Gallagher Design Building

Gallagher Design Building Absolute NNN Single Tenant Asset with New 11-Year Lease in Portland MSA 11150 SW Allen Blvd, Beaverton, OR, 97005

Gallagher Design Building The Gallagher Design Building is a 50,000 SF asset fully occupied by Gallagher Design, a preeminent design and fabrication operation with a second location based out of L.A., serving primarily nationally-recognized brands. The Tenant executed a brand new 11-year Absolute Net lease with an August 2017 rent commencement. The Subject is a mission critical site for Gallagher Design and is well-positioned within the Portland MSA in an urban west side location directly off Highway 217 on-off ramps. The Tenant has invested $1M in improvements thus far, with continued upgrades through Spring 2018 totaling approximately $2.5M; all permits are in place with the City and will include a substantial office build-out. PRICE: $9,000,000 CAP: 6.00% LEASE TYPE........................ Absolute NNN - Zero Landlord Responsibilities LEASABLE SF...±49,800 SF PRICE PER SF...$181 LAND AREA...±117,176 SF; ±2.69 Acres LEASE TERM...11 Years LEASE COMMENCEMENT...April 1, 2017 RENT COMMENCEMENT...August 1, 2017 LEASE EXPIRATION...March 31, 2027 YEAR BUILT...1962-1997; Remodeled 2017 PARKING...±45 Spaces ADDRESS: 11150 SW Allen Blvd, Beaverton, OR, 97005 GALLAGHER DESIGN BUILDING 2

Core Characteristics Gallagher has been in operation for 20+ years and is a leader in experiential design and fabrication for nationally-recognized brands with locations in portland and los angeles. Brand new 11-year lease with Scheduled 10% rent bumps every 5 Years. Absolute net lease provides zero Landlord responsibilities. Major improvements of $1M have been invested by Tenant thus far with continued T.I.s to be completed Spring 2018 totaling approximately $2.5M. Significant barriers to entry in tight industrial-zoned submarket along Highway 217. Close proximity to established clients such as Nike and among some of Oregon s largest employers. Excellent accessibility along major Highway with location between Interstate 5 and Highway 26. West side location only 15 minutes from Portland s CBD. Highway visibility provides exposure to 100,000+ vehicles per day. High demographic, dense surrounding residential base of 350,000+ residents. Located in the state s highest-earning county for 2016. GALLAGHER DESIGN BUILDING 3

About the Tenant ABOUT GALLAGHER DESIGN Gallagher Design is a creative experience agency, trusted by the world s most influential brands to strategically design and execute their most innovative, ambitious and immersive experiences. With offices in Portland, San Francisco, Los Angeles, and New York, Gallagher Design is a collective of tech-forward artists, designers, engineers, production specialists, fabricators and craftsmen working at the intersection of graphic, architectural and industrial design. Gallagher Design works to bring the experience of top brands and products into the physical world, designing and building high quality environments. Gallagher Design owns entire projects from idea to execution and has created immersive experiences for world-class youth and pop culture brands, including Nike, Levi s, TNT, Cole Haan, Sony PlayStation, Beats by Dre, and Visa. NOTABLE CLIENTS

Fortune 100 Employers TWO OF OREGON S LARGEST EMPLOYERS, MINUTES FROM GALLAGHER DESIGN BUILDING Both Intel and Nike are in the middle of sizable expansions, creating more jobs and likely new residential developments in the Beaverton-Hillsboro area. Construction on an additional 3.6 Million SF at Intel s Ronler Acres is ongoing. Intel currently employs 17,500 - more than anywhere else the company operates - with more jobs to be added upon completion. Intel is the Portland Metro Area s top employer. Nike s World Headquarters is undergoing a $150 Million expansion which includes two buildings, totaling 1.3 Million SF. Nike currently employs 6,000 people, having added an additional 2,000 employees since construction. [ NIKE S BEAVERTON EXPANSION ] 3.6 MILLION SF EXPANSION 17,500 EMPLOYEES 11 MILES TO GALLAGHER INTEL INTEL 1.3 MILLION SF EXPANSION 8,000 EMPLOYEES 3.9 MILES TO GALLAGHER PORTLAND NIKE GALLAGHER DESIGN BUILDING GALLAGHER DESIGN BUILDING 5

