Offering Memorandum ARVILLE APARTMENTS E Union Street Seattle, WA. Exclusively offered by Paragon Real Estate Advisors

Offering Memorandum ARVILLE APARTMENTS 1422 E Union Street Exclusively offered by Paragon Real Estate Advisors 1

HARBORVIEW MEDICAL CENTER SEATTLE UNIVERSITY SWEDISH VIRGINIA MASON MEDICAL CENTER AMAZON HEADQUARTERS SOUTH LAKE UNION CAL ANDERSON PARK ARVILLE APARTMENTS 2

Offering Summary Paragon Real Estate Advisors is proud to exclusively list for sale for the first time in over thirty years the twenty-two-unit Arville Apartments located in the highly desirable Capitol Hill neighborhood of Seattle, Washington. With a Walk Score 98, the property is perfectly positioned on the Southwest slope of Capitol Hill directly adjacent to Downtown Seattle Central Business District which gives renters a perfect balance of a charming residential feel with the perks of being in the heart of the action. The Arville Apartments offer investors a wide array of potential value add opportunities such as raising below market rents, increasing the numbers of apartments within the existing structure and/or building an additional separate structure on the western portion of the lot where the garages are located. Name ARVILLE APARTMENTS Address 1422 E Union Street, Seattle WA 98122 Total Units 22 (1 NC Unit) Built 1928 Square Feet 13,390 Total Net Rentable Price $6,500,000 Price Per Unit $295,455 Price Per Foot $485 Current GRM/CAP 16.4/3.9% Market GRM/CAP 15.5/4.1% Expense Per Unit $5,968/Year Terms Cash Out Lot Size 7,591 Square Feet Zoning LR3-12th Avenue Urban Village ARVILLE APARTMENTS 3

Investment Summary Wood frame 1920 s classic brick building in the heart of Capitol Hill (engineer letter on file) Classic Capitol Hill construction with high levels of details in laid tile and oak hardware floors True pride of ownership property - meticulously maintained Incredibly well preserved original era charm Located in one of the strongest and stable rental markets Four blocks from the Cal Anderson Light Rail Station Walk Score 98 out of 100-- Walkers Paradise Upside in raising below market rents Potential to build separate structure under proposed new HALA zoning (buyer to verify) Potential to convert parking garages into habitable units under certain conditions (buyer to verify) 4

Location Highlights Superior Capitol Hill Location just east of downtown Seattle Walk to Seattle University, Seattle Central, and Cal Anderson Park Walking distance to many restaurants, coffee shops, and other neighborhood amenities Located in the 12th Avenue Urban Village Located on several Sound Transit s Bus routes, offering frequent service to Downtown, Pike Place Market and South Lake Union. Immediate neighborhood East of the Seattle CBD Nearby Hospitals---Virginia Mason Hospital/Seattle Medical Center, First Hill Medical Swedish Hospital, Seattle Children s Odessa Brown Clinic, Harborview Medical Center and Swedish Cherry Hill Campus Other close by parks include: Seven Hills Park, Homer Harris Park, Spring Street Mini Park, McGilvra Place, First Hill Park and Volunteer Park. Quick accessibility to Seattle CBD, Highway 99, I-5, I-90 and the new Mercer Street bike paths Sound Link Light Rail---Less than a 15-minute walk to the Capitol Hill Light Rail Station with service to places like Downtown Seattle, Century Link Field, Pioneer Square, Northgate and the Seattle Tacoma Airport. Nearby Grocery Quality Food Center (QFC), Safeway and Trader Joe s all within walking distance! Nearby Restaurants/Bars Skillet, Lark Restaurant, Momiji Sushi, Barrio Mexican Kitchen & Bar, Elysian Capitol Hill Brewery, Madison Pub, Tavern Law, Katsu Burger & Bar, Old School Frozen Custard, Café Presse, Needle & Thread Bar, Stumptown Coffee Roasters, Plum Bistro and more! Walking Distance to Seattle Central College, Seattle University and Seattle Academy of Arts & Sciences. Cal Anderson Park 7-acre park with water features, large lawn area, footpaths, a play area, an athletic field and oversized chess boards. 5

