144 units Lakewood, Washington€¦ · UNITS SINCE 2011 (50+ UNITS) TOP PERFORMING STATE & LOCAL...

144 unitsLakewood, Washington

HFF E XCLUSIVE MULTI-HOUSING INVESTMENT OFFERING

Confidentiality & Conditions

Ira Virden, a licensed real estate broker in the state of Washington, along with Holliday Fenoglio Fowler, L.P. (collectively “HFF”).

This Offering Memorandum has been prepared by HFF for use by a limited number of recipients. All information contained herein has been

obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes

any representations or warranties, expressed or implied, as to the accuracy or completeness of the information contained herein. Further, the

Offering Memorandum does not constitute a representation that no change in the business or affairs of the property or the Owner has occurred

since the date of the preparation of the Offering Memorandum. All analysis and verification of the information contained in the Offering Memorandum

is solely the responsibility of the recipient. HFF and Owner and their respective officers, directors, employees, equity holders and agents expressly

disclaim any and all liability that may be based upon or relate to the use of the information contained in this Offering Memorandum.

Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified

prospective investors.

Owner and HFF each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property

and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any

recipient reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a

written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any

obligations set by Owner thereunder have been satisfied or waived.

The recipient (“Recipient”) agrees that (a) the Offering Memorandum and its contents are confidential information, except for such information

contained in the Offering Memorandum, which is a matter of public record, or is provided from sources available to the public (b) the Recipient,

the Recipient’s employees, agents and consultants (collectively, the “need to know parties”) will hold and treat it in the strictest of confidence,

and the Recipient and the need to know parties will not, directly or indirectly, disclose or permit anyone else to disclose its contents to any other

person, firm, or entity without the prior written authorization of HFF and the Owner, and (c) the Recipient and the need to know parties will not

use or permit to be used this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Owner or HFF or

for any purpose other than use in considering whether to purchase the property. The Recipient and the need to know parties agree to keep this

Offering Memorandum and all confidential information contained herein permanently confidential and further agree to use this Offering

Memorandum for the purpose set forth above. If the Recipient has no interest in the property, or if in the future the Recipient or owner discontinue

such negotiations, the Recipient will return this Offering Memorandum to HFF.

Icons: Flaticon basic license; Attribution 3.0 Unported (CC BY 3.0)

Investment Advisory

Ira VirdenSenior Managing Director

(503) 417-5587

[email protected]

Chris RossDirector

(425) 533-1954

[email protected]

For underwriting

questions, please contact:

Anthony PalladinoAssociate

(503) 956-9024

[email protected]

Frank SolorzanoReal Estate Analyst

(503) 265-5093

[email protected]

ii

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Property Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Location Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Property Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

iii

Holiday Fenoglio Fowler, L.P. (“HFF”) is pleased to present the multi-housing investment opportunity of The James (the “Property”), a 144-unit garden-style apartment community located in Lakewood, Washington. The property is located near several of Pierce County’s largest employment drivers, including the adjacent Joint Base Lewis-McChord (JBLM), which supports over 60,000 jobs. Additionally, the location provides immediate access to various Seattle MSA commuting options such as Interstate 5 and the Lakewood Transit Station.

EXECUTIVE SUMMARY

2

Unit Mix Studio 1 × 1 2 × 1 2 × 2 3 × 2 Aggregate

No. units 1 unit 72 units 47 units 16 unit 8 units 144 units

% total 1% 50% 33% 11% 6% 100%

Total rentable SF (±) 500 SF 43,360 SF 34,780 SF 16,736 SF 9,920 SF 105,296 SF

Per unit SF (±) 500 SF 602 SF 740 SF 1,046 SF 1,240 SF 731 SF

Average achieved rent $1,000 $928 $1,077 $1,202 $1,353 $1,034

PSF $2.00 $1.54 $1.46 $1.15 $1.09 $1.41

Per rent roll dated 01/03/18

Address4828 123rd Street SWLakewood, WA 98499

№ of apartments144 (105,296 SF)

Average unit size731 SF

Year built1976

№ of buildings14 residential & 1 clubhouse

ConstructionWood-frame, garden-style

Plumbing SupplyCopper

Parking spaces205 (1.42:1)201 regular surface, 4 ADA

Acreage7.16 acres (21.10 du/ac)

Achieved rent$1,034 ($1.41 PSF)

Per rent roll dated 01/03/18

3

PROVEN VALUE-ADD OPPORTUNIT Y…with heavy-lifting complete The James presents an exceptional opportunity for a new investor to realize rent premiums through the continuation of the current value-add renovation program. In November 2016, current ownership began extensive interior and exterior renovations.

To date, interior renovations have been completed on roughly half of the property, achieving a $189 premium on average over non-renovated units.

NON-RENOVATED KITCHEN

RESURFACED COUNTERTOPS

WOOD-LOOK VINYL FLOORING

UPDATED CABINET FACES

BRUSHED NICKEL CABINET HARDWARE

MODERN PLUMBING FIXTURES

NEW APPLIANCES

RENOVATED KITCHEN

Additional unit renovations:MODERN LIGHTING FIXTURESIN-UNIT WASHERS & DRYERS REPLACEMENTS**Select Units

4

Recent Community Upgrades

Additionally, large-scale investments made by current ownership have significantly reduced the scope of future capital projects for a new investor.

