OFFERING MEMORANDUM EVERGREEN HEALTH RECOVERY CENTER

OFFERING MEMORANDUM EVERGREEN HEALTH RECOVERY CENTER

EVERGREEN HEALTH RECOVERY CENTER Table of Contents 01 Executive Summary The Opportunity Investment Highlights Property Summary Retail Aerials Site Plan 02 03 04 Financial Analysis Pricing Summary Income Rent Roll Lease Options Expenses Proposed New Financing Tenant Profile Location & Market Overview Location Overview Location Map Site Overview Demographics Contact Information Erik Swanson eswanson@kiddermathews.com 206.296.9628 Mike King mking@kiddermathews.com 206.296.9624 The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB s or asbestos, the compliance with State and Federal regulations, current or past tax payments, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies. kiddermathews.com

EVERGREEN HEALTH RECOVERY CENTER 01 Executive Summary Investment Overview Investment Highlights Property Summary Retail Aerials Site Plan

Investment Overview The is a 22,867 SF outpatient medical facility that is 100% leased to Snohomish Public Hospital District No 1. The facility consists of 35 residential units and is situated on a 39,964 SF lot. The building was originally built as an assisted-living facility and is now occupied by Evergreen Health s regional substance abuse recovery center. The improvements consist of two interconnected buildings that contain a mix of residential units, business offices, dining and living areas, kitchens, nurse s stations, and public spaces which are accessed by the stairwells and a single elevator. This site has an excellent location in Monroe, situated off of Highway 522, across from Evergreen Health Monroe Hospital, a Level-4 trauma facility that provides surgical and emergency services. Investment Summary Offering Price Current Cap Rate Occupancy Price per SF Year Built $6,200,000 7.22% 100% $271 1990 Providence Medical Center also occupies a number of office buildings surrounding the property, including a medical clinic that employs over 100 people. KIDDER MATHEWS OFFERING MEMORANDUM 4

INVESTMENT HIGHLIGHTS Located on Evergreen Health Monroe Campus Situated off of Highway 522 and across the street from Evergreen Health Monroe Hospital. NNN Lease Structure Passive investment with minimal landlord responsibility for roof and structure. Stable Tenant Leased through November 2023 with three 5 year options. No Debt The property is offered without any obligation to assume debt. Strong Snohomish County Economy Snohomish County has experienced exceptional economic growth over the past decade and has become nationally recognized as a strong, stable and expanding economy. Boeing and the US Navy are the largest employers in the area. Organizations such as Premera Blue Cross, the Tulalip Tribe, Intermec and many other local companies add to the county s diversified employment. KIDDER MATHEWS OFFERING MEMORANDUM 5

PROPERTY PHOTOS KIDDER MATHEWS OFFERING MEMORANDUM 6

PROPERTY OVERVIEW BUILDING Property Name Evergreen Health Monroe Recovery Center Address 17880 147th Street SE, Monroe, WA 98272 Year Built The east wing was constructed in 1987; the west wing was added in 2003. Total Building SF± 22,867 Amenities Common areas include social, living, and dining areas, a beauty-barber shop, restrooms, and a sunroom. The facility contains two commercial kitchens, a laundry room, nurse s station, storage rooms, mechanical rooms, and offices. One elevator serves both floors. Stories Two (2) Units Foundation Framing Roof Windows HVAC Security 10 residential units in the east wing 13 main floor units and 8 second floor units in the west wing 3 second floor office spaces could be used as residential units, thereby increasing the unit count to 35 Concrete footings with concrete foundation walls Wood frame Pitched, composition roof replaced in 2002 with 30-year estimated life Double-paned sliders The building is air-conditioned and is heated with gas. Raidiant floor heat is installed in the residential units. The facitility has a total of three heat pumps totaling 8 tons of capacity installed in 2007. The building is sprinklered and equipped with emergency lighting. Smoke detection and carbon monoxide alarms have been installed. KIDDER MATHEWS OFFERING MEMORANDUM 7