Amenities Map SEATTLE CBD 300,000+ JOBS MADISON PUB ARVILLE APARTMENTS 6

Aerial Map PORT OF SEATTLE SEATTLE CBD SOUTH LAKE UNION QUEEN ANNE CAL ANDERSON PARK CAPITOL HILL E UNION ST E MADISON ST ARVILLE APARTMENTS 7

Capitol Hill Capitol Hill is situated on a hill just East of the city s downtown central business district. This popular residential neighborhood is funky and fast-paced, with an endless number of cool blocks to explore. During the day, markets, boutiques, and salons are a big draw. Nightlife is hopping with clubs, bars, and music venues, and you ll often find coffee shops that moonlight as cocktail lounges. This desirable location contains some of Seattle s wealthiest neighborhoods, including Millionaire s Row along 14th Avenue E, a charming collection of single family residences on tree-lined streets, and the Harvard-Belmont Landmark District. It also has many distinguished apartment houses, including several designed by the distinguished builder Fred Anhalt, of which the subject is modeled after. The demand for Capitol Hill apartments continues to rise as nearby Amazon.com continues its feverish hiring pace alongside other technology companies that are hiring as well as relocating to the South Lake Union area. This location is also home to longstanding health care providers including Swedish Medical Center, Group Health and Virginia Medical Center. Nearby Seattle University and Seattle Central College provide a consistent base to the apartment demand in the area. The neighborhood figures prominently in nightlife and entertainment, with many bars hosting live music and with numerous avant garde theaters. Most of the Hill s major thoroughfares are dotted with coffeehouses, taverns and bars, and residences cover the gamut from modest motellike studio apartment buildings to some of the city s most historic mansions, with the two types sometimes shoulder-to-shoulder. To the north is Capitol Hill s largest and most popular public park. The 48 acre Volunteer Park is home to Seattle s Asian Art museum, tennis courts, a conservatory, and a variety of city-wide events. 8

Capitol Hill Snapshot Population 45,253 Median household income $73,400 Owner Occupied Renters Walk Score Bike Score Transit Score 29% 71% 98 - Walker s Paradise 86 - Very Bikable 79 - Excellent Transit Median 1 Bd/1 Bth Rent $1,949 Median 2Bd/1 Bth Rent $2,694 Seattle Commute Times Bus: 14 minutes via Bus 2 and 13 Car: 3 minutes via E Union St Foot: 23 minutes via Seneca St Bike: 8 minutes via Seneca St Bellevue Commute Times Bus: 47 minutes via Bus 2 and 550 Car: 20 minutes via 23rd and I90 TOP JOB SECTORS: * Management: 11.9% Business 6.7% Computer: 11.1% Education 6.3% Engineering 3.3% Administrative: 10.8% Sales: 7.8% Service: 9.9% Healthcare: 6.1% Legal 3.1% Construction 1.2% Social Services: 2.5% * https://statisticalatlas.com/neighborhood/washington/seattle/capitol-hill/occupations 9

Seattle Central Business District Major Health Care: Harborview Medical Center, University of Washington Medical Center, Swedish Medical Center, Children s Hospital, Virginia Mason Medical Center, Providence Medical Center and Group Health Seattle Icons: Space Needle, Pike Place Market, South Lake Union, Seahawks, Mariners Home to major universities such as University of Washington, Seattle University, Seattle Pacific University, Antioch University, City University, Seattle Art Institute, Cornish School of Arts Headquarters to Amazon, Starbucks, Fred Hutchinson Cancer Research Center, Paul Allen Institute, Holland America Cruise Line, REI, Real Networks, Big Fish, Expedia (2018), Zillow, Redfin, F-5 Networks, Nordstrom s, Boeing, Expeditors International, Payscale, Zulily New Companies entering Seattle s Market: Dropbox, Facebook, Tableau and Apple Seattle is the number ten top fastest growing big U.S. cities Amazon currently host s 24,000 employees, and is projected to host an additional 47,000 more (total 71,000) by 2019 Projected to occupy over 9 million square feet of office space by 2019 10

