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L_25_Ren_Morris_Appraisal_Report_25.0825.pdf
1.800.801.3224 www.aeiconsultants.com Appraisal Report REPORT DATE: July 24, 2024 PROPERTY INFORMATION SINGEL TENANT OFFICE BUILDING 211 Morris Ave S, Renton King County, WA, 98057 PROJECT INFORMATION AEI Project No. 495859 Date of Value: July 19, 2024 PREPARED FOR: Letty Francewar In Spirit and In Truth Ministries 2152 S 286th St Federal Way, WA, 98003 PREPARED BY: AEI Valuation 701 Campus Square W, Suite 723A El Segundo, CA 90245 July 24, 2024 Letty Francewar In Spirit and In Truth Ministries 2152 S 286th St Federal Way, WA 98003 Re: Real Estate Appraisal Singel Tenant Office Building 211 Morris Ave S, Renton, King County, WA, 98057 AEI Project No.: 495859 Dear Ms. Francewar: At your request, we have prepared an appraisal for the above referenced property, briefly described as follows: The subject property is improved with a single tenant general office building. The building was originally constructed in 1965 as per public records, and renovated in 1990 as per the property management company. The listing broker indicated the interior was rehabilitated in 2007. The subject includes 4,666 square feet of gross building area and is located on a 12,284 square foot lot. The subject includes 11 on-site parking spaces and there is currently a vehicle access and parking agreement in place with the City of Seattle Public Utilities - Water, that grants the owner access to an additional 13 parking spaces on the contiguous parcel to the south. These parking spaces were not included in the market value included in this appraisal report. Important information on the scope of work is here. We certify that we have no present or contemplated future interest in the property beyond this estimate of value. The appraisers have not performed any prior services regarding the subject within the previous three years of the appraisal date. Your attention is directed to the Limiting Conditions and Assumptions here. Acceptance of this report constitutes an agreement with these conditions and assumptions. The following hypothetical conditions and extraordinary assumptions are noted. Hypothetical Conditions There are no hypothetical conditions for this appraisal. Extraordinary Assumptions There are no Extraordinary Assumptions for this appraisal. As discussed in this appraisal report, subject to the Limiting Conditions and Assumptions, Extraordinary Assumptions and Hypothetical Conditions (if any), the following value conclusion(s) are made: Premise Interest Appraised Effective Date Value Conclusion Current As Is Market Value Fee Simple 7/19/2024 $1,360,000 Value Conclusions Respectfully submitted, AEI Valuation Richard West, MAI Head of Valuation (310) 798-4255 rwest@aeiconsultants.com Certified General WA - 1102027 Expires 9/21/2024 1.800.801.3224 www.aeiconsultants.com TABLE OF CONTENTS Introduction ........................................................................................ 1 Summary of Important Facts and Conclusions .............................................. 3 Scope of Work ...................................................................................... 7 Market Analysis .................................................................................... 9 Conclusion ........................................................................................................... 13 Area & Neighborhood Analysis ................................................................ 14 Conclusion ........................................................................................................... 17 Subject Property Description ................................................................. 18 Site .................................................................................................................... 18 Improvements ....................................................................................................... 23 Subject Photographs ............................................................................................... 26 Zoning ................................................................................................................ 27 Conclusion ........................................................................................................... 29 Assessment and Taxes .......................................................................... 31 Highest and Best Use ........................................................................... 33 Sales Comparison Approach ................................................................... 35 Improved Sales ...................................................................................................... 35 Analysis Grid ......................................................................................................... 37 Sales Comparison Approach Conclusion ......................................................................... 40 Income Approach ................................................................................ 41 Rent Roll ............................................................................................................. 42 Market Rent/Comparables......................................................................................... 43 Net Operating Income .............................................................................................. 51 Capitalization Rate ................................................................................................. 52 Direct Capitalization Analysis Conclusion ....................................................................... 54 Reconciliation .................................................................................... 55 Certification ...................................................................................... 57 Addenda ........................................................................................... 59 Legal Description ................................................................................................... 60 Subject Photos (Additional) ....................................................................................... 61 Area Description Appendix ........................................................................................ 82 Demographics ........................................................................................................ 85 Improved Sale Data Sheets ........................................................................................ 91 Rent Comparable Data Sheets .................................................................................... 97 Supporting Documents ............................................................................................ 102 CoStar Market Analysis ............................................................................................ 103 Scope, Methodology & Definitions .............................................................................. 104 Limiting Conditions & Assumptions ............................................................................. 112 Letter of Engagement ............................................................................................. 113 Qualifications/License ............................................................................................ 114 211 Morris Ave July 24, 2024 Page 1 Introduction Subject. The subject property is improved with a single tenant general office building. The building was originally constructed in 1965 as per public records, and renovated in 1990 as per the property management company. The listing broker indicated the interior was rehabilitated in 2007. The subject includes 4,666 square feet of gross building area and is located on a 12,284 square foot lot. The subject includes 11 on-site parking spaces and there is currently a vehicle access and parking agreement in place with the City of Seattle Public Utilities - Water, that grants the owner access to an additional 13 parking spaces on the contiguous parcel to the south. These parking spaces were not included in the market value included in this appraisal report. Market. The Renton/Tukwila Office Submarket has underperformed compared to the greater Seattle metropolitan area. As of the third quarter of 2024, the submarket's vacancy sits at 23.6%. That compares to 23.2% one year ago. The rate has been elevated since 2021 when Boeing vacated its Longacres campus, which it sold later that year. Absorption over the past 12 months was 34,000 SF. That compares to an average annual absorption of -84,000 SF over the past five years. In 24Q1, Southcenter Place saw several move-ins, adding up to about 78,000 SF of absorption there. Meanwhile, Boeing downsized its presence in the submarket that quarter by about 53,000 SF. The company has been shedding office space lately, even as it expands its industrial footprint in south King County. Asking rents average $33.00/SF gross, compared to $37.00/SF for the overall Seattle metro. Annual rent growth over the past year was flat. It was negative for 4 & 5 Star properties, with more than a quarter of the inventory in that tier built in 2019 or later. Additional supply-side pressure will not be an issue in the short term, as no major office projects are underway in the submarket. Cumulative deliveries over the past five years came to 190,000 SF. That represents about a 10th of the overall office inventory in the submarket. About $103 million in deals have been recorded over the past 12 months. That compares to the submarket's five-year average of $86.2 million and a high of $150 million over that stretch. Neighborhood. The subject property is located in the downtown area of Renton, Washington which is an inner-ring suburb of Seattle. Downtown Renton is located south of Lake Washington and is approximately 11 miles south of Bellevue and 15 miles south of Seattle. The subject's neighborhood is bound by Airport Road to the north, Interstate 405 to the east, South 7th Street to the south, and Rainer Blvd to the west. The area is dominated by single and multi-family residences and supporting retail, office and service uses. The subject is approximately 1 block south of Renton IKEA Performing Arts Center and 1 block north of Renton Civic Center. The nearest hospital is ICHS Medical Center, which is just over 1 mile southwest of the subject. 