PROPERTY OVERVIEW CONTINUED SITE Land Area Acres± 0.92 Land Area SF± 39,946 Parcel Number (APN) 280635-004-008-00 County Municipality Parking Spaces Access Frontage Zoning Snohomish City of Monroe, Washington 23 spaces 147th Street SE provides vehicular access to the property ±249 feet of frontage on the south side of 147th Street SE ±160 feet of frontage on the west side of 179th Avenue SE PO - Professional Office TAX ASSESSMENT Taxable Value of Land $438,400 Taxable Value of Improvements $4,011,600 Total Taxable Value $4,450,000 2016 Property Tax $0 As an entity of a non-profit public hospital, the property is currently exempt from real property taxes. KIDDER MATHEWS OFFERING MEMORANDUM 8

Site Overview Aerial N SKYRIVER MEDICAL CENTER EVERGREEN HEALTH MONROE HOSPITAL EVERGREEN HEALTH RECOVERY CENTER 149th St SE 179th Ave SE 147th St SE SITE CHARACTERISTICS PROVIDENCE HEALTH MONROE CLINIC Large, level corner lot at intersection Easy access to Highway 2 and Highway 522 Directly across the street from Evergreen Health Monroe Hospital KIDDER MATHEWS OFFERING MEMORANDUM 9

THE EVERGREEN STATE FAIRGROUNDS EVERGREEN HEALTH MONROE HOSPITAL Stevens Pass Hwy PROVIDENCE HEALTH MONROE CLINIC EVERGREEN HEALTH RECOVERY CENTER SKYRIVER MEDICAL CENTER West Main Street N KIDDER MATHEWS OFFERING MEMORANDUM 10

EVERGREEN HEALTH RECOVERY CENTER 02 Financial Analysis Pricing Summary Rent Roll Lease Abstract Proposed New Financing

PRICE $6,200,000 CAP RATE 7.22% PRICE / SF $271 OCCUPANCY 100% RENT ROLL TENANT START END MONTHLY RENT ANNUAL RENT ANNUAL RENT/SF COMMENTS Evergreen Health Recovery Center 11/01/13 11/30/23 $37,304.48 $447,653.76 $19.58 12/01/23 11/30/28 FMV First option 12/01/28 11/30/33 FMV Second option 12/01/33 11/30/38 FMV Third option KIDDER MATHEWS OFFERING MEMORANDUM 12

EVERGREEN HEALTH RECOVERY CENTER LEASE ABSTRACT Tenant/Guarantor Snohomish County Public Hospital Distrct No. 1 Lease Type Roof & Structure HVAC Insurance Utilities Property Taxes Parking & CAM Lease Term Triple Net (NNN) Landlord Responsibility Tenant Responsibility Tenant Responsibility (Landlord carries building insurance which is reimbursed by tenant) Tenant Pays Direct As an entity of non-profit public hospital, the property is currently exempt from real property taxes. Tenant Responsibility 10 Years Annual Base Rent (Current) $447,654 Annual Rent / SF $19.58 Security Deposit N/A Lease Commencement 11/01/13 Current Term Expiration 11/30/23 Renewal Options Right of First Offer Estoppels Tenant Financials 3-5 Year Options The tenant has a 15 business day right of first offer from initial offering. The tenant has been given notice as part of this offering. Tenant to provide within 20 days Tenant to provide within 20 days KIDDER MATHEWS OFFERING MEMORANDUM 13

PROPOSED FINANCING POTENTIAL LOAN TERMS BANK LIFE INS CO Loan to Value 70% LTV 65% LTV Amortization 15-30 Years 25 Years Term 5-10 Years 7-10 Years Rate Range 4.60% - 5.50% 4.25% - 5.25% Recourse Full Full to Partial Holdbacks Leasing Fees None PROPOSED FINANCING Price $6,200,000 Down Payment $1,860,000 Loan To Value (LTV) 70% New Loan Amount $4,340,000 Interest Rate 4.75% Amortization 30 Debt Coverage Ratio 1.65 Current Net Operating Income $447,654 Annual Debt Service ($271,674) Cash Flow After Debt Service $175,980 LEVERAGED CASH ON CASH RETURN 9.46% PRICING SNAPSHOT Offering Price CAP Rate Net Operating Income Bulding Price/SF $6,200,000 7.22% $447,654 $271 Principal Reduction $66,969 Return with Principal Reduction $242,949 TOTAL RETURN ON EQUITY 13.06% KIDDER MATHEWS OFFERING MEMORANDUM 14

