northgate shopping center

northgate shopping center grocery anchored center in corvallis, home of oregon state university 1235-1245 NW 10th St, Corvallis, OR 97330 SEAN MACK smack@capitalpacific.com (503) 675-8378 ORE# 990100161 BOB SANNER bsanner@capitalpacific.com (415) 274-2717 CA BRE# 00869657 MICHAEL HORWITZ mhorwitz@capitalpacific.com (503) 675-8381 ORE# 930800253 RICK SANNER rsanner@capitalpacific.com (415) 274-2709 CA BRE# 01792433 CHRIS KOSTANECKI ck@capitalpacific.com (415) 274-2701 CA BRE# 01002010 SCOTT FRANK sfrank@capitalpacific.com (503) 675-8383 ORE# 980400138

Contents SECTION 01 EXECUTIVE SUMMARY INVESTMENT HIGHLIGHTS.... 04 QUICK STATS... 05 CORE CHARACTERISTICS... 06 SECTION 02 AERIALS & MARKET INTEL AERIALS........................08-09 AREA INFO AND DEMOS.... 10 SECTION 03 UNDERWRITING FINANCIAL SUMMARY... 12 RENT ROLL... 13 OPERATING EXPENSES... 14 REIMBURSEMENTS... 15 SECTION 04 SITE & TENANTS SITE PLAN.... 17 ACCESS POINTS... 18 NATURAL GROCERS... 19 SECTION 05 Q&A Q&A WITH CAPITAL PACIFIC.........21 CONTACT INFO.... 22 NORTHGATE SHOPPING CENTER 2

SECTION 01 EXECUTIVE SUMMARY INVESTMENT HIGHLIGHTS... 04 QUICK STATS... 05 CORE CHARACTERISTICS... 06 NORTHGATE SHOPPING CENTER 3

NORTHGATE SHOPPING CENTER IS A 34,333 SQUARE FOOT GROCERY ANCHORED SHOPPING CENTER IN CORVALLIS, OREGON. Investment Highlights The property is 100% occupied and anchored by Natural Grocers (NYSE:NGVC), which recently signed a new 15 year NNN lease. Located in a market with significant barriers to entry, this property also includes long-term tenants Campbell s Cleaners and The Arc, a local thrift store. Originally built in 1957, the center has been remodeled numerous times. In 2013, $1.5 million total was invested by the owner and Natural Grocers in preparation for the grocer s tenancy. PRICE: $7,020,000 CAP: 7.00% RENTABLE SF.... 34,333 SF PRICE PER SF.... $204 OCCUPANCY.... 100% LAND AREA.... 2.88 Acres LEASE TYPE............ NN & NNN YEAR BUILT.... 1957 with multiple remodels MOST RECENT REMODEL.. 2013 ANCHOR... Natural Grocers PARKING*.... 140 Spaces or 4/1,000 *Parking is approximate and based on a manual count. ADDRESS: 1235-1245 NW 10th St, Corvallis, OR 97330

Quick Stats OCCUPANCY 100% CURRENT OCCUPANCY GROCERY ANCHOR 52% OCCUPIED BY NATURAL GROCERS "Northgate Shopping Center has only three tenants: The grocery anchor just signed a new 15 year lease, the second biggest tenant has been there for 10 years and just expanded, and the third tenant has been there for 30 years. This 100% leased center should enjoy solid occupancy for years to come - Rick Sanner, Capital Pacific Partner ABOUT ANCHOR TENANT 104 $3.5M $10.55M $6.65M 150% LOCATIONS IN 13 STATES BY END OF 2014 2011 2012 2013 OPERATING PROFIT NATURAL GROCERS STOCK PRICE GAIN SINCE MID 2012 NORTHGATE SHOPPING CENTER 5

Core Characteristics GROCERY ANCHORED Anchor Natural Grocers is a well-capitalized publicly traded grocery chain with no debt (according to the most recent financial report on file with the SEC) and is expected to operate 104 locations in 13 states by the end of 2014 (see page 19 for more information). GROCERY ANCHOR with NEW 15 YEAR NNN LEASE >> NATURAL GROCERS RECENTLY SIGNED NEW 15 YEAR NNN LEASE Rent increases at years 5 and 10. THE ARC RECENTLY EXERCISED ITS OPTION TO EXPAND INTO ADJOINING SPACE Tenant s expansion is a reflection of its success at this location. EXCELLENT HISTORICAL OCCUPANCY Campbell s Cleaners, which occupies two spaces including one with a drive-thru, has been a tenant for 30 years; The Arc, a local thrift store, has been a tenant for over 10 years. PROPERTY SITS ON TWO HARD CORNERS AND FRONTS THREE ROADS Four ingress/egress points on three main roads provides excellent visibility and access. 2013 AND FUTURE REMODELS In 2013, the owner spent $600,000 on Natural Grocers remodeling and $217,000 on other work in the center. Natural Grocers itself spent $900,000 on the store remodel. The Arc is planning as much as $50,000 worth of enhancements in the upcoming year. NORTHGATE SHOPPING CENTER 6