211 Morris Ave July 24, 2024 Page 2 Recent Subject Sale. The subject property has not sold or transferred within the last 3 years as per public records. The subject is currently under contract for a purchase price of $1,325,000. As per the listing broker, Kyle Sterling with NAI Puget Sound Properties, the property was on the market for approximately 3 weeks at a list price of $1,400,000 and had two (2) other offers around the pending sale price. 211 Morris Ave July 24, 2024 Page 3 Summary of Important Facts and Conclusions Property Name N1DBProperty_NameSingel Tenant Office Building Property Major Type N1DBProperty_Major_TypeOffice Address N1DBAddress211 Morris Ave S City N1DBCityRenton County N1DBCountyKing State N1DBStateWA Zip N1DBZip98057 Tax ID N1DBTax_ID784180-0065 Legal Description N1DBLegal_Description SMITHERS 6TH ADD TO RENTON ALL LOTS 4 & 5 TGW POR OF VAC ALLEY ADJ TGW 18 FT R/W ADJ TO S LN Owner N1DBOwnerCOOLEY D B J LLC Land SF N1DBLand_SF12,284 Acres N1DBAcres0.28 Topography N1DBTopographyLevel Zoning N1DBZoningSRA_CC;UDD_A;BISDIST;CD GBA N1DBGBA4,666 Rentable Area N1DBRentable_Area4,666 Quality N1DBQualityAverage Condition N1DBConditionAverage No. of Buildings N1DBNo._of_Buildings1 No. of Stories N1DBNo._of_Stories1 No. of Units N1DBNo._of_Units1 Year Built N1DBYear_Built1965 Renovations N1DBRenovations1990 per property manager, 2007 per listing broker Site Characteristics Property Identification Improvement Characteristics Subject Summary 211 Morris Ave July 24, 2024 Page 4 Report Date 7/24/2024 Inspection Date 7/19/2024 As Is Date of Value 7/19/2024 Report Dates Intended Use Intended Users Intended Use and Users Equity/acquisition In Spirit and In Truth Ministries Taxing Authority King County Assessor Tax Year(s)2024 Total Tax Rate 1.0504140% Assessment Year(s)2024 Frequency of Assessment Annual Reassessment triggered by sale?Yes Assessment Comments Properties in Kings County are reassessed every year and reinspected every 6 years. Tax Summary Tax ID Land Improvements Other Total Assessment Tax Rate Base Taxes Special Assessments Taxes 784180-0065 $522,000 $761,200 $0 $1,283,200 1.0504140%$11,763 $554 $12,316 Totals $522,000 $761,200 $0 $1,283,200 $11,763 $554 $12,316 Real Estate Assessment and Taxes Transaction Type Closed Sale Legal Description SMITHERS 6TH ADD TO RENTON ALL LOTS 4 &5 TGW POR OF VAC ALLEY ADJ TGW 18 FT R/W ADJ TO S LN Comments The subject property has not sold or transferred within the last 3 years as per public records. The subject is currently under contract for a purchase price of $1,325,000. As per the listing broker, Kyle Sterling with NAI Puget Sound Properties, the property was on the market for approximately 3 weeks at a list price of $1,400,000. Subject Sale History Highest and Best Use as Vacant Maximum Density Commercial Project Highest and Best Use as Improved Existing Office Building Highest and Best Use 211 Morris Ave July 24, 2024 Page 5 No. of Commercial Tenants N/A (Owner-occupied) Tenancy Type Single-Tenant Leased SF 4,666 Occupancy 100.0% Tenancy Summary As Is Market Value Current 07/19/2024 Interest Appraised Fee Simple Estimated Exposure Time 6 months Estimated Marketing Time 6 months Cost Approach Cost Approach Value Not Developed Sales Comparison Approach No. of Improved Sales 5 Sales Approach Value $1,360,000 Income Capitalization Approach No. of Lease Comparables 5 Pro Forma Operating Data Potential Gross Income $108,368 Effective Gross Income $102,949 Operating Expenses $23,407 Net Operating Income $79,542 Capitalization Rate Applied 6.25% Direct Capitalization Value $1,190,000 Income Capitaliztion App. Value $1,190,000 Market Value Conclusion $1,360,000 As Is Value Indications 211 Morris Ave July 24, 2024 Page 6 Value Premise As Is Date of Value 7/19/2024 Value Type Market Value Value Perspective Current Interest Appraised Fee Simple Cost Approach Not Developed Sales Comparision Approach $1,360,000 Direct Capitalization Analysis $1,190,000 Income Approach $1,190,000 Value Conclusion:$1,360,000 Summary of Values Strengths, Weaknesses, Opportunities and Threats Occupancy The subject is 100% owner-occupied. Location The site is located in a mature, infill neighborhood with limited threat of new completion. Demand The subject is a smaller size single tenant office building. The most typical buyer is an owner-user. As per the listing broker, the subject was on the market for 3 weeks and had two (2) other offers around the pending purchase price. Supply The market is in balance with 76.4% occupancy and limited threat of new construction as the neighborhood is nearly 100% developed. Strengths / Opportunities Economy The valuation of numerous commercial real estate properties has been adversely affected due to decreased occupancy rates and shifts in people's work and shopping patterns. Interest Rates The volatility and rising interest rates have already had, and are predicted to continue having, a negative impact on real estate values. Weaknesses / Threats 211 Morris Ave July 24, 2024 Page 7 Scope of Work Background on Scope of Work is here. Scope Summary - Definition of the Problem Problem To estimate the current "As Is" market value for internal decision purposes Intended Use Equity/acquisition Intended User(s) In Spirit and In Truth Ministries Appraisal Report Based on the intended users understanding of the subject's physical, economic and legal characteristics, and the intended use of this appraisal, an appraisal report format was used. The appraisal report has been prepared in conformance with guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, Title XI of the Financial Institution Reform, Recovery and Enforcement Act (FIRREA) of 1989, and the Interagency Appraisal and Evaluation Guidelines (December 2, 2010). Scope of Work Property Identification The subject has been identified by reviewing provided and public information including a legal description, assessor plat map(s), aerial photographs, and a site inspection. Is this a 'Land Only' appraisal? No Inspection An inspection of the subject property has been made, and photographs taken. Zoning A limited review of zoning and applicable land use controls has been made. An AEI Zoning Report is available separately from this Appraisal report. Market Analysis An analysis of market conditions has been made. The appraiser maintains and has access to comprehensive databases for this market area (AEI Files, CoStar, PwC, and other sources) and has reviewed the market for sales and listings relevant to this analysis. Highest and Best Use Analysis An as vacant and as improved highest and best use analysis for the subject has been made. Physically possible, legally permissible and financially feasible uses were considered, and the maximally productive use was concluded. Information Sources The following description is based on our property inspection, assessment records, property deeds, marketing brochure, and information provided by property contact. Information Not Available A recent preliminary title report was not available. Three years of operating data was not available. 211 Morris Ave July 24, 2024 Page 8 Category Sources Market Data AEI Files, CoStar, PwC, News Sources Subject Ownership & Transaction History Public Records, Interview with the property contact. Subject Assessment & Tax Data King County Assessor Subject Site Data Public Records, Inspection Subject Zoning Data City - Renton, WA Subject Improved Data Public Records, PCA Report, Inspection Sale Comparables CoStar as a lead, AEI Research, all sales confirmed by AEI unless otherwise noted. Lease Comparables CoStar/Loopnet as a lead, AEI Research, all rents confirmed by AEI Database unless otherwise noted. Subject Construction Estimates Not required for this assignment Subject Data Inspection Data Sources Background on Methodology is discussed here. Cost Approach Sales Comparison Approach x Income Approach x Utilized Approaches to Value The age of the improvements makes the depreciation difficult to accurately measure and investors put no material weight on this approach for similar properties. There is adequate data to develop a value estimate and investors use this approach as a primary methodology to estimate value for similar properties to the subject. While the subject could generate an income stream, the most probable buyer is an owner-occupant. Hypothetical Conditions There are no hypothetical conditions for this appraisal. Extraordinary Assumptions There are no Extraordinary Assumptions for this appraisal. 211 Morris Ave July 24, 2024 Page 9 Market Analysis The subject is in the Seattle market. A detailed CoStar market report is here. Market Boundary Map Map Source: CoStar The Seattle office market is in the middle of its most pronounced downturn in more than 40 years. While leasing activity improved in the first quarter, absorption remained negative. Tenants have vacated more than 10 million SF since March 2020, about double the impact compared to the proportion of inventory vacated during the dot com bust. With some significant move-outs still anticipated, the near-term outlook for office properties is for additional negative absorption over the coming year. 211 Morris Ave July 24, 2024 Page 10 Exposure to tech companies with large leases expiring makes Seattle more vulnerable than most U.S. office markets. As companies focus on efficient usage and right-size their headcounts, reduced space requirements are the norm. Leasing is also down by about a third from 2019 levels, and leases are smaller. As a result, Seattle's vacancy is rising faster than the national benchmark. With slower leasing and elevated availability, Seattle remains a tenant's market. As such, rent growth has been among the slowest in the nation. As of the end of last quarter, annual rent growth was -1.5%. Over the past four years, Seattle has ranked lower than any market outside the Bay Area for office rent growth. According to market participants, some tenants negotiate steep discounts from pre- pandemic pricing on starting rents and can also receive significant concessions. Tenant improvement allowances as high as $150/SF have been reported, and many are negotiating several months of free rent. On the positive side for building owners, pressure from new supply should be minimal after the current supply wave dissipates. Seattle's construction starts were also at their lowest level on record last year. Less than 400,000 SF of office projects broke ground in 2023, and no major projects have broken ground in 2024. There have been pockets of leasing activity of late, which helps soften the blow of the recent office downturn. Market participants also indicate an uptick in leasing tours over the past several months. However, with office utilization figures still well below 2019 levels, companies will continue to scrutinize their needs closely. As such, the metro's office occupancy will likely continue to fall. 211 Morris Ave July 24, 2024 Page 11 Submarket Overview The subject property is in the Renton-Tukwila Submarket. Submarket Boundary Map Map Source: Bing Maps and Moody’s Analytics Submarket Boundaries Supply and demand indicators, inventory levels, absorption, vacancy, and rental rates for all class cuts are presented in the following table. 