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12410 NE Totem Lake WayKirkland, WA 98034

For Real-Time Property Information go to:

TheCanopy.BerkadiaREA.com

DAVID SORENSEN

Associate Director

206.801.3102

[email protected]

BEN JOHNSON

Associate Director

206.801.3144

[email protected]

KENNY DUDUNAKIS

Senior Managing Director

206.521.7216

[email protected]

| EXCLUSIVE MULTIFAMILY OFFERING a Berkshire Hathaway and Leucadia National company

57 Units Price: Unpriced Development Opportunity|


Adjacent to The Village at Totem Lake Lifestyle Shopping CenterRedevelopment

Kirkland Home Values Increased 14.5% in 2015

Kirkland Median Family Income - $90,455, 32% Higher thanWashington State Average

Comparable Market Occupancy - 97.3%

Totem Lake Market Rents Increased 37.6% Since 2011

Near the Shores of Lake Washington

For Real-Time Property Information visit:


PROPERTY HIGHLIGHTS

KENNY DUDUNAKIS


206.521.7216

[email protected]

BEN JOHNSON

Associate Director

206.801.3144

[email protected]

DAVID SORENSEN

Associate Director

206.801.3102

[email protected]

SEATTLE OFFICE

601 Union Street, Suite 3909

Seattle, WA 98101

206.521.7220 | Fax: 206.521.7222


One of the Most Sought-After

Investment Markets in the Country

Market Positioning 24

The Market 31

The Opportunity 5

The Property 11

Financial Analysis 22

TABLE OF CONTENTS


One of the Newest Assets in a Thriving Eastside Market

� Steps from the The Village at Totem Lake

� Kirkland / Totem Lake is one of the fastest-developing and most desirable

submarkets on the Eastside

� Along the best walking trail in the State

� Less than four miles from Google’s third-largest Engineering Campus in

the Country

The Village at Totem Lake

� State-of-the-art lifestyle shopping center will be a regional destination

� In total, the mall will be a 1,000,000-square-foot luxury mixed-use development

� Less than a two minute walk from The Canopy Above the Lake

� Will feature both Whole Foods and Trader Joe’s

� Phase one set to be completed in the fall of 2017

A Rapidly Growing Downtown Kirkland Core

� Minutes from Redmond and Bellevue

� Microsoft world headquarters is seven miles from the development site

� Google’s engineering office is four miles from the development site

One of the Tightest Real Estate Markets in the Nation

� Kirkland median home value is $571,000, increasing 14.5% in the past year.

Zillow predicts an additional 6.7% increase this year. The median list price is

$343 per foot, $129 higher than the Seattle metro average

� Kirkland is currently experiencing occupancy rates of 97.3% per Dupre +

Scott for multifamily properties

� The five-year market occupancy is 95.4%

� Market rents in the Totem Lake submarket have increased 37.6% since 2011

Well-Positioned around the Eastside’s Economic Growth

� Leading technology, medical, marketing, and financial jobs nearby

� Microsoft, Nintendo, Google, Overlake Hospital, PACCAR, and Symetra are

all within eight miles of the site

� Over 35,000 Microsoft employees are located less than seven miles away

� Downtown Bellevue is seven miles, Seattle central business district is 15 miles away

Sought-After Submarket � The Eastside, Kirkland included, features some of the best schools in the State

of Washington

� The single-family home and condominium market is very strong; Ranked “Red

Hot” by Zillow.com

� Additional retail - The Bellevue Collection, The Bravern, Redmond Town

Center - all within eight miles of the development site

Limited Supply of Development Sites Available

� Rare investment opportunity in one of the strongest markets in the Nation

� Lack of available large sites in the Bellevue and Kirkland markets will

contribute to limited future supply, especially in this type of location with views

of Lake Washington

� Development sites within the immediate area have been sold in excess of

$70,000 per door

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THE OPPORTUNITY

5TheCanopy.BerkadiaREA.com


The Village at Totem Lake

The Village at Totem Lake is an open-air, lifestyle center that will combine

approximately 1,000,000 square feet of high-end retail and entertainment,

and luxury dwellings. This massive redevelopment will cover 26 acres and be

well over a $200,000,000 investment. This destination shopping center will

feature both gourmet grocers Whole Foods and Trader Joe’s which will play a

huge part in the development. National studies by Zillow show that home

values within a one-mile radius of a Whole Foods or Trader Joe’s increased

10% within two years of opening. Both Whole Foods and Trader Joe’s are

specific in selecting their locations, typically based on strong demographics,

which is the case in Kirkland and the Totem Lake submarket. This revitalized

shopping center will become a regional destination and the ultimate

gathering place for Kirkland and other Eastside residents.

Development of 120th

Avenue NE - pedestrian oriented, strategic

placement of trees and landscaping

The Canopy Kirkland views the mall as a key component of its

overall economic growth and has targeted the redevelopment as a

primary goal

Purchased by Totem Lake LLC - joint venture between CenterCal

and PCCP, LLC

Mixed-use development totaling 1,000,000 square feet

538,600 square feet of retail and entertainment, 130,000 square

feet of office, 650-seat movie theater, 395 residential units, and a

parking structure

The city of Kirkland will contribute $15,000,000 in site

improvements once CenterCal completes at least 250,000 square

feet of retail and 600,000 square feet of total development. This

includes improvements to 120th

Avenue NE

Totem Lake is designated as an Urban Center, meaning Totem Lake is a hub

for planned regional growth, and expected to have high-density housing and

employment, specifically 15,000 jobs within a half-mile of a transit center.

The area currently is home to Kirkland’s largest employer, Evergreen Health,

and the city estimates the Totem Lake area will grow from 5,500 to 9,800

people by 2030 with housing rising up to 6,000 units. There is an expected

11,500 to 29,000 person growth in employment.

There are 2,117 residential units in review in and around the area. There

also are office and community proposals coming in, thanks in part to

excitement created by The Village at Totem Lake.