Employment Greater Seattle excels at the industries of the future - the region is a center of innovation and features some of the world s top global brands. Our aerospace industry is one of the largest in the world, home to Boeing Commercial Airplanes and over 800 aerospace firms that employ 17% of all aerospace workers in the United States. Greater Seattle is also a leading center for information and communications technology, bolstered by industry pioneers such as Microsoft and Amazon. As a result, our region has emerged as a world leader in cloud computing and data visualization, and ranks 4th as a global startup hub ahead of New York and Boston. > > Adobe > > Alaska Airlines > > Amazon > > Apple > > AT&T Wireless > > Boeing > > Costco > > Expedia, Inc. > > Expeditors International > > F5 Networks > > Facebook > > Fred Hutchinson > > Gates Foundation > > Getty Images > > Google > > Microsoft > > Nintendo > > Nordstrom > > Paccar > > Real Networks > > REI > > Russell Investments > > SpaceX > > Starbucks > > Symetra Financial > > Tableau Software > > T-Mobile > > Twitter > > Uber > > University of Washington > > Virginia Mason > > Weyerhaeuser > > Zillow > > Zulily 11

Major Employers - Central Business District 12

Major Employers - South Lake Union 13

Unit Features 11 one bedroom/one bathroom units 11 - studio units Nice size kitchens High ceilings with gorgeous coved moldings Tiled bathrooms and oak floors in all units Some units have been updated with quartz countertops and newer cabinets All units feature original ceiling light fixtures with updated electrical when needed One bedroom units have walk in closets and entry way closet Extra storage throughout units Separately metered for electricity Electric wall unit forced air heating Double pane vinyl windows with era appropriate grid pattern 14

Property Features Secured access entry Charming brick/wood framed building Abundant natural light in most units Quartz countertops in most units Beautiful entryway with exposed aggregate stairway Views from upper floors on Western/Southern sides of the building Spacious floor plans averaging 638 square feet (per KCR) A variety of one bedroom and large studios layouts 9 covered garage parking spaces Slightly pitched torchdown style roof Manicured landscaping Owner storage closets/room and 19 tenant storage lockers Common laundry room - debit/coin op Recently tuck-pointed Partial plumbing upgrades Individual unit breaker panels 7,591 +/- square foot corner lot Zoned LR3 Located in the 12th Avenue Urban Village 15

Building Photos 16

Building Photos 17

Unit Photos 18

Unit Photos 19

Floor Plan - Basement UNIT C 550 SQ.FT. UNIT B 650 SQ.FT. BOILER & OWNER STORAGE ROOM LAUNDRY ROOM CLOSET TENANT STORAGE UNIT A 650 SQ.FT. ELECTRICAL UNIT D 475 SQ.FT. 21

Floor Plan - First Floor UNIT 102 475 SQ.FT. UNIT 103 475 SQ.FT. UNIT 104 724 SQ.FT. UNIT 105 475 SQ.FT. VIEWS UNIT 101 650 SQ.FT. UNIT 106 650 SQ.FT. VIEWS 22

Floor Plan - Second Floor UNIT 202 475 SQ.FT. UNIT 203 475 SQ.FT. UNIT 204 724 SQ.FT. UNIT 205 475 SQ.FT. VIEWS UNIT 201 650 SQ.FT. UNIT 206 650 SQ.FT. VIEWS 23

Floor Plan - Third Floor UNIT 302 475 SQ.FT. UNIT 303 475 SQ.FT. UNIT 304 724 SQ.FT. UNIT 305 475 SQ.FT. VIEWS UNIT 301 650 SQ.FT. UNIT 306 650 SQ.FT. VIEWS 24