Area Zoning BARRIERS TO ENTRY DENSE SURROUNDING RESIDENTIAL The surrounding zoning shows the industrial sub market alongside Highway 217 with a variety of surrounding uses and a significant residential base. The extremely limited industrial and office-industrial zoned land provides significant barriers to entry for close-in competition in the sub market. The Subject benefits from a dense surrounding residential base to the west with 23,177+ households with continued growth of 4.6% over the last 6 years, similar to the growth rate to close-in portions of east Portland. ZONING LEGEND Industrial 217 Office/Industrial Community Service Residential Regional Center GALLAGHER DESIGN BUILDING 217 GALLAGHER DESIGN BUILDING 6

Site Characteristics HIGHLY EXPOSED SITE (140,000+ VPD) 118,200 DAILY ADJACENT TO FREEWAY INTERCHANGE 217 FRONTAGE ALONG HIGHWAY 217 PRIVATE DRIVE PROVIDES ACCESS AMPLE TRUCK MANEUVERABILITY PROXIMITY TO PUBLIC TRANSPORTATION SW ALLEN BLVD 22,607 DAILY SITUATED EQUIDISTANT TO HIGHWAY 26 AND I-5 MAP KEY SUBJECT OUTLINE GALLAGHER DESIGN BUILDING 7

Proximity to Highway HIGHWAY PROXIMITY Gallagher Design Building has a highly visible, prominent location along Highway 217 and the Allen Boulevard interchange. Highway 217 acts as the main connector to I-5 South and Highway 26 to the north. Portland s Central Business District (CBD) is a 15 minute drive via Highway 26. The site benefits from excellent accessibility and exposure as Highway 217 is one of the region s most trafficked highways with over 100,000 VPD. HWY 26 3 MILES 217 118,200 DAILY CBD 8 MILES SOUTHBOUND NORTHBOUND I-5 5 MILES GALLAGHER DESIGN BUILDING 8

Aerial ENTERPRISE ZONE The northern portion of Highway 217 is an Enterprise Zone created by Business Oregon to encourage business investment and development through property tax relief (land and existing improvements do not qualify) for three to five years. The Enterprise Zone hugs the immediate east and west portions of the northern part of Highway 217 that make up the industrial sub market. DIVERSE EMPLOYMENT BASE The Subject is nearby the Sunset Corridor (Highway 26) that has attracted major employers to the area. Nearby commuter rail lines and bus transportation provided by Tri-Met and close proximity to the Sunset Corridor provide a diverse surrounding employment base with excellent accessibility. 26 26 MAJOR AREA EMPLOYERS EMPLOYEES Intel 17,500 Nike 8,000 Columbia Sportswear Company 1,800 IBM - Linus Tech Center 1,600 Maxim Integrated Products 1,500 Wells Fargo Call Center 1,300 Kaiser Permanente Westside Hospital 1,200 OHSU Tuality 1,200 Tektronix 1,000 Reser s Fine Food 700 (Estimated) Laika 394 Genentech 300 International Paper 150 (Estimated) 217 26 GALLAGHER DESIGN BUILDING 217 GALLAGHER DESIGN BUILDING 9

Site Plan SITE PLAN KEY 217 PARCEL: LAND AREA: BUILDING AREA: LEASABLE: INGRESS/EGRESS: ±2.69 ACRES ±49,800 SF SW LEE AVE SEE PAGE 11 FOR FLOOR PLAN SW ALLEN BLVD Site Plan Not To Scale GALLAGHER DESIGN BUILDING 10

