Offering Memorandum LORRAINE APARTMENTS Franklin Ave E Seattle, WA. Exclusively offered by Paragon Real Estate Advisors

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1 Offering Memorandum LORRAINE APARTMENTS 2236 Franklin Ave E Exclusively offered by Paragon Real Estate Advisors 1

2 Offering Summary Paragon Real Estate Advisors is proud to be chosen to market the Lorraine Apartments located in the highly sought-after Eastlake neighborhood. Just minutes north of South Lake Union, the location offers quick access to Amazon headquarters and the fast-growing number of tech companies in the surrounding area. Sitting on a large 6,600sf LR3 lot with expansion potential, the property consists of an 8-unit apartment building plus a separate house and garage, offering a mix of one, two, and three-bedroom units. The Lorraine has been meticulously maintained by the owners, and this is the first time the property has been on the market in over 20 years. This is a rare opportunity to purchase a trophy asset in a neighborhood perfectly positioned for Seattle s continued employment growth. Name Lorraine Apartments Address 2236 Franklin Avenue E, Total Units 8 Apts + 1 House Built 1901 Square Feet 6,730 Total Net Rentable Price $2,950,000 Price Per Unit $327,778 Price Per Foot $ Current GRM/CAP 19.46/3.31% Market GRM/CAP 14.38/4.86% Expense Per Unit $5,904/Year Terms Cash Out Lot Size 6,600 Square Feet Zoning LR3, Urban Village (No Parking Required) 2

3 Investment Highlights Views of Lake Union and Downtown Large 6,600sf LR3 Urban Village Lot with expansion potential High demand cottage style units with back yard area Large storage lockers in detached garage Individual entry for most units High ceilings and classic millwork Copper plumbing upgrades throughout both buildings. Double pane vinyl frame windows Single family home is a large 3 bedroom 2 bath home with a basement and two upper floors. Two on-site parking stalls 3

4 Neighborhood Map CAPITOL HILL SEATTLE CBD PUGET SOUND MADISON PARK AMAZON CAMPUS SOUTH LAKE UNION EASTLAKE LORRAINE APARTMENTS UNIVERSITY OF WASHINGTON FREMONT WALLINGFORD 4

5 Location Highlights Perfectly positioned between UW, South Lake Union, Downtown, and Capitol Hill neighborhoods Minutes to Amazon s 30,000+ employee corporate campus in South Lake Union Tech and bio-tech companies are expanding their presence in South Lake Union and nearby Fremont neighborhoods Short walk to the shores of Lake Union One block to excellent restaurant, bar, and retail amenities on Eastlake Avenue E Active transit service to UW and the downtown CBD via King County Metro Bus Routes 71/72/73 Quick access to I-5, 520, to the Eastside and Highway 99 5

6 Major Employers - South Lake Union LORRAINE APARTMENTS 6

7 Employment Greater Seattle excels at the industries of the future - the region is a center of innovation and features some of the world s top global brands. Our aerospace industry is one of the largest in the world, home to Boeing Commercial Airplanes and over 800 aerospace firms that employ 17% of all aerospace workers in the United States. Greater Seattle is also a leading center for information and communications technology, bolstered by industry pioneers such as Microsoft and Amazon. As a result, our region has emerged as a world leader in cloud computing and data visualization, and ranks 4th as a global startup hub ahead of New York and Boston. > > Adobe > > Alaska Airlines > > Amazon > > Apple > > AT&T Wireless > > Boeing > > Costco > > Expedia, Inc. > > Expeditors International > > F5 Networks > > Facebook > > Fred Hutchinson > > Gates Foundation > > Getty Images > > Google > > Microsoft > > Nintendo > > Nordstrom > > Paccar > > RealNetworks > > REI > > Russell Investments > > SpaceX > > Starbucks > > Symetra Financial > > Tableau Software > > T-Mobile > > Twitter > > Uber > > University of Washington > > Virginia Mason > > Weyerhaeuser > > Zillow > > Zulilly 7