211 Morris Ave July 24, 2024 Page 12 Market Overview 2024 Q2 Key Indicators Seattle Renton-Tukwila % of Total/Diff.Forecast Inventory (SF)235,785,053 11,220,489 5% Vacancy 15.0%23.5%-8.5% Vacancy projected to decrease and stabalize in 2025 Rent (PSFY)$36.96 $33.08 $3.88 Projected to be stable Absorption (SF)(2,332,585)47,885 Minimal projected % of Market -1.0%0.4% Under Construction 8,268,492 -None projected Trends Vacancy Change (YOY)2.7%-0.4%lower than average Rent Growth - 1 Year -1.5%-0.7%Projected to decrease Sales Volume - 1 Year ($M)$713 $104 Decrease projected Sales Volume - Change -16.7%-14.3% Capitalization Rates 7.2%7.3%Decrease projected Source: AEI Valuation, CoStar The trailing 12-month sales volume for office properties in Seattle is about $600 million as of May 2024. That is a more than 90% drop from the peak of $6.4 billion in 2021 and the inflation-adjusted average of about $5.5 billion in the 2010s. It is also close to the low in 2009, as office sales bottomed out following the 2007-2009 Great Recession. Sales have decelerated across the metro, especially in core areas such as the Seattle CBD and Lake Union submarkets. Suburban submarkets such as Suburban Bellevue, North Snohomish County, and the Tacoma CBD have seen relatively steadier deal flow. Large institutional players have historically taken up a large share of the buyer pool in the metro, accounting for about 37% of deals between 2012 and the start of 2022. In contrast, the segment accounts for less than 15% of the sales over the past year. Meanwhile, Private investors and owner-users comprise the remainder of the buyer pool. Given rising vacancy rates and falling rents, institutional owners have exercised caution over the past few quarters. The large trades they typically participate in have been absent from the market. Those making deals have been finding creative solutions such as debt acquisition or loan assumptions. An example is Palisade Group and Sabal Investment Holdings' joint acquisition of 1000 and 1100 Dexter Avenue in South Lake Union. The properties total about 222,000 SF, and the purchase price was $47.5 million ($213/SF). An assumable low interest-rate loan helped facilitate the purchase. Market players suggest that large players ready to deploy capital for the right opportunities are already looking to the Seattle market, and a few have found opportunities through creative acquisition strategies. As capital markets stabilize, it seems likely that this trend will begin to accelerate, and the market will see more institutional capital deployed. 211 Morris Ave July 24, 2024 Page 13 Conclusion The Renton/Tukwila Office Submarket has underperformed compared to the greater Seattle metropolitan area. As of the third quarter of 2024, the submarket's vacancy sits at 23.6%. That compares to 23.2% one year ago. The rate has been elevated since 2021 when Boeing vacated its Longacres campus, which it sold later that year. Absorption over the past 12 months was 34,000 SF. That compares to an average annual absorption of -84,000 SF over the past five years. In 24Q1, Southcenter Place saw several move-ins, adding up to about 78,000 SF of absorption there. Meanwhile, Boeing downsized its presence in the submarket that quarter by about 53,000 SF. The company has been shedding office space lately, even as it expands its industrial footprint in south King County. Asking rents average $33.00/SF gross, compared to $37.00/SF for the overall Seattle metro. Annual rent growth over the past year was flat. It was negative for 4 & 5 Star properties, with more than a quarter of the inventory in that tier built in 2019 or later. Additional supply-side pressure will not be an issue in the short term, as no major office projects are underway in the submarket. Cumulative deliveries over the past five years came to 190,000 SF. That represents about a 10th of the overall office inventory in the submarket. About $103 million in deals have been recorded over the past 12 months. That compares to the submarket's five-year average of $86.2 million and a high of $150 million over that stretch. 211 Morris Ave July 24, 2024 Page 14 Area & Neighborhood Analysis A summary description of Renton is here. Location Map 211 Morris Ave July 24, 2024 Page 15 Neighborhood Map Map Source: Google Maps Neighborhood: Location: Neighborhood Boundaries North: South: East: West: South Renton Airport Way Interstate 405 Rainer Avenue South South 7th Street Area Description & Boundaries Suburban 211 Morris Ave July 24, 2024 Page 16 Market Area and Property Characteristics Up Dn Location X Urban Suburban Rural Population Trend X Built Up X Fully Developed Over 75%25% to 75%Under 25%Employment Trend X Development Pace Rapid Steady X Slow Personal Income Level X Property Values Increasing Stable X Declining Retail Sales X Demand/Supply Shortage X In Balance Over Supply New Construction X Vacancy Trend Increasing X Stable Declining Vacancy Trend X Change in Economic Base Likely X Unlikely Taking Place Rental Demand X Is subject in Opportunity Zone? Stbl Area & Property Use Characteristics N Access and Transit Primary Access to Area Public Transportation Provider Main Source of Transportation Description Distance from Subject Nearest On-Ramp Nearest Bus Stop Nearest Subway Station Nearest Train Station Nearest Airport Discussion Access, Linkages and Transit 2.60 0.20 0.60 (Miles) (Miles) Neighborhood access is excellent with numerous amenties within a short distance. To the north east To the south None None To the north (Miles) (Miles) (Miles) Interstate 405 to Houser Way North to Third Street. Renton Transit Center Automobile Housing and Income Median Home Value Median Household Income Source: $479,307 $87,580 Median Home Value and Household income Summary www.easidemographics.com Major Employers 1. 2. 3. 4. 5. Source: Major Employers City of Renton Taco Time Northwest McGee Air Services Providence Health & Services Zippa ATS Automation 211 Morris Ave July 24, 2024 Page 17 Land Use Trends Land Use Trends The neighborhood is dominated by single and multi-family residences, retail and office space. There are some industrial use buildings and parks throughout the neighborhood. There is limited vacant land. Cedar River runs along the northeast section of the neighborhood. Adjacent Property Use Adjacent property uses include a residential building directly to the north, futher north is a high school and a municipal airport. To the east there is mixed use retail and multi-family properties. To the south is a special use parking lot, an industrial use property and retail. Immediately southwest is a religous facilty and parking lot. Adjacent Property Use Market Comparison Arterial (Highway) Access Public Transit Governmental Services New Construction Gentrification Amenities Market Sentiment Employment Trends Demand Generation Average Average Average Average Below Average Average Market Area Comparison Average Average Average Conclusion The subject property is located in the downtown area of Renton, Washington which is an inner-ring suburb of Seattle. Downtown Renton is located south of Lake Washington and is approximately 11 miles south of Bellevue and 15 miles south of Seattle. The subject's neighborhood is bound by Airport Road to the north, Interstate 405 to the east, South 7th Street to the south, and Rainer Blvd to the west. The area is dominated by single and multi-family residences and supporting retail, office and service uses. The subject is approximately 1 block south of Renton IKEA Performing Arts Center and 1 block north of Renton Civic Center. The nearest hospital is ICHS Medical Center, which is just over 1 mile southwest of the subject. 