VARSITY TREEHOUSEStudio Apartment Homes

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JOSEPH HO11400 SE 6th Street, Ste 100 | Bellevue, WA 98004425-466-6736 | team@ho-realty.com

MARTIN HO11400 SE 6th Street, Ste 100 | Bellevue, WA 98004425-466-6736 | team@ho-realty.com

4724 22nd Avenue NE, Seattle, WA 9810534 Units

TABLE OF CONTENTS

▪ EXECUTIVE SUMMARY

▪ PROPERTY DESCRIPTION

▪ MARKET OVERVIEW

▪ MULTI-FAMILY MARKET ANALYSIS

▪ FINANCIALS

EXECUTIVE SUMMARY

EXECUTIVE SUMMARYBERKSHIRE HATHAWAY as exclusive listing agent to the seller, is pleased to be bringing to market the opportunity to acquire the Varsity

Treehouse Apartments, a recently built, 34-unit apartment community in the University District neighborhood of Seattle. Varsity

Treehouse is a student housing oriented development sited near multiple convenient transit options in one of Seattle’s thriving urban

neighborhoods with outstanding demographics. The buyer of this property will control a vibrantly designed apartment with best in class

amenities and tremendous future income upside potential.

PROPERTY HIGHLIGHTS

▪Building completed in 2016

▪Sited steps from the University of Washington Campus and just blocks from the University Village Shopping Center

▪All units offer a sizeable living area and views overlooking the University Village Shopping Center

▪Conveniently located within close proximity to the Link Light Rail UW Station, and bus lines with direct access to tech employers inSeattle, South Lake Union, and the Eastside (Amazon, Google, Facebook, Tableau, Expedia, and Microsoft)

A DESIRABLE GROWING NEIGHBORHOOD

▪ Developers have been active here, with more than 1,200 units built in 2016–17, which is more than twice the historical annual average. Most development has taken place in the University District, but there have also been a considerable number of deliveries in Roosevelt.

▪ Construction is under way on the $2.1 billion extension of light rail between Husky Stadium and Northgate, which is scheduled toopen in 2021

▪ City officials are making a concerted effort to add non-university jobs within the submarket. The mayor unveiled a growth plan in September 2016 that would allow more density in the neighborhoods surrounding the UW campus and would focus on commercializing the university’s research. The up-zone was unanimously approved by the city council in February 2017 and will increase height limits on 65-foot and 85-foot properties to 85 and 320 feet, respectively.

▪ Surrounded by a strong local housing market with home prices exceeding $1 Million in the adjacent neighborhoods of Montlake, Wallingford, Windermere, Laurelhurst, Green Lake, Roosevelt, Bryant and Ravenna

THE UNIVERSITY OF WASHINGTON, SEATTLE

The University of Washington was founded in 1861 and currently has an annual enrollment of over 46,000 students in their

undergraduate, graduate, and professional degree programs through 16 colleges and schools.

Through their School of Medicine, the university also operates a health sciences center and an academic medical center, which includes

the University of Washington Medical Center and Harborview Medical Center. With an endowment over $3 billion and a sprawling urban

campus covering over 700 acres, the university is a cornerstone and major driver of this investment.

Link Light Rail, University of Washington Station – The station is served by Sound Transit's Link light rail system and is the current northern terminus of Central Link, which continues south towards the Capitol Hill station, Downtown Seattle, and further south to SeaTac Airport and Angle Lake. The University of Washington station is located at the intersection of Montlake Boulevard Northeast and Northeast Pacific Street, adjacent to Husky Stadium and the University of Washington Medical Center.

The station consists of an underground island platform connected to a surface entrance by elevators and escalators. A pedestrian bridge over Montlake Boulevard connects the station to the University of Washington campus and the Burke-Gilman Trail. University of Washington station was built as part of the University Link Extension and opened in 2016. The Northgate Link Extension, scheduled to open in 2021, will extend Central Link service through the University District to Northgate. The East Link Extension, scheduled to open in 2023, will divert from the Central Link at the International District/Chinatown Station and connect to the Eastside communities of Mercer Island, Bellevue, and Redmond.

The station is currently served by a major bus hub; King County Metro and Sound Transit Express bus routes connect the University District to the Eastside region.

Ride times:

▪ University of Washington to Downtown Seattle: 6 minutes

▪ University of Washington to SeaTac Airport: 44 minutes

▪ University of Washington to Downtown Bellevue: 33 minutes

Usage Projection – Future East Link trains are projected to carry 50,000 passengers daily by 2030.

Residential Sales – One major contributor to the rise in home values is the increase in

biding wars. With the rise in the practice of residential realtors implementing offer

review dates when listing properties, buyers often have to decide within a week of a

home being listed if they want to submit an offer or not. This creates bidding situations

and often means that buyers are waiving inspection contingencies when buying.

Many high-cost areas are experiencing a simple phenomenon. While the Bay Area still

has the most bidding wars. Seattle is just behind it. The region is ahead of competing

tech-heavy cities such as Los Angeles, Portland, Denver, Austin and Boston.

