OFFERING MEMORANDUM. 415 Washington Street. Waukegan, IL PRESENTED BY: COLLIERS INTERNATIONAL

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1 OFFERING MEMORANDUM 415 Washington Street PRESENTED BY:

2 CONFIDENTIALITY AGREEMENT This Offering Memorandum contains select information pertaining to the business and affairs of the Property at 415 Washington Street,. It has been prepared by Colliers International. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Colliers International. The material is based in part upon information supplied by the Seller and in part upon financial information obtained by Colliers International sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completeness or this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence. By acknowledging your receipt of this Offering Memorandum from Anne Dempsey, you agree: 1) The Offering Memorandum and its contents are confidential; 2) You will hold it and treat it in the strictest of confidence; and 3) You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Seller. Owner and Colliers International expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of 415 Washington Street, Waukegan, IL or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Colliers International or any of their affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum. 2

3 TABLE OF CONTENTS INVESTMENT SUMMARY Overview 4 Property Aerial 5 Terms of Sale 6 Area Maps 7 PROPERTY OVERVIEW Physical Description 8 Site Plan 10 Floor Plans 11 Building SF Breakdown 17 FINANCIAL OVERVIEW Cash Flow Projection 19 Rent Roll 22 MARKET OVERVIEW Chicago Suburban Office Market Overview 24 North Office Market Overview 25 3

4 Highlights Investment Highlights Value-add opportunity with 45% vacancy for immediate up-side income Acquisition at substantial Discount to replacement cost Well maintained property with on-site property manager OVERVIEW This is a confidential, all-cash offering that is being presented to a select group of prospective investors on a principal-only basis. Property Highlights Ample Parking with ability to capture additional income from the Lake County and neighboring office buildings Individual temperature control in tenant suites Colliers International, on behalf of the owner, VFC Properties 17 LLC, is pleased to offer for sale the 100% fee simple interest in 415 Washington Street in downtown Waukegan, Illinois. Property is located just steps away from the Lake County Courthouse and is approximately 73,418 square feet. This property represents a unique value-add investment opportunity that combines current occupancy with available space and also offers: - Strong cash flows - Outstanding access to the Lake County Courthouse - Abundant Parking - On-site property manager - Quality Tenants Attorney s, Accountants, Financial Services, Architects and Government 4

5 Location Location Highlights Located just steps from the Lake County Court House in Downtown Waukegan Blocks from the Northwestern Train Station. Easy Access to Hwy 41 and I-294 5

6 TERMS OF SALE OFFER DUE DATE Investors will be advised as to a Call for Offer date. SALE PRICE $3,995,000 (8.4% Cap Rate) Contact Information This opportunity is being exclusively handled by the Chicago Office of Colliers International. Please contact the individual below to answer any questions or to schedule a property tour. NET OPERATING INCOME $336,248 for 2013 TERMS The property is being sold on an as is, where is basis. PROPERTY TOURS Property tours are available by appointment only. 6

7 AREA MAPS 7

8 PHYSICAL DESCRIPTION Property Name 415 Washington Street PIN Number County Lake Land Area 2.61 Acres Gross Building Area 80,760 s.f. Net Rentable Area 73,418 s.f. Year Built 1940's, Renovated in 1983 Zoning B-5 - Central Service District Legally Conforming Yes Permitted Uses Office, retail, entertainment and lodging uses. Foundation Continuous monolithic slab poured on reinforced concrete footings Construction Components Fireproof steel frame with steel beams and steel deck Floor Structure Ground Floor - Concrete slab on compacted fill Other Floors - Metal deck with light-weight concrete cover Exterior Walls Painted masonry Roof Cover Built-up tar and gravel (70%) and rubber membrane (30%) on a concrete slab and steel deck Elevator/Stair System Two sets of interior stairwells located at opposite ends of the main lobby are provide access to the basement and upper stories. The building also includes one elevator dedicated to passenger service, which is accessible via the main lobby. 8