211 Morris Ave July 24, 2024 Page 18 Subject Property Description The subject property is improved with a single tenant general office building. The building was originally constructed in 1965 as per public records, and renovated in 1990 as per the property management company. The listing broker indicated the interior was rehabilitated in 2007. The subject includes 4,666 square feet of gross building area and is located on a 12,284 square foot lot. The subject includes 11 on- site parking spaces and there is currently a vehicle access and parking agreement in place with the City of Seattle Public Utilities - Water, that grants the owner access to an additional 13 parking spaces on the contiguous parcel to the south. These parking spaces were not included in the market value included in this appraisal report. Additional exhibits are located here. Site Parcel ID 784180-0065 Land Use Office Bldg (General) Current Use Office Bldg (General) Highest and Best Use Site as Vacant Office Bldg (General) Highest and Best Use Comments Site as Vacant The subject site is located in downtown Renton and is best suited for an office or related use. Highest and Best Use Site as Improved Office Bldg (General) Highest and Best Use Comments Site as Improved The subject is improved with a one-story office building. It is very well suited to it's current use as an office building. Traffic Count (Primary Frontage)Not Available Legal Description SMITHERS 6TH ADD TO RENTON ALL LOTS 4 & 5 TGW POR OF VAC ALLEY ADJ TGW 18 FT R/W ADJ TO S LN Map Latitude 47.480737 Map Longitude -122.211136 Site Summary Gross Land Area (Sq Ft)12,284 Gross Land Area (Acres)0.28 Usable Land Area (Sq Ft)12,284 Usable Land Area (Acres)0.28 Site Size Attributes Land Category Acres Square Feet Usable Land 0.2820 12,284 Unusable Land 0.0000 0 Excess Land 0.0000 0 Surplus Land 0.0000 0 Easement 0.0000 0 Total Site Area 0.2820 12,284 Site Area 211 Morris Ave July 24, 2024 Page 19 Site Area Methodology The subject site appears to have 100% utility. For land area, we relied on public records. Corner Lot Is Not Primary Frontage Street Name Morris Avenue Frontage - Primary Street (Feet)125 View Average Access Average Site Visibility Average Street Lighting Yes Sidewalks Yes Curb and Gutter Yes Drainage Yes Landscaping Minimal landscaping Topography Level Shape The site is irregularly shaped Soil Conditions The soil conditions observed at the subject appear to be typical of the region and adequate to support development. Site Characteristics FEMA Map #53033C0977G FEMA Map Date 8/19/2020 Flood Zone X In Flood Plain is not Flood Zone Comments The subject is outside the 500 year flood plain. The appraiser is not an expert in this matter and is reporting data from FEMA maps. Site in Earthquake Zone The subject is not in an earthquake zone. Earthquake Hazard Risk Very High Earthquake Zone Comments Seismic Zone 3: an area with a moderate to high probability of damaging ground motion. Encumbrance / Easement Description There no known adverse encumbrances or easements. Please reference Limiting Conditions and Assumptions. Environmental Issues No environmental concerns were noted in the Phase I Environmental Site Assessment completed by AEI Consultants. Please reference Limiting Conditions and Assumptions. Wetlands Type Not in Hazard Wetlands and Watershed Comments No wetlands were observed during our site inspection. Site Hazards 211 Morris Ave July 24, 2024 Page 20 Flood Map Source: Bing Maps and Federal Emergency Management Agency (FEMA) Flood Legend The subject is located in Flood Zone X. The subject is outside the 500 year flood plain. The appraiser is not an expert in this matter and is reporting data from FEMA maps. 211 Morris Ave July 24, 2024 Page 21 All Utilities to Site?Available Adequacy of Utilities The subject's utilities are typical and adequate for the market area. Public Electricity The site is served by public electricity. Water Supply Type City water Sewer Type City sewer Natural Gas City gas Underground Utilities The site is serviced by underground utilities. Irrigation Water Yes Irrigation Water Description Typical landscaping is present. Rail Access No Site Utilities / Amenities 211 Morris Ave July 24, 2024 Page 22 Tax Map/Survey Source: Public Records 211 Morris Ave July 24, 2024 Page 23 Improvements Property Name: Singel Tenant Office Building Property Type: Office Building Overview: The subject property is improved with a single tenant general office building. The building was originally constructed in 1965 as per public records, and renovated in 1990 as per the property management company. The listing broker indicated the interior was rehabilitated in 2007. The subject includes 4,666 square feet of gross building area and is located on a 12,284 square foot lot. The subject includes 11 on-site parking spaces and there is currently a vehicle access and parking agreement in place with the City of Seattle Public Utilities - Water, that grants the owner access to an additional 13 parking spaces on the contiguous parcel to the south. These parking spaces were not included in the market value included in this appraisal report. Number of Buildings 1 Predominant Building Class C Predominant Construction Wood frame with brick façade Construction Quality Average Predominant Condition of All Buildings Average Overall Land to Building Ratio 2.63 to 1 Overall Floor Area Ratio (FAR)0.38 Source For Square Foot Areas Public Records Overall Deferred Maintenance See Comments Below Overall Design/Appeal & Functional Utility The subject is an office building that is functional for a general office use. There are water stains near windows, condensation, drafty windows. There was water damage and suspect mold on drywall along base of west exterior wall. The water heater is corroded. Planned Capital Improvements There are no planned capital improvements. Overall Property Comments The site has access from Morris Ave. Improvements Summary 211 Morris Ave July 24, 2024 Page 24 Building Name/ID Office Building Building Class C Construction Class Class D Construction Wood frame with brick façade Construction Quality Average Year Built 1965 Renovations 1990 per property manager, 2007 per listing broker Effective Age 10 Total Economic Life 50 Remaining Economic/Useful Life 40 Condition Average Number of Stories 1 Building Summary Gross Building Area 4,666 Rentable Area 4,666 Source for SF Area Public Records Building Efficiency Ratio 1.00 Land to Building Ratio 2.63 Building Area Building Area Methodology For building area, we considered public records. Parking Spaces 11 (See Parking Comments) Parking Type Paved open surface parking Parking Adequacy Adequate for current use Parking Condition Fair Parking Comments The subject includes 11 on site parking spaces. There are an additional 13 parking spaces located on the contiguous parcel to the south. The current owner leases theses spaces for $5,000/year. Parking Ratio 2.36 per 1,000 SF of GBA Parking Attributes Foundation Concrete slab on-grade with concrete spread footers Frame Wood frame Exterior Walls Painted brick façade Windows Fixed Casement Roof Type Low-slope Roof Cover TPO (Thermosplastic Polyolefin) Foundation Frame/Ext. 211 Morris Ave July 24, 2024 Page 25 Floor Plan Layout Average Floor Covering Carpet and vinyl Walls Painted drywall Ceiling Cover Suspended Interior Lighting Fluorescent Restrooms Adequate for current use Interior Heating Roof Top Pacage units (RTUS)-gas Cooling Individual Roof Top Package Units (RTU) Electrical Copper branch wiring Plumbing Condition Average Fire Sprinkler Fire Extinguisher/Strobe light alarms/ Illuminated exit signs/Fire Department Connection (FDC) Security Gate at entry/Fence/Security cameras Mechanical Systems Americans With Disabilities Act No ADA survey completed. Reference Limiting Conditions and Assumptions here. Hazardous Substances Appraiser(s) are not experts. Reference Limiting Conditions and Assumptions section here. 211 Morris Ave July 24, 2024 Page 26 Subject Photographs Front View Interior View Additional photos are here. 211 Morris Ave July 24, 2024 Page 27 Zoning 1 2 3 4 Zoning Authority City - Renton, WA City - Renton, WA City - Renton, WA City - Renton, WA Zoning District Overlay Overlay Overlay Downtown Zoning Code SRA_CC UDD_A BISDIST CD Zoning Type/Description City Center Sign Regulation Area Urban Design District A Downtown Business District Center Downtown Current Use Legally Conforming Yes N/A N/A N/A Zoning Change Requested None N/A N/A N/A Zoning Change Likely A zoning change is unlikely.N/A N/A N/A Permitted Uses N/A N/A N/A Permitted uses include but are not limited to:General Retail,Restaurant,Housing - Senior,Hotel /Motel,Office, Medical Office,Educational / School,Sports Arena / Stadium,Theater / Performing Arts Facility, Veterinary Clinic.Religious Facilities require a conditional use permit. Maximum Site Coverage N/A Common open space and/or recreation areas:All mixed use residential and attached housing developments of 10 or more dwelling units:50 sq ft per unit. N/A None Minimum Lot Area N/A N/A N/A None Front Set Back Distance N/A Buildings with residentialuses located at the street level:10 ft from the sidewalk N/A None;Secondary:None; Minimum Freeway Frontage Setback:10 ft landscaped setback from the property line. Side Yard Distance N/A Buildings with residentialuses located at the street level:10 ft from the sidewalk N/A None,unless the ground floor facade provides living room windows of attached dwellings:10 ft.unless adjacent to an alley:None; Abutting residential:15 ft wide landscaped strip or a 5 ft.wide sight-obscuring landscapedstrip and a solid 6 ft.high barrier along the common boundary with an additional 5 ft.setback from the barrier. Back Yard Distance N/A Buildings with residentialuses located at the street level:10 ft from the sidewalk N/A None,unless the ground floor facade provides living room windows of attached dwellings:10 ft.unless adjacent to an alley:None; Abutting residential:15 ft wide landscaped strip or a 5 ft.wide sight-obscuring landscapedstrip and a solid 6 ft.high barrier along the common boundary with an additional 5 ft.setback from the barrier. Maximum Building Height N/A N/A N/A 150 ft;Maximum Building Height When a Lot Is Abutting a Lot Designated as Residential:20 ft.more than the maximum height allowed in the abutting residential zone.Heights may exceed the maximum height with a Hearing Examiner conditional use permit.;Maximum Height for Wireless Communication Facilities: See RMC 4-4-140 Zoning Parking Requirements N/A N/A N/A Office in Center Downtown:1 space per every 1,000 SF of gross building area Zoning Summary 211 Morris Ave July 24, 2024 Page 28 Zoning Map Source: City - Renton, WA The subject site is part of a City Center Sign Regulation Area, Urban Design District A, Downtown Business District, and Center Downtown District. The purpose of the City Center sign regulations is to provide sign standards and regulations which recognize and strengthen the unique character of the City Center area businesses and streets, provide for appropriate signage which contributes to the economic vitality of the area and which complements its environment, and to enhance the pedestrian orientation of the district. These urban design regulations are established in accordance with and to implement policies established in the Land Use Element of the Comprehensive Plan. These standards are divided into 7 areas: Site