SECTION 02 AERIALS & MARKET INTEL AERIALS........................08-09 MARKET INTEL AND DEMOS... 10 NORTHGATE SHOPPING CENTER 7

Aerial LOCATED WITHIN ONE MILE OF TWO TOP AREA EMPLOYERS Oregon State University, with a student body of 28,000, and Hewlett-Packard are among the largest employers in Corvallis, and are both located within one mile of the subject property. 99 NW CIRCLE BLVD 26,800 DAILY NORTHGATE SHOPPING CENTER WILLAMETTE RIVER FRANKLIN ELELMENTARY SCHOOL CORVALLIS HIGH SCHOOL 99 Oregon State University

Aerial LOCATED ON TWO HARD CORNERS Located on NW Beca Ave at the intersections of NW 9th and NW 10th St, Northgate Shopping Center fronts three streets giving it excellent visibility and easy access and is just minutes from Corvallis High School. LOCATED AT THE INTERSECTIONS OF NW BECA AVE. AND NW 9TH & 10TH ST NORTHGATE SHOPPING CENTER << NW 9th St >> 99 NW BECA AVE 26,800 DAILY FRANKLIN ELELMENTARY SCHOOL CORVALLIS HIGH SCHOOL NW BUCHANAN AVE NW 10TH ST NW 9TH ST NORTHGATE SHOPPING CENTER 9

Market Intel & Demos ABOUT CORVALLIS, OR Corvallis is nestled in the heart of Oregon s Willamette Valley, within 90 minutes of the Portland metropolitan area. Corvallis has a residential population of 55,345 and is home to Oregon State University. The city has been recognized as one of the best college towns, as one of the top ten places to live, and as having the most green buildings per capita. ABOUT OREGON STATE UNIVERSITY Oregon State University, with a student population of 28,000, is the city s major local employer. The 400-acre campus is located near the edge of the main downtown area and just one mile south of the subject property. SURROUNDING POPULATION 1-Mile 3-Miles 5-Miles 2010 14,951 51,683 64,381 2013 15,232 52,156 65,230 2018 15,617 53,128 66,633 2013 HOUSEHOLD INCOMES 1-Mile 3-Miles 5-Miles Median $24,653 $37,159 $42,092 Average $40,641 $58,311 $63,735 NORTHGATE SHOPPING CENTER 90 min 85 Miles Portland 1 Mile radius downtown corvallis Salem 5 corvallis 3 Mile radius oregon state university 50 min 40 Miles Eugene NORTHGATE SHOPPING CENTER 10

SECTION 03 UNDERWRITING FINANCIAL SUMMARY... 12 RENT ROLL... 13 OPERATING EXPENSES... 14 REIMBURSEMENTS... 15 NORTHGATE SHOPPING CENTER 11

Financial Summary PRICE $7,020,000 Capitalization Rate: 7.00% Price Per Foot: $204 NET OPERATING INCOME SUMMARY Plus: STABILIZED INCOME Per SF Scheduled Rent: 5/1/2014 $14.71 $505,104 Plus: Rent Increases Through: 4/30/2015 $0.03 $1,067 Plus: Expense Reimbursement $1.40 $48,026 Equals: Scheduled Gross Income $16.14 $554,197 Proforma Vacancy (1) 5% ($9,010) Equals: Effective Gross Income $15.88 $545,188 Less: OPERATING EXPENSES Per SF CAMs $0.25 $8,507 Property Taxes $0.70 $24,033 Insurance $0.13 $4,567 Management Fee 3.0% of EGI $0.48 $16,356 Total Operating Expenses $1.56 ($53,463) Equals: NET OPERATING INCOME (2) $491,725 Notes 1) Natural Grocers excluded from vacancy. 2) This NOI assumes vacancy and there is none, thus actual NOI is higher. This information 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. Buyer must verify the information and bears all risk for any inaccuracies. NORTHGATE SHOPPING CENTER 12