EVERGREEN HEALTH RECOVERY CENTER 03 Tenant Profile

Tenant Profile The Recovery Center at EvergreenHealth Monroe serves those seeking help for chemical dependency throughout the Pacific Northwest. All programs are conducted at the center, located adjacent to the hospital in Monroe. Evergreen Health Monroe is governed by an Alliance Governance Board (AGB), consisting of two Board members from EvergreenHealth, two Commissioners from Snohomish County Public Hospital District #1 and the CEO of EvergreenHealth. The AGB governs Valley General Hospital s operations, while the Snohomish County Public Hospital District #1 Board retains responsibility for the public hospital district s health needs. The financial position of the Monroe hospital has improved greatly since the affiliation formed, thanks in part to improved management and added tax support approved in 2012. EvergreenHealth Monroe is an accredited, full-service district hospital serving East Snohomish County. Since opening in 1960, the hospital has met the needs of the community by providing emergency services, surgical and specialty services. Located in Monroe, Washington, near the junction of US 2 and SR 522, Evergreen Health Monroe believes in a patient and family-centered philosophy, combined a commitment to advancing medical technologies. Source: https://www.evergreenhealth.com On March 1, 2015, Valley General Hospital in Monroe became part of the EvergreenHealth system a change reflected by its new name, EvergreenHealth Monroe. This completed the final phase of an affiliation agreement that began in late 2012, in which EvergreenHealth committed to working more closely with Valley General, locating additional physicians and adding services to the Monroe hospital. EvergreenHealth provided assistance and expertise in support areas as well (see news release for more detail). Since the affiliation agreement, EvergreenHealth has added new primary care, prenatal obstetrics, orthopedic surgery and rehabilitation care to the Monroe community. A new 34-bed psychiatric hospital, operated by Fairfax Behavior Health, will open at hospital in 2016. KIDDER MATHEWS OFFERING MEMORANDUM 16

EVERGREEN HEALTH RECOVERY CENTER 04 Location & Market Overview Location Overview Location Map Site Overview Demographics Representative Photo

Location Overview Snohomish County The Northern Snohomish County is the manufacturing center of Washington State. Twenty-five percent of our workforce is associated with manufacturing; twice the State average. The assembly of commercial aircraft is significant in our local economy, including both The Boeing Company and the associated supply chain. This supply chain, representing both products and services, is not limited to The Boeing Company. Many are doing business with Airbus while looking for opportunities with the growing list of single-aisle airframe manufacturers. Additionally, these suppliers have diversified to serve multiple markets including shipbuilding, defense, energy generation, etc. Monroe Monroe is located in southeast Snohomish County and is the home of the Evergreen State Fairgrounds, Evergreen Speedway, and Equestrian Park. Highways 2, 522 and 203 converge in this city. Only an hour away from Stevens Pass, Monroe is the largest city on Highway 2 between Everett and Wenatchee. Monroe and surrounding areas present a kaleidoscope of past and present. Dairy farming, berry farming, vegetables, poultry and beef, nurseries, tree farms and logging, horse breeding and training, all blend harmoniously with the majesty of the mountains, swift-running rivers, ancient cedar and hemlock forests, and many wonderful parks and trails full of natural beauty. The Monroe Chamber of Commerce sponsors the Annual Fair Days Parade on the first Saturday of the Evergreen State Fair. Participants come from all over to showcase a wide variety of entertainment, from marching bands to antique autos and show horses. Southern Snohomish County, with its proximity to Seattle, has a concentration of knowledgeable workers and life science companies. T-Mobile has an engineering technology center with a staff of 600 and Google is planning to open a facility in Bothell that is designed to house 800 workers. On the life science side, we have a cluster of medical device companies with a specific focus in ultrasound diagnostics. Philips Healthcare and Sonosite have a combined workforce of 3000. On the pharmaceutical side and smaller in scale, CMC Biologics has 200 scientists researching and producing pharmaceuticals on a contract basis. Sources: Economic Alliance of Snohomish County & Experiencewa.com KIDDER MATHEWS OFFERING MEMORANDUM 18