◆ Partial siding replacement

◆ Balcony enclosures

◆ Updated landscaping & sidewalks

◆ Resurfaced parking lot

◆ Exterior lighting

◆ New signage

◆ Clubhouse & fitness center remodel

NEW SIGNAGE

RENOVATED CLUBHOUSE & FITNESS CENTER

5

DAILY

TRAF

FIC:

135,0

00

DAILY

TRAF

FIC: 3

0,000

BRIDGEPORT WAY SW

250 EMPLOYEES

CLOVER PARK SCHOOL

LAKEWOOD RACQUET& SPORT CLUB

ST. CLARE HOSPITAL850 EMPLOYEES

LAKEWOOD STATION600-CAR PARK & RIDE

LAKEWOOD TOWNE CENTER 504K SFLAKEWOOD INDUSTRIAL PARK • 3.5M SF

425 EMPLOYEES

JOINT BASE LEWIS-McCHORD 46,000 ACTIVE-DUTY MEMBERS

20,000 CIVILIAN EMPLOYEES

JOINT BASE LEWIS-McCHORDGATE ENTRY

DOWNTOWN SEATTLE45 MINUTES • 300,000 EMPLOYEES

DOWNTOWN TACOMA 15 MINUTES

TACOMA MALL 1.2M SF • 159 STORES

PORT OF TACOMA43,000 EMPLOYEES

3,100 STUDENTS

PUGET SOUND

TACOMA

99

512

N

©Aerolistphoto.com

6

IMMEDIATE ACCESSIBILIT Y TO MAJOR THOROUGHFARES & PUBLIC TRANSITStrategically located along the I-5 corridor, Lakewood residents have premier access to the region’s largest employers. In addition, residents can also find the Lakewood Transit Station within walking distance from the property, which serves the Sounder Commuter Train, and has a 600-car park and ride garage.

Seattle was recognized as the 2018 top investment market in the top performing state & local economy—Urban Land Institute

130 bpsVACANCY RATE

DECLINE YOY

ZeroNEW APARTMENT UNITS SINCE 2011

(50+ UNITS)

TOP PERFORMING STATE & LOCAL ECONOMYThe state of Washington and the Seattle and Tacoma MSAs continue to be recognized nationally as top places for investment. Drivers include employer expansion, wage growth, and private sector job creation.

◆ №1 fastest growing big city in the U.S. (Census 2017)

◆ №1 city for wage growth in the U.S. (PayScale 2017)

◆ №1 market for real estate investment by 2017 Emerging Trends in Real Estate (ULI & PwC)

◆ №1 city for tech job growth (12.0% from 2014–2016)

◆ №1 for STEM growth (7.6% from 2013–2015)

Excellent Submarket Fundamentals

7

Property Performance

HISTORICAL ASKING & ACHIEVED RENTSWhile the average achieved rent at The James has increased by $225 (27.8%) year-over-year, a substantial disparity between current asking and achieved rents provides plenty of additional room for growth. As seen below, a new investor has the ability to collapse an embedded loss-to-lease of $171 (16.7%). Since the start of 2017, The James has experienced 12 consecutive months of positively trending achieved rents, which has allowed the property-wide average achieved rent to surpass the previous asking rent level twice throughout the year. During the same time frame, the property has maintained an average physical occupancy rate of 92.7%.

Historical Rents vs. Occupancy

Annualized Trailing-3 Net Rental Income (NRI) TRAILING-3 MONTH NET RENTAL INCOMEAs a result of the combination of healthy economic occupancy and positively trending rents, The James displays an impressive acceleration of annualized average trailing-3 month net rental income (NRI). The property’s annualized trailing-3 month net rental income has increased 13.0% since February 2017. As collections from the recent renovations have just begun to be captured over the last 6 months, a new investor has an opportunity to further accelerate rental collections, not only by realizing the full upside of the recently renovated units, but by also upgrading the remaining non-renovated units.

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-1784%

86%

88%

90%

92%

94%

96%

98%

100%Average Monthly Rent Occupancy

Physical Occupancy Asking Rent Achieved Rent

$1,100,000

$1,150,000

$1,200,000

$1,250,000

$1,300,000

$1,350,000

$1,400,000

$1,450,000

$1,500,000

$1,550,000

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17T-3 Rental Income Linear (T-3 Rental Income)

13.0% Increase since 02/2017

8

HFF Pro Forma NOI Post Renovation

Renovated vs. Non-Renovated Average Achieved Rents

$1,000,000

$1,050,000

$1,100,000

$1,150,000

$1,200,000

$1,250,000

$1,300,000

$1,350,000

$1,400,000

Year-1 Year-3

$836

$1,003 $1,021

$1,328

$943

$1,000

$1,063

$1,130

$1,359

$1,425

$1,132

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

0x1 1x1 2x1 2x2 3x2 Aggregate

Value-Add ProgramAlthough The James has been well maintained, the property has the potential to capture significant revenue growth with the continuation of a value-add renovation program.

To date, renovations have been completed on 75 units, or roughly 50% of the property. These units have obtained substantial rental premiums, averaging $189 (20.0%) over their respective non-renovated units. By continuing a value-add program, a new investor is projected to further enhance rent growth. With a projected completion of the current renovation program in year-2 of a new investor’s hold, NOI is projected to realize an increase of 21.6% by year-3.

Current Renovation Scope• Resurfaced countertops• Updated black appliances• New cabinet faces & hardware• Wood-look vinyl flooring in wet areas• New carpet in living room & bedrooms• Modern plumbing & lighting fixtures• New interior paint

In addition to interior upgrades, current ownership has completed exterior upgrades of nearly $1.5 million including, new paint, residing up to four feet, enclosed patios, seal coated and re-striped the parking lot, clubhouse renovations, and landscape improvements. Clubhouse renovations include a new fitness center, leasing office, furniture and business center. Additional community amenity space upgrades including a dog park or outdoor grill area will allow the property to garner interest from a high-end renter profile, improve renewals, and reduce turnover.