Development Potential Potential to build 2,000 (+/-) square foot building under new HALA Zoning. HALA Potential (LR3(M) = 2.3 FAR Potential to convert garages to habitable units under certain conditions (3 Units) Under both conditions, buyer to verify to their own satisfaction. This is only for future potential and no value has been given to this area in our valuation. Architects have been consulted and a summary is available upon request. 25

Operating Summary Units 22 (1 NC) Year built 1928 Rentable Area 13,390 Sq.Ft. Down Payment $3,200,000 49% Loan Amount $3,300,000 51% Interest Rate 4.00% Amortization 30 Years Price $6,500,000 Price Per Unit $295,455 Per Square Foot $485.44 Current GRM 16.36 Current CAP 3.91% Market GRM 15.53 Market CAP 4.05% Units Type Size Current Rent Monthly Income Market Rent Monthly Income 11 Studio 475-500 $1,195-$1,395 $14,265 $1,250-$1,395 $14,705 11 1/1 650-725 $1,475-$1,795 $17,565 $1,550-$1,795 $18,440 22 Avg 609 $2.38 $2.48 Total Monthly Income Monthly Scheduled Rent $31,830 $33,145 Laundry Income $267 $267 Parking/Storage Income 9 Garages $895 $1,350 Utility Bill Back $0 $1,979 Miscellaneous Income $118 $118 Total Monthly Income $33,110 $34,880 Annualized Operating Data Current Market Scheduled Gross Income $397,320 $418,560 Less Vacancy 3.0% $11,920 3.0% $12,557 Gross Operating Income $385,400 $406,003 Less Expenses $131,296 $142,917 Net Operating Income $254,104 $263,086 Annual Debt Service ($15,755/mo) $189,056 $189,056 Cash Flow Before Tax 2.03% $65,048 2.31% $74,030 Principal Reduction $58,114 $58,114 Total Return Before Tax 3.85% $123,162 4.13% $132,144 Annualized Operating Expenses Current Market Real Estate Taxes $40,379 $52,000 Insurance $5,794 $5,794 Utilities $26,672 $26,672 Property Management $15,416 $15,416 On-Site Management $10,560 $10,560 Maintenance & Repairs $19,241 $19,241 Turnover $4,418 $4,418 Landscaping $390 $390 Advertising & Admin $2,926 $2,926 Reserves $5,500 $5,500 Total Expenses $131,296 $142,917 Current Operations Expenses/Unit Expenses/Foot Percent of EGI $5,968 $9.81 33.05% Market Operations Expenses/Unit Expenses/Foot Percent of EGI $6,496 $10.67 34.14% 26

Sale Comparables SUBJECT - ARVILLE APARTMENTS 1422 E Union St, Seattle WA Year Built 1928 Units 22 (1 NC) Sales Price $6,500,000 Price/Unit $295,455 Price/Foot $485 GRM/CAP 16.4/3.9% Sales Date TBD 1. HARRIET MANOR 1304 E Harrison St, Seattle WA Year Built 1960 Units 9 Sales Price $3,659,000 Price/Unit $406,556 Price/Foot $588 GRM/CAP 17.3/4.3% Sales Date 1.12.2018 2. NORMANDY ARMS 420 13th Ave E, Seattle WA Year Built 1930 Units 16 Sales Price $4,600,000 Price/Unit $287,500 Price/Foot $516 GRM/CAP 16.3/3.8% Sales Date 9.29.2017 4. 8 UNIT APARTMENT 1300 E Mercer St, Seattle WA Year Built 1926 Units 8 Sales Price $4,525,000 Price/Unit $565,625 Price/Foot $841 GRM/CAP 31.6/1.9% Sales Date 9.8.2017 3. STELLA APARTMENTS 165 17th Ave, Seattle WA Year Built 1970 Units 20 Sales Price $6,850,000 Price/Unit $342,500 Price/Foot $463 GRM/CAP 14.7/4.5% Sales Date 9.8.2017 5. HIGHLAND CONDOS 931 11th Ave E, Seattle WA Year Built 1924 Units 12 Sales Price $6,000,000 Price/Unit $500,000 Price/Foot $409 GRM/CAP 18.1/3.8% Sales Date 8.9.2017 27