Location Overview EVERETT EVERETT 20 MINS PUGET SOUND EVERGREEN HEALTH RECOVERY CENTER LYNNWOOD MONROE BOTHELL KIRKLAND SEATTLE SEATTLE 40 MINS BELLEVUE 30 MINS N KIDDER MATHEWS OFFERING MEMORANDUM 19

DEMOGRAPHICS 1 MILE 3 MILES 5 MILES Population Estimated Population (2015) 9,012 24,140 34,777 Projected Population (2020) 9,749 25,876 37,393 Census Population (2010) 8,798 23,487 33,844 Projected Annual Growth (2015-2020) 737 (1.6%) 1,736 (1.4%) 2,617 (1.5%) Historical Annual Growth (2010-2015) 214 (0.5%) 653 (0.6%) 933 (0.6%) Population by Race White 7,007 (77.8%) 19,499 (80.8%) 29,201 (84.0%) Black or African American 77 (0.9%) 712 (2.9%) 779 (2.2%) American Indian or Alaska Native 73 (0.8%) 243 (1.0%) 307 (0.9%) Asian 304 (3.4%) 691 (2.9%) 886 (2.5%) Hawaiian or Pacific Islander 14 (0.2%) 65 (0.3%) 80 (0.2%) Other Race 1,145 (12.7%) 2,015 (8.3%) 2,270 (6.5%) Two or More Races 391 (4.3%) 914 (3.8%) 1,255 (3.6%) Households Estimated Average Household Income (2015) $73,287 $85,521 $95,311 Projected Average Household Income (2020) $78,426 $92,905 $104,719 Census Average Household Income (2010) $64,782 $77,210 $82,951 Projected Annual Change (2015-2020) $3,823 (1.1%) $4,643 (1.2%) $5,296 (1.2%) Historical Annual Change (2000-2015) $17,411 (2.3%) $23,153 (2.8%) $27,596 (3.1%) Housing Units Owner-Occupied (2015) 1,868 (59.5%) 5,239 (70.1%) 8,575 (75.7%) Housing Units Renter-Occupied (2015) 1,273 (40.5%) 2,236 (29.9%) 2,746 (24.3%) Estimated Median Household Income (2015) $68,108 $79,111 $87,167 Projected Median Household Income (2020) $71,931 $83,754 $92,463 Estimated Per Capita Income (2015) $25,618 $28,509 $32,437 Census Per Capita Income (2010) $22,273 $23,530 $26,609 Households by Income Distribution HH Income $200,000 or More 62 (2.0%) 362 (4.8%) 769 (6.8%) HH Income $150,000 to $199,999 145 (4.6%) 545 (7.3%) 1,061 (9.4%) HH Income $125,000 to $149,999 193 (6.1%) 545 (7.3%) 972 (8.6%) HH Income $100,000 to $124,999 466 (14.8%) 1,170 (15.7%) 1,182 (16.0%) HH Income $75,000 to $99,999 520 (16.6%) 1,248 (16.7%) 1,819 (16.1%) HH Income $50,000 to $74,999 677 (21.6%) 1,386 (18.5%) 1,962 (17.3%) HH Income $35,000 to $49,999 389 (12.4%) 825 (11.0%) 1,133 (10.0%) HH Income $25,000 to $34,999 257 (8.2%) 628 (8.4%) 756 (6.7%) HH Income $15,000 to $24,999 228 (7.3%) 350 (4.7%) 451 (4.0%) HH Income $10,000 to $14,999 90 (2.9%) 212 (2.7%) 293 (2.6%) 5-MILE TRADE AREA DEMOGRAPHICS Population (2015) Average Household Income Estimated Population (2020) 5 MILES 3 MILES 1 MILE 34,777 $95,311 Monroe 37,393 EVERGREEN HEALTH RECOVERY CENTER KIDDER MATHEWS OFFERING MEMORANDUM 20

Contact Information Erik Swanson eswanson@kiddermathews.com 206.296.9628 Mike King mking@kiddermathews.com 206.296.9624 Kidder Mathews 601 Union Street, Suite 4720 Seattle, WA 98101 kiddermathews.com