PROPERTY DESCRIPTION

PROPERTY DESCRIPTION

Address 4724 22nd Ave NE, Seattle, WA

Year of Completion 2016

Number of Units 34

Average Unit Size 232 SF

Number of Buildings 1

Number of Stories 5

Parking Street Parking

Land Area 7,125 SF

Average Rent/Unit

Average Rent/SF

Leased 31/34

Existing Debt None; Free and Clear

Utilities

Water and Sewer City of Seattle – Residents Pay

Electricity Seattle City Light – Residents Pay

Gas N/A

Trash On-Site, City of Seattle Services

Cable Residents Pay

Foundation Concrete slab

Construction Components Wood products

Floor Structure Wood products

Exterior Walls Wood & Hardie Composite Siding

Window Double pane windows

Roof Cover Flat

Elevators N/A

HVAC Electric

Security On-Site Security SystemUnit Amenities

▪ Cable Ready

▪ Full Bath

▪ Full Kitchen with all appliances (DW, Disposal, Oven, Range, Refrigerator)

▪ Open Floor Plans

▪ Vinyl Flooring

▪ Window Covering

Community Amenities

▪ Built Green 4 Star Certified

▪ Coin Operated Laundry Facilities on Multiple Floors

▪ Secured Bike Storage at Street Level

▪ Additional Storage Space for Residents

MARKET OVERVIEW

MARKET DRIVERS

SEATTLE METRO

MARKET HIGHLIGHTS

Growing economy

Employment growth throughout the metro has outpaced the national average, with the majority of hiring by

companies with headquarters or major operations just a short commute away from Northeast Seattle.

Major companies include: Microsoft, Amazon, Starbucks, Expedia, Nordstrom, Paccar and Boeing.

Highly educated workforce

Approximately 53.8 percent of Seattle residents have at least a bachelor’s degree and 91.9 percent have a

high school diploma or equivalent.

GEOGRAPHY

The Seattle-Tacoma-Bellevue metro area is situated between Portland, Oregon to the south and Vancouver,

British Columbia, to the north. The metro is located between the Cascade Mountains to the east, Mount

Rainier to the southeast, and the Puget Sound to the west.

MARKET DRIVERS

METRO

The Seattle-Tacoma-Bellevue metro has a population of more than 3.8 million people and is composed of the

state’s three most populous counties: Snohomish, King and Pierce. Seattle is the largest city with over 713,000

residents. Outlying cities recorded some of the largest population increases over the past decade as people

moved toward lower housing costs. The Seattle-Tacoma-Bellevue metro is the 14th largest in the nation and

includes over half of Washington’s population.

INFRASTRUCTURE

Interstates 5, 90 and 405 and State Route 520 serve as the main arteries for surface transportation throughout

the Seattle metro. The Sound Transit 2 plan is linking transportation systems in the region, including a light rail,

commuter train, local bus service and hundreds of miles of carpool lanes. The region also maintains the largest

ferry system in the United States.

Burlington Northern Santa Fe and Union Pacific provide transcontinental rail service and operate three

intermodal yards in Seattle. Amtrak offers passenger rail service to major U.S. destinations.

SeaTac Airport and Boeing Field provide international air service.

Three ports are located on the Puget Sound in Seattle, Tacoma and Everett.

Largest Cities in Metro by Population

Seattle 713,700

Tacoma 211,277

Bellevue 141,400

Kent 127,514

Everett 109,043

Renton 100,953

MARKET DRIVERS

Rents

▪Northeast Seattle's rents are slightly above the metro average and have grown

significantly since the beginning of the recovery. Rent growth remained relatively

strong in 2015–16 considering the number of units to deliver here over this cycle. Due

to its proximity to UW, the U District has one of the highest proportions of microunits

and small efficiency dwelling units (SEDUs) in the metro. Average asking rent for these

properties can easily exceed $5/SF and developers love building them because of the

ease of construction and profitability. However, the city essentially made it impossible

to build congregate microunits (typically 140-200 SF with shared bathrooms) in 2015,

which will add to rent growth in buildings that were able to get approved before these

regulations went into place.

MULTI-FAMILY MARKET ANALYSIS

MULTI-FAMILY MARKET ANALYSIS

Since Northeast Seattle is home to the University of Washington (UW), students have long dominated the submarket. While this is an ongoing phenomenon, the submarket stands

poised for strong growth. Recently, young professionals commuting to jobs throughout Lake Union and Downtown have found Northeast Seattle an affordable alternative to the

submarkets in which they work. The number of commuters living here could increase as rents continue to rise in Seattle, pricing renters out of the downtown core. Renters make up

50% of all occupied households, which is significantly higher than the metro average of 39%. The submarket also has the metro's highest proportion of 20–34 year old's, the profile

most likely to rent.