Sales Comparables Map ARVILLE APARTMENTS 1422 E Union St 5 1. Harriet Manor 1304 E Harrison St 4 2. N0rmandy Arms 420 13th Ave E 3. Stella Apartments 165 17th Ave 6 7 1 2 8 4. 8 Unit Apartment 1300 E Mercer St 5. Highland Conods 931 11th Ave E ARVILLE APARTMENTS 6. Glen Eden 921 1st Ave W 7. Centerview 3016 1st Ave 3 8. Whitworth 1619 E John St 29

Rent Comparables Property Units Age Unit Type Size Rent Rent/Sq.Ft. ARVILLE APARTMENTS 1422 E Union St 22 1928 Studio 1Bd/1Bth 475-500 650-725 $1,195 - $1,395 $1,475 - $1,795 $2.51 - $2.79 $2.27 - $2.48 1. Buckley Apartments 201 17th Ave E 31 1928 Studio 500 $1,365 $2.73 2. Roosevelt Apartments 1729 12th Ave 45 1925 Studio 500 $1,295 - $1,450 $2.59 - $2.90 3. Washington Irving Apts 1305 E Howell St 39 1923 Studio 1Bd/1Bth 480 740 $1,295 - $1,395 $1,895 - $2,195 $2.70 - $2.91 $2.56 - $2.97 4. Madison Court Apartments 1519 E Madison St 19 1920 Studio 1Bd/1Bth 435-481 670 $1,295 $1,395 - $1,450 $2.69 - $2.98 $2.08 - $2.16 30

Rent Comparables Property Units Age Unit Type Size Rent Rent/Sq.Ft. ARVILLE APARTMENTS 1422 E Union St 22 1928 Studio 1Bd/1Bth 475 650-725 $1,195 - $1,395 $1,475 - $1,795 $2.51 - $2.94 $2.27 - $2.48 5. Dixonian Apartments 1133 17th Ave 14 1928 1Bd/1Bth 575 $1,500 $2.61 6. Garden Court 1631 16th Ave 74 1929 1Bd/1Bth 616 $1,790 $2.91 7. Union Arms Apartments 604 E Union St 84 1925 Studio 475 $1,320 - $1,350 $2.78 - $2.84 31

Rent Comparables Map ARVILLE APARTMENTS 1422 E Union St 1 1. Buckley Apartments 201 17th Ave E 2 6 2. Roosevelt Apartments 1729 12th Ave 7 3 4 3. Washington Irving Apts 1305 E Howell St 4. Madison Court Apts 1519 E Madison St 5. Dixonian Apartments 1133 17th Ave 6. Garden Court 1631 16th Ave 7. Union Arms Apartments 604 E Union St ARVILLE APARTMENTS 5 32

Paragon Real Estate Advisors ABOUT PARAGON Paragon Real Estate Advisors is the leading Seattle real estate investment firm for multifamily property sales in Washington State. We have accrued over $3.4 billion in sales and have closed over 1,700 successful real estate transactions. We are locally owned, client-focused and highly experienced. When it comes to apartments and investment real estate in the Puget Sound region, we are the smart choice to partner with. At Paragon, we build long-term partnerships that help our clients reach their long- and short-term real estate investment goals while maintaining maximum profitability for them. Our brokers have an in-depth knowledge of the Washington state real estate market, particularly in the greater Seattle area and the I-5 corridor, that comes from more than 23 years experience in the industry. Paragon s unique focus on sharing knowledge, teamwork and collaboration within the brokerage industry leverages our collective intellect for all our clients. Our brokers provide superior customer representation through our innovative and effective marketing campaigns, co-brokerage, skilled negotiations, and ongoing partnerships. The information found in this offering memorandum 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. 33