Exterior & common area improvement ideas: Outdoor kitchen & covered BBQ area • Dog park

$1,500

1,400

1,300

1,200

1,100

1,000

900

800

700

Millions

$1.40

1.35

1.30

1.25

1.20

1.15

1.10

1.05

1.00

Studio 1 × 1 2× 1 2 × 2 3 × 2 Aggregate

Year 1 Year 3

+$227 (27.2%) +$127

(12.7%)

+21.6%

+$338 (33.1%)

+$97 (7.3%)

+$189 (20.0%)

9

PROPERT Y PROFILE

10

Unit Mix

Non-renovated Studio 1 × 1 2 × 1 2 × 2 3 × 2 AggregateNo. units — 37 units 19 units 7 units 6 units 69 units

% total — 51% 40% 44% 75% 48%

Total rentable SF (±) — 22,270 SF 14,060 SF 7,322 SF 7,440 SF 51,092 SF

Per unit SF (±) — 602 SF 740 SF 1,046 SF 1,240 SF 740 SF

Average achieved rent — $836 $1,003 $1,021 $1,328 $943

PSF — $1.39 $1.36 $.98 $1.07 $1.27

Renovated Studio 1 × 1 2 × 1 2 × 2 3 × 2 AggregateNo. units 1 unit 35 units 28 units 9 units 2 units 75 units

% total 100% 49% 60% 56% 25% 52%



Average achieved rent $1,000 $1,063 $1,130 $1,359 $1,425 $1,132

PSF $2.00 $1.76 $1.53 $1.30 $1.15 $1.57

Total Studio 1 × 1 2 × 1 2 × 2 3 × 2 AggregateNo. units 1 unit 72 units 47 units 16 unit 8 units 144 units

% total 1% 50% 33% 11% 6% 100%



Average achieved rent $1,000 $928 $1,077 $1,202 $1,353 $1,034

PSF $2.00 $1.54 $1.46 $1.15 $1.09 $1.41Per rent roll dated 01/03/18

12

CLUBHOUSE

RENOVATED KITCHEN RENOVATED LIVING ROOm

OUTDOOR POOL

Community Amenities

◆ Business center

◆ Clubhouse

◆ Fitness center

◆ Outdoor pool

◆ Community laundry

◆ Sundeck

◆ Valet waste service

Apartment Amenities

◆ Large closets

◆ Window coverings

◆ Washer & dryer*

◆ Dishwasher*

◆ Private balcony

*Select units

13

Property Characteristics

Building & SiteYear completed 1976

No. of buildings 15 total; 14 residential & 1 clubhouse/office

No. of units 144 units

Net rentable SF 105,296 SF

Building style Garden

No. of floors 2 stories

Exterior material Compressed wood siding exterior walls, bottom ±4’ have been replaced with Hardi.

Window material Double-pane

Window framing Aluminum

Ceiling height 8’3”

Framing Wood-frame

Roof construction Pitched wood trusses & asphalt shingle

Roof age Bldg A,D,H: 2012; F,L: 2011; C: 2010; E: 2009All other buildings: 10–12 years old

Hallway construction Concrete

Breezeway construction Concrete

Foundation Reinforced concrete

Land area 7.16 acres (21.1 du/ac)

Entrances 1 entrance at 123rd Street SW

Monument signs 1 sign located at entrance

Mechanical/Electrical/PlumbingHeating Electric baseboard

Water heater Electric 50-gallon

Electrical 100 amps, copper wiring

Plumbing supply Copper

Plumbing outlet Acrylonitrile-Butadiene-Styrene (ABS)

Water meter Buildings individually metered

Fire protection Smoke detectors with a battery backup

Fire extinguishers Exterior wall-mounted locations

ParkingType Spaces

Regular surface 201

ADA 4

Total spaces 205

Overall ratio per unit 1.42:1

14

Property Characteristics continued

Kitchen SpecificationsNon-Renovated Renovated

Range GE, electric coil cooktop, white GE, electric smooth cooktop, black

Refrigerator GE, white GE, black

Cabinet materials Wood with laminate finish Wood, painted

Countertop materials Laminate Laminate

Backsplash materials Laminate Laminate

Flooring materials Living, bedrooms: CarpetKitchen, bathrooms: Vinyl

Living, kitchen, bathrooms: Wood-look vinylBedrooms: Carpet

Washer/Dryer* Full-size stackable W/D in select 2 and 3 bedroom units Full-size stackable W/D in select 2 and 3 bedroom units*Select units

UtilitiesUtilities/Service Provider Payment

Electricity Lakeview Light & Power Residents reimburse property

Water Lakewood Water District Residents reimburse property

Sewer Pierce County Public Works & Utilities Residents reimburse property

Cable/Phone Comcast Xfinity Residents pay directly

Trash Lakewood Refuse (includes valet waste service) Residents reimburse property

15

Site Plan

51

62

73

84

71

82

93

104

115

126

71

82

93

104

115

126

62

73 6 2

84 5 1

51 8 4

62 7 3

73 6 284 5 1

51 6 4

62 5 3

51

51

62

91

9 1

168

10 2

157

11 3

146

12 4

135

135

124

146

113

157

102

168

91

101

113

124

168

157

146

135

73

73

84

73

84

51

62

73

84

51

62

84

A

B

L

C

K

D

J

E F

GH

N

P

M

4930

4926 4922

4820

4812

4906

4808

4824

4902

4918

4914

4910

4828 4816

4932

POOL

LA

UN

DR

Y

LAUNDRY

Compactor

CLUBHOUSE& OFFICE

N

16

B C DE F

G

P

H

J

KL

LAUNDRY

POOL

CLUBHOUSE& OFFICE

A

m

N

N

17

Closet

Bathroom

Kitchen

Patio/Balcony

Dining6' 1" x 8' 11"

Living14' 10.5" x 11' 3"

Bedroom11' 6" x 11' 10.5"

Closet

Closet

Bathroom

Kitchen

Patio/BalconyLiving/Bedroom14' 10.5" x 11' 3"

Dining6' 1" x 8' 11"

Closet

W/H

Closet

Bathroom

Kitchen

Patio/Balcony

Dining7' 9.5" x 8' 4"

Living12' 9.5" x 15' 1"

Bedroom12' 0" x 12' 9.5"

Select Floor Plans

1 Bed, 1 Bath 590 SFStudio 500 SF

18

Closet

W/H

Closet

Bathroom

Kitchen

Patio/Balcony

Dining7' 9.5" x 8' 4"

Living12' 9.5" x 15' 1"

Bedroom12' 0" x 12' 9.5"

Closet

Closet

Clo

set

Clo

set

BathroomKitchen

Patio/Balcony

Dining6' 1" x 8' 11"

Living14' 10.5" x 11' 3"

Bedroom9' 2" x 9' 10.5"

Bedroom13' 6.5" x 10' 3"