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The Canopy Above the Lake will provide investors with a rare opportunity to develop a 57-unit, luxury apartment complex in

one of Kirkland's most rapidly growing and most desirable submarkets. This highly sought-after Eastside location is minutes

from downtown Bellevue, steps from The Village at Totem Lake, and near the shores of Lake Washington. The Totem Lake

submarket is positioned three miles north of downtown Kirkland and seven miles northwest of Redmond, home to technology

industry leader Microsoft.

The Canopy Above the Lake is a two-minute walk from the $200 million redevelopment, The Village at Totem Lake, set for

completion in the fall of 2017. Whole Foods and Trader Joe's will be two of the anchor tenants of the mall that will feature

roughly 300,000 square feet of retail and entertainment. Evergreen Hospital is also walking distance from the property and

the submarket's largest employer. Surrounded by a plethora of medical employers and in the heart of the Eastside's Tech

corridor, this central location will be highly sought after by both residents and investors alike for years to come.

Development Opportunity in a Premier Eastside Location

This irreplaceable location in Kirkland's Totem Lake submarket is one of the Nation's most highly sought-after locations to

own multifamily investors in the country. As land constraints continue to become more prevalent, this type of asset will

become increasingly rare.

Located in the heart of the High-Tech Corridor, this premier location offers a convenient commute to Boeing and the quickly

expanding cadre of aerospace suppliers in South Everett, as well as the UW Bothell Campus, Cascadia College, and the

Canyon Park and North Creek business parks. Bothell is only five minutes away and is redefining its historically quiet town

feel with vibrant new developments.

The burgeoning medical community in Totem Lake is led by Evergreen Health (King County Public Hospital District No. 2),

which is comprised of more than 1.1 million square feet and over 2,600 employees. There are numerous support services

and specialized practices nearby that provide both services and employment base. Virginia Mason's medical center with over

100 employees is directly across from the property. Other medical providers, such as Evergreen Radial Imaging, Proliance,

and Pacific Medical are also nearby.

THE OPPORTUNITY

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Employment-Centric Location

Located in the heart of the Eastside that features more than 350,000

jobs, The Canopy Above the Lake is positioned in close proximity to

downtown Kirkland and provides immediate access to employment.

The property is only steps away from Evergreen Hospital and Medical

Center in addition to many other medical employers totaling over

4,500 jobs. Less than seven miles to Bellevue, Bothell, and Redmond,

the property is central to the Eastside's tech hubs. Industry leader

Microsoft's main campus is ten minutes southeast. Even closer to the

property in downtown Kirkland, Google is completing its campus

expansion making it the third-largest engineering office in the

country. This campus hosts nearly 2,000 employees. Furthermore,

downtown Seattle is just a 20-minute drive and contains over

500,000 jobs. With a steadily declining unemployment rate of 3.7%

and ranking among the nation's leaders in wage growth at 2.3%, the

positive forecasts for the greater Seattle area will continue. This

premier location provides easy access to a variety of employment

opportunities for residents.

In Seattle MSA - over 500,000 jobs

Downtown Seattle - 300,000 jobs

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THE OPPORTUNITY

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THE CANOPY ABOVE THE LAKEDEVELOPMENT NOTES

The canopy currently has SEPA and Traffic

concurrency approvals from the city of Kirkland to

support the site's development. Additionally, a

parking demand study has been completed,

supporting the project's unit count of 57. In total,

these studies will save the developer 3-4 months

and approximately $25,000, in addition to

providing certainty for the project density.

Intensive geotechnical explorations have been

completed and are available for review. This

information will help the potential developer obtain

reliable information as it pertains to the required

site retainage, as well as another several months in

time and $30,000 in cost savings.

The developer needs to go through the full design

and permitting process with the city of Kirkland.

With a phased permit approach, the development

site could be shovel-ready in summer of 2017.

There is a requirement for the site to participate in

the ARCH program providing 10% of the units at

60% of the AMI. In return, the developer will receive

an 8-year tax abatement.

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Extraordinary Demographics

Kirkland Median Household Income is $90,455

Exceptional Access to Major Transit

The Canopy Above the Lake is positioned less than one-half mile from I-405 and provides easy access to 120th Avenue and

Totem Lake Boulevard. This ideal location is a short walk to both the Kingsgate and Evergreen Hospital Park and Ride, two of

the most frequently traveled stops along the I-405 corridor, with over 500 parking spaces.

In 2007, King County invested over $80 million to develop the HOV direct access ramp above I-405 across 128th Street. This

provides residents with direct access to I-405 both north and south bound in addition to being a Sound Transit Express stop.

Metro Routes via Totem Lake Park & Ride

235 To Bellevue Departs 7:11 am - Travel Time 20 Minutes

238 To Downtown Kirkland Departs 7:33 am - Travel Time 15 Minutes

244 To Redmond Departs 7:43 am - Travel Time 30 Minutes

252 To Seattle Departs 6:48 am - Travel Time 36 Minutes

277 To U-District Departs 6:51 am - Travel Time 31 Minutes

Sound Transit Express Routes

Express Routes leave every 15 minutes during standard commute hours

535 Bellevue to Vue Kirkland - Travel Time 10 Minutes

532 Vue Kirkland to Everett - Travel Time 45 Minutes

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THE OPPORTUNITY

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SITE AERIAL

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Totem Lake Park

The development of the Totem Lake Park will help complete the makeover of

the Totem Lake submarket. This park is ideally located steps away from The

Canopy Above the Lake and is the ideal amenity for the property. The

Kirkland City Council has approved the Totem Lake Park Master Plan, which

would turn the 17-acre parcel of land and lake into a park with a looping

boardwalk, restroom facility, and play area.

Cross Kirkland Corridor Trail

The Cross Kirkland Corridor Trail is a 5.75-mile stretch of the Eastside’s Rail

Corridor that has been recently retrofitted to accommodate cyclists and

pedestrians. Along the nearly six-mile stretch of trail, there are 1,737

business and 14,486 employees within 2,000 feet of the trail. Residents living

at The Canopy Above the Lake now have direct access via the new trail to the

stunning Kirkland Waterfront.