design and building location; Parking and vehicular access; Pedestrian environment; Recreation Areas and Common Open Space; Building Architectural Design; Signage; Lighting. The purpose of the Center Downtown Zone (CD) is to provide a mixed-use urban commercial center serving a regional market as well as high-density residential development. Uses include a wide variety of retail sales, services, multi-family residential dwellings, and recreation and entertainment uses. 211 Morris Ave July 24, 2024 Page 29 General office uses in the Center Downtown District require a maximum of 1 parking space per every 1,000 square feet of gross building area. As per the property contact, the buyer plans to utilize the subject property as a religious facility. Religious uses require 1 parking space for every 5 seats in the main auditorium; however, in no case shall there be less than 10 parking spaces. Parking regulations for religious uses in the Center Downtown District a minimum and maximum of 1 space for every 5 seats in the main auditorium; however, in no case shall there be less than 10 spaces. The buyer/client plans to owner-occupy the subject office building and utilize the space as a religious building. This would require a conditional use permit. As mentioned, the subject property includes 11 on-site parking spaces. Additionally, there are 13 parking spaces located on the contiguous parcel to the south of the subject which is owned by the Seattle City of Public Utilities - Water. There is an agreement in place that allows the subject property to utilize this parcel (APN: 000720-0188) for vehicle access and parking. The agreement commenced on January 1, 1983. As per the listing broker, the vehicle access and parking agreement includes a current rental rate is $5,000/year. In order for the agreement to transfer to a new property owner, approval must be granted by the City’s Superintendent of Water. Based on current parking regulations, the additional parking is not needed for the existing office use. The subject property appears to be legal and conforming. Conclusion The subject property is improved with a single tenant general office building. The building was originally constructed in 1965 as per public records, and renovated in 1990 as per the property management company. The listing broker indicated the interior was rehabilitated in 2007. The subject includes 4,666 square feet of gross building area and is located on a 12,284 square foot lot. The subject includes 11 on- site parking spaces and there is currently a vehicle access and parking agreement in place with the City of Seattle Public Utilities - Water, that grants the owner access to an additional 13 parking spaces on the contiguous parcel to the south. These parking spaces were not included in the market value included in this appraisal report. The subject has a concrete slab on-grade with concrete spread footers foundation. The building is wood frame with a painted brick façade. The roof is low-slope and covered with TPO (thermoplastic polyolefin). The interior improvements include carpet and vinyl floors, drywall walls, and suspended ceilings with fluorescent lighting. Although the subject is improved as an office building, the building could be adapted to an alternative use as well. 211 Morris Ave July 24, 2024 Page 30 Deferred Maintenance Based on the Property Condition Assessment completed by AEI Consultants, the subject is in need to some immediate, short-term, and long-term repairs. The appraiser deducted the estimated costs of the immediate and short-term repairs in the reconciliation sections of the sales comparison approach and the income approach, in order to determine the As Is Market Value of the subject. As per the PCA Report immediate repairs total $1,950 and include replacing storm water drainage/retaining walls, cladding, and accessibility. Short-term repairs total $84,520 and include paving in the parking area, landscaping, utilities, classing, roof systems, doors and windows, heating/cooling/ventilation, electrical systems, and moisture and microbial growth. The total immediate and short-term repair costs total $86,470. 211 Morris Ave July 24, 2024 Page 31 Assessment and Taxes Taxing Authority King County Assessor Tax Year(s)2024 Total Tax Rate 1.0504140% Assessment Year(s)2024 Frequency of Assessment Annual Reassessment triggered by sale?Yes Assessment Comments Properties in Kings County are reassessed every year and reinspected every 6 years. Tax Summary Tax ID Land Improvements Other Total Assessment Tax Rate Base Taxes Special Assessments Taxes 784180-0065 $522,000 $761,200 $0 $1,283,200 1.0504140%$11,763 $554 $12,316 Totals $522,000 $761,200 $0 $1,283,200 $11,763 $554 $12,316 Real Estate Assessment and Taxes Assessed Year Land Assessment Improvements Assessment Total Assessment % Improved Taxes % Change 2021 $515,900 $408,000 $923,900 44.2% $12,121 -0.1% 2022 $515,900 $534,000 $1,049,900 50.9% $10,571 -12.8% 2023 $51,900 $603,900 $119,800 504.1% $10,782 2.0% 2024 $522,000 $761,200 $1,283,200 59.3% $12,316 14.2% Tax History Comments Properties in Kings County are reassessed every year and reinspected every 6 years. Assessment Analysis We have analyzed the assessment and corresponding taxation of competitive properties in the marketplace as a test of reasonableness compared to the subject’s current assessment and taxation. 211 Morris Ave July 24, 2024 Page 32 Property Name Property Type Tax ID Assessment Year Taxes Taxes/SF GBA Overall Comparison 211 Morris Avenue Office Building 784180-0065 2024 $12,316 $2.64 Subject 126 Logan Ave Office Building 569600-0215 2023 $4,457 $0.82 Inferior 319-325 S 3rd St Office Building 784130-0005 2023 $13,745 $2.15 Similar 138-206 S 3rd Pl Office Building 922890-0035 2023 $16,354 $2.84 Similar 100 S 2nd St Office Building 182305-9236 2023 $16,944 $3.11 Superior Minimum $4,457 $0.82 Maximum $16,944 $3.11 Average $12,763 $2.31 Real Estate Assessment Analysis 211 Morris Ave July 24, 2024 Page 33 Highest and Best Use Highest and Best Use of the Site The highest and best use of the site, as vacant, is for a maximum density commercial project. Background is discussed here. Highest and Best Use as Vacant:Maximum Density Commercial Project Legally Permissible X Yes Zoning Code, District SRA_CC;UDD_A;BISDIST;CD, Overlay;Downtown Permitted Uses 0 Zoning Change Likely?A zoning change is unlikely. Physically Possible X Yes Land Size .28 acres, 12,284 square feet Shape The site is irregularly shaped Topography Level Utilities The subject's utilities are typical and adequate for the market area.: All Utilities Available Access Average Visibility Average Functional Utility Average Financially Feasible X Positive Net Income/Rate of Return?Yes Maximally Productive X Does the Use Return Maximum Value?Yes The subject is located in the downtown area of Renton, WA. The zoning allows a varietyof commercial uses including mixed-use projects and high density residential uses. Highest and Best Use as Vacant 211 Morris Ave July 24, 2024 Page 34 Highest and Best Use as Improved The highest and best use of the subject as improved existing office building. Highest and Best Use as Improved:Existing Office Building Legally Permissible X Yes Zoning Code, District SRA_CC;UDD_A;BISDIST;CD, Overlay;Downtown Permitted Uses 0 Zoning Change Likely?A zoning change is unlikely. Physically Possible X Yes Improvement Size 4,666 square feet Condition Average Quality Average Physical Limitations None, the site is at street grade and we are not aware of any adverse soil conditions. Functional Utility Average Financially Feasible X Positive Net Income/Rate of Return?Yes Maximally Productive X Does the Use Return Maximum Value?Yes The subject property is currently improved with a single tenant office building, and is well suited for the existing use. Highest and Best Use as Improved 211 Morris Ave July 24, 2024 Page 35 Sales Comparison Approach The Sales Comparison Approach methodology is discussed here. Improved Sales We have researched five improved sales; these are documented on the following pages followed by a location map and analysis grid. All sales have been researched through numerous sources and we have attempted to verify it with a party to the transaction or other available information. Comp Address Grantor Price Price Per RA Year Built Property Type Subject 211 Morris Ave S N/A N/A N/A 1965 Office Building Subject Renton 4,666 1 636 Shattuck Ave S Michael Donnelly $900,000 $443.79 1989 Medical Office 1 Renton Voc Healthcare 10/23/2023 2,028 2 433 Park Ave N John Galluzzo and Linda Galluzzo $955,000 $311.68 1934 Office Building 2 Renton Fofo Anga Seattle Community 10/20/2023 3,064 3 941 Powell Ave SW Maschmedt & Associates $2,650,000 $270.10 1985 Office Building 3 Renton Jaime Barron, P.C.7/31/2023 9,811 4 19400 108th Ave SE Estate of William Ruth $1,825,000 $232.10 2004 Office Building 4 Renton Manjit Singh 7/31/2023 7,863 5 3500 Maple Valley Hwy Humble & Davenport Insurance Brokers $1,210,000 $378.72 1998 Office Building 5 Renton Kristin & Mike Griffith 4/14/2023 3,195 Comparable Low:$900,000 $232.10 1934 Comparable Low:4/14/2023 2,028 Comparable High:$2,650,000 $443.79 2004 Comparable High:10/23/2023 9,811 Comparable Average:$1,508,000 $327.28 1982 Comparable Average:8/11/2023 5,192 Comparable Median:$1,210,000 $311.68 1989 Comparable Median:7/31/2023 3,195 Improved Sales Summary Table Detailed datasheets are located here. 211 Morris Ave July 24, 2024 Page 36 Improved Sales Comparables Map Legend Address City Distance Subject 211 Morris Ave S Renton Comp 1 636 Shattuck Ave S Renton .5 miles Comp 2 433 Park Ave N Renton .7 miles Comp 3 941 Powell Ave SW Renton 1.2 miles Comp 4 19400 108th Ave SE Renton 3.7 miles Comp 5 3500 Maple Valley Hwy Renton 1.9 miles Improved Sales Map Legend 211 Morris Ave July 24, 2024 Page 37 Analysis Grid The appraiser researched sales of similar office uses in and around the subject’s immediate market area, as well as active listings. The best, most recent and comparable sales were included in the analysis below. The following adjustments were considered. Property Rights. Most of the comparable sales were fee simple, similar to the subject. Comparable 4 was