Rent Roll TENANT INFO LEASE TERMS CURRENT RENT RENT INCREASES OPTIONS Tenant Name Suite Size % of SF Occupancy Lease Monthly Base Date Expiration Rent Rent/SF/YR The Arc of Benton County 9,991 29.10% 8/14/03 10/31/18 $5,519 $6.63 comment: See Note 1. Date of Increase Monthly Base Rent Campbell's Cleaners (Dry Cleaner) 3,150 9.17% 5/15/84 5/31/19 $3,308 $12.60 6/1/14 $3,405 $1,067 Campbell's Cleaners (Laundromat) 3,192 9.30% 10/23/95 12/31/16 $4,150 $15.60 comment: On the separate pad. Additional Annual Two (5) Year 1) $6,071 2) $6,678 Two (5) Year 1) $3,507 2) $3,612 Two (5) Year CPI LEASE TYPE NNN N N Natural Grocers 18,000 52.43% 12/1/2013* 11/30/28 $29,115 $19.41 12/1/18 $30,280 Three (5) Year 12/1/23 $31,491 1) $32,750 NNN 2) $34,061 3) $35,423 Totals: 34,333 100% $42,092 $14.71 $1,067 Occupied 34,333 100% Leasable 0 0% $0 Note 1) The Arc of Benton County exercised its additional space option for the adjacent 4,472 SF in January 2014. *Rent commencement date. This information 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. Buyer must verify the information and bears all risk for any inaccuracies. NORTHGATE SHOPPING CENTER 13

Operating Expenses ESTIMATED OPERATING EXPENSES REIMBURSEMENTS Total /SF Comments CAMs $8,507 $0.25 Based on 2014 Budget $6,936 Property Taxes $24,033 $0.70 Estimated 2014 Property Tax $24,033 Insurance $4,567 $0.13 Based on 2014 Budget $3,723 Management $16,356 $0.48 Based on 3% of EGI $13,334 Total Expenses $53,463 $1.56 $48,026 [ CAMPBELL S CLEANERS DRIVE-THRU ] This information 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. Buyer must verify the information and bears all risk for any inaccuracies. NORTHGATE SHOPPING CENTER 14

Reimbursements CAMs Property Taxes Insurance Management Tenant Name Pro Rata % Pro Rata Share Pro Rata % Pro Rata Share Pro Rata % Pro Rata Share Pro Rata % Pro Rata Share Notes Tenant Totals Expense Total $8,507 $24,033 $4,567 $16,356 The Arc of Benton County 29.1% $2,476 - - 29.1% $1,329 29.1% $4,760 1 $3,805 Campbell's Cleaners (Dry Cleaner) 9.2% - 12.9% $3,110 9.2% - 9.2% - 2 $3,110 Campbell's Cleaners (Laundromat) 9.3% - 13.1% $3,151 9.3% - 9.3% - 3 $3,151 Natural Grocers 52.4% $4,460 73.9% $17,772 52.4% $2,394 52.4% $8,575 4 $24,627 TOTAL 100% $6,936 100% $24,033 100% $3,723 100% $13,334 $34,693 Notes: 1) Per county assessor, ARC's property tax exemption means its SF is removed from tax assessment. Other tenants property tax pro-rata shares have been adjusted accordingly. 2) Tenant reimburses for property taxes only. Tenant maintains landscaping within 10 feet of premises. Tenant maintains its own insurance. 3) Tenant reimburses for property taxes only. Tenant maintains its own insurance. 4) Natural Grocer management fee reimbursement capped at.50/sf/yr. This information 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. Buyer must verify the information and bears all risk for any inaccuracies. NORTHGATE SHOPPING CENTER 15

SECTION 04 SITE & TENANTS SITE PLAN... 17 ACCESS POINTS... 18 NATURAL GROCERS... 19 NORTHGATE SHOPPING CENTER 16

Site Plan NW BECA AVE SITE PLAN KEY PARCEL OUTLINE: LAND AREA: 2.88 ACRES BUILDING AREA: 34,333 SF INGRESS/EGRESS: NW 10TH ST Back lot access points Campbell's Cleaners' drive-in for dry cleaning drop-off and pick-up DRIVE-IN CAMPBELL S CLEANERS (DRY CLEANERS) NW 9TH ST Campbell's Cleaners' drive-thu offers coffee and snacks CAMPBELL S CLEANERS (LAUNDROMAT) DRIVE-THRU Site Plan Not To Scale NORTHGATE SHOPPING CENTER 17