The city is embracing the opportunity to continue to develop the trail

as a multi-modal transportation corridor

The trail connects eight of the 13 Kirkland neighborhoods

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DEVELOPMENT HIGHLIGHTS

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Evergreen Health Medical Center

Located two blocks from The Canopy Above the Lake, Evergreen Health

Medical Center is one of the elite hospitals in the Puget Sound, and also

represents Kirkland’s largest employer with over 2,500 employees.

Ranked #3 in Washington, and ranked #2 in Seattle Metro

508 full-time physicians and nurses, 656 part-time physicians and

nurses

With 293 beds, the hospital had over 15,000 admissions last year

In 2007, underwent a 50,000-square-foot expansion of its

emergency departments in addition to a new 200,000-square-foot,

eight-story patient and facility tower

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DEVELOPMENT HIGHLIGHTS



AREA HIGHLIGHTS

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PROJECT STATISTICS

Lot Size: 48,166 Square Feet

Units: 57

Zoning: TL8

Parcel Number: 8663270011

Average SF: 901

Average Rent: $2,098

Rent / SF: $2.33

Comparable Properties Market Occupancy: 96.8%

SEPA Including Traffic Concurrency Approval

Short PLAT Complete

Overlooking Totem Lake

Steps from The Village at Totem Lake

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Google - The Kirkland Google campus is located four miles from The Canopy Above the Lake, and is currently the

third-largest Google campus in the country. The 180,000-square-foot planned expansion will nearly double the size of the

campus and will host another 1,000 employees. Google recently surpassed Microsoft for total employees worldwide. The

average Google software engineer salary is $127,143.

Microsoft - Microsoft is one of Puget Sound's largest employers with over 43,000 local employees occupying over

14,000,000 square feet of space. Microsoft's headquarters are 6.5 miles southeast via surface streets. The main campus

occupies 10,000,000 square feet of space and hosts over 30,000 employees.

Boeing - Located 17 miles north of Kirkland, Boeing has over 84,000 employees locally. In 2013, the new 777x received

over $95 billion in orders and will begin production in 2017. In 2014, Boeing set a record with 1,432 net commercial

orders, the most ever in a single year. The commercial orders are valued at $232.7 billion at list price. The aerospace leader

will also begin construction on its new 1,000,000-square-foot plant and warehouse for the 777x wing in the near future,

creating even more jobs in the Puget Sound region.

STRONG LOCAL EMPLOYERS DRIVE ECONOMY

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Amazon - Amazon.com employs approximately

25,000 locally in nearly 4,000,000 square feet of

space between downtown Seattle and the South

Lake Union campus. The online giant has begun

building three, 500-foot towers encompassing

3,000,000 square feet adjacent to their South Lake

Union Campus in the Denny Triangle. This is a

game changer in any region and will undoubtedly

cause a spin-off of a multitude of businesses and

job growth throughout the region, in addition to the

company's own hiring surge, which could double

the current employment.

Diverse Employment Base - In addition to

Microsoft, Boeing, Google, Lake Washington

Institute, and Evergreen Healthcare, the area is

home to a plethora of diverse employment. Puget

Sound Energy, Paccar, T-Mobile, and Esterline

Technologies, all among the state's largest public

companies, are located in nearby Bellevue. Bellevue

is also home to Coinstar, Drugstore.com, Esterline

Corp., Eddie Bauer, Genie Industries, and AT&T, as

well as the regional headquarters of Symetra

Financial. Nearby Redmond is home to 21% of the

state's biotech companies, including Spacelabs

Medical and Physio-Control.

Regional Job Growth - Kirkland is close to the

major employment centers of Seattle, Bellevue,

Everett and the Eastside Technology Corridor.

According to forecasts from the Puget Sound

Regional Council, Kirkland will see the addition of

more than 25,600 new jobs before 2040, bringing

its total employment to over 58,000. The region is

ranked second in job growth in addition to ranking

first in wage growth.

STRONG LOCAL EMPLOYERS

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THRIVING MARKET - RENTAL INCREASESThe Kirkland submarket has proven to be extremely strong over the past five years with a

strong occupancy trending above 96%. Currently, properties built from 2010 to 2015 are

posting average occupancy of 98.4%, while average rents continue to trend upwards. From

Q1 2015 to Q4 2015, average market rents in Kirkland have increased 11.55%, according

to AXIOMetrics. New product within the submarket has recently come online including

properties such as Slater 116, Ondine at Juanita Bay, and Waterscape at Juanita Village.

These properties are all achieving rents approaching $2.50 per square foot. These current

rent levels in Kirkland, Juanita, and Totem Lake provide compelling evidence that the market

supports continued rental increases and strong rents at The Canopy Above the Lake, once

fully stabilized.

Juani ta

Properties built since 2010 average rents of $2.14 per square foot and $1,805 per

month. Market rents increased 14% over the past 24 months.

Woodinvi l le | Totem Lake



Redmond



Comparable Property Highlights

Rents at Waterscape at Juanita Village, Ondine at Juanita Bay, and Slater 116 are

above $2.35 per square foot, while Chelsea at Juanita Village is $2.08 per square

foot.

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KIRKLAND RANKINGS

2015 Money Magazine #5 Best Place to Live in

U.S.

2015 Sotheby's International Realty Top Five Most

Expensive Neighborhoods

2014 Money Magazine Top 50 Places to Live

2014 Washington's best Small City to Live

2016 Lake Washington School District Ranks 9 of

10 - greatschools.org

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SEATTLE RANKINGS

#1 - City in U.S. to Find a Job - Wallet Hub 2015

#1 - Fastest Growing Big City in the U.S. - U.S.

Census Bureau

#1 - Highest Job Growth for Small Businesses in

the U.S. - Paychex

#1 - Nation's Most Sustainable City - STAR

Communities

#2 - Best City for Recent College Graduates

- Nerdwallet.com

#3 - Best Market in North America for Hotel

Property Investment 2015 - ULI

#4 - Best Market in North America for Office

Property Investment 2015 - ULI

#5 - Best U.S. City for Tech Startups

- Entreprenuer.com

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MARKET HIGHLIGHTS

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IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Berkadia® and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Berkadia® employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions.