Select Floor Plans continued

1 Bed, 1 Bath 700 SF 2 Bed, 1 Bath 740 SF

19

Clo

set

Clo

set

Storage

Closet

W/D

Closet

Closet

Bathroom

Bath

room

Kitchen

Patio/Balcony

Living17' 0" x 11' 6"

Bedroom10' 7" x 10' 0"

Bedroom8' 10" x 10' 0"

Bedroom11' 4" x 13' 0"

Clo

set

Clo

set

Bathroom

Bathroom

Kitchen

Patio/Balcony

Dining10' 6" x 8' 3"

Living16' 11" x 11' 7"

Bedroom10' 6" x 9' 10"

Bedroom9' 10" x 14' 2"

W/D

Select Floor Plans continued

3 Bed, 2 Bath 1,240 SF2 Bed, 2 Bath 1,046 SF

20

Clo

set

Clo

set

Storage

Closet

W/D

Closet

Closet

Bathroom

Bath

room

Kitchen

Patio/Balcony

Living17' 0" x 11' 6"

Bedroom10' 7" x 10' 0"

Bedroom8' 10" x 10' 0"

Bedroom11' 4" x 13' 0"

NON-RENOVATED LIVING ROOm

21

LOCATION OVERVIEW

22

Lakewood, WALakewood, Washington is situated in the southern Puget Sound region. Lakewood is the second largest city in Pierce County with a population of 59,557, and supporting an estimated 3,500 businesses as of 2017. Just 30 miles from Seattle, the Lakewood-Tacoma MSA serves as the center of business activity for the south sound region and is one of the fastest growing markets in Washington with nearly 20,000 jobs (+7%) added since 2016, with concentrations in manufacturing, administrative support, educational, and health services sectors.

IMMEDIATE ACCESSIBILIT Y TO MAJOR THOROUGHFARES & PUBLIC TRANSITStrategically located directly next to Interstate 5, residents at The James have premier access to the region’s largest employers. In addition, residents can also find the Lakewood Transit Station within one mile from the property, which serves the Sounder Commuter Train, with a 600-car park and ride garage.

LAKEWOOD TRANSIT STATION

24

DAILY

TRAF

FIC:

135,0

00

DAILY

TRAF

FIC: 3

0,000

BRIDGEPORT WAY SW

250 EMPLOYEES

CLOVER PARK SCHOOL

LAKEWOOD RACQUET& SPORT CLUB

ST. CLARE HOSPITAL850 EMPLOYEES

LAKEWOOD STATION600-CAR PARK & RIDE

LAKEWOOD TOWNE CENTER 504K SFLAKEWOOD INDUSTRIAL PARK • 3.5M SF

425 EMPLOYEES

JOINT BASE LEWIS-McCHORD 46,000 ACTIVE-DUTY MEMBERS

20,000 CIVILIAN EMPLOYEES

JOINT BASE LEWIS-McCHORDGATE ENTRY

DOWNTOWN SEATTLE45 MINUTES • 300,000 EMPLOYEES

DOWNTOWN TACOMA 15 MINUTES

TACOMA MALL 1.2M SF • 159 STORES

PORT OF TACOMA43,000 EMPLOYEES

3,100 STUDENTS

PUGET SOUND

TACOMA

99

512

©Aerolistphoto.com 25

JOINT BASE LEWIS-MCCHORD 0.25 MILES • 60,100 EMPLOYEESPierce County’s largest employer, and the 2nd largest employer in the state

Located a quarter mile directly east of the property is the fourth largest military base in the United States, Joint Base Lewis-McChord (“JBLM”), the Defense Department’s premier military installation on the West Coast. JBLM was established as one of 12 joint bases worldwide on October 1, 2010, and provides state-of-the-art training and infrastructure for its inhabitants. JBLM is a fully-integrated part of the Puget Sound community and houses branches of the Army, Navy, Air Force, and Marines.

Overall, the military branches provide more than $3.1 billion annually in payroll to 91,000 people in the Puget Sound area. The total economic impact of Joint Base Lewis-McChord is estimated at $6.1 billion, according to the Puget Sound Regional Council.

In July 2015, The Washington State Legislature approved a $495 million project to make improvements to Interstate 5 along JBLM. The improvements include widening both north and southbound directions by one lane each, and is projected to be funded through 2025. (Pierce County, Veteranaid)

20,000CIVILIAN JOBS

60,000FAMILY MEMBERS

30,000MILITARY RETIREES

46,000ACTIVE DUTY MEMBERS

JOINT BASE LEWIS-mCCHORD

26

PORT OF TACOMA 7.5 MILES • 29,000 EMPLOYEESSupports over 29,000 jobs, adding 6,700 more over the next 5 years

The Port of Tacoma has become a major hub for cargo in North America, ranking in the top 50 ports worldwide. The port handles between 9 and 13 million tons of cargo, and more than $25 billion of commerce each year. Major exports include machinery, computers, grains, and vegetables, while the port’s top foreign shipping destinations are Japan, China, and South Korea.

In 2014, the Port of Tacoma and the Port of Seattle partnered to fund a joint economic impact study. Together the two ports form the third-largest gateway in North America based on the number of containers pass through the seaports. Together the two ports economic activity accounts for $138.1 billion which is a third of the state’s gross domestic product. (Port of Tacoma)

As a part of the 2012 strategic plan, the Port of Tacoma will invest $5 billion by 2022 in improvements to its existing property, buildings, and infrastructure. An additional, $1.5 to $2.5 billion in public and private investments are expected in the same time-frame and will improve the existing terminals, roads, and rail infrastructure. With these improvements, the port will seek to increase port-related direct jobs by 4,700 and port-related indirect jobs by 2,000 or more over the next five years.

$58,000AVERAGE SALARY

$1 billionIN LOCAL CONSUMPTION

$4.3 billionECONOMIC IMPACT

LARGEST IN THE STATE

AMONG TOP 50 PORTS

WORLDWIDE

PORT OF TACOmA

27

OTHER MAJOR EMPLOYERS

CHI Franciscan Health Systems 0.9 MILES • 6,528 EMPLOYEES*The closest hospital, St. Clare, is within one mile from The James, and is just one of eight full service hospitals in the South Sound region. In October 2017, the company announced the opening of two new clinics; the Franciscan Medical Clinic on Gravelly Lake and the Franciscan Prompt Care on Gravelly Lake.