9 PHYSICAL DESCRIPTION HVAC Electrical Plumbing Restrooms Fire Protection Security Parking and Drives Landscaping ADA Compliance Heating and cooling is provided by a gas-fired boiler and mail chiller with seven supplemental rooftop units. Assumed to be in good working order and adequate for the building. Plumbing components include a cast iron sanitary sewer system with copper domestic water mails and distribution lines. Two common area restrooms are located on each floor with one each designated for men's and women's use. The finish of each is considered building standard grade with ceramic tile flooring, porcelain fixtures and mirrored vanities. The improvements are 100% fire sprinklered via an overhead wet system that is also wired into the local fire department. Building has adequate fire alarm systems, fire exits, fire extinguishers, fire escapes and/or other fire protection measures to meet local fire marshal requirements. Security for the building includes keyed locks and exterior lighting. The property features an adequate number of surface parking spaces, including reserved handicapped spaces. All parking spaces and vehicle drives are concrete paved and considered to be in average condition. Patron parking area are located along the front and sides of the building. The number of parking spaces is legally conforming for the existing use. The facility features combinations of grass, flowers, shrubs and tree landscaping which is considered to be in good condition and well maintained. All planting is sprinklered or irrigated. All common areas of the property are handicap accessible. 9

10 SITE PLAN 10

11 FLOOR PLANS 11

12 FLOOR PLANS 12

13 FLOOR PLANS 13

14 FLOOR PLANS 14

15 FLOOR PLANS 15

16 FLOOR PLANS 16

17 BUILDING S.F. BREAKDOWN 415 Washington Street Square Footage calculations - completed September 2012 Building Level Suite # Interior Gross Area ("IGA"), BOMA term Usable Area Rentable Area (Factor = 22%) Gross Exterior Area Mech. LEVEL LEVEL A A B _ 1,897 2, _ 2,105 2, _ 906 1, _ 1,385 1, _ 6,239 7, _ 1,077 1,314 LEVEL A TOTAL 19,027 14,752 17,997 19,757 LEVEL B ,239 2, ,415 1, ,521 4, ,017 LEVEL B TOTAL 12,091 9,758 11,904 12,721 17

18 BUILDING S.F. BREAKDOWN 415 Washington Street Building Level Suite # Interior Gross Area ("IGA"), BOMA term Usable Area Rentable Area (Factor = 22%) Gross Exterior Area LEVEL C ,668 3, ,399 5, ,237 6, ,055 2, ,137 3,827 LEVEL C TOTAL 23,374 17,942 21,890 24,916 LEVEL D ,427 2, ,008 2,450 LEVEL D TOTAL 5,958 5,114 6,239 7,794 LEVEL E 200 2,823 3, ,122 3, ,034 2, ,712 2, ,554 3, ,715 3,313 LEVEL E TOTAL 19,621 14,960 18,251 20,353 BUILDING TOTAL 80,071 62,525 76,281 85,541 18

