ACE HARDWARESINGLE TENANT INVESTMENT OPPORTUNITY

Mukilteo, WA

Table of Contents

Contact Information

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, current or past tax payments, 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.

Erik Swansoneswanson@kiddermathews.com206.296.9628

Eric Bissell ebissell@kiddermathews.com 425.450.1121

Mike Kingmking@kiddermathews.com206.296.9624

kiddermathews.com

ACE

HARDWARE

The Opportunity

Property Summary

Property Aerial

Location Overview

Demographics

Financial Analysis

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 2

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 3ACE HARDWARE | MUKILTEO, WA

The Opportunity

Ace Hardware is a single tenant net leased investment located approximately 35 minutes north of Seattle in Mukilteo, Washington. The build to suit property is 100% leased by Ace Hardware. The lease is personally guaranteed by the franchisee who operates this Ace plus a number of Jamba Juice locations in the Pacific Northwest.

The property is located on Mukilteo Speedway where traffic counts exceed 40,000 cars per day. The building was well built in 2008 with masonry and steel construction and includes a rollup door with loading dock. The property is situated on a 1 acre lot with ample parking.

Offering Price

Current Cap Rate

Lease Expiration

Building Size

Year Built

Investment Summary

Net Operating Income

$3,118,000

6.82%

$212,668

04/30/18

11,000

2008

INVESTMENT HIGHLIGHTS

Experienced Franchise Operator With Personal Guarantee

Multi-unit franchisee operates Ace Hardware and 20+ other Jamba Juice locations

High Traffic Location Traffic counts on State Route 525 exceed 40,000 cars per day

Newer Construction Concrete brick and steel completed in 2008

NNN Lease StructureTenant responsible for taxes, insurance, and all maintenance expenses, except roof structure and exterior walls

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 4ACE HARDWARE | MUKILTEO, WA

Property Summary

Address 12680 Mukilteo Speedway, Mukilteo, WA Year Built 2008

County Snohomish Parcel 004412-000-004-00

Municipality City of Mukilteo Construction Masonry and steel

Land Area 0.99 acres Land SF 43,124 SF

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 5ACE HARDWARE | MUKILTEO, WA

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 6ACE HARDWARE | MUKILTEO, WA

ACE HARDWARE

Property Aerial

19,827+ DAILY

38,666+ DAILY

Harbour Pointe Bldv SW

Bever

ly Par

k Rd

Mukilteo S

peedway

PAINE FIELD AIRPORT

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 7ACE HARDWARE | MUKILTEO, WA

Location Overview

Ace Hardware is located in Mukilteo, Washington approximately 30 minutes north of Seattle.

The property fronts State Highway 525 (Mukilteo Speedway), a heavily trafficked highway connecting the City of Mukilteo and the surrounding retail and industrial to Interstate 5.

Less than 2 miles away is The Boeing Everett Factory is an airplane assembly building employing more 30,000 people in three shifts. According to Wikipedia, it is the largest building in the world by volume. The Ace Hardware and surrounding retailers serve a five mile population of over 261,339 with an average household income of $81,294.

CITY OF MUKILTEO

Mukilteo is a waterfront community situated on Puget Sound in southern Snohomish County, about 25 miles north of Seattle. The city’s population has grown to 20,440 (April 2013) and its diverse, multi-cultural residents continue to share a great sense of pride, history and tradition of community involvement. Mukilteo amenities include quaint shopping areas, restaurants, financial institutions and several parks and open spaces for recreational opportunities. The city is also a neighbor to the Boeing Company, Paine Field Regional Airport and other major employers along a

technology corridor that reaches from northern King County through Mukilteo.