MultiCare Health Systems 1.6 MILES • 7,439 EMPLOYEES*Recently, the company teamed up with CHI Franciscan Health to develop a brand new behavioral health hospital with an estimated cost of $45 million. After its estimated completion in 2018, the hospital will serve as a non-profit, treating approximately 5,000 patients per year and creating over 340 jobs.

Amazon Distribution Centers 9.0 MILES • 1,400 EMPLOYEES*DuPont: 15 minutes southwest from the property is a 1 million square foot distribution center. The facility opened back in 2015 and employs over 900 full-time and seasonal employees. Sumner: Amazon is opening a second fulfillment warehouse in Sumner, adding a 400,000 square foot building next to an existing 500,000 square foot facility which opened in 2011. This latest addition will create hundreds of full-time jobs. Kent: In the second quarter of 2016, Amazon opened an 800,000 square foot fulfillment facility. Amazon is offering warehouse workers in Kent a higher starting wage than those in any of the 18 states where the Seattle-based company is hiring.

State Farm Insurance Company 10.0 MILES • 2,150 EMPLOYEES*The company recently sought out to hire 200 employees at their Tacoma and DuPont locations for both full-time and part-time positions. Additionally, State Farm’s operations center in Tacoma employs nearly 2,000 employees, making the company one of Pierce County’s largest private employers.

Boeing 10.0 MILES • 1,575 EMPLOYEES*Boeing is estimated to secure an additional 11,000 direct (and indirect) jobs in Washington State to support the notable $35 billion Air Force Tanker and 737. Currently, Boeing produces 47 aircrafts per month at its Renton facility, and anticipates on increasing production to 52 aircrafts per month in 2018. The new fuel-efficient 737 attracted a 200-aircraft purchase order from American Airlines, and the largest airplane order in history from Southwest Airlines for an estimated $18 billion. Boeing’s total backlog for its 737 family of planes is now 4,485—equating to nearly eight years of production at its current pace. (Sources: Multicare.org, Patch.com, Edbtacomapierce.org)

*Represents number of full-time employees in Pierce County.

28

KENT VALLEY EMERGING INNOVATION DISTRICT65,000 employees • 50 million SF of industrial space

Kent, Washington is the fourth largest center for manufacturing and distribution in the United States, and second largest on the west coast.

In 2016, Kent amended its zoning code to expand the array of land uses permitted in one of the valley’s largest industrial zones. The change allows for convenience stores, bakeries, restaurants, bars, and hotels to coexist with the larger corporate and industrial complexes — enabling development of a more amenity-rich area to attract and retain talented workers without compromising industrial use.

If the region continues at its current pace it could become a major driver of the economy, with job growth predicted to be as much as 40% in the next decade.

Source: US Census, Costar, Puget Sound Business Journal

Top Employment Sectors Employees

Manufacturing 21,584

Services 15,620

Retail Trade 13,770

Wholesale Trade 8,982

Transportation, Communication & Utilities 5,584Source: US Census

KENT VALLEY INDUSTRIAL CORRIDOR

Manufacturing 32.9%

Services 23.8%

Retail Trade 21.0%

Wholesale Trade 13.7%

Transportation,Communication & Utilities

8.5%

29

Local University Expansions

UNIVERSIT Y OF WASHINGTON TACOMA 10 MILES • 5,185 STUDENTS№ 18 for Top Public Schools • № 20 in Best Undergraduate Engineering Programs

The university is currently underway on several capital projects in efforts to keep up with rising student enrollment demands. Current plans are projected to support a total enrollment of 5,800 full time students over the next four years.

PACIFIC LUTHERAN UNIVERSIT Y 4 MILES • 3,100 STUDENTS№ 16 for Best Western Regional University • № 10 for Best Colleges for Veterans

Located just 10 minutes from The James, the university has approximately 3,100 students in attendance, employs over 220 full-time professors. The university has released their detailed capital improvements schedule outlining approximately $2.5 million in renovations across the campus. (PLU.edu)

PACIFIC LUTHERAN UNIVERSITY

UW TACOmA

30

Proximate to Retail & Recreational Amenities Lakewood Towne Center 1.7 MILES

An open-air shopping mall with 80 tenants, offering shopping, dining and entertainment options. The shopping center was redeveloped in 2002. Anchors include Target, Safeway, Old Navy, Office Depot, Barnes & Noble, and AMC Theaters.

Tacoma Mall 5.8 MILESTacoma Mall is the largest shopping center in Tacoma with 1,325,000 square feet of retail and 150 tenants. Anchors include JC Penney, Sears, Macy’s, and Nordstrom.

Fort Steilacoom Park 4.5 MILESFort Steilacoom Park is the largest park in Lakewood, featuring an expansive trail system, baseball, softball, and soccer fields, a dog park, multiple picnic shelters, and a state-of-the-art playground.

Steilacoom Lake 3.4 MILESSteilacoom Lake is a man-made reservoir with an average depth of eleven feet. A public boat launch can be found on the eastern shore in Edgewater Park.

South Puget Sound Wildlife Area 3.8 MILESThe 90-acre wildlife refuge provides habitable land for multiple endangered species and provides visitors the opportunity to observe them in their natural habitats.

Sunnyside Beach Park 6.8 MILESProviding beach access on the Puget Sound to residents of Lakewood. The park includes BBQ grills, benches, trails, volleyball court, as well as a playground.

