$3,800,000. Offering Memorandum MONTEREY APARTMENTS & 4028 California Ave SW Seattle, WA 98116

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1 $3,800,000 Offering Memorandum MONTEREY APARTMENTS 4022 & 4028 California Ave SW Seattle, WA 98116

2 For More Information Please Contact Aaron Locke Ethan Szmania The information included in this document has been obtained from sources we believe to be reliable. While we do not doubt its accuracy, we have not verified it and cannot make any guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions, or estimates used are for example only and may not accurately represent the current or future performance of the property. The value of any proposed transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs Eastlake Ave E Seattle, WA

3 Contents Investment Overview Submarket Information Financial Analysis Sales/Rent Comparables Puget Sound Region

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5 SECTION 1 :: INVESTMENT OVERVIEW Investment Overview The Foundation Group is pleased to offer the opportunity to purchase the Monterey Apartments, a rare 16-unit complex in the heart of West Seattle located just 2 blocks from the Junction center on California Avenue. It is not often that a proven high preforming asset like this comes on the market in one of the most unique and trendy neighborhoods of Seattle. A new owner can come in and start collecting great cash flow, while still capitalizing on repositioning of the remaining un-renovated units or adding washer/dryers to the units. West Seattle continues to see rapid growth while still maintaining its cool factor for Seattleites. The Monterey gives a buyer the opportunity to enter this competitive Seattle market at under $250k a unit. Originally built in 1954, the Monterey Apartments has undergone almost a complete renovation over the last two years. Thirteen of the units have had updates. The kitchens have been updated with quartz counter tops, tasteful back-splashes, laminate hardwood flooring and stainless steel appliances. The bathrooms have been updated with laminate hardwood flooring and new-modern shower surrounds. Other interior improvements are the new wall heaters and high-end carpet. Visible exterior improvements have included a fresh eye-catching paint job complimented by all new doors and new wood siding in the front and back. Other building improvements have included a new connection to the electrical main and the sewer line connection to the mainline was replaced in A neighborhood oasis within a booming city.

6 SECTION 1 :: INVESTMENT OVERVIEW Quick Facts Units 16 Current Cap Rate 4.80% Market Cap Rate 5.35% Current GRM Market GRM Price/SqFt $444 Price/Unit $237,500 Structures Two Eight Unit Buildings Parcel Numbers , Parking Spaces 8 uncovered spaces Rentable SqFt 8,560 Lot SqFt 11,500 Zoning LR3-RC MONTEREY APARTMENTS Year Built 1954 Construction Type Wood Frame Heating Electric Wall Windows Average Unit Size Washer/Dryer Buyer to verify Double Pane Windows 540 SqFt Common Laundry Room

7 SECTION 1 :: INVESTMENT OVERVIEW

8 SECTION 1 :: INVESTMENT OVERVIEW

9 SECTION 2 :: SUBMARKET INFORMATION West Seattle Area Description West Seattle is known as its own unique/hip community separate from the rest of the city. This neighborhood has been able to maintain a small town feel compared to the city north of downtown. The heart of West Seattle is known as "The Junction", which is the intersection of SW Alaska St and California Ave SW. At the Junction you will find a lively business district with many boutique shops, cafes, restaurants, bars and major brand stores. West Seattle gives a slice of serenity just minutes away from the big city feel. Alki Beach Park gives the locals and visitors a getaway type feel with a street of retail along the beach. On the average sunny day you can find several beach volleyball games going on and bonfires by night. Lincoln Park gives the locals a little bit of everything: 4.6 miles of walking paths, 3.9 miles of bike trails, sheltered picnic areas, playfields and a heated saltwater pool & bathhouse. West Seattle has sprawling green spaces and parks, which make up 1/3 of Seattle's urban forest. In 2016, voters took a bold step by passing Sound Transit 3. The $53.8 billion plan will expand the existing light rail system as well as connect Ballard to West Seattle. ALKI BEACH LINCOLN PARK Source: Expedia.com Source: Beuastifulwashington.com

