 48,000 jobs. The region’s ports serve not only the Puget Sound region. Pacific Northwest, but also the Midwest, East Coast, and Canada. 2014 marked a strong recovery is the region’s port activity. Seattle-Tacoma grew 8.6 percent in terms of cargo volume from 2013. Marine cargo operations also generated $138.1 billion in total economic activity. That accounts for about one-third of Washington state’s gross domestic product. The figure includes revenue generated by port-related businesses as well as wages paid to people holding direct jobs.

In 2016, 45.7 million passenger and 366,000 metric tons of air cargo passed though Sea-Tac airport. Passenger levels increased eight percent from 2015 and the volume ranked the airport as the 9th busiest in the U.S. Because of the state’s strategic geographic location, Sea-Tac is one to two

Aladdin Townhomes Offering Memorandum | Kidder Mathews 25 Clean Technology

Analysts predict a boom in clean technologies The Washington Clean Technology Alliance Top Puget Sound amid an oncoming energy crunch. The (WCTA) was established in 2007 to take full Area Companies alternative-energy industry’s revenues are advantage of the opportunities presented Amazon.com projected to quadruple to $226 billion by by this emerging sector and to ensure AT&T Wireless 2019, according to a report by Clean Edge, a Washington’s continued leadership. Portland-based market-research firm. Alaska Airlines Information Technology Berlex Laboratories There are more than 400 clean technology Boeing companies located in region employing more Many of the most well-known names in the than 21,000 people. There is a 64 percent software and information technology industry Children’s Hospital greater concentration of clean technology, or are located in the Great Seattle area. The Costco “green,” jobs in the Seattle area than the U.S. established companies include Microsoft, Expedia, Inc. average. Amazon, Nintendo, T-Mobile, RealNetworks, Group Health Cooperative Expedia, and several others. Statewide, the clean technology industry Macy’s accounted for more than 62,000 jobs in the The strong base of businesses has created Microsoft sectors of energy efficiency, renewable energy, the largest employment cluster in the MultiCare Health System reducing pollution and pollution cleanup. The region, supporting nearly 110,000 jobs. The sectors of wind, solar, biomass, wave / tidal Greater Seattle area has several world- Nintendo and geothermal energy currently employ more leading strengths in the IT sector. The Nordstrom than 17,000. Washington State has long State of Washington is the largest employer Paccar, Inc. of software publishing workers in the US. supported clean technology and has the largest Providence Health Care coordinated hydro-electric system in the world, Washington ranks first in the country in the REI providing 73 percent of the state’s electrical creation of new software companies. power. Safeco Safeway Starbucks Swedish Health Services Symetra Financial T-Mobile The Kroger Company University of Washington Virginia Mason Medical Center Weyerhaeuser

Aladdin Townhomes Offering Memorandum | Kidder Mathews 26 Microsoft is the second largest employer in the state of Washington. already near capacity. They are currently under construction on the first In addition to the nearly 42,940 employees in the region, the company of four city blocks totaling approximately three million square feet. Tech historically has had an estimated 3.4 implied employment multiplier. companies require approximately 250 square feet per employee. Therefore As a result, the company currently also supports nearly 98,000 indirect they plan to house an additional 10,000 employees upon completion of jobs in the area. Microsoft has also greatly impacted the region through this Amazon campus. In addition, Amazon opened a 1,000,000-square- next generation companies. Since Microsoft’s founding, over 250 foot distribution center in Kent and DuPont. companies have been spun off through investment and development or from former Microsoft employees. The rich and deep pool of talent has led other industry leading IT companies such as Google to establish the area as an important location Amazon continued its strong employment growth, adding over 12,000 for growth. In the Greater Seattle area, Google has a complex of new employees worldwide last year, an expansion of more than 42 percent. buildings in Kirkland and offices in the Fremont neighborhood of Seattle. A The company doesn’t release detailed employment information for the local manager has indicated that at least 100 positions will be added to the region; however, recent local leasing activity indicates many of the new 700 employees already working in the two locations. The local engineers and planned hires will be based in the Seattle area. are working on the high priority projects such as the Chrome browser and operation systems and Google Talk. Amazon leased approximately 460,000 square feet at the 1918 Eighth office tower in Downtown Seattle. This lease is in addition to the 1.7 Interactive Media million-square-foot headquarters in South Lake Union which is apparently The Puget Sound is an undisputed global leader in Interactive Media development. Starting with Cyan’s PC games of the nineties, Myst and Riven, to Valve’s Half Life and Portal, and Bungie’s Halo trilogy, the history of the area is strong. With Microsoft, Nintendo, and RealNetworks in the region, along with over 150 noteworthy game-technology companies, the Greater Seattle area can claim to be of the top three game-development centers in the world.

Industry leaders such as Warner Bros. Interactive, Gas Powered Games, NCSoft, and Sony Online Entertainment have offices here. Over the last few years, an industry task force gathered and collaborated with public and private sector leaders to develop the Washington Interactive Media Program—the first of its kind in the nation. The program is designed to promote, nurture, and grow the video game industry in the area.

AMAZON CAMPUS

Aladdin Townhomes Offering Memorandum | Kidder Mathews 27 Life Sciences The Foundation opened its new campus at 500 5th Avenue N in June 2011. The 12-acre Gates campus reinforces the area’s comeback, while The life science industry in Greater Seattle includes, but is not limited adding a more buttoned-down sensibility. A pair of curved office buildings, to, biotechnology companies, medical device companies, research a reception pavilion, and a 1,000 car parking structure anchor three institutions, and global health organizations. The industry employs corners of the site and may be joined by a third office building in the future. approximately 22,000 individuals. The strongest industry association is the Construction costs for this 640,000-square-foot complex totaled $500 Washington Biotechnology and Biomedical Association (WBBA) to which million, housing 1,116 employees. over 500 local companies belong. The growth of this sector in Washington State is reflected in the fact that the WBBA added 70 new members in The South Lake Union biotechnology area, near both the Foundation and 2010. The overall industry is estimated to generate nearly $7 billion in the University, houses The Fred Hutchinson Cancer Research Center, the annual revenues. Institute for Systems Biology, the Pacific Northwest National Laboratory (Seattle office), Amgen’s Helix Campus on Elliot Bay, the Allen Institute In 2005, Washington State created the Life Sciences Discovery Fund to for Brain Science, the Pacific Northwest Research Institute, the Infectious support the life science industry as a $350 million commitment to research Disease Research Institute, PATH, the Seattle Biomedical Research over a 10-year period. Institute, and the Benaroya Research Institute at Virginia Mason. With a current endowment of $37 billion, the Bill and Melinda Gates The distinct healthcare industry which includes hospitals, healthcare Foundation is also a major supporter of the area’s life science companies. products and services, training, and research, accounts for 96,000 Recent funding helped the University of Washington move the jobs in Seattle and annual revenue of $10 billion. Collaboration among Departments of Genome Sciences and Bioengineering into a new, shared professionals in healthcare, life sciences and information technology has facility and helped establish a Department of Global Health. led to advances in bioinformatics and health informatics.

Aladdin Townhomes Offering Memorandum | Kidder Mathews 28 Tyler Stanek Kidder Mathews Associate Vice President [email protected] 253.722.1414

Arielle Dorman Kidder Mathews Associate Vice President [email protected] 425.450.1100

Dirk Stegeman Kidder Mathews Associate Vice President [email protected] 253.722.1408

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