© 2016 Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Berkadia® and Berkadia Commercial Mortgage® are trademarks of Berkadia Commercial Mortgage LLC. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. In California, Berkadia Real Estate Advisors Inc. conducts business under CA Real Estate Broker Lic. #01931050, Berkadia Commercial Mortgage LLC under CA Finance Lender & Broker Lic. #998-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx

All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

ALL FINANCING

NEW FIRST MORTGAGE (to be originated at purchase)

Total Loan Amount

Down Payment

LTV

Mo. Payment

Debt Constant

LTV for this loan

Amount

Interest Rate

Amortization

Payment

Fees

I/O Term (Yrs)

INVESTMENT SUMMARY

Price

Price/Unit

Price/SF

Pro Forma Cap Rate

$17,885,000

$7,843,850

70%

($59,617)

4.00%

70%

$17,885,000

4.00%

Interest Only

($59,617)

1.00%

2

$25,550,000

$448,246

$497.57

4.60%

Unit Mix & Rent Schedule Unit Total Market Monthly Annual

Units Type SF SF Rent Mkt. Rent Mkt. Rent Rent/SF

8 Open 1 Bed 750 6,000 $1,900 $15,200 $182,400 $2.53

18 1 Bed/1 Bath 850 15,300 $1,975 $35,550 $426,600 $2.32

21 1 Bed/1 Bath Plus Den 950 19,950 $2,295 $48,195 $578,340 $2.42

4 2 Bed/2 Bath 1,150 4,600 $2,850 $11,400 $136,800 $2.48

1 Open 1 Bed - A 750 750 $1,508 $1,508 $18,096 $2.01

2 1 Bed/1 Bath - A 850 1,700 $1,508 $3,016 $36,192 $1.77

2 1 Bed/1 Bath Plus Den - A 950 1,900 $1,508 $3,016 $36,192 $1.59

1 2 Bed/2 Bath - A 1,150 1,150 $1,698 $1,698 $20,376 $1.48

57 901 51,350 $2,098 $119,583 $1,434,996 $2.33

BerkadiaIncome Pro Forma

Scheduled Market Rent $1,434,996

Less: Vacancy 5.00% ($71,750)

Less: Non-Rev/Bad Debt/Adjust 0.25% ($3,587)Net Rental Income $1,359,659

Plus: RUBS Income $52,000

Plus: Other Income $80,000

Total Operating Income (EGI) $1,491,659

Expenses Per Unit

Administrative $193 $11,000

Advertising & Promotion $246 $14,000

Payroll $1,500 $85,500

Repairs & Maintenance/Turnover $526 $30,000

Management Fee 3.00% $785 $44,750

Utilities $1,202 $68,500

Contracted Services $175 $10,000

Real Estate Taxes $421 $24,000

Insurance $219 $12,500

Replacement Reserve $200 $16,000

Total Expenses $316,250

Per Unit: $5,548

Per SF: $6.16

Net Operating Income $1,175,409

Less: Debt Service ($715,400)

Projected Net Cash Flow $460,009

Total Economic Loss 5.3%

Cash-on-Cash Return (Based on List Price) 5.86%

Cash-on-Cash Return (Based on High Strike) 6.67%

Cash-on-Cash Return (Based on Low Strike) 7.49%

Debt Service Coverage 1.64

Cap Rate Analysis Price $/Unit $/SF Cap Rate

Whisper Price $25,550,000 $448,246 $497.57 4.60%Middle Strike $24,240,000 $425,263 $472.05 4.85%Low Strike $23,050,000 $404,386 $448.88 5.10%

A = Affordable Units

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FINANCIAL ANALYSIS - STABILIZED

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INCOME ASSUMPTIONS

Scheduled Market Rent: Pro Forma Scheduled Market Rent is based on analysis of trends

in the Kirkland rental market. The rents received at comparable properties and data from

apartment research firm Dupre + Scott.

§ Juanita

o Assets 2010 and newer average $2.14 per square foot and $1,805 per month

o Market rents increased 16.60% over the past 24 months

§ Woodinville | Totem Lake

o Assets 2010 and newer average rents in Juanita $1.89 per square foot and $1,574 per month

o Market rents increased 16.50% over the past 24 months

Vacancy: Pro Forma Vacancy is underwritten at 5.00% of Gross Potential Rent, per

industry standard. The overall Vacancy for the Kirkland market is 2.7%, per data from

apartment research firm Dupre + Scott.

Concessions: Pro Forma Concessions are underwritten at 0.00% of GPR to reflect the operations

at the property post-stabilization. The vast majority of comparable properties in the Kirkland

market have not recently offered concessions nor are they currently offering concessions.

Non-Revenue / Bad Debt / Adjustments: Pro Forma Non-Revenue / Bad Debt / Adjustments

are underwritten at 0.25% of GPR.

RUBS Income: Pro Forma RUBS is underwritten at $912 per unit or $76 per month and this

number is based upon Berkadia research and data from Dupre + Scott. Utilities are billed

back only for the market rate apartments.

Other Income: Pro Forma Other Income is underwritten at $1,403 ($117 / month)

per unit. Notable items are likely to include parking revenue, month-to-month premiums

and turnover collections.

EXPENSE ASSUMPTIONS

Expenses: Pro Forma Expenses are based on Berkadia research and data from apartment

research firm Dupre + Scott.

Property Taxes: This model assumes a tax liability based on participation in the ARCH

affordable housing program. In this scenario, the tax liability is based solely the assessed

value of the land for 10 years. At the end of the 10 years the taxes will be reassessed and

will consider both the value of the land as well as improvements. In exchange for the tax

abatement, rents on 10% of the units (across all unit types) at the property are restricted to a

level that is deemed affordable for a renter or renters earning 80% of the median income in

the area (AMI). The affordable rents in this package are the projected 2018 amounts.

Replacement Reserves: The Pro Forma Replacement Reserve is underwritten at $200 to

reflect the vintage and quality of the property.

IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Berkadia® and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Berkadia® employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions.

© 2016 Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Berkadia® and Berkadia Commercial Mortgage® are trademarks of Berkadia Commercial Mortgage LLC. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. In California, Berkadia Real Estate Advisors Inc. conducts business under CA Real Estate Broker Lic. #01931050, Berkadia Commercial Mortgage LLC under CA Finance Lender & Broker Lic. #998-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx

All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

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NOTES TO PRO FORMA



COMPARABLE SALE PROPERTIES

THE CANOPY ABOVE THE LAKE 12410 NE Totem Lake WayKirkland, WA 98034 UNITS: 57AVG SF: 901

LIST PRICE:Unpriced Development

OpportunityCAP RATE: 4.60%

CAPRI 324 Central WayKirkland, WA 98033 BUILT: 2016UNITS: 73PRICE / UNIT: $550,685PRICE / SF: $729.72AVG SF: 755SOLD FOR: $40,200,000CLOSED ON: 8/16CAP RATE: 4.2%

WESTWATER 221 1st StreetKirkland, WA 98033 BUILT: 2001UNITS: 62PRICE / UNIT: $396,774PRICE / SF: $438.40AVG SF: 905SOLD FOR: $24,600,000CLOSED ON: 12/15CAP RATE: 5.2%

THE LUKE 8280 164th Avenue NERedmond, WA 98052 BUILT: 2015UNITS: 208PRICE / UNIT: $349,760PRICE / SF: $501.96AVG SF: 697SOLD FOR: $72,750,000CLOSED ON: 10/15CAP RATE: 4.6%

OLD TOWN LOFTS 16175 Cleveland StreetRedmond, WA 98052 BUILT: 2014UNITS: 149PRICE / UNIT: $353,671PRICE / SF: $456.89AVG SF: 774SOLD FOR: $52,697,000CLOSED ON: 10/15CAP RATE: 4.6%

SIX OAKS 18333 Bothell Way NEBothell, WA 98011 BUILT: 2014UNITS: 203PRICE / UNIT: $310,345PRICE / SF: $410.11AVG SF: 757SOLD FOR: $63,000,000CLOSED ON: 10/15CAP RATE: 4.8%

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COMPARABLE SALE PROPERTIES

PARK METRO 11101 NE 12th StreetBellevue, WA 98004 BUILT: 2013UNITS: 74PRICE / UNIT: $393,176PRICE / SF: $466.30AVG SF: 843SOLD FOR: $29,095,000CLOSED ON: 2/15CAP RATE: 4.7%

ELAN REDMOND 16325 Cleveland StreetRedmond, WA 98052 BUILT: 2013UNITS: 134PRICE / UNIT: $372,388PRICE / SF: $427.03AVG SF: 872SOLD FOR: $49,900,000CLOSED ON: 12/14CAP RATE: 4.4%

WATERSCAPE AT JUANITA VILLAGE 11801 97th Lane NEKirkland, WA 98034 BUILT: 2013UNITS: 196PRICE / UNIT: $383,673PRICE / SF: $417.39AVG SF: 919SOLD FOR: $75,200,000CLOSED ON: 9/14CAP RATE: 4.1%

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Subject: The Canopy Above the Lake

12411 NE Totem Lake Way

Kirkland, WA 98034

Waterscape at Juanita Village

11801 97th Lane NE

Kirkland, WA 98034

8.

Elan Redmond

16325 Cleveland Street

Redmond, WA 98052

7.

Park Metro

11101 NE 12th Street

Bellevue, WA 98004

6.

Six Oaks

18333 Bothell Way NE

Bothell, WA 98011

5.

Old Town Lofts

16175 Cleveland Street

Redmond, WA 98052

4.

The Luke

8280 164th Avenue NE

Redmond, WA 98052

3.

Westwater

221 1st Street

Kirkland, WA 98033

2.

Capri

324 Central Way

Kirkland, WA 98033

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COMPARABLE SALE PROPERTIES MAP

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COMPARABLE RENTAL PROPERTIES

$2.33Avg Rent / SF:

$2,098Avg Rent:

901Avg SF:

57Units:

The Canopy Above the Lake


Kirkland, WA 98034

– Subject

96.9%Occupancy:

$2.37Avg Rent / SF:

$2,182Avg Rent:

919Avg SF:

2013Built:

196Units:


11801 97th Lane NE

Kirkland, WA 98034

97.1%Occupancy:

$2.43Avg Rent / SF:

$1,772Avg Rent:

728Avg SF:

2012Built:

102Units:

Ondine at Juanita Bay


Kirkland, WA 98034

98.1%Occupancy:

$2.31Avg Rent / SF:

$1,747Avg Rent:

757Avg SF:

2013Built:

108Units:

Slater 116

12340 NE 115th Place

Kirkland, WA 98034

48%Occupancy:

$3.06Avg Rent / SF:

$2,307Avg Rent:

755Avg SF:

2016Built:

73Units:

Capri

324 Central Way

Kirkland, WA 98033

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COMPARABLE RENTAL PROPERTIES

97%Occupancy:

$2.88Avg Rent / SF:

$2,603Avg Rent:

905Avg SF:

2001Built:

62Units:

Westwater

221 1st Street

Kirkland, WA 98033

94%Occupancy:

$2.08Avg Rent / SF:

$1,998Avg Rent:

958Avg SF:

2002Built:

196Units:

Chelsea at Juanita Village

11718 97th Lane NE

Kirkland, WA 98033

$2.60Avg Rent / SF:

$2,148Avg Rent:

827Avg SF:

2015Built:

177Units:

Milehouse


Redmond, WA 98052

99.5%Occupancy:

$2.77Avg Rent / SF:

$1,933Avg Rent:

697Avg SF:

2015Built:

208Units:

The Luke


Redmond, WA 98052

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COMPARABLE RENTAL PROPERTIES - GRAPHSO

NE

BE

D$2,400

$2,100

$1,800

$1,500

$1,200

$900

$600

$300

$0

Ond

ine

at J

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ta B

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$1,

704

Slat

er 1

16 |

$1,

721

The

Luke

| $

1,78

2

Che

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uani

ta V

illag

e |

$1,7

83

The

Can

opy

Abo

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$2,

048

Mile

hous

e |

$2,0

58

Cap

ri |

$2,

088

Wat

ersc

ape

at J

uani

ta V

illag

e |

$2,1

09

Wes

twat

er |

$2,

322

TW

O B

ED

$3,200

$2,800

$2,400

$2,000

$1,600

$1,200

$800

$400

$0

Che

lsea

at J

uani

ta V

illag

e |

$2,3

74

Slat

er 1

16 |

$2,

412

Ond

ine

at J

uani

ta B

ay |

$2,

538

Mile

hous

e |

$2,6

06

The

Luke

| $

2,60

7

The

Can

opy

Abo

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$2,

620

Wat

ersc

ape

at J

uani

ta V

illag

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$2,7

00

Wes

twat

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$3,

064

Cap

ri |

$3,

150

Average$1,891

Average$2,623

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Subject: The Canopy Above the Lake


Kirkland, WA 98034

The Luke


Redmond, WA 98052

8.

Milehouse


Redmond, WA 98052

7.

Chelsea at Juanita Village

11718 97th Lane NE

Kirkland, WA 98033

6.

Westwater

221 1st Street

Kirkland, WA 98033

5.

Capri

324 Central Way

Kirkland, WA 98033

4.

Slater 116

12340 NE 115th Place

Kirkland, WA 98034

3.

Ondine at Juanita Bay


Kirkland, WA 98034

2.


11801 97th Lane NE

Kirkland, WA 98034

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KIRKLAND, WASHINGTONMarket Overview


Situated on the eastern shore of Lake Washington, the affluent city of Kirkland is an upscale community located 10 miles from

Seattle. Kirkland is the sixth-largest city in King County and part of the Seattle-Tacoma-Bellevue MSA, the most-populated

metro area in Washington. Kirkland offers its own thriving employment base while providing access to employment centers

in Seattle, Redmond, and Bellevue. With a median household income of $94,000, among the highest in the state, Kirkland

continues to attract new residents and prominent businesses. The city’s high quality of life and pro-business environment fuel a

strong demand for local housing.

Ranked No. 1 “Best Suburb

for Millennials in Seattle”

(NICHE, 2015)

Ranked No. 25 “Best

Places to Live in Country”

(LIVABILITY, 2016)

Ranked Among “50 Safest

Cities in Washington”

(BACKGROUNDCHECK, 2016)

Ranked No. 2 “Washington

Cities for Families”

(APARTMENT LIST, 2016)

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KIRKLAND, WASHINGTON

32


Totem Lake Urban Center

Kirkland Google Office

ECONOMIC QUICK-FACTS

The services sector accounts for more than half of all jobs held by Kirkland residents, followed by manufacturing

(11.7%), retail trade (10.8%), and finance / insurance / real estate (8.7%). Approximately 80% of employed city

residents work in white-collar positions.

The Puget Sound Regional Council forecasts that Metro Seattle will add more than 1.2 million new jobs by

2040, equating to an increase of 64% and bringing the regional jobs base to more than 3.1 million.

Retail powerhouse Costco, formerly headquartered in Kirkland for many years, was inspired by its home town to launch the

Kirkland Signature, private-label brand that has made Kirkland a household name for millions of consumers worldwide.

Google celebrated its 10-year anniversary in Kirkland after having opened its first office in 2004, and has rapidly

expanded, occupying much larger spaces. By year-end, Google will double the size of their Kirkland campus, creating

room to hire 1,000 more employees.

Key employment corridors in Kirkland include the downtown, Carillon Point, and Totem Lake areas. Top employers

include Google, Nintendo, PACCAR’s Kenworth Truck Company, Astronics, WB Games, Wave Broadband,

Griptonite Games, Inrix, Tableau, and Bluetooth Special Interest Group.

Kirkland is expecting a growth spurt to accommodate 8,361 new housing units and 22,435 new jobs by 2035, which

averages out to about 363 housing units per year and 975 jobs per year. In comparison, from 2006 to 2011 the city

gained about 1,500 housing units for the 6-year period or around 250 units per year.

The availability of local jobs per local household ratio is 1.63 in Kirkland, equating to more than half as many jobs

as households. The ratio is higher than King County (1.44) and notably higher than the combined ratio of the four

county region of King, Snohomish, Pierce, and Kitsap counties.

Totem Lake Urban Center is almost nine times the size of the downtown business district and may become the new

future of Kirkland with its proximity to Microsoft in Redmond and Woodinville wine country. Evergreen Medical Center

also has room to grow, possibly adding a new comprehensive cancer care center in its hospital complex.

Continental Properties is constructing two five-story mixed-used developments in downtown Kirkland. The project

on Third Street includes a 130-unit apartment building with 13,000 square feet of commercial space. Almost 8,000

square feet of commercial space and 76 units are being built on Central.

Evergreen Healthcare

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From 1990 to 2016, the population of Kirkland

increased 26.7%, growing from 41,624 residents to

an estimated 52,728 people.

The city’s population is projected to reach 55,704

people by 2021, equating to a 1.1% average annual

increase, outpacing the projected national rate of

0.8% annually over the same period.

The city of Kirkland’s unemployment rate was 4.1%

in March 2016, up 40 basis points year over year.

Even with the increase, local unemployment remained

below the five-year average of 4.4%.

Over the year ended in March 2016, the Seattle

metropolitan area noted employment growth of 3.1%,

equating to the addition of 57,500 nonfarm jobs.

According to Moody’s, Seattle metro headcounts will

grow 2.1% annually in 2016, followed by a 2.0%

gain in 2017. These increases would result in the net

addition of 78,600 jobs over the next two years.