5 MILES

1 MILE

MUKILTEO

EVERETT

3 MILESACE HARDWARE

LYNNWOOD

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 8ACE HARDWARE | MUKILTEO, WA

Site Plan

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 9ACE HARDWARE | MUKILTEO, WA

1 MILE 3 MILES 5 MILES

Population

Projected Population (2020) 9,200 124,851 279,500

Estimated Population (2015) 8,830 116,217 261,339

Census Population (2010) 9,177 105,069 241,495

Projected Annual Growth (2015-2020) 4.19% 7.43 6.95%

Historical Annual Growth (2010-2015) (3.78%) 10.61% 8.22%

2015 Population by Race

White 6,077 81,720 190,608

Hispanic or Latino Population 864 15,534 31,697

Black or African American 375 6,197 11,807

American Indian or Alaska Native 82 1,295 2,919

Asian 1,826 20,335 41,624

Hawaiian or Pacific Islander 28 886 1,679

Other Race 442 5,786 12,702

Households

Estimated Households (2015)

Projected Households (2020) 3,551 49,104 107,896

Census Households (2010) 3,539 41,181 93,184

Projected Annual Growth (2015-2020) 4.26% 7.54% 7.00%

Housing Units Owner-Occupied 2,085 24,823 58,931

Housing Units Renter-Occupied 1,321 20,839 41,902

Estimated Average Household Income (2015) $81,381 $77,254 $81,294

Estimated Median Household Income (2014) $64,160 $61,178 $64,613

2015 Households by Income distribution

HH Income <$25,000 592 8,079 17,881

HH Income $25,000 - $50,000 729 9,568 20,497

HH Income $50,000 - $75,000 560 9,966 19,136

HH Income $75,000 - $100,000 495 6,964 15,382

HH Income $100,000 - $125,000 351 3,997 9,714

HH Income $125,000 - $150,000 235 2,544 6,336

HH Income $150,000 - $200,000 320 2,746 7,283

HH Income $200,000+ 123 1,797 4,605

5 MILES

1 MILE

261,339

279,500

$81,294

6.95%

5-MILE TRADE AREA DEMOGRAPHICS

Population (2015)

Estimated Population (2020)

Average Household Income

Projected Annual Growth

MUKILTEO

EVERETT

3 MILES

Demographics

ACE HARDWARE

LYNNWOOD

KIDDER MATHEWS | INVESTMENT OPPORTUNITY 10ACE HARDWARE | MUKILTEO, WA

PROPOSED FINANCINGNET OPERATING INCOME

PRICE $3,118,000

Down Payment $779,500

Loan to Value (LTV) 75%

New Loan Amount $2,338,500

Interest Rate 4.50%

Amortization 30

Debt Coverage Ratio 1.50

CURRENT NET OPERATING INCOME $212,668

Annual Debt Service ($142,186)

Cash Flow After Debt Service $70,482

LEVERAGED CASH ON CASH RETURN 9.04%

Principal Reduction $37,725

Return with Principal Reduction $108,207

TOTAL RETURN ON EQUITY 13.88%

Investment Summary

$3,118,000PRICE

6.82%CAP RATE

$296.95PRICE / SF

04/30/18LEASE TERM

ACTUAL PER SF

Scheduled Rent $209,004 $19.00

+ Expense Recapture* $43,968 $4.00

+ Year 1 Rent Increases $3,664 $0.33

Effective Gross Income $256,636 $23.33

Operating Expenses -$43,968 -$4.00

NET OPERATING INCOME $212,668 $19.33

LAND/SF $72.19

BUILDING PRICE/SF $283.45

PRICE $3,118,000

CAP RATE 6.82%

*NNN paid by tenant

TENANT SUITE SIZE % GLA MONTHLY RENT ANNUAL RENT ANNUAL RENT/SF LEASE TYPE LEASE TERM

STARTLEASE TERMEXPIRATION

OPTION PERIODS COMMENTS

Ace Hardware 11,000 100.00% $17,417 $209,004 $19.00 NNN 05/01/08 04/30/18 2, 5 year Increase year 8 & 10

GROSS LEASABLE AREA 11,000 $32,917 $209,004 $19.00

RENT ROLL

Contact Information

Erik Swansoneswanson@kiddermathews.com206.296.9628

Eric Bissellebissell@kiddermathews.com425.450.1121

Mike Kingmking@kiddermathews.com206.296.9624

Kidder Mathews 601 Union Street, Suite 4720 Seattle, WA 98101

kiddermathews.com