Floor Plan MASTER FLOOR PLAN tenant improvements Gallagher Design took control of the Premises April 2017 with a rent commencement of August 2017. Gallagher has invested $1M thus far in initial improvements to be completed by the end of September 2017, with ongoing improvements to be completed Spring 2018 for a combined total of approximately $2.5M. A large portion of improvements includes a significant office build-out for administrative purposes; all permits are lined up with the City. Interior Re-configuration of interior spaces to accomodate specialized production areas for development/ fabrication, welding, woodwork, painting, and large office portion for administrative and management purposes. Improvements will include brand new ADA compliant restrooms and upgrades to plumbing, electrical, and HVAC. Estimated Completion: September 2017 Structure/Exterior Roof upgrades, window replacement, and upgrades to reinforced unit masonry. Estimated Completion: Spring 2018 $2.5M TOTAL PROJECTED IMPROVEMENTS Please contact Capital Pacific for more information GALLAGHER DESIGN BUILDING 11

Financial Summary PRICE $9,000,000 Capitalization Rate: 6.00% Price Per Foot: 49,800 Square Feet $181 NET OPERATING INCOME SUMMARY SCHEDULED INCOME Per SF Scheduled Rent: 10/1/2017 $10.84 $540,000 Equals: Effective Gross Income $10.84 $540,000 Less: OPERATING EXPENSES Per SF CAMS NNN Property Taxes NNN Insurance NNN Total Operating Expenses NNN - Equals: NET OPERATING INCOME $540,000 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. GALLAGHER DESIGN BUILDING 12

Rent Roll TENANT INFO TERM RENT SUMMARY Tenant Name Size Date Monthly Rent Percent Increase Annual Rent PSF Cap Rate Gallagher Designs 49,800 8/1/2017 $45,000 $540,000 $10.84 6.00% 8/1/2021 $49,500 10.0% $594,000 $11.93 6.60% Occupancy Date : 4/1/2017 8/1/2025 $54,450 10.0% $653,400 $13.12 7.26% Lease Expiration : 3/31/2028 Lease Notes Option 1 4/1/2028 FMR Option 2 4/1/2033 FMR Comments: Absolute Net lease - Tenant is responsible for all operating expenses, including all repair and replacement of structural and non-structural building expenses. Tenant has four month of rent abatement upon commencement. Tenant has two, five-year option periods with six months notice, never to be less than the then-current rental rate. Lease terms also call for the tenant to have a first right to purchase if the Property is offered for sale. Current Totals: 49,800 $45,000 $540,000 $10.84 6.00% 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. GALLAGHER DESIGN BUILDING 13

Lease Abstract PREMISES/TERM TENANT Gallagher Designs, Inc. SQUARE FEET 49,800 SF LEASE TYPE Absolute Net LEASE COMMENCEMENT April 1, 2017 LEASE EXPIRATION March 31, 2028 TERM 11 Years OPTIONS 2, 5-Year Options; 180 Day s Notice RENT/EXPENSES 10% Increases every 5 Years. BASE RENT 4/1/2017-7/31/2017 Rent Abated (Excludes NNN) 8/1/2017-7/31/2021 $45,000/Month $540,000/Annually 8/1/2021-7/31/2025 $49,500/Month $594,000/Annually 8/1/2025-3/31/2028 $54,450/Month $653,400/Annually OPTIONS Rent to increase to Fair Market Rental rates, never to be less than the preceding period. 4/1/2028-3/31/2033 FMR 4/1/2033-3/31/2038 FMR TAXES Tenant is responsible for direct payment of Property Taxes to taxing authority. INSURANCE Tenant is responsible for maintaining property and liability insurance policies. UTILITIES Tenant is responsible for all utilities to be paid directly to billing authority. TENANT S OBLIGATIONS Tenant is responsible for the maintenance, repair and replacement of every part thereof, structural and non-structural (whether or not such portion of the Premises requiring repair, or the means of repairing the same are reasonably or readily accessible to Tenant and whether or not the need for such repairs occurs as a result of Tenant s use, any prior use, the elements of the age of such portion of the Premises) including, all plumbing, HVAC, electrical, lighting facilities and equipment, fixtures, walls (interior and exterior), foundation, ceilings, roofs (interior and exterior), floors, windows, doors, plate glass and skylights, landscaping, driveways, parking lots, fences, signs, sidewalks and parkways adjacent to the Premises. LANDLORD S OBLIGATIONS Landlord has no obligation, in any manner whatsoever, to repair and maintain the Premises nor the building located thereon, equipment therein, whether structural or non-structural. LEASE PROVISIONS RIGHT OF FIRST OFFER Tenant has the right of first offer to purchase the Premises should Landlord make the Premises available for sale. Landlord shall extend an offer to Tenant and allow the 30 day s from the date Tenant receives offer to respond, prior to listing the Premises for sale. Note, Tenant has waived their right of first refusal for present sale. ASSIGNMENT & SUBLETTING Tenant may not assign lease without the prior written consent of Landlord, yet may sublease up to 20% of the leased Premises without Landlord s approval so long as Landlord receives a copy of sublease prior to possession of the subleased premises by a subtenant. FINANCIAL REPORTING Landlord may request a copy of Tenant s financials no more than once per year, within 30 day s notice. TI ALLOWANCE Landlord to provide $1.5M allowance to Tenant for their build-out monthly, or at Tenant s option bi-monthly alongside copies of current invoices to be paid from such specific draw. All design plans are subject to prior Landlord approval. This may be handled by 1) TI allowance to be held back in escrow from Seller funds, or 2) purchase price is reduced and Buyer assumes responsibility for paying out T.I. allowance. GALLAGHER DESIGN BUILDING 14