8 Building Photos 8

9 Unit Photos 9

10 Unit Photos 10

11 Floor Plans BASEMENT FIRST FLOOR 11

12 Floor Plans SECOND FLOOR THIRD FLOOR 12

13 Operating Summary Units 9 Year built 1901 Rentable Area 6,730 Down Payment $1,550, % Loan Amount $1,400, % Interest Rate 4.50% Amortization Lot Size 30 Years 6,600 (LR3-UV) Price $2,950,000 Price Per Unit $327,778 Per Square Foot $ Current GRM Current CAP 3.31% Market GRM Market CAP 4.86% Current DCR 1.15 Units Type Size Current Rent Monthly Income Market Rent Monthly Income 2 Studio 750 $1,125-$1,695 $2,820 $1,500 $3, Bd/1Bth 566 $835-$1,030 $4,940 $1,400 $7, Bd/1Bth 750 $1,695 $1,695 $1,895 $1, Bd/2Bth 1,650 $2,450 $2,450 $3,250 $3,250 9 Avg S.F. 748 $1.77 $2.25 Total Monthly Income Monthly Scheduled Rent $11,905 $15,145 Parking (2 open) $250 $250 Storage Income (7) $40-$55 $135 $75 $525 Laundry Income $150 $150 Utility Billback Income $0 $75/$90/$110 $725 Other Income $45 $45 Pet Rent $50/unit $150 5@ $50/unit $250 Total Monthly Income $12,635 $17,090 Annualized Operating Data Current Market Scheduled Gross Income $151,620 $205,080 Less Vacancy 1.00% $1, % $8,203 Gross Operating Income $150,104 $196,877 Less Expenses $52,600 $53,596 Net Operating Income $97,504 $143,281 Annual Debt Service ($7,094) $85,123 $85,123 Cash Flow Before Tax.80% $12, % $58,158 Principal Reduction $22,585 $22,585 Total Return Before Tax 2.26% $34, % $80,743 Annualized Operating Expenses Current Market RE Taxes 2018 Proforma $22,748 $25,022 Insurance 2017 Proforma $4,428 $3,150 Utilities 2017 $11,904 $11,904 Repairs/Maint/ 2017 $5,382 $5,382 Turnover Landscaping 2016 Actual $1,658 $1,658 On-Site Mgmt Proforma $3,780 $3,780 Admin/Misc Proforma $450 $450 Reserves Proforma $2,250 $2,250 Total Expenses $52,600 $53,596 Current Operations Expenses/Unit Expenses/Foot Percent of EGI $5,844 $ % Market Operations Expenses/Unit Expenses/Foot Percent of EGI $5,955 $ % 13

14 Sale Comparables SUBJECT - LORRAINE APARTMENTS 2236 Franklin Ave E, Year Built 1901 Units 9 Sales Price $2,950,000 Price/Unit $327,778 Price/Foot $ GRM/CAP 19.46/3.31% Sales Date TBD E JOHN ST Year Built 1900 Units 5 Sales Price $1,550,000 Price/Unit $310,000 Price/Foot $ GRM/CAP 17.7/4.07% Sales Date MALDEN AVE E Year Built 1909 Units 6 Sales Price $2,400,000 Price/Unit $400,000 Price/Foot $ GRM/CAP 16.0/3.91% Sales Date FRANKLIN ARMS 2821 Franklin Ave E, Year Built 1926 Units 6 Sales Price $2,123,500 Price/Unit $353,916 Price/Foot $ GRM/CAP N/A Sales Date HARRIET MANOR 1304 E Harrison St, Year Built 1960 Units 9 Sales Price $3,660,000 Price/Unit $406,667 Price/Foot $ GRM/CAP 17.2/4.41% Sales Date MERSOLEIL FRANKLIN 2635 Franklin Ave E, Year Built 1962 Units 9 Sales Price $3,925,000 Price/Unit $436,111 Price/Foot $ GRM/CAP 16.9/4.27% Sales Date

15 Sale Comparables 6. PORTAGE BAY FLATS 3232 Fuhrman Ave E, Year Built 1960 Units 5 Sales Price $2,500,000 Price/Unit $500,000 Price/Foot $ GRM/CAP 20.7/3.41% Sales Date LAUREY ANN APARTMENTS 2529 Yale Ave E, Year Built 1969 Units 6 Sales Price $2,600,000 Price/Unit $433,333 Price/Foot $ GRM/CAP 20.3/3.33% Sales Date

16 Sales Comparables Map Lorraine Apartments 2236 Franklin Ave E E John St Malden Ave E Harriet Manor 1304 E Harrison St LORRAINE APARTMENTS 4. Franklin Arms 2821 Franklin Ave E 5. Mersoleil Franklin 2635 Franklin Ave E 6. Portage Bay Flats 3232 Fuhrman Ave E 7. Laurey Ann Apartments 2529 Yale Ave E

17 Paragon Real Estate Advisors ABOUT PARAGON Paragon Real Estate Advisors is the leading Seattle real estate investment firm for multifamily property sales in Washington State. We have accrued over $3.4 billion in sales and have closed over 1,700 successful real estate transactions. We are locally owned, client-focused and highly experienced. When it comes to apartments and investment real estate in the Puget Sound region, we are the smart choice to partner with. At Paragon, we build long-term partnerships that help our clients reach their long- and short-term real estate investment goals while maintaining maximum profitability for them. Our brokers have an in-depth knowledge of the Washington state real estate market, particularly in the greater Seattle area and the I-5 corridor, that comes from more than 23 years experience in the industry. Paragon s unique focus on sharing knowledge, teamwork and collaboration within the brokerage industry leverages our collective intellect for all our clients. Our brokers provide superior customer representation through our innovative and effective marketing campaigns, co-brokerage, skilled negotiations, and ongoing partnerships. The information found in this offering memorandum has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. 17