Due to the proliferation of high-wage jobs in the

city of Kirkland, the median household income rose

from $38,748 in 1990 to an estimated $94,014 in

2016, equating to an increase of 142.6%.

The city’s median household income is projected to

reach $101,092 by 2021, up 7.5% from 2016.

More than 46% of Kirkland households earn

$100,000 or more annually, two times the

projected national household amount of 23%.

41,6

24

44,8

21

48,7

66

52,7

28

55,7

04

30,000

40,000

50,000

60,000

1990 2000 2010 2016* 2021**PROJECTED*PROJECTED*PROJECTED

$38

,748

$60

,399

$94

,014

$10

1,09

2

$0

$25,000

$50,000

$75,000

$100,000

$125,000

1990 2000 2016* 2021**PROJECTED*PROJECTED*PROJECTED*PROJECTED

ANNUAL UNEMPLOYMENT RATES

KIRKLAND, WA

POPULATION TREND

KIRKLAND, WA

MEDIAN HOUSEHOLD INCOME

CITY OF KIRKLAND

POPULATION UNEMPLOYMENT INCOME

41,6

24 44,8

21 48,7

66 52,7

28

55,7

04

30,000

40,000

50,000

60,000

1990 2000 2010 2016* 2021**PROJECTED*PROJECTED*PROJECTED

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Kirkland has become an attractive city for the

millennial cohort due to the available jobs in high-

tech industries and companies like Google, Amazon,

and Microsoft. With 15% of the city’s population

between the ages of 25 to 35, the population growth

contributing to improved vacancy rates.

The Kirkland / Juanita submarket’s average

apartment vacancy rate was 4.2% in March 2016,

down 50 basis points year over year.

Vacancy is projected to be between 4.3% and

4.6% through the end of 2016.

Lower vacancy rates are also supporting steady

rent growth. In March 2016, the average rent in

the Kirkland / Juanita submarket was $1,793 per

month, up 6.2% year over year.

The average rent is projected to finish the year at

$1,788 per month, up 4.7% from the close of 2015.

Average rent in this market has increased

40.3% since 2010.

4.9%

4.8%

5.2%

4.6%

4.6%

5.3%

4.5%

3.5%

4.0%

4.5%

5.0%

5.5%

2010 2011 2012 2013 2014 2015 2016**PROJECTED *PROJECTED *PROJECTED *PROJECTED *PROJECTED

$1,

275

$1,

307

$1,

388

$1,

554

$1,

675

$1,

707

$1,

788

$1,000

$1,200

$1,400

$1,600

$1,800

2010 2011 2012 2013 2014 2015 2016*

AVERAGE APARTMENT RENT

KIRKLAND / JUANITA SUBMARKET

AVERAGE APARTMENT VACANCY RATE

KIRKLAND / JUANITA SUBMARKET

VACANCY RENT

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A number of small businesses and industries, such as light industrial and

manufacturing, and a growing number of high-tech companies comprise

Kirkland’s economy. Other major industries include health care, financial

services, insurance, and real estate.

Local businesses in Kirkland benefit from the city’s convenient access to major

transportation routes, desirable office space, and a location in the midst of the

dynamic Eastside market.

Evergreen Healthcare, with more than 3,760 employees, is Kirkland’s largest

employer, operating the 275-bed Evergreen Hospital Medical Center in the city.

Evergreen Healthcare 3,762

Lake Washington School District 1,112

Google Inc. 774

City of Kirkland 580

Kenworth Truck Co. 410

Astronics Advanced Electronic Systems 388

Costco Wholesale 318

Isoftstone Inc. 272

Wave Broadband 268

ATG Stores 253

City of Kirkland CAFR, 2014

CITY OF KIRKLAND

LARGEST EMPLOYERS

As indicated by the exceptionally high income in Kirkland, city residents

are also highly educated, with 58.0% of those ages 25 and older having

bachelor’s degrees or higher, compared to 28.1% nationally.

Kirkland residents are served by the Lake Washington School District,

which enrolled 27,830 students in the fall of 2015. The district includes 31

elementary schools, 13 junior high schools, and nine high schools. According

to the district, student standardized test scores are generally 15% to 20%

higher than statewide averages.

Kirkland is a higher education hub with more than 15 colleges and universities

within 15 miles of the city. Located in Kirkland, Lake Washington Institute of

Technology is a vocational school with over 4,800 students, as is Northwest

University, a private institution with an enrollment of 1,862 students.

EDUCATION

ECONOMY / EMPLOYMENT

Lake Washington Institute of Technology

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Seattle-based Talon Private Capital and

Prudential announced the mega mixed-use

project planned for downtown Kirkland.

Heralded as the largest project the city will

see in a century, the 11-acre redevelopment

project will include 225,000 square feet

of retail / entertainment space, 300,000

square feet of apartment homes, and

650,000 square feet of Class A office

space. Plans include a movie theater, 325

hotel rooms, and a QFC grocery store.

Kirkland Urban will support over 5,000 jobs

at build-out. Development of the project will

occur in three to four phases over the next

seven to eight years with phase one slated

to complete by year-end 2018.

KIRKLAND URBAN

Google completed construction on an

180,000-square-foot expansion on

the existing Google Kirkland campus

in the first quarter 2016. The Kirkland

campus already is Google’s third-largest

engineering center in the country while

the company generates a $3.5 billion

impact on the region. The Kirkland

campus expansion doubled its size and

will accommodate about 1,000 additional

employees. The entire Google Kirkland

campus is now 375,000 square feet.

GOOGLE KIRKLAND CAMPUS

In April 2015, CenterCal Properties

purchased the two-story enclosed mall for

$35.5 million with plans to redevelop it. The

$200 million project includes: demolition

and construction of buildings, addition

of new parking structures, a redesigned

public plaza, and a new lower mall east

/ west connection. The redevelopment will

be done in phases over several years and

upon completion will include up to one

million square feet. The city will invest up

to $15 million in public improvements.

The 26-acre mall site is located within the

860-acre Totem Lake Urban Center and

the Totem Lake Business District which also

have revitalization plans.