Q&A with Capital Pacific Q: ARE THERE ANY ENVIRONMENTAL CONSIDERATIONS? A: A recent Phase I was performed by Hahn and Associates, Inc. in January 2017 concluded no Recognized Environmental Conditions (RECs) at the property. Note, a No Further Action (NFA) was granted by the State of Oregon in 2002 due to gasoline and diesel fuel underground storage tanks decommissioned by removal in 1990. Q: PRIOR TO TENANCY IN 2017, WHO PREVIOUSLY OCCUPIED THE GALLAGHER DESIGN SPACE? A: The site was built-to-suit for Reser s Fine Foods, one of Oregon s largest privately-held businesses with national distribution, who used the Premises for food processing, office and storage purposes from the 1960s through 2015. Reser s consolidated two Beaverton production and distribution facilities including the Subject s location, and purchased a 30- acre site in Hillsboro. Q: DOES GALLAGHER REPORT SALES? A: Tenant must provide a financial statement no more than once per year, within 30-days upon request by Landlord. GALLAGHER DESIGN BUILDING 15

Demographics Drive-Time Demographics 5 Mins 10 Mins 15 Mins AVERAGE $68,806 $90,544 $101,777 MEDIAN $51,294 $64,489 $73,482 2017 HOUSEHOLD INCOMES Radius Demographics 1-Mile 3-Miles 5-Miles AVERAGE $68,920 $88,951 $102,570 MEDIAN $54,135 $63,560 $73,471 5 Mins 10 Mins 15 Mins 2010 22,709 157,732 412,838 2017 24,163 172,028 450,222 2022 25,384 182,864 479,648 POPULATION 1-Mile 3-Miles 5-Miles 2010 15,017 130,633 333,480 2017 16,035 140,899 363,082 2022 16,857 149,040 386,446 5 MINUTES 10 MINUTES 15 MINUTES GALLAGHER DESIGN BUILDING HIGHEST ANNUAL AVERAGE WAGE IN OREGON WASHINGTON COUNTY 1-MILE 3-MILES 5-MILES GALLAGHER DESIGN BUILDING 16