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11 SECTION 2 :: SUBMARKET INFORMATION Monterey Apartments Submarket Information RETAIL 1 QFC 2 Trader Joe's 3 Bartell Drugs 4 Junction True Value Hardware 5 West Seattle Runner 6 Alki Lumber & Hardware TRANSPORTATION SCORES RESTAURANTS 1 Prost! West Seattle 2 Freshy's 3 Pagliacci Pizza 4 Elliott Bay Brewery & Pub 5 Coastline RECREATION 1 West Seattle Golf Course 2 Dakota Place Park 3 Junction Plaza Park 4 Ercolini Park 5 Schmitz Preserve Park MONTEREY APARTMENTS SCHOOLS 1 Schmitz Park Elementary School 2 Genesee Hill Elementary School 3 West Seattle High School 4 Madison Middle School 5 The Cove Scool

12 SECTION 3 :: FINANCIAL SUMMARY Scheduled Income Units Unit Type Average Sq Ft Current Rent Current / Sq Ft Market Rent Market / Sq Ft 1 1B/1B 540 $1,450 $2.69 $1,475 $ B/1B 540 $1,295 $2.40 $1,475 $2.73 *3 1B/1B 540 $1,295 $2.40 $1,475 $ B/1B 500 $1,395 $2.79 $1,475 $ B/1B 540 $1,445 $2.68 $1,475 $ B/1B 540 $1,295 $2.40 $1,475 $2.73 *7 1B/1B 540 $1,295 $2.40 $1,475 $ B/1B 540 $1,395 $2.58 $1,475 $ B/1B 540 $1,450 $2.69 $1,475 $ B/1B 540 $1,425 $2.64 $1,475 $2.73 *11 1B/1B 540 $1,295 $2.40 $1,475 $ B/1B 500 $1,345 $2.69 $1,475 $ B/1B 540 $1,425 $2.64 $1,475 $ B/1B 540 $1,395 $2.58 $1,475 $ B/1B 540 $1,395 $2.58 $1,475 $ B/1B 540 $1,445 $2.68 $1,475 $2.73 Utility Bill Back $230 $960 Laundry $205 $205 Parking $0 $ Total $22,475 $24,965 * Unrenovated unit

13 SECTION 3 :: FINANCIAL ANALYSIS Current Pro Forma Scheduled Gross Income $269,700 $299,580 Vacancy ($8,091) 3% ($8,987) 3% Gross Operating Income $261,609 $290,593 Expenses Property Taxes (2018) $27,166 $30,600 Insurance $4,613 $4,610 Utilities $14,012 $14,012 Maintanance $9,576 $8,000 Landscaping $3,213 $2,400 Resident Manager $3,692 $8,640 Pro Management $12,508 $14,250 Reserves $4,000 $4,000 Admin/Misc $370 $370 Total Expenses $79,150 29% $87,162 29% Net Operating Income $182,459 $203,431 Loan Payments ($137,536) ($137,536) Pre-Tax Cash Flow $44, % $65, % Principal Reduction $36,815 $36,815 Total Pre-Tax Return $81, % $102, % Net Operating Income $56,306 $61,421 * Buyer to verify loan quote. Loan quote at 4.47% 5yr fixed with loan amount of $2,270,000 **Current expenses from 2017 P&L Source: soundtransit.org AIRPORT LIGHT RAIL