leased fee. No adjustments were necessary. Financing. No above or below market financing impacted the sales and no adjustments were made. Comparables 1 and 4 were 100% cash sales and did not include any financing. As per the listing broker for Comparable 4, the property sold at a 5-10% discount since the buyer did not finance the property. The appraiser adjusted the sale 5% based on the broker interview since it was indicated this impacted the sale price. This is not always the case. An adjustment was not made to Comparable 1. Conditions of Sale. All of the sales were arm’s length and no reported detrimental conditions. No adjustments were made. Market Trends. The following graph is from CoStar and includes sales of office uses within a 10-mile radius of the subject that sold between April 2023 and present, ranging in size from 1,000 to 10,000 SF. Based on the trendline it appears property values increased approximately 1% per month over this time period. The appraiser scaled this adjustment to 0.25% per month since price per square foot is also impacted by factors other than market trends, such as location, condition, tenants/income, parking, etc. 211 Morris Ave July 24, 2024 Page 38 Location. The location adjustment considers property values and rental rates based on tenant demand, as well as access and visibility. Most of the comparables are in similar overall locations. Comparable 4 is in an inferior location and required an upward adjustment. Quality. All of the comparable sales are overall similar in quality with some minor differences. No adjustments were necessary. Condition. All of the comparable sales are overall similar in condition. No adjustments were necessary. Rentable Area. The subject includes 4,666 square feet of gross building area as per public records. Comparables 1, 2 and 5 are smaller in size and were adjusted downward. Comparables 3 and 4 are larger in size and were adjusted upward. Property Type. Most of the comparable sales are office buildings, similar to the subject. Comparable 1 was improved as a medical office (veterinary clinic) at the time of sale and warranted a downward adjustment. Medical office space typically demands higher property values and rental rates as compared to general office space, due to specialized improvements such as upgraded plumbing as well as superior demand. Land to Building Ratio. The subject includes a parking ratio of 2.63 spaces per every 1,000 square feet of gross building area. Similar office properties with superior parking ratios typically demand higher property values and rental rates. This is the case since properties with superior land to building area ratios typically provide superior parking, and/or allow for future expansion. Most of the comparables include superior land to building area ratios and were adjusted downward. An adjustment was not necessary for Comparable 2. Following is a sales comparison grid displaying the subject property, the comparables and the adjustments applied. 211 Morris Ave July 24, 2024 Page 39 Analysis Grid Address City State Date Price Rentable Area Price Per SF Transaction Adjustments Property Rights Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Leased Fee 0.0%Fee Simple 0.0% Financing 100% Cash 0.0%100% 1st T.D.0.0%80% 1st T.D.0.0%100% Cash 5.0%60% 1st T.D.0.0% Conditions of Sale Typical 0.0%Typical 0.0%Typical 0.0%Typical 0.0%Typical 0.0% Expenditures After Sale Market Trends Through 7/19/2024 Characteristics Adjustments Location % Adjustment Qualitative $ Adjustment Quality % Adjustment Qualitative $ Adjustment Condition % Adjustment Qualitative $ Adjustment Rentable Area % Adjustment Qualitative $ Adjustment Property Type % Adjustment Qualitative $ Adjustment Land To Building Ratio % Adjustment Qualitative $ Adjustment Adjusted Price/SF Net Adjustments Gross Adjustments Inferior Inferior Superior 5.0% Similar $0.00 Adjusted Price/SF 0%5% Similar $0.00 $270.10 $232.10 $0.00 Comp 4 $0.00 Similar 0%0% WA 3,064 WA $900,000 WA Renton 211 Morris Ave S 7/31/2023 Similar Similar -$18.23 7,863 $0.00 Renton 636 Shattuck Ave S 941 Powell Ave SW 3500 Maple Valley Hwy Comp 5 19400 108th Ave SE Comp 3 433 Park Ave N Comp 1 Comp 2 4.26 Average Average Similar 0% -5% 0% 3.80 $0.00 $250.58 6.0%-25.0% 15.0% $275.10$310.76 2.0% $335.35 8.0% -8.0% 25.0% $325.35 8.0%16.0% $0.00 Superior 3.83 4.37 -5%-5% Similar $1,825,000 10/20/2023 $0.00 N/A Superior $0.00 -5% $0.00 RentonRenton 0% 2,028 Similar 0% Similar N/A WA Renton 10/23/2023 WAWA $2,650,000N/A $955,000 Similar Similar Inferior 0% Similar N/A 4,666 $262.00 Similar $378.72 3,195 $0.00 4/14/2023 9,811 $443.79 7/31/2023 $433.80 Fee Simple N/A Adjusted Price/SF $443.79 $311.68 $311.68 Similar Similar $270.10 Similar -2.25% $304.67 Office Building Average $0.00 Similar 5% Inferior 9,811 $0.00 -5% 2,028 0% $0.00 $15.23 0% Inferior -$9.14 -$65.07 3,064 Similar -15% -$21.69 -$13.10 -3.00% Medical Office -2.25% -3% $378.72 Office Building Similar 0% Similar Similar Superior Superior $0.00 Superior Office Building $0.00 $26.20 SuperiorSimilar 10% Similar 0% 3.13 Similar $0.00 Superior -3% Similar 0% Office Building 0% 0% $0.00 Similar Similar 3,195 $14.18 0% Office Building Similar 6% $0.00 $0.00 Similar 2.63 -$21.69 4,666 -3.75% 7,863 0% Inferior $236.39 -$11.82 0% -$10.94 $0.00 $1,210,000 Renton Similar $0.00 $0.00 $243.70 -3.00% $11.82 $364.51 Similar 211 Morris Ave July 24, 2024 Page 40 Sales Comparison Approach Conclusion Compiled by: AEI Valuation Unadjusted and Adjusted $/Rentable area Subject 1 2 3 4 5 Unadjusted Price $0.00 $443.79 $311.68 $270.10 $232.10 $378.72 Adjusted Price $310.00 $325.35 $310.76 $275.10 $250.58 $335.35 $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 $500.00 Unadjusted Price Adjusted Price Linear (Adjusted Price) Following adjustments, the comparables indicated prices per rentable area of $251 to $335, with a median value of $311. All of the value indications have been considered in arriving at our final reconciled per rentable area value of $310. 5 % Δ 8% -24% -9% 0% $312 $1,210,000 rentable area Adjustments Deferred Maintenance: Total Adjustments As Is Indicated Value: 4,666 Value Ranges & As Is Reconciled Value Reconciled Value/Unit Value:$310 Average:$299 Number of Comps:Unadjusted $1,360,000 Subject Size: Median: $232 High: Low: $327 $335$444 $311 Adjusted -$86,470 -$86,470 $1,359,990 $1,446,460 $251 Reconciled Final As Is Value: Indicated Value: $312 211 Morris Ave July 24, 2024 Page 41 Income Approach Since income-producing property is usually purchased as an investment, a basic investment premise holds that the higher the earnings, the higher the value. More information is here. Potential Gross Income (PGI) Income Appraisal Unit/Space Type Amount $/SF Office $88,654 $19.00 Total Rental Income $88,654 $19.00 Expense Reimbursements $19,714 $4.22 Potential Gross Income $108,368 $23.22 - Vacancy & Collection Loss $5,418 $1.16 Effective Gross Income $102,949 $22.06 Notes:$/SF and/or $/Unit are based on totals for each space type. Income Summary Lease Structure NNN: An alternative term for a type of net lease. In some markets, a net net net lease is defined as a lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management; also called NNN lease, triple net lease, or fully net lease. 211 Morris Ave July 24, 2024 Page 42 Rent Roll The following rent roll details subject tenancy. Total Occupied Vacant % of Lease Date Lease Date Lease Lease Monthly Contract Contract Asking $Market Rent Cntr./Ask Tenant/Lessee Space Type Units Units Units SF Total Start End Term Type Rent Rent*Rent/SF Rent/SF Rent Method Variance Owner Office 1 1 0 4,666 100.0%N/A N/A N/A N/A N/A $0 $0.00 N/A $19.00 $/SF/Year 0% Total Units 1 Total SF 4,666 100.0%Total Commercial $0 $0.00 Rent/SF/Year Leased Units 1 Leased SF 4,666 100.0%*Contract Rent = Effective Rent Per Year Vacant Units 0 Vacant SF 0 0.0% Commercial Lease Rent Roll The subject property is currently 100% owner-occupied. The subject is under contract for a purchase price of $1,325,000. The buyer/client plans to owner-occupy the subject office building and utilize the space as a religious building. The appraiser considered a market rental rate of $19.00/SF/Year NNN for the subject in the income analysis. 211 Morris Ave July 24, 2024 Page 43 Market Rent/Comparables Rent Comparables Comp #Address Year Built Property Name City/State Lessee Start Date Lease Term Lease Type SF Base Rent/SF 1 575 Andover Park W 1980 575 Andover Park W 1 Tukwila, WA Office 4/6/2024 Typical FS 4,025 $27.00 2 263 Rainier Ave S 1980 263 Rainier Ave S 2 Renton, WA Office 6/1/2023 5 years NNN 2,053 $20.04 3 1000 Oakesdale Ave SW 1989 1000 Oakesdale Ave SW 3 Renton, WA Office 6/9/2023 Typical FS 4,565 $30.00 4 711 Powell Ave SW 1983 711 Powell Ave SW 4 Renton, WA Available Available Typical NNN 4,338 $15.00 5 1200 Whitman Ct NE 2000 1200 Whitman Ct NE 5 Renton, WA Office Available Typical NNN 3,340 $18.96 Commercial Lease Summary Table Detailed datasheets are located here. 211 Morris Ave July 24, 2024 Page 44 Rent Comparables Map Legend Address City Distance Subject 211 Morris Ave S Renton Comp 1 575 Andover Park W Tukwila 2.9 miles Comp 2 263 Rainier Ave S Renton .3 miles Comp 3 1000 Oakesdale Ave SW Renton 1.3 miles Comp 4 711 Powell Ave SW Renton 1.1 miles Comp 5 1200 Whitman Ct NE Renton 2.8 miles Lease Comps Map Legend 211 Morris Ave July 24, 2024 Page 45 Analysis Grid The appraiser researched rentals of similar office uses in and around the subject’s immediate market area, as well as active listings. The best, most recent and comparable rentals were included in the analysis below. The following adjustments were considered. Conditions of Lease. All of the leases include typical terms and provisions for rental increases. Market Trends. Comparables 1-3 are somewhat recent leases. Adjustments were not necessary. Comparables 4 and 5 are active listings and were adjusted downward since they are not closed lease transactions. The adjustments consider room for negotiations. Lease Type. The subject is currently 100% owner-occupied. Based on the appraiser’s research, NNN leases appear to be most common in the immediate area although there are also some Full Service and Modified Gross leases in the area. The comparable rentals with Full Service Gross leases were adjusted to reflect a NNN lease type for comparison purposes. Location. The location adjustment considers property values and rental rates based on tenant demand, as well as access and visibility. Most of the comparables are in similar overall locations. Comparables 1 and 3 are in superior locations and were adjusted downward. Comparable 4 is in an inferior location and required an upward adjustment. Quality. All of the comparable sales are overall similar in quality with some minor differences. No adjustments were necessary. Condition. All of the comparable sales are overall similar in condition. No adjustments were necessary. Rentable Area. The subject includes 4,666 square feet of gross building area as per public records. Comparables 2 and 5 are smaller in size and were adjusted downward. Property Type. All of the comparable rentals are general office buildings, similar to the subject. No adjustments were necessary. On the following page is a lease analysis grid displaying the subject property, the comparables and the adjustments applied. 