Tacoma Dome 8.8 MILESThe Tacoma Dome hosts over 500,000 visitors annually and over 125 live events each year. Built in 1983, the Tacoma Dome is the largest arena with a wooden dome in the world when measured by volume. Renowned for its’ unique wooden configuration and exceptional acoustics, the Tacoma dome hosts a variety of events, including concerts, sporting events, and festivals. The Tacoma City Council recently approved a $21.3 million renovation. (TacomaDome.org)

TACOmA DOmE

31

Seattle, WARANKED №3 BEST PLACES FOR BUSINESS & CAREERS FORBESSeattle, is the nation’s 15th largest metropolitan area. As a west coast hub of innovation, Seattle attracts and retains entrepreneurial businesses and individuals. Its diverse economic base anchors the aerospace, transport, and tourism industries. The city has seen rapid growth of dynamic high technology and biotechnology firms and is a magnet for young educated professionals from around the world in search of well-paying jobs and a high quality of life.

3,807,891POPULATION

2017

1,654,700RESIDENT LABOR FORCE

NOV. 2017

4,077,792PROJECTED

POPULATION 2022

3.8%UNEMPLOYMENT RATE

NOV. 2017

$89,265MEDIAN

HOUSEHOLD INCOME

3.2%ANNUAL PRIVATE SECTOR

JOB GROWTH NOV. 2017

Sources: Claritas, State of Washington, BEA

32

Sources: Claritas, State of Washington, BEA

Technology: Cloud Capital of the WorldSeattle is quickly becoming one of America’s largest tech-labor markets. As of June 2017, according to Glassdoor, the Seattle metropolitan area accounted for 16.9% of open software related jobs, 0.9% higher than of Silicon Valley. Cloud computing has also played an integral role in Seattle’s economic growth. By 2020, a shift to the cloud will affect more than $1 trillion in IT spending. As home to Amazon Web Services and Microsoft Azure, Seattle is recognized as the “Cloud Capital of the World.”

Top 10 U.S. Markets for Tech Leasing (2015-2016)

984,696 SFIndianapolis

992,091 SFDenver

1,041,552 SFDallas

1,280,843 SFAustin

1,399,726 SFNew York

1,718,598 SFSan Francisco

1,720,975 SFChicago

1,830,058 SFBoston

2,527,798 SFSeattle

3,927,015 SFSilicon Valley

24,669

2014

35,000

2017 est.

71,500

2020 proj.

AMAZON 35,000 NEW JOBS PROJECTED BY 2020Amazon’s explosive growth over recent years has pushed it to #12 on the Fortune 500 list. Amazon is also the largest internet retailer in the United States and Seattle's largest private employer with nearly $136 billion in sales for the 2016 fiscal year, continuing its unbroken 20-year streak of double digit revenue growth.

Now considered the third most-innovative company in the world by Forbes, the online giant’s staggering 27.1% revenue increase in 2016 contributed to the company’s already impressive sales growth which has now nearly quadrupled in the last five years. As Amazon continues to expand into new markets and alter the landscape of worldwide online retail, their brand continues to gain momentum.

Amazon Seattle Headcount Forecast

33

Technology continued

MICROSOFT UNDERGOING 500-ACRE TRANSFORMATIONIn November, 2017 the company announced a major renovation of its campus in Redmond, Washington. Breaking ground next fall, the company will turn the campus into a mini city, adding 18 new buildings and $150 million in transportation and public space improvements. When complete in 2023 the campus will have enough space for up to 8,000 more employees.

GOOGLE DOUBLING DOWN ON OFFICE SPACEThe company recently doubled the size of its Kirkland campus, with more than 375,000 square feet of space, the company has significantly boosted its presence in the Seattle region, creating room for an additional 1,000 employees. Google is also planning to occupy an additional 607,000 square feet of office space in four different buildings in South Lake Union, which will comprise their new Seattle headquarters. The new office complex will be almost double the size of Google’s Kirkland campus with construction scheduled for completion in late 2019.

FACEBOOK CREATING ROOM FOR 4,700 MORE EMPLOYEESThe company quadrupled its previous footprint in downtown Seattle with a major move to South Lake Union in 2016. The company leased eight floors of the 10-floor, Dexter Station building. In addition, the company doubled down by leasing the Arbor Blocks, consisting of two buildings, and the 1101 Denny building. With nearly 930,000 square feet of total office space, and approximately 1,500 employees in the region to date, Facebook has the room for an additional 4,700 employees.

EXPEDIA COMING SOON TO SEAT TLEThe online travel giant has plans to move into Seattle, redeveloping four lab buildings on the former Amgen site in Belltown. The move will bring an estimated 4,000 jobs to the region upon taking occupancy in 2019.

34

MARKET OVERVIEW

36

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

5,000

5,200

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000Inventory (units) Vacancy Rate

Eective Rent Vacancy Rate Poly. (Vacancy Rate)

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

$700

$750

$800

$850

$900

$950

$1,000

E�ective Rent Vacancy Rate Poly. (Vacancy Rate)

Average Rent Vacancy Rate

Lakewood Apartment Market

SEVERE DEARTH OF NEW SUPPLYThe Lakewood apartment submarket is currently comprised of 5,975 total units across 45 properties (50+ units). Over the last three years, the submarket has not delivered any new supply, which has created a significant shortage of housing options, and thus serious downward pressure on vacancy rates. (Dupre & Scott)

✓ Vacancy rates have been less than 5% since 2014

✓ 0 new apartment projects since 2011

Lakewood Inventory vs. Vacancy

Lakewood Historical Rent vs. Vacancy

Source: Dupre & Scott

38

SIGNIFICANT ROOM FOR RENT GROWTH Despite the exceptional rent growth has occurred over the last 36 months, achieved rents in the Lakewood apartment submarket still have a substantial amount of room to grow before encroaching on the effective rent levels of neighboring submarkets. (Axiometrics)

✓ Lakewood submarket average rent is $1,233

✓ $75 (7%) below the Auburn/Enumclaw submarket

✓ More than $200 (16%) below North Tacoma & Kent submarkets

Average Achieved Rent by Submarket

DEVELOPMENT PIPELINE IS VIRTUALLY NON-EXISTENTNeither CoStar nor Dupre & Scott list a single project (50+ units) currently under construction. The virtually non-existent development pipeline is projected to increase total submarket inventory by a meager 69 units (1.16%) per year through 2020. In contrast, Claritas anticipates the area within a three-mile radius of The James to add 257 households per year throughout 2022.