Property Sale Price$ Per Unit

$ Per SF

Date of Sale

# of Units

Year Built/Renovated Buyer Seller

Varsity Treehouse4724 22nd Ave NESeattle, WA

Asking$7,750,000

$227,941 $650.66 Available 34 2016 Varsity Treehouse LLC

Lakeview Apartments4040 7th Ave NESeattle, WA

$10,900,000 $403,704 $547.27 12/1/2017 27 1987/2017 Absaroka Holdings LLC Jeremy Gustavel

The Den5043 Brooklyn Ave NESeattle, WA

$8,825,000 $176,500 $668.56 2/28/2017 50 2013 Den LLC 52nd & Brooklyn LLC

Penrith Apartments4708 22nd Ave NE Seattle, WA

$2,095,000 $139,667 $287.77 10/03/2013 15 1956 Brookmar Properties LLC Stonecrest Apartments LLC

Catherine Court4528 20th Ave NESeattle, WA

$3,000,000 $111,111 $504.03 04/12/2017 27 1964 Erez Hava Academy Housing LLC

Pacific Apartments5217 University Way NESeattle, WA

$7,000,000asking

$205.882 $487.06 Sale Pending 34 1958/1984 Hoypro LLC

FINANCIALS

Unit Proforma Monthly Rent Move-In Date Proforma Start Date

Unit 101 $1,100.00 10/15/2017 10/14/2018

Unit 102 $1,100.00 10/3/2017 10/2/2018

Unit 103 $1,100.00 4/1/2018 4/1/2019

Unit 104 $1,100.00 8/1/2017 7/31/2018

Unit 105 $1,100.00 12/12/2016 8/31/2018

Unit 106 $1,100.00 12/31/2016 8/31/2018

Unit 201 $1,100.00 3/10/2017 8/31/2018

Unit 202 $1,100.00 10/5/2017 10/4/2018

Unit 203 $1,100.00 9/24/2017 7/23/2018

Unit 204 $1,100.00 8/15/2017 8/14/2018

Unit 205 $1,100.00 10/14/2017 7/31/2018

Unit 206 $1,100.00 2/14/2017 8/31/2018

Unit 207 $1,100.00 12/8/2017 12/7/2018

Unit 301 $1,100.00 12/16/2017 12/15/2018

Unit 302 $1,100.00 2/24/2017 7/31/2018

Unit 303 $1,100.00 12/21/2016 8/31/2018

Unit 304 $1,100.00 1/4/2018 7/3/2018

Unit 305 $1,100.00 9/1/2017 8/31/2018

Unit 401 $1,100.00 3/1/2017 8/31/2018

Unit 402 $1,100.00 Vacant

Unit 403 $1,100.00 1/20/2018 1/19/2019

Unit 404 $1,100.00 2/16/2018 8/15/2019

Unit 405 $1,100.00 3/1/2018 2/28/2019

Unit 406 $1,100.00 Vacant

Unit 407 $1,100.00 1/1/2018 6/30/2018

Unit 408 $1,100.00 3/31/2017 3/31/2018

Unit 501 $1,100.00 12/28/2017 12/27/2018

Unit 502 $1,100.00 Vacant

Unit 503 $1,100.00 3/3/2017 7/31/2018

Unit 504 $1,100.00 12/26/2017 5/26/2018

Unit 505 $1,100.00 12/15/2017 12/14/2018

Unit 506 $1,100.00 3/1/2017 8/31/2018

Unit 507 $1,100.00 12/16/2017 6/15/2018

Unit 508 $1,100.00 6/7/2017 6/6/2018

$37,400 monthly rent

$448,800 annual rent

Rent Roll (Pro Forma)

Unit Proforma Monthly Rent Move-In Date Proforma Start Date

34 UNITS

GROSS REVENUES Per Unit Total

Gross Potential Rental Income 13,200 448,800

Proforma Deposits 1,100 37,400

2017 Fees 223.66 7,604.70

2017 Utility Billback 119.78 4,072.65

Effective Gross Revenue $14,643.51 $497,877.35

2017 OPERATING EXPENSES Per Unit Total in 2017

Leasing Fees 710.02 24,141

Repairs & Maintenance 490.14 16,664.82

Utilities 821.65 27,936.23

Management Fee 554.59 18,856.32

Insurance (estimated) 250 8,500

Taxes 1,030.44 35,035

Total Expenses $3,856.86 $131,133.37

FINANCIAL ANALYSISNotes

Gross Potential Rental IncomeThe proforma income is assuming that all 34 units will be at a rental rate of $1,100/month.

DepositsThe proforma deposits assume a $1,100 deposit for each studio.

FeesThe 2017 were non-utility fees that were billed back to tenants.

Utility BillbackUtility billback is part of the residents portion of the utility expenses such as water, sewer, and garbage.

Leasing FeesLeasing commissions charged in 2017

Repairs & Maintenance2017 fees included cleaning, carpet cleaning, electrical work, janitorial services, painting, plumbing, re-keying, and general repairs.

UtilitiesIncludes common areas, vacant unit electricity, HVAC, water, sewer, and garbage.

Management FeesCost of the third party property management company.

InsuranceComprehensive general liability, fire, and property coverage.

Real Estate Taxes2017 real estate property taxes.