211 Morris Ave July 24, 2024 Page 46 Lease Analysis Grid Address City State Tenant Start Date Base Rent/SF Lease Type Lease Term Size Transaction Adjustments Conditions of Lease Normal 0%Normal 0%Normal 0%Normal 0%Normal 0% Other Similar 0%Similar 0%Similar 0%Similar 0%Similar 0% Market Trends/Year Lease Type Characteristics Adjustments Location % Adjustment Qualitative $ Adjustment Quality % Adjustment Qualitative $ Adjustment Condition % Adjustment Qualitative $ Adjustment Rentable Area % Adjustment Qualitative $ Adjustment Property Type % Adjustment Qualitative $ Adjustment Adjusted Rent Net Adjustments Gross Adjustments Superior 0% $0.00-$1.01 0% Similar Similar Superior -$0.56 Similar 0% Similar Office Building 0% 0% 10.0%-5.0% $18.02 -5.0%-5.0% 0% Similar Office Building Average Office Building -$1.00 0% Similar Similar Similar Similar Similar $0.00 -5% 0% Superior Office Building $0.00 $0.00 $0.00 0% Similar 4,025 Similar 2,053 WA Similar 0% Superior Average Similar Similar $0.00 Average $20.04 Superior N/A 0% $20.25 -5% Similar $0.00 Adjusted Rent $27.00 0.00% $20.04 N/A 0.0% -25.00% $20.04 0.0% Adjusted Rent Owner 0.0% Renton 5 years Adjusted Rent N/A 4,666 $20.04 WA Typical 4,025 NNN Renton Available6/9/2023 WA Office 711 Powell Ave SW 2,053 4,565 $27.00 Office N/A Comp 2 N/A Office 575 Andover Park W $27.00 4/6/2024 FS $30.00 FS WA 6/1/2023 Comp 5 3,340 Typical -2.0% $14.70 0.00% $30.00 $30.00 $18.58 $15.00 4,338 Typical -25.00%0.00% $14.70 0% Similar Similar $0.00 0.0%-2.0% $18.96 Superior -$1.13 -5% $18.58 Comp 1 Tukwila 263 Rainier Ave S $18.96 NNNNNN WA Typical WA Comp 3 RentonRenton Office 1000 Oakesdale Ave SW Renton Comp 4 1200 Whitman Ct NE $15.00 Available Similar $0.00 0% Similar 0% $1.47 Inferior Inferior 10% Similar $22.50 Similar 0% $0.00 $0.00 4,338 0% Similar $0.00 $0.00 0% -3% 3,340 $0.00 Similar Similar Office Building Similar 4,565 0% $0.00 Similar 0%0% $0.00 $0.00 Similar $0.00 $0.00 Office Building Similar 211 Morris Ave S 4,666 Similar $0.00 10.0%5.0% $19.04$19.24 5.0% $16.17 -3.0% 5.0% $21.38 Office 3.0% Similar Similar 211 Morris Ave July 24, 2024 Page 47 Market Rent Reconciliation Compiled by: AEI Valuation Unadjusted and Adjusted Rent Subject 1 2 3 4 5 Unadjusted $0.00 $27.00 $20.04 $30.00 $15.00 $18.96 Adjusted $19.00 $19.24 $19.04 $21.38 $16.17 $18.02 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 Unadjusted Adjusted Linear (Adjusted) Following adjustments, the comparables indicated a market rent of $16.17 to $21.38, with a median value of $19.04/SF/Year NNN. Based on the above analysis, market rent is concluded at $19.00/SF/Year NNN, as of July 19, 2024, for the subject Office. 5 % Δ 8% -29% -15% -5% Number of Comps: $30.00 Median: $19.00Reconciled Market Rent: Unadjusted Adjusted High: $22.20Average: Ranges & Office Reconciled Rent $18.77 $20.04 $19.04 Nineteen Dollars and Zero Cents $16.17Low: $21.38 $15.00 211 Morris Ave July 24, 2024 Page 48 Summary of Market Rent The table below summarizes the market rent estimates for the subject, organized by space type. Space Type Market Rent Increases Lease Type Term Notes / Concessions Office $19.00 Annual CPI NNN 2-5 Years Concessions at 5+ years Market Rent per SF per Month by Space Type 211 Morris Ave July 24, 2024 Page 49 Potential Gross Income Summary *Contract Contract Market Market Contract V. Occupied Space Rent/SF Units Rent Rent/SF Rent Method Rent/SF Mkt. Rent Office 4,666 1 $0 $0.00 $88,654 $/SF/Year $19.00 0.0% *Contract Rent = Effective Rent Per Year *Contract Rent = Annual Rent Per Year per Unit for occupied space Occupied Space Totals 4,666 1 $0 $0.00 $88,654 $19.00 0.0% Potential Gross Rent Market Market Vacant Space Rent/SF Units Rent Method Rent/SF Vacant Space Totals 0 0 $0 $0.00 Market Rent Contract & Market Rent Market PGI For Occupied Space $88,654 Contract Rent For Occupied Space $0 Market PGI For Vacant Space $0 Market PGI For Vacant Space $0 Market Potential Gross Income $88,654 Contract & Market PGI $0 Market PGI Per SF $19.00 Contract & Market PGI Per SF $0.00 Contract to Market Ratio 0.0% Potential Gross Income - Occupied Space Potential Gross Income Summary Potential Gross Income - Vacant Space 211 Morris Ave July 24, 2024 Page 50 Other Income Other Income is projected at $0. Vacancy and Collection Loss Based on a review of market conditions we have projected vacancy and collection loss at 5.00%. This is significantly lower than the market vacancy rate for office uses in Renton/Tukwila which is above 23%. The vacancy and collection loss rate considers the subject is a smaller size building. These buildings are in high demand in the subject area; and several are owner-occupied. These buildings typically have significantly lower vacancy rates as compared to larger multi-tenant office buildings which are included in the market vacancy rate of 23%. Effective Gross Income Total Rental Income: $88,654 81.8% Expense Reimbursements: $19,714 18.2% Other Income:$0 0.0% Potential Gross Income:$108,368 100% - Vacancy & Collection Loss: $5,418 5.00% Effective Gross Income (EGI): $102,949 95.0% Expenses The table below details the subject’s proforma expenses. Appraisal Expense Amount $/SF Tax Expense $15,748 $3.37 Insurance $1,633 $0.35 Management $2,527 $0.54 Total Utilities Paid by Tenant $0.00 Repairs and Maintenance $2,333 $0.50 General and Administrative $0 $0.00 Reserves $1,167 $0.25 Total Expenses:$23,407 $5.02 Net Operating Income $79,542 $17.05 Notes:$/SF and/or $/Unit are based on totals for the property. Expense Summary 211 Morris Ave July 24, 2024 Page 51 Expense Discussion Taxes. The Concluded taxes are calculated based on the market value indicated in the sales comparison approach (prior to the deduction for deferred maintenance) multiplied by the tax rate plus any special assessments. This expense is reimbursed by the tenant in a NNN lease. Insurance. Property insurance for the subject unit was estimated at $0.35/SF per year. This expense is reimbursed by the tenant in a NNN lease. Management. Management expenses were estimated based on 3% of the effective gross income. This expense is typically paid by the landlord in a NNN lease. Utilities. This expense is typically paid directly by the tenant(s), and any common area utilities are reimbursed by the tenant(s) in a NNN lease type. Repairs & Maintenance. Repairs and maintenance were estimated at $0.50/SF. This expense is paid by the tenant in a NNN lease type. Reserves. We estimated this expense based on $0.25/SF per month. A reserve account sets aside money for future capital expenses. This line item is paid for by the landlord in a NNN lease type. Expense Reimbursements Expense Reimbursed %Amount Notes Tax Expense Yes 100.00%$15,748 Reimbursed 100% by Tenant Insurance Yes 100.00%$1,633 Reimbursed 100% by Tenant Management No Paid by Landlord Total Utilities Yes 100.00%Paid directly by Tenant Repairs and Maintenance Yes 100.00%$2,333 Reimbursed 100% by Tenant Reserves No Paid by Landlord Total $19,714 Expense Reimbursements Net Operating Income Effective Gross Income (EGI): $102,949 - Total Expenses: $23,407 Net Operating Income (NOI): $79,542 211 Morris Ave July 24, 2024 Page 52 Capitalization Rate The capitalization rate is the factor that converts the stabilized net operating income (NOI) to a present value. It is the ratio of net income to value or sale price. NOI ÷ Sale Price = Capitalization Rate For example, if a property sells for $500,000, and has a stabilized NOI of $50,000, the indicated capitalization rate is 10%. Market Extracted Rates The table below details capitalization rates extracted from the market. Comparable City Price Date Property Type Cap Rate 17414 SE 272nd St Covington $1,489,000 2/15/2024 Medical Office 7.00% 22501-22511 Marine View Dr SDes Moines $1,500,000 1/5/2024 Office Building 5.08% 180 NE Juniper St Renton $950,000 10/31/2023 Office Building 6.32% 3459 S 152nd St Tukwila $750,000 10/20/2023 Medical Office 6.50% 10700 SE 174th St Renton $4,100,000 Active Medical Office 6.35% Low 5.08% High 7.00% Average 6.25%"" Comparable Sale Cap Rates Survey Data Type Low High Average CoStar Renton/Tukwila Office 6.00%8.40%7.00% PwC Investor Survey Pacific Northwest Office 6.25%13.00%9.02% Averages:6.13%10.70%8.01% Investor Survey Capitalization Rates Survey Period Jul-24 2nd Quarter 2024 Capitalization Rate Conclusion Method Emphasis Low High Average Improved Comparable Sales 5.08%7.00%6.25% Investory Surveys - Averages 6.13%10.70%8.01% Reconciled Capitalization Rate: Capitalization Rate Ranges and Reconciled Rate 6.25% 211 Morris Ave July 24, 2024 Page 53 Capitalization rates increased with the increase of interest rates starting in 2022. Based on the analysis, a 6.25% cap rate is applied. This is at the lower end of the cap rates indicated by the investor surveys and average in comparison to the comparable cap rate sales in the subject’s immediate and surrounding market area. The subject is currently 100% owner-occupied and under contract with a buyer (client) that plans to owner-occupy the subject building as well. Owner-users will typically accept lower cap