$1,100 $1,180 $1,260 $1,340 $1,420 $1,500

$1,441

$1,437

$1,354

$1,317

$1,308

$1,233

$1,180South Tacoma

Lakewood

Auburn/Enumclaw

East Tacoma

Federal Way

Kent

North Tacoma

39

Rent Comparables SummaryAVERAGE

Property Occupancy Year Built Type Units Square Feet Asking Rent PSFThe James*4828 123rd Street SWLakewood, WA 98499

95.0% 1976 Studio 1 500 $1,000 $2.001 bedroom 72 602 1,089 1.812 bedroom 63 818 1,247 1.533 bedroom 8 1,240 1,575 1.27

Totals/Average 144 731 1,185 1.62Beaumont Grand8504 82nd Street SETacoma, WA 98498

98.5% 1996 1 bedroom 96 780 1,280 1.642 bedroom 124 988 1,456 1.473 bedroom 47 1,145 1,600 1.40

Totals/Average 267 941 1,418 1.51The Harrison8311 83rd Avenue Court WLakewood, WA 98498

94.6% 1992 2 bedroom 127 930 1,402 1.513 bedroom 8 1,053 1,650 1.57

Totals/Average 135 937 1,417 1.51Village at Seeley Lake5719 95th Street SWLakewood, WA 98499


Totals/Average 522 895 1,331 1.49Citizen & Oake5406 82nd Street SWLakewood, WA 98499


Totals/Average 231 909 1,358 1.50Altitude 1042201 104th Street STacoma, WA 98444


Totals/Average 230 912 1,351 1.48

Subject Current Manager's Ask 144 731 1,185 1.62Competitive Set 277 913 1,364 1.49Variance 133 182 179 -0.13

*Represents asking rents for renovated units., per rent roll dated 01/03/18

40

Rent Comparables Summary continued

Average Monthly Rent Average Monthly Rent PSF

731 SF 941 SF 937 SF 895 SF 909 SF 912 SF$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

The James* Beaumont Grand The Harrison Village at SeeleyLake

Citizen & Oake Altitude 104

731 SF 941 SF 937 SF 895 SF 909 SF 912 SF$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

$1.90

$2.00

The James* BeaumontGrand

The Harrison Village at SeeleyLake

Citizen & Oake Altitude 104


$1,800

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

$2.00

1.90

1.80

1.70

1.60

1.50

1.40

1.30

1.20The

James*Beaumont

GrandThe

HarrisonVillage at

Seeley LakeCitizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison

Village at Seeley Lake

Citizen & Oake

Altitude 104

41

Rent Comparables by Unit Type

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

The James Beaumont Grand The Harrison Village at Seeley Lake Citizen & Oake Altitude 104

602 SF 780 SF 677 SF 673 SF 640 SF$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

$1.90

$2.00


602 SF 780 SF 677 SF 673 SF 640 SF

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800


740 SF 910 SF 844 SF 905 SF 875 SF 915 SF$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

$1.90


740 SF 910 SF 844 SF 905 SF 875 SF 915 SF

1 Bed, 1 Bath

2 Bed, 1 Bath

PSF

PSF

RENT

RENT

$1,800

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

$1,800

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

$2.00

1.90

1.80

1.70

1.60

1.50

1.40

1.30

1.20

$2.00

1.90

1.80

1.70

1.60

1.50

1.40

1.30

1.20

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104


42

Rent Comparables by Unit Type continued

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800


1,046 SF 1,036 SF 955 SF 1,066 SF 995 SF 970 SF$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

$1.90

$2.00


1,046 SF 1,036 SF 955 SF 1,066 SF 995 SF 970 SF

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800


1,240 SF 1,145 SF 1,053 SF 1,155 SF 1,230 SF 1,221 SF$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

$1.90

$2.00


1,240 SF 1,145 SF 1,053 SF 1,155 SF 1,230 SF 1,221 SF

2 Bed, 2 Bath

3 Bed, 2 Bath

PSF

PSF

RENT

RENT

$1,800

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

$1,800

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

$2.00

1.90

1.80

1.70

1.60

1.50

1.40

1.30

1.20

$2.00

1.90

1.80

1.70

1.60

1.50

1.40

1.30

1.20

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104

The James*

Beaumont Grand

The Harrison


Citizen & Oake

Altitude 104


43

PROPERT Y ECONOMICS

44

Rent Roll Summary Per rent roll dated 01/03/18HFF PRO FORMA ACHIEVED

Description Units SF (±) Rent PSF Rent PSF Average LTLStudio Non-Renovated 0 — $ — $ — $ — $ — $ —

Renovated 1 500 1,000 2.00 1,000 2.00 0 1 × 1 A Non-Renovated 33 590 1,025 1.74 827 1.40 (198)

Renovated 31 590 1,100 1.86 1,038 1.76 (62)1 × 1 B Non-Renovated 4 700 1,075 1.54 925 1.32 (150)

Renovated 4 700 1,150 1.64 975 1.39 (175)2 × 1 Non-Renovated 19 740 1,150 1.55 1,003 1.36 (147)

Renovated 28 740 1,225 1.66 1,130 1.53 (95)2 × 2 Non-Renovated 7 1,046 1,250 1.20 1,021 0.98 (229)

Renovated 9 1,046 1,325 1.27 1,359 1.30 34 3 × 2 Non-Renovated 6 1,240 1,450 1.17 1,328 1.07 (122)

Renovated 2 1,240 1,575 1.27 1,425 1.15 (150)Total/Average 144 731 1,156 1.58 1,034 1.41 (122)

RENOVATED LIVING ROOmRENOVATED KITCHEN

46

NON-RENOVATED KITCHEN

47

Operating StatementTrailing 12Nov 2017

Trailing 6Nov 2017

Trailing 3Nov 2017 CURRENT NOI ANNUALIZED HFF PRO FORMA YEAR 1 NOTE

IncomeEffective rental income Per unit Per unitGross potential income $1,799,816 $1,863,637 $1,969,301 $1,998,000 $13,875 $2,067,930 $14,361 1Loss-to-Lease (247,294) (252,538) (300,896) (193,980) (1,347) (142,916) (992) 2Gross scheduled rent 1,552,522 1,611,099 1,668,405 1,804,020 12,528 1,925,014 13,368 Net renovation income N/A N/A N/A N/A N/A (9,825) (68) 3Vacancy (110,731) (134,375) (154,836) (90,201) (626) (95,759) (665) 4Concessions (12,917) (7,674) (5,016) 0 0 0 0 Bad debt (15,625) (14,115) (17,712) (13,530) (94) (14,364) (100) 5Non-revenue units (14,200) (21,600) (23,700) (13,800) (96) (14,283) (99) 6Subtotal Effective rental income 1,399,048 1,433,335 1,467,141 1,686,489 11,712 1,790,782 12,436 Other income 97,214 109,123 131,956 97,214 675 100,130 695 7Utility reimbursements 125,367 143,994 145,068 125,367 871 129,128 897 8Subtotal Other income 222,581 253,117 277,024 222,581 1,546 229,258 1,592 Effective gross income 1,621,629 1,686,452 1,744,165 1,909,070 13,257 2,020,040 14,028

ExpensesControllable expensesPayroll 191,455 199,448 194,208 191,455 1,330 197,199 1,369 9Marketing 33,318 31,982 30,451 33,318 231 34,318 238 10General & administrative 39,779 41,126 39,079 39,779 276 40,972 285 11Turnover 24,322 23,412 30,216 24,322 169 25,052 174 12Repairs & maintenance 22,606 23,661 26,831 36,000 250 37,080 258 13Contract services 38,490 44,172 39,727 38,490 267 39,645 275 14Utilities 181,534 180,567 172,689 181,534 1,261 186,980 1,298 15Subtotal Controllable expenses 531,506 544,369 533,200 544,899 3,784 561,246 3,898 Fixed expensesManagement fee 62,952 67,905 71,584 57,272 398 60,601 421 16Ad valorem taxes 120,949 120,949 120,949 120,949 840 120,949 840 17Insurance 31,332 43,883 17,942 36,000 250 36,000 250 18Capital reserves N/A N/A N/A 36,000 250 36,000 250 19Subtotal Fixed expenses 215,232 232,737 210,475 250,221 1,738 253,550 1,761 Total expenses 746,738 777,106 743,675 795,120 5,522 814,796 5,658 Net operating income $874,891 $909,346 $1,000,490 $1,113,949 $7,736 $1,205,244 $8,370

48

First Mortgage

Initial loan amount: $8,880,000

Origination date: November 10, 2016

Maturity date: December 1, 2026

Initial term: 10 years

Initial interest only: 5 years

Fixed interest rate: 3.88%

Supplemental

Origination date: December 15, 2017

Proceeds: $2,512,000

Interest rate: 5.32%

Term: Coterminous with first mortgage

Interest only: None

Blended Existing Financing

Total proceeds: $11,392,000

Interest rate: 4.20%

Underwriting Assumptions & NotesIncome Loan Assumption

1. Gross potential income Underwrote aggregate pro forma rents equating to current estimated market rent of $1.58 per square foot or $1,156 per unit. Current achieved rents per the January 3, 2018 rent roll equate to $1.41 per square foot or $1,034 per unit.

The James is currently encumbered by a fixed-rate Freddie Mac loan that was originated in November, 2016, and a fixed-rate supplemental loan originated in December 2017.

2. Loss-to-lease Initial loss-to-lease equates to $122 (11.8%) per unit per month between pro forma rents and current achieved.

3. Net renovation income Accounts for first full year of net renovation income, including rent premiums and downtime for unit vacancy.

4. Vacancy loss Underwrote 5.0% vacancy loss of Gross Scheduled Rent.

5. Bad debt Underwrote 0.75% net bad debt loss of Gross Scheduled Rent in year-1, 0.5% in year-2, and 0.25% thereafter.

6. Non-revenue units Underwrote one model unit with monthly rent of $1,150, or $13,800 annually.

7. Other income Underwrote consistent with the trailing-12 month statement ending November 30, 2017 (T-12), equating to $675 per unit annually. General other income line items typically include application fees, NSF fees, late fees, lease cancellation fees, damages/cleaning, interest income, and miscellaneous income.

8. Utility reimbursements Underwrote consistent with the T-12, or $871 per unit annually.

Expenses9. Payroll Underwrote consistent with the T-12, or $1,330 per unit annually.

10. Marketing Underwrote consistent with the T-12, or $231 per unit annually.

11. General & administrative Underwrote consistent with the T-12, or $276 per unit annually.

12. Turnover Underwrote consistent with the T-12, or $169 per unit annually.

13. Repairs & maintenance Underwrote to estimated market expenses of $36,000 or $250 per unit annually.

14. Contract services Underwrote consistent with the T-12, or $267 per unit annually.

15. Utilities Underwrote consistent with the T-12, or $1,261 per unit annually.

16. Management fee Underwrote management fee equal to 3.0% of effective gross income.

17. Real estate taxes Current NOI reflects 2017 tax bill(s).

18. Insurance Underwrote to estimated market expense of $250 per unit annually.

19. Capital reserves Underwrote to $250 per unit annually.

49

HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been

obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents

makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference

to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or

estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence

criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be

based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation

and rely on those results. The information contained herein is subject to change.

Investment Advisory

Ira VirdenSenior Managing Director

(503) 417-5587

[email protected]

Chris RossDirector

(425) 533-1954

[email protected]

For underwriting

questions, please contact:

Anthony PalladinoAssociate

(503) 956-9024

[email protected]

Frank SolorzanoReal Estate Analyst

(503) 265-5093

[email protected]

iv

HFF Seattle1301 Fifth AvenueSuite 3008Seattle, WA 98101

Executive Summary�Property ProfileUnit MixAmenitiesProperty CharacteristicsSite Plan

Location OverviewMarket OverviewRent Comparables

Property EconomicsRent Roll SummaryOperating StatementUnderwriting Assumptions & Notes

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