19 CASH FLOW 415 Washington Street 415 Executive Center (415washi) Completed: 4/8/ Month Cash Flow BUDGET For The Period January December 2013 Books = Cash INCOME RENTAL INCOME Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Notes: Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Rent Income 51,683 51,683 51,683 56,485 58,886 58,886 58,886 58,886 58,886 58,886 58,886 58, ,619 New lease eff Prepayments TOTAL RENTAL INCOME 51,683 51,683 51,683 56,485 58,886 58,886 58,886 58,886 58,886 58,886 58,886 58, ,619 OTHER INCOME Late Fees estimate only CAM Estimate 5,678 5,678 5,678 5,678 5,678 5,678 5,678 5,678 5,678 5,678 5,678 5,678 68,136 TOTAL OTHER INCOME 5,728 5,728 5,728 5,728 5,728 5,728 5,728 5,728 5,728 5,728 5,728 5,728 68,736 TOTAL INCOME 57,411 57,411 57,411 62,213 64,614 64,614 64,614 64,614 64,614 64,614 64,614 64, ,355 EXPENSES TAXES AND INSURANCE Real Estate Taxes 2012 actual, not , , ,170 reflective of appeals Real Estate Tax Protest - - 2, , actual bill Hazard & Liability Insurance , , actual plus 3% TOTAL TAXES AND INSURANCE - - 2,904-75, , ,037 UTILITIES Gas Electric Water and Sewer TOTAL UTILITIES 2,699 2,699 2,699 2,699 2,699 2,699 2,699 2,699 2,699 2,699 2,699 2,699 32, estimate plus 3 4,582 4,582 4,582 4,582 4,582 4,582 4,582 4,582 4,582 4,582 4,582 4,582 54, estimate plus , estimate plus 3 7,453 7,453 7,453 7,453 7,453 7,453 7,453 7,453 7,453 7,453 7,453 7,453 89, estimate plus 3 19

20 CASHFLOW 415 Washington Street ADMINISTRATIVE Advertising Other estimate only Legal General ,000 estimate only Telephone 2013 actual monthly ,872 bill Internet 2013 actual monthly bill Signs estimate only Inspections estimate plus 3% TOTAL ADMINISTRATIVE 1,046 1,046 1,046 1,046 1,046 1,247 1,046 1,046 1,046 1,046 1,046 1,046 12,753 MAINTENANCE AND REPAIRS General Maintenance 2013 actual monthly 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 7,167 53,004 janitor bill plus bonus Carpet Cleaning estimate only Plumbing ,000 estimate only Glass/Glazing estimate only Door Repairs estimate only HVAC 2013 actual monthly ,040 bill plus estimate for repairs Hardware ,200 estimate only Cleaning Supplies ,800 estimate only Roof Repair 2013 actual quarterly ,400 bill plus estimate for additional Floor Tiling estimate only Locks/Keys estimate only Elevator Repairs , actual plus 3% Elevator Maintenance 2013 actual monthly ,988 bill Elevator Telephone Monitoring estimate only Landscaping 2013 actual monthly ,668 bill Common Area Remodeling To be determined Office Remodeling - - 6, , actual bill TOTAL MAINTENANCE and REPAIRS 6,801 6,801 12,801 6,801 6,801 6,801 6,801 6,801 6,801 6,801 6,801 9,801 90,607 20

21 CASHFLOW 415 Washington Street SERVICES Exterminating Janitor Services 2,969 2,969 2,969 2,969 2,969 2,969 2,969 2,969 2,969 2,969 2,969 2,969 35,628 Trash Removal , ,428 Snow Removal - 2,835 3, ,000 3,000 3,000 15,555 Security System ,602 Miscellaneous Service TOTAL SERVICES 3,253 6,355 7,857 3,520 3,253 3,520 3,253 3,520 3,253 6,520 6,253 6,520 57, actual monthly bill 2013 actual monthly bill 2013 actual monthly bill plus additional costs incurred 2013 actual bills plus estimate 2013 actual bimonthly bill MANAGEMENT SERVICES Management Fees 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 26,196 TOTAL MANAGEMENT SERVICES 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 2,183 26, actual 3 month average bill (Jan, Feb, Mar) TOTAL EXPENSES 20,736 23,838 34,244 21,003 95,783 21,204 20,736 82,088 20,736 24,003 23,736 27, ,108 TOTAL NET INCOME BEFORE DEBT SERVICE 36,675 33,573 23,167 41,210 (31,170) 43,410 43,878 (17,474) 43,878 40,611 40,878 37, ,248 21

22 RENT ROLL 415 Washington Street 22

23 RENT ROLL 415 Washington Street 23

24 CHICAGO SUBURBAN OFFICE MARKET OVERVIEW 24

25 NORTH OFFICE MARKET OVERVIEW 25

26 Photos 26