About Beaverton BEAVERTON OVERVIEW The City of Beaverton is located seven miles west of Portland, Oregon, in the Tualatin River Valley, encompasses 19.6 square miles, and is home to more than 94,000 residents. The city is Oregon s sixth largest city and the second-largest incorporated city in Washington County. EDUCATION There are over 39,000 students in 51 schools from grades K-12 in the Beaverton School District (the third largest district in Oregon). Nationally acclaimed for their students high SAT scores, Beaverton schools have formed strong partnerships with area businesses. Several highly regarded private schools as well as some of the region s best state and private universities and community colleges are also located within 30 miles of Beaverton. WORKFORCE Beaverton is located in the heart of Oregon s Silicon Forest, home to many of the world s top companies such as Nike, IBM and Tektronix, and now an emerging array of Bio Science firms including, Welch Allyn, Micro Power Electronics, Inovise and Blacktoe Medical. Beaverton s labor force includes approximately 42,015 workers. Beaverton and Washington County offer a large number of highly knowledgeable, trained and skilled workers. INCOME Washington County experienced the highest annual average income in Oregon for 2016. The County has experienced annual increases of 10.5% over the last five years, adjusted for inflation, the highest wage growth in the Portland metro region, and the second highest wage growth on a net basin in Oregon. EXPANDING BUSINESS OPPORTUNITIES Beaverton is working to retain and recruit local businesses and add value to its region s economy. They have established a number of programs to assist their business community. The Business Assistance Program helps existing businesses grow by providing assistance in business planning, finance, market research, site selection, and other business education opportunities. The Workforce Development program uses a partnership model to provide workforce training. Since its inception the program has leveraged nearly $1 million toward the retention of more than 700 employees and the creation of 500 jobs in Beaverton. ENTERPRISE ZONE EXPANSION The Enterprise Zone is a State of Oregon economic development program that allows for 100 percent property tax exemptions for up to five years. In March 2013, the city s application to expand the zone by 2.93 square miles was approved by the state. The most recent expansion includes all eligible industrial and commercially zoned land within the city limits including a 0.64 square mile area in unincorporated Washington County. Vernier Technology and Vanguard EMS are the first two companies to take advantage of this program, which represents a total investment of $4.7 million. 94,015 BEAVERTON POPULATION $80,092 AVERAGE HH INCOME $ $310,319 MEDIAN HOME VALUE GALLAGHER DESIGN BUILDING 17

Portland Metro URBAN GROWTH BOUNDARY (UGB) Portland constrains its development to a tight ring around Portland s center. This has led to the re-development of a large portion of downtown, a number of mid-rise and high-rise developments, and an overall increase in housing and business density. UGB s limitations on development have also led to increased property values over the years. HIGHLY DIVERSIFIED ECONOMY & SKILLED WORKFORCE Leading economic drivers are renewable energy, technology, health care, and professional services. High tech employment is responsible for the employment of 72,100 people (7.2% of labor force). 30% of workers have a bachelor s degree. Home of Intel, Nike, and Adidas America. LOW COST OF DOING BUSINESS CNBC ranked Oregon 19th for cost of doing business. IN-MIGRATION According to surveys by United Van Lines, Oregon has been ranked as the #1 state for in-migration over the past 3 years. COMPANY PORTLAND MSA TOP 20 EMPLOYERS SOURCE: PORTLAND BUSINESS JOURNAL ± EMPLOYEES Intel 17,500 US Federal Government 17,500 Providence Health & Services 15,239 Oregon Health & Science 14,616 State of Oregon 14,200 Kaiser Permanente Northwest 11,881 Legacy Health System 10,436 Fred Meyer 10,237 City of Portland 8,558 Nike 8,000 Portland Public Schools 6,266 Multnomah County 5,616 Wells Fargo 4,617 Portland State University 4,353 US Bank 4,000 Beaverton School District 3,905 PeaceHealth Southwest 3,300 Portland Community College 3,255 Vancouver School District 3,200 Evergreen Public Schools 3,100 2.31 million PORTLAND MSA POPULATION 23rd LARGEST METRO AREA IN THE US $79,377 AVERAGE HH INCOME GALLAGHER DESIGN BUILDING 18

KEVIN ADATTO kadatto@capitalpacific.com (503) 675-7726 MICHAEL HORWITZ mhorwitz@capitalpacific.com (503) 675-8381 NATE FLIFLET nfliflet@capitalpacific.com (206) 457-8613 SCOTT FRANK sfrank@capitalpacific.com (503) 675-8383 SEAN MACK smack@capitalpacific.com (503) 675-8378 PETER DUNN pdunn@capitalpacific.com (503) 607-0197 SEAN TUFTS stufts@capitalpacific.com (206) 693-3352 DAVID GELLNER dgellner@capitalpacific.com (206) 693-3349 [ Copyright 2017 Capital Pacific LLC ]