14 SECTION 4 :: SALES COMPARABLES Sales Comparables Property Address Location Units Price Sale Date Price / Unit Price / Sq ft Cap Rate GRM R & 4028 California Ave SW West Seattle 16 $3,800,000 TBD $237,500 $ % California Ave SW West Seattle 11 $3,185,000 5/15/17 $289,545 $ % th Ave SW West Seattle 14 $3,625,000 7/14/17 $258,929 $ % th Ave SW West Seattle 12 $3,475,000 7/14/17 $289,583 $ % th Ave SW West Seattle 8 $1,900,000 8/16/17 $237,500 $ % California Ave SW West Seattle 6 $1,850,000 9/8/17 $308,333 $337 N/A N/A 5959 Fauntleroy Way SW West Seattle 12 $2,475,000 9/29/17 $206,250 $ % th Ave SW West Seattle 12 $4,419,080 10/31/17 $368,257 $ % 16.5 Averages $279,991 $ % 17.2

15 SECTION 4 :: SALES COMPARABLES Sales Comparables 4022 & 4028 California AVE SW 2132 California Ave SW th Ave SW th Ave SW R th Ave SW California Ave SW 5959 Fauntleroy Way SW th Ave SW

16 SECTION 4 :: SALES COMPARABLES Sales Comparables 2132 CALIFORNIA AVE SW TH AVE SW TH AVE SW TH AVE SW MONTEREY APARTMENTS 4127 CALIFORNIA AVE SW 2 R TH AVE SW 5959 FAUNTLEROY WAY SW 6

17 SECTION 4 :: RENT COMPARABLES Rent Comparables Property Address Building Name Unit Type Unit Sq ft Rent Rent / Sq Ft R & 4028 California Ave SW West Seattle 1 Bed / 1 bath 540 $1,295 - $1,450 $ $ California Ave SW Villa Andora 1 Bed / 1 bath 712 $1,695 $ SW Edmunds St Elan 41 1 Bed / 1 bath 760 $1,899 $ California Ave SW Soundview 1 Bed / 1 bath 620 $1,675 $ & 4028 California AVE SW 1520 California Ave SW R 1 R 4100 SW Edmunds St 4815 California Ave SW

18 SECTION 5 :: SEATTLE / PUGET SOUND REGION Seattle / Puget Sound Seattle is the largest city in the state of Washington with an estimated population of 686,800 as of The Seattle metropolitan area, also known as the Puget Sound, is comprised of King, Pierce and Snohomish County. As an MSA, the Puget Sound is the 15th largest metropolitan area in the United States with a population of approximately 3.7 million people. Seattle has a thriving local economy and is home to eight Fortune 500 companies including Costco, Microsoft, Amazon, Paccar, Starbucks, Nordstrom, Expeditors International and Weyerhauser. In addition, Seattle is home to other notable tech companies such as Expedia, Zillow, Tableau and Zulily. It is quickly establishing itself as a national tech hub as multiple companies from Silicon Valley, such as Google and Facebook, have opened Seattle offices in an attempt to draw on the talented pool of tech workers living in and rapidly moving to Seattle. In 2016, Zillow ranked Seattle as the second hottest housing market in the nation for appreciation. Similarly in June of 2016, Redfin also ranked Seattle as the second hottest housing market behind Denver, where the average days on market of a listing is eight and median sales price growth year over year is 7.5%. Much of this growth comes from the hot job market in Seattle, ranked as the fourth best in the nation. A statistical analysis by Careerbuilder found that in 2015 Seattle added 78,082 jobs. Recently Conway Pederson forecasts they expect the Puget Sound region to add 47,900 jobs in Currently, the year to date in-migration to the Puget Sound based on driver s license data for January through May shows 49,656 people have moved into the area. On an annual basis, the 12-month moving average of monthly in migration is approximately 10,000 people. Annually that puts more than 120,000 people moving into the Puget Sound region; though this does not account for people moving out of the region, the bottom line is the area has and will continue to grow at a rapid pace making the rental market as strong as its ever been.

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20 SECTION 5 :: PUGET SOUND REGION Buoyed by its technology sector and the metro s appeal as a live-work-play environment, Seattle s economy and multifamily market continue to break new ground.

21 For More Information Please Contact Aaron Locke Ethan Szmania Eastlake Ave E Seattle, WA