Access Points FOUR POINTS OF INGRESS/EGRESS ON THREE STREETS (+ THREE BACK LOT ACCESS POINTS) [ ACCESS FROM NW 9TH ST ] [ 1 OF 2 ACCESS POINTS FROM NW 10TH ST ] [ ACCESS TO BACK LOT ] [ ACCESS FROM NW BECA AVE ] NORTHGATE SHOPPING CENTER 18

Natural Grocers THE SPACE WAS RECENTLY RENOVATED IN 2013 IN PREPARATION FOR NATURAL GROCERS NEW TENANCY ABOUT NATURAL GROCERS BY VITAMIN COTTAGE Natural Grocers was founded in 1955 in Lakewood, CO. The company sells natural and organic products in their 6,000-15,000 square foot stores. They have been expanding and planning on operating 104 locations by end of 2014. The compnay went public on the New York Stock Exchange in July, 2012. Since mid-2012 to April of 2014, the stock price has gained about 150%. Existing store sales have increased an average of 21.4% over the past 3 years. +11 11 new stores opened or opening in 2014 NYSE NGVC 2013 REVENUE $430 Million NUMBER OF LOCATIONS 104 by end of 2014 NORTHGATE SHOPPING CENTER 19

SECTION 05 Q&A Q&A WITH CAPITAL PACIFIC.........21 CONTACT INFO... 22 NORTHGATE SHOPPING CENTER 20

Q&A With Capital Pacific Q: ARE THERE ARE ANY LEASES WITH SPECIAL OPTIONS/CLAUSES? A: Natural Grocers has a Go Dark Option in their lease. Tenant has the option to discontinue its operations in the premises by providing at least sixty days written notice to landlord prior of the date which Tenant intends to cease operations ( Go Dark Date ). Under its lease tenant must continue to pay fixed rent, additional rent, and other fees due. On January 28, 2014 The Arc exercised its option to lease the adjacent space of approximately 4,472 SF. This expansion is reflected in our underwriting. WHAT IS THE ZONING OF THE PROPERTY? A: The property is zoned CB (Central Business zone) by the city of Corvallis. This is a commercial zone intended to provide an area for commercial uses, as well as civic and residential uses, and to provide all basic services and amenities required to keep downtown as the vital center of Corvallis. Q: WHAT ARE TENANTS REIMBURSING FOR? A: The Arc: Tenant is currently reimbursing for its pro rata share of insurance and CAMs. As to property taxed for The Arc, see page 15, note 1. Natural Grocers: Tenant is reimbursing for its share of taxes, insurance, and CAMs. Campbell s Cleaners: Tenant is only reimbursing for its share of taxes; it is not reimbursing CAMs or insurance. Q: WHAT ARE THE EXCLUSIVE USE RESTRICTIONS WITHIN THE CENTER? A: Natural Grocers has Exclusive Use within 500 feet of Leased Premises to be used for sales of nutritional supplements and grocery items, excluding incidental sales. Campbell s Cleaners has Exclusive Use to offer dry cleaning and laundry service. Q: WHAT IS THE CONSTRUCTION HISTORY OF THE BUILDING? A: Built in 1957, the building has undergone numerous remodels. The most recent renovation occurred in 2013 as the current owner prepped the empty grocery space (formerly a Grocery Outlet) for Natural Grocers. The previous grocery store had expanded into a vacated space in 2003/04, when The Arc also expanded adjacent space. The exterior of the building was also previously renovated in 2001. This information 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. Buyer must verify the information and bears all risk for any inaccuracies.

A unique HUMAN RESULTS-DRIVEN client experience THE CAPITAL PACIFIC EXPERIENCE - OUR DAILY COMMITMENT TO OUR CLIENTS [ www.capitalpacific.com ] SEAN MACK smack@capitalpacific.com (503) 675-8378 ORE# 990100161 MICHAEL HORWITZ mhorwitz@capitalpacific.com (503) 675-8381 ORE# 930800253 RICK SANNER rsanner@capitalpacific.com (415) 274-2709 CA BRE# 01792433 SCOTT FRANK sfrank@capitalpacific.com (503) 675-8383 ORE# 980400138 BOB SANNER bsanner@capitalpacific.com (415) 274-2717 CA BRE# 00869657 CHRIS KOSTANECKI ck@capitalpacific.com (415) 274-2701 CA BRE# 01002010