TOTEM LAKE MALL

DEVELOPMENT / CONSTRUCTION

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Kirkland is located on the eastern shore of Lake Washington, just north of Bellevue and west of Redmond.

Access from the north or south is available from Interstate 405. State Route 908 connects Kirkland with

Redmond to the east, while state Route 520 travels west across Lake Washington to Seattle. Kirkland is only

10 miles east of downtown Seattle and 20 minutes northeast of Sea-Tac International Airport.

King County is served by King County Metro Transit, a county-wide bus network, and by Sound Transit, a

three-county multimodal transit network serving the urban areas of King, Pierce, and Snohomish counties.

King County Metro Transit serves more than 2 million residents with 214 buses, trollies, and dial-a-ride

transit routes over 2,000 square miles.

In late 2009, the Port of Seattle purchased a 42-mile rail corridor linking Renton and Snohomish from BNSF

Railway. Sound Transit is considering purchasing rights to use parts of the old line to use for the Eastside rail

extension. In April of 2012, the city of Kirkland finalized on the purchase of 5.75 miles of the rail corridor

running between the two Google campuses and along 1,700 other businesses. In August of 2015, the

city’s Transportation Commission began work on a master plan for the Cross Kirkland Corridor, which

runs through three of the city’s key business districts. Development could include recreational uses, such

as a bike / pedestrian trail, as well as being part of the planned light-rail extension.

TRANSPORTATION

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TOTAL POPULATION

TOTAL HOUSEHOLDS

MEDIAN INCOME

AVERAGE INCOME

2010 44,821

2016* 52,728

2021* 55,704

Growth Rate (2016 – 2021) 5.6%

2010 22,409

2016* 24,198

2021* 25,542

Growth Rate (2016 – 2021) 6.5%

2010 $80,317

2016* $94,014

2021* $101,092

Growth Rate (2016 – 2021) 7.5%

2010 $99,367

2016* $123,032

2021* $131,834

Growth Rate (2016 – 2021) 7.2%

MEDIAN AGE

MEDIAN HOME PRICE

RENT VS. OWN

2010 37.4

2016* 39.6

2021* 41.4

March – 2015 $473,800

March – 2016 $539,900

Growth Rate Y-o-Y 14.0%

Average Mortgage Payment* $2,887

Average Rent $1,761

Difference $1,094

* 30-yr fixed; 20% down; 4.15% interest rate; 1.75% property taxes

Sources: Berkadia; ESRI Business Information Solutions;

U.S. Census Bureau; U.S. Bureau of Labor Statistics; Apartment

List; Livability; Fortune / Money.CNN.com; BackgroundCheck;

Forbes; Moody’s; Wikipedia; Axiometrics; City of Kirkland; King

County; Kirkland Chamber of Commerce; Puget Sound Regional

Council; Bureau of Labor Statistics; City of Kirkland; Economic

Development Council of Seattle & King County; DataQuick; Puget

Sound Business Journal; The Seattle Times; Evergreen Health;

Kirkland Urban; Lake Washington School District; Kirkland Patch;

Kirkland Reporter; Kirkland Views; Seattle King County Realtors;

CenterCal Properties; DLR Group; Zillow.com.

DEMOGRAPHICS

* Projected

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DAVID SORENSEN

Associate Director

206.801.3102

[email protected]

BEN JOHNSON

Associate Director

206.801.3144

[email protected]

KENNY DUDUNAKIS


206.521.7216

[email protected]

DISCLAIMER & CONFIDENTIALITY AGREEMENT

The material contained in this document is confidential, furnished solely for the purpose of considering investment in the property described therein and is

not to be copied and/or used for any purpose or made available to any other person without the express written consent of Berkadia Real Estate Advisors.

In accepting this, the recipient agrees to keep all material contained herein confidential.

This information package has been prepared to provide summary information to prospective purchasers and to establish a preliminary level of interest in

the property described herein. It does not, however, purport to present all material information regarding the subject property, and it is not a substitute for

a thorough due diligence investigation. In particular, Berkadia Real Estate Advisors and seller have not made any investigation of the actual property, the

tenants, the operating history, financial reports, leases, square footage, age or any other aspect of the property, including but not limited to any potential

environmental problems that may exist and make no warranty or representation whatsoever concerning these issues. The information contained in this

information package has been obtained from sources we believe to be reliable; however, Berkadia Real Estate Advisors and Seller have not conducted any

investigation regarding these matters and make no warranty or representation whatsoever regarding the accuracy or completeness of the information

provided. Any pro formas, projections, opinions, assumptions or estimates used are for example only and do not necessarily represent the current or future

performance of the property.

Berkadia Real Estate Advisors and Seller strongly recommend that prospective purchasers conduct an in-depth investigation of every physical and financial

aspect of the property to determine if the property meets their needs and expectations. We also recommend that prospective purchasers consult with their

tax, financial and legal advisors on any matter that may affect their decision to purchase the property and the subsequent consequences of ownership.

All parties are advised that in any property the presence of certain kinds of molds, funguses, or other organisms may adversely affect the property and the

health of some individuals. Berkadia Real Estate Advisors recommends, if prospective buyers have questions or concerns regarding this issue, that

prospective buyers conduct further inspections by a qualified professional.

The Seller retains the right to withdraw, modify or cancel this offer to sell at any time and without any notice or obligation. Any sale is subject to the sole

and unrestricted approval of Seller, and Seller shall be under no obligation to any party until such time as Seller and any other necessary parties have

executed a contract of sale containing terms and conditions acceptable to Seller and such obligations of Seller shall only be those in such contract of sale.

For more information on these and other Berkadia Real Estate Advisors exclusive listings, please call or visit our website at www.BerkadiaREA.com

Berkadia Real Estate Advisors is the nation's largest real estate firm focused exclusively on the sale of multifamily properties. All information contained herein is from sources deemed to be reliable; however, it is not

guaranteed. Printed in the USA. All rights reserved.

Copyright 2016 © by Berkadia Real Estate Advisors, Inc.


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