rates as compared to investors, since they plan to owner-occupy the property and are not concerned with the income potential. Capitalization to Value Unit/Space Type Income Method Units/SF Annual % of PGI Office $19.00 $/SF/Year 4,666 $88,654 81.8% 1 Total Rental Income:$88,654 81.8% 1 Expense Reimbursements:$19,714 18.2% Other Income:$0 0.0% Potential Gross Income:$108,368 100% - Vacancy & Collection Loss:$5,418 5.00% Effective Gross Income (EGI):$102,949 95.0% $84,221 77.7% Expense Amount Annual $/SF Tax Expense $15,748 $15,748 $3.37 Insurance $1,633 $1,633 $0.35 Management $2,527 $2,527 $0.54 Total Utilities Paid by Tenant Paid by Tenant $0.00 Repairs and Maintenance $2,333 $2,333 $0.50 Reserves $1,167 $1,167 $0.25 $23,407 $5.02 22.74% $79,542 $17.05 6.25% $1,272,680 $272.76 Deferred Maintenance: -$86,470 -$18.53 Indicated Value: $1,186,210 $254.22 $1,190,000 $255.04 Value (NOI/Cap Rate): Rounded: Total Expenses: Expense Ratio (Expenses/EGI): Net Operating Income (NOI): Capitalization Rate: $/Year $/Year Method $/Year $/Year $/Year $/Year Effective Gross Rental Income (EGRI): Income Capitalization Analysis 211 Morris Ave July 24, 2024 Page 54 Direct Capitalization Analysis Conclusion Based on the above analysis detailed above, as of July 19, 2024 we have reconciled to a direct capitalization approach value of: $1,190,000 One Million One Hundred Ninety Thousand Dollars 211 Morris Ave July 24, 2024 Page 55 Reconciliation The process of reconciliation involves the analysis of each approach to value. The quality of data applied, the significance of each approach as it relates to market behavior and defensibility of each approach are considered and weighed. Finally, each is considered separately and comparatively with each other. Value Indications Value Premise As Is Date of Value 7/19/2024 Value Type Market Value Value Perspective Current Interest Appraised Fee Simple Cost Approach Not Developed Sales Comparision Approach $1,360,000 Direct Capitalization Analysis $1,190,000 Income Approach $1,190,000 Value Conclusion:$1,360,000 Summary of Values Cost Approach This approach was not developed. The subject neighborhood is almost completely developed with no nearby land sales and the improvements are over 15 years old. As such, land value and depreciated replacement cost are less reliable. Finally, the most likely buyer, an investor, would not rely on this approach. Sales Comparison Approach We found recent similar sales of similar office buildings that lend credibility to this analysis. The subject is currently occupied by an owner-user and is under contract with a buyer (client) that plans to owner-occupy the subject property as well. We have placed primary emphasis on this approach. Income Approach As mentioned, the subject is occupied by an owner-user. The most typical buyer is another owner-user. Additionally, the lower market value indicated by the income approach indicates the highest and best use of the subject property is not as an investment. Therefore, we have placed secondary emphasis on this approach. 211 Morris Ave July 24, 2024 Page 56 Value Conclusion The subject property has not sold or transferred within the last 3 years as per public records. The subject is currently under contract for a purchase price of $1,325,000. As per the listing broker, Kyle Sterling with NAI Puget Sound Properties, the property was on the market for approximately 3 weeks at a list price of $1,400,000 and had two (2) other offers around the pending sale price. Based on the investigations and analyses performed by the appraiser and presented in this report, and subject to the indicated conditions, assumptions, and limiting conditions, our opinion(s) of value for the subject property are as follows: Premise Interest Appraised Effective Date Value Conclusion Current As Is Market Value Fee Simple 7/19/2024 $1,360,000 Value Conclusions 211 Morris Ave July 24, 2024 Page 57 Certification We certify that, to the best of our knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions and conclusions. We have no present or prospective future interest in the property that is the subject of this report, and have no personal interest with respect to the parties involved. We have no bias with respect to the property that is the subject of this report, or to the parties involved with this assignment. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). The report complies with the requirements of the USPAP, promulgated by the Appraisal Standards Board of the Appraisal Foundation, that are in effect at the time of certification, including USPAP’s requirements that the Appraisal was conducted in compliance with all relevant laws, including the Fair Housing Act and Equal Credit Opportunity Act. The Appraisal complies with the current version of the FIRREA of 1989, including its Title XI regulations. No one provided significant real property appraisal assistance to the person(s) signing this certification. We certify sufficient competence to appraise this property through education and experience, in addition to the internal resources of the appraisal firm. The appraisers have not performed any prior services regarding the subject within the previous three years of the appraisal date. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, all MAI designated signers below have completed the continuing education program for Designated Members of the Appraisal Institute. 211 Morris Ave July 24, 2024 Page 58 As of the date of this report, Richard West, MAI, has completed the Standards and Ethics Education Requirements for Candidates of the Appraisal Institute. The following personnel appraised the subject or provided significant assistance (which included subject identification, front end report and comparable research) in the appraisal process: Role Name Inspected Extent Date of Inspection Appraiser Richard West, MAI has not N/A N/A Site Inspection Scott Miller has Interior/Exterior 7/19/2023 Researcher Judith Valadez N/A N/A N/A Analyst Jesselyn Kelley N/A N/A N/A Property Inspection and Report Compilation Assistance The site inspection was completed by Scott Miller with AEI Consultants. Mr. Miller completed the property condition assessment report ordered by the client. The appraiser relied on the notes and photographs in the property condition assessment in this report. Richard West, MAI Head of Valuation (310) 798-4255 rwest@aeiconsultants.com Certified General WA - 1102027 Expires 9/21/2024 Ric 1.800.801.3224 www.aeiconsultants.com Addenda 1.800.801.3224 www.aeiconsultants.com Legal Description SMITHERS 6TH ADD TO RENTON ALL LOTS 4 & 5 TGW POR OF VAC ALLEY ADJ TGW 18 FT R/W ADJ TO S LN Source: Public Record 1.800.801.3224 www.aeiconsultants.com Subject Photos (Additional) Exterior View Exterior Side View 1.800.801.3224 www.aeiconsultants.com Exterior Side View Exterior Side View and Fence View 1.800.801.3224 www.aeiconsultants.com Exterior Side View Exterior Side View 1.800.801.3224 www.aeiconsultants.com Exterior Rear View Exterior Rear View 1.800.801.3224 www.aeiconsultants.com Exterior Rear View Exterior Side View 1.800.801.3224 www.aeiconsultants.com Exterior Window View Exterior Landscape and Sidewalk View 1.800.801.3224 www.aeiconsultants.com Exterior Parking Lot View Exterior Parking Lot View 1.800.801.3224 www.aeiconsultants.com Interior Office View Interior Office View 1.800.801.3224 www.aeiconsultants.com Interior Office View Interior Hallway View 1.800.801.3224 www.aeiconsultants.com Interior Office View Interior Kitchen View 1.800.801.3224 www.aeiconsultants.com Interior Sink View Interior Bathroom View 1.800.801.3224 www.aeiconsultants.com Interior Bathroom View Interior Bathroom View 1.800.801.3224 www.aeiconsultants.com Interior Bathroom View Electrical View 1.800.801.3224 www.aeiconsultants.com Electrical View Fire Extinguisher View 1.800.801.3224 www.aeiconsultants.com Utility View Exterior Roof View 1.800.801.3224 www.aeiconsultants.com RUL Exterior View Exterior Roof View 1.800.801.3224 www.aeiconsultants.com Subject Exhibits Traffic Count Map Source: Bing Maps and AADT/DOT Traffic Count Legend 1.800.801.3224 www.aeiconsultants.com Wetlands Map Source: Bing Maps and U.S. Department of Fish & Wildlife Wetlands Legend 1.800.801.3224 www.aeiconsultants.com Earthquake Risk Map Source: Bing Maps and U.S. Geological Survey Earthquake Risk Legend 1.800.801.3224 www.aeiconsultants.com Subject/Access Map Source: Bing Maps and Municipal Parcel Boundaries 1.800.801.3224 www.aeiconsultants.com Building Footprints Map Source: Bing Maps and Building Footprints USA 1.800.801.3224 www.aeiconsultants.com Area Description Appendix Seattle, WA Seattle, Washington is a vibrant and eclectic city located in the Pacific Northwest region of the United States. Founded in 1869, Seattle has a rich history dating back to its early days as a small settlement at the mouth of the Duwamish River. The city's early economy was driven by the logging and maritime industries, which led to the construction of the iconic Space Needle in 1962 for the World's Fair. Today, Seattle is a thriving metropolis with a diverse economy that includes tech giants like Amazon and Microsoft, as well as a thriving arts and cultural scene. Seattle is strategically located on the Puget Sound, surrounded by waterways, mountains, and forests. The city has a total area of approximately 142 square miles, with over 95% of it being urbanized. Seattle is easily accessible by air, with Seattle-Tacoma International Airport (SEA) located just 15 miles south of downtown. The city is also connected to the surrounding region by highways and public transportation systems, including buses and light rail. Seattle offers a wide range of amenities for its residents and visitors, including world-class museums like the Seattle Art Museum and the Frye Art Museum, as well as iconic landmarks like the Space Needle and Pike Place Market. The city is also home to a thriving food scene, with a variety of restaurants serving everything from fresh seafood to international cuisine. Outdoor enthusiasts will love the many parks and green spaces, including Gas Works Park and Discovery Park. Seattle is divided into many distinct neighborhoods, each with its own unