Villa Franca Apartments th Avenue West, Seattle, WA

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1 Restored Seattle Classic Villa Franca Apartments th Avenue West, Seattle, WA + Rare Anhalt Building + Prime SW Queen Anne Hill Location + Abundant Period Charm Intact + Six Townhouse Units + Beautiful Secluded, Private Setting + Sound, Mountain and Sunset Views

2 Executive Summary PRICE $9,100,000 STORIES 2 UNITS 13 PARCEL SIZE 20,600 Square Feet $/UNIT $700,000 ZONING LR2 $/SF $734 EXTERIOR Stucco CURRENT CAP 3.68 % HEATING Forced Air Electric MARKET CAP 3.86 % PARKING 12 Garages CURRENT GIM 19.5 MARKET GIM 17.4 UNIT MIX 4-1 Bedroom / 1 Bath 8-2 Bedrooms / 1 Bath 1-1 Bedroom + Den / 1 Bath NET RENTABLE AREA 12,393 Square Feet Note: 6 units are townhomes AVERAGE UNIT SIZE 953 Square Feet WASHER/DRYERS In-unit washers/dryers YEAR BUILT 1930 ROOF Pitch-Tile The information contained herein, while not guaranteed, has been secured from sources Westlake Associates, Inc. believes to be reliable and is considered to be the most current and correct data available.

3 Property Photos Olympic Way West 9th Avenue West West Prospect Street Courtyard layout on a quiet, secluded street. Sunny South & West Exposure.

4 The History Connoisseurs of Seattle real estate instantly recognize the name Frederic Anhalt, a legendary designer, developer and landscaper of Seattle buildings, especially apartment homes, beginning in An apartment building is an Anhalt much like a painting is a Rembrandt, a piece of glass is a Chihuly, or a symphony is a Mozart. Properties built by Anhalt are part real estate and part objects d art. But make no mistake; they are 100% successful income properties. Anhalt s genius for creating home-like living, produced buildings that are every bit as popular today as they were when they opened. Anhalt built mostly Tudor style buildings but his work included several Spanish-Mediterranean style structures. Perhaps his most noteworthy building is located at 1005 E. Roy Street on Capitol Hill, a Tudor building which is affectionately known as Anhalt s Castle EAST ROY STREET If 1005 E. Roy Street was Anhalt s Castle, then Villa Franca was his Mediterranean Villa. Situated on a private, quiet site on the southwest face of Queen Anne Hill, the apartments overlook Puget Sound and the Olympic Mountains. The huge lot accommodates very low density with one and two-story apartments fashioned in a long U around a central courtyard with gently sloping lawns and garages around the perimeter. The site sits well above street level which adds to the ambiance. In addition to privacy and views, the site enjoys preferred south and west exposure which makes for bright and light apartments.

5 The History Anhalt buildings are so prized that they rarely change hands. The current ownership bought Villa Franca in 2015 from investors who acquired the property in This was a match made in heaven, a historic building in need of restoration and a developer with a long history of tastefully restoring vintage buildings including two of Seattle s finest, the Villa Costella (left) and the Sheffield (below), plus numberous renovations of luxury single family homes, conversion of nearly 500 multifamily units to condominiums and ground-up new construction of luxury apartment buildings. The period charm, artistic touches, wonderful architecture and use of the finest building materials have enabled Anhalt buildings to outperform other rentals; achieving higher rents, lower vacancies and exceptionally long occupancies.

6 The Location Fred Hutch Facebook Google South Lake Union Amazon Microsoft Bill & Melinda Gates Foundation Queen Anne Hill Seattle CBD Seattle Center Villa Franca Kinnear Park Zulily F5 Networks Expedia Queen Anne Hill has long been considered Seattle s premier residential neighborhood due to its close proximity to Seattle s CBD, easy access to public transportation and the ability to maintain a family-friendly neighborhood with strong community ties. Villa Franca has easy access to Upper Queen Anne s bustling retail scene with coffee shops, restaurants, boutiques, grocery stores and other service-oriented businesses. Equally accessible is Lower Queen Anne; home to vibrant night life, numerous neighborhood restaurants and the 64-acre Seattle Center which houses the Pacific Northwest Ballet, the Pacific Science Center, the Seattle Opera, the Seattle Children s Theatre, the Space Needle, Paul Allen s MoPOP Museum and the recently-opened Chihuly Garden and Glass exhibit. Kinnear Park is literally a few steps from Villa Franca and Expedia s newly acquired 41-acre campus is just down the hill to the West. Expedia is expected to move 3,000 employees from its Headquarters in Bellevue to the existing 670,000 square feet of offices by Plans filed with the city indicate more than doubling the amount of office space over the next 15 years. Demand for Queen Anne apartments continues to rise as nearby South Lake Union experiences explosive growth as a high-tech and medical mecca. Amazon, projecting 71,500 employees by 2019 in Seattle continues to hire at a feverish pace bringing new, highly paid residents to the area. Other prominent employers in the South Lake Union area include Facebook, Microsoft, the University of Washington, the Fred Hutchinson Cancer Research Center and the Bill and Melinda Gates Foundation, and coming soon Google.

7 Employment Hub The Villa Franca is perfectly positioned to capitalize on the rapid job growth on Queen Anne, South Lake Union, Belltown and Fremont. Companies within 3 miles of the Villa Franca include:

8 Property Photos South Elevation A new waterproof, concrete deck was added, creating expansive, sunny patios off the kitchens of units 1, 2 and 3. West Elevation Private patios for units 12 (left) and 14 (right) were created. Altogether 11 of the 13 units have patios, balconies or both.

9 Property Photos Restored stairway at entrance All new landscaping and sidewalks. New fountain. New exterior lighting.

10 Property Photos Complete exterior restoration included removal of asbestos coating, new stucco, new landscaping, new irrigation system and new gutters and down spouts tightlined off-site. Acclaimed designer Gary Dethlefs and the developer collaberated on the exterior colors, inspired by award winning Mexican architect/artist Luis Barragán. The twelve garages were retrofitted with electricity and new overhead garage doors.

11 Property Photos The period charm has been retained while the kitchens were totally updated with deluxe appliances including gas ranges.

12 Property Photos Spacious Townhome bedrooms open to private, covered, view balconies.

13 Property Photos In-unit laundry New bathrooms

14 Property Photos Professionally landscaped grounds

15 Property Photos Gourmet Kitchens

16 Property Photos Numerous Artistic Touches

17 Property Photos Spacious, open floor plans

18 Property Photos Future Expedia Headquarters Site Location Kinnear Park Elliot Bay

19 Scope of Restoration VILLA FRANCA UPGRADES AND REPAIRS th Ave W. retaining wall replaced Front stairway replaced Plaza sidewalk/approaches replaced New exterior railings/ handrails installed at all stairways Front fountain replaced All landscaping replaced New landscape irrigation system w/ deduct meter Tile roof reconditioned throughout Exterior Stucco Siding completely resurfaced (asbestos abatement) Garage roof waterproofing replaced in all garages (#1, #2, new concrete) New garage doors w/auto openers installed, electrical in all garages Downspout/gutter system repaired or replaced throughout Units #12 and #14 patios replaced. Aluminum windows replaced with wood windows Kitchen walls removed to create open floor plans Patios for units #1, #2 and #3 replaced All new window coverings (roller shades) New water supply from SPU water main New plumbing supply (pex) to all units New showers and plumbing fixtures All new bathroom tile/glass enclosures New natural (PSE) gas supply plumbed to all units Individual in-unit laundry supply/waste Individually metered unit water/gas equipment All units completely rewired from sub panel to current code GFCI and grounded circuitry New in-wall forced-air cadet-type heaters New kitchen cabinets/countertops/sinks/fixtures/etc. All new high-grade Bosch, Bloomberg kitchen appliances All hardwood floors refinished Note: Included in the offering price is the renovation of the 2 remaining apartments. This can be accomplished by Seller postclosing. Alternatively Seller will consider a negotiable credit at closing to cover the renovation cost of units 7 and 8.

20 Franco Villa - Unit Configuration Units 1 and 12 are two bedroom / one bath flats Units 2, 3, 10 and 11 are one bedroom / one bath flats Unit 14 is a one bedroom + den / 1 bath flat Units 4-9 are two bedroom / 1 bath Townhomes

21 Current & Post Renovation Rents UNIT # UNIT TYPE SQ. FT. ALL UNITS AT POST LEASE PSF RENOVATION MARKET PSF RENTS EXPIRATION RENTS (EXCL. #6) 1 2 Bedroom 1 Bath 874 $3,000 $3.43 $3,295 $ Bedroom 1 Bath 596 $2,495 $4.19 $2,495 $ Bedroom 1 Bath 636 $2,495 $3.92 $2,495 $ Bedroom 1 Bath 1,183 $3,850 $3.25 $3,850 $ Bedroom 1 Bath 1,191 $3,850 $3.23 $3,850 $ Bedroom 1 Bath 1,208 $3,450 $2.86 $3,450 $ Bedroom 1 Bath 1,208 $2,450 $2.03 $3,850 $ Bedroom 1 Bath 1,191 $2,200 $1.85 $3,850 $ Bedroom 1 Bath 1,183 $3,850 $3.25 $3,850 $ Bedroom 1 Bath 602 $2,195 $3.65 $2,195 $ Bedroom 1 Bath 611 $2,395 $3.92 $2,395 $ Bedroom 1 Bath 869 $3,395 $3.91 $3,395 $ Bedroom + Den 1 Bath 1,041 $3,295 $3.17 $3,295 $ TOTAL 12,393 $38,920 $42,265 AVERAGES 953 $2,994 $3.14 $3,251 $3.41 * Units 4-9 are Townhouses, listed square footages for these units include enclosed 126 square foot balconies. * Square footages are from Johnson Architects as-built drawings. * Units 1, 2, 3, 5, 6, 10 11, 12 and 14 are fully renovated and rented; units 4, 9, 11 and 12 were all preleased prior to completion. * Units 7 and 8 (8-year occupant) have not been renovated. These apartments are on month-to-month or short term tenancies. Renovation of these units is forecast to start in September and be completed by the end of October. * Unit 1 is occupied by the developer at a reduced rent. Unit 6 moved in on and received a $400 per month construction discount. The market rent for this apartment should be at least $3,850.

22 Financial Analysis PROPERTY OVERVIEW Number of Units 13 Year Constructed 1930 No. of Buildings 1 Rentable SF 12,393 Lot Size SF 20,600 Zoning Roof Exterior Heating Parking PRICE ANALYSIS LR2 Spanish Tile Stucco Forced Air Electric 12 Garages Sale Price $9,100,000 Price per Unit $700,000 Price per NRSF $734 Price per Land SF $442 Current CAP Rate 3.68% Current GRM 19.5 Pro Forma CAP Rate 3.86% Pro Forma GRM 17.4 The statements, figures & computations herein, while not guaranteed, are secured from sources we believe reliable. Investors should verify all numbers, computations, and assumptions before committing to an investment. 8/1/17 ALL UNITS UNIT TYPE # AVG SIZE PSF PSF INCOME RENOVATED 1 Bedroom 1 Bath SF $2,395 $3.92 $2,395 $ Bedroom + Den 1 Bath 1 1,041 SF $3,295 $3.17 $3,295 $ Bedroom 1 Bath 8 1,113 SF $3,256 $2.93 $3,674 $3.30 Total AVG 13 12,393 SF $38,920 $3.14 $42,265 $3.41 INCOME 8/1/17 INCOME ALL UNITS RENOVATED Scheduled Rental Income $467,040 $507,180 + Garage Income $260 $3,120 $1,200 $14,400 + Other Income $100 $1,200 $100 $1,200 Scheduled Gross Income $471,360 $522,780 - Vacancy & Cr. Losses 3.0% ($14,141) 3.0% ($15,683) Effective Gross Income $457,219 $507,097 EXPENSES 8/1/17 INCOME PER UNIT PER UNIT ALL UNITS RENOVATED Real Estate Taxes (2017) $38,890 $2,992 $5,403 $70,236 Property Insurance 14,252 1,096 1,096 14,252 Professional Mgt. (3.5%) 15,911 1,224 1,365 17,748 On-Site Management 16,003 1,231 1,224 15,915 Administration 2, ,500 Gas 3, ,200 Electricity Water & Sewer 1, ,200 Garbage 6, ,120 Repairs & Maintenance 6, ,500 Landscaping 9, ,200 Reserves 3, ,250 Turnover Maintenance 3, ,000 Miscellaneous 2, ,000 Total Operating Expenses $122,356 $9,412 $11,958 $155,448 NET OPERATING INCOME $334,863 $351,649

23 Notes to Financials INCOME Current rents are based on the August 1, 2017 rent roll. It is important to note that the property s extensive restoration has been very gradual. Units have been rented as their interior remodels have been completed. Unit #6 was rented during the peak of the exterior restoration work. This apartment received a construction discount. Unit 1 is occupied by the developer who receives a small discount, hence the difference between the current and post renovation rent for this fully remodeled apartment. Units 7 and 8 are in their original condition and are occupied on month-to-month and short term leases. Remodeling of these units is expected to start on September 1 and be finished in October. Post renovation rents were set by the professional property managers, Blanton Turner. As noted above, in-place rents fully support these projected rents. In a sense the property is its own rental comp. As units have become available they have rented quickly, which is not surprising considering the property s all-encompassing restoration, views, unique setting, low density and extraordinary period charm. Villa Franca truly offers the best of the old and the new. The garages are projected to rent for $100 per month. EXPENSES Real Estate Taxes - Current Real Estate Taxes are the actual amount for Proforma Real Estate Taxes are based on a projected future Assessed Value equal to 80% of the selling price and the actual 2017 millage rate. Insurance - The insurance line item is the current actual premium. Professional Management - Current and Pro Forma Professional Management is budgeted at 3.5% of Effective Gross Income. On-Site Management - This cost is in-line with current operations and includes bonuses, payroll taxes and medical. Natural Gas - The domestic hot water is heated by two leased gas-fired boilers. This line item is an estimate since during its restoration the property has not had gas bills reflecting full occupancy. The apartments feature gas ranges however this gas consumption is sub-metered. Electricity - Estimate of house electricity expense post-restoration. Water & Sewer - The renovated apartments are sub-metered for water. Non-renovated apartments are billed back for their share of the water & sewer charges. The irrigation system is tied to a deduct meter which charges for water only. The annual expense in this line item is an estimate based on best available information. Garbage - This line item covers solid waste and yard waste charges. This is an estimate based on past historical data and best available information. Repairs & Maintenance - These are estimated at $500 per unit per year. Landscaping - Current actual expense based on landscape maintenance contract. Reserves - Pro Forma Replacement Reserves are calculated at $250 per unit per year. Turnover Maintenance - Pro Forma turnover maintenance is estimated at four turnovers per year and $750 per turn for cleaning, painting, etc.

24 Sales Comparables - Notes on Pricing Income Approach to Value When the remodeling of all 13 apartments is completed and when all units at Villa Franca are rented at their post-renovated rents, the Gross Income Multiplier will be 17.4 times the annual income and the Capitalization Rate will be 3.9%. These income-related indicators of value are in line with sales of other quality vintage buildings as shown in the table below. ADDRESS UNITS SALE PRICE YEAR BUILT SALE DATE CAP Rate GRM WHITWORTH 1619 E. John Street THE MCKEAN th Ave West GLEN EDEN 921 1st Ave West 54 $18,230, % $2,875, % $11,500, % 16.5 VILLA FRANCA 13 $9,100, % 17.4 Physical Value Considering its all-encompassing restoration / remodeling, location, views, unique setting, low density and extraordinary period charm, Villa Franca is truly better than new. Therefore the prices per square foot in the sales of the new buildings below are the best indicators of physical value. Yardhouse 1406 E. Republican St. East Howe Steps 1823 Eastlake Ave E Villa Franca th Avenue West 80 Main 80 S. Main St. $766 $756 $734 $691 $600 $650 $700 $750 $800

25 Investment Highlights Once-in-a-lifetime opportunity to acquire a flawless trophy property Expert restoration team years experience in construction and design + Impeccable taste + Attention to detail + Commitment to quality Anhalt design, quality, vintage charm, artistic touches Home-like living with beautiful grounds Quiet, secluded site with south and west exposure Puget sound, Olympics and sunset views Prime Queen Anne Hill location Individual garage parking Flexible finished product + Complete current restoration plan for all units + Reconfigure currently unfinished units for live-in owner Flexible closing date - Potential for 120-day escrow to accommodate 1031 Buyer FOR MORE INFORMATION PLEASE CONTACT: Aerial Photo Credits: Erik Holsather Sky Solutions NW Mike Marinella PRINCIPAL MANAGING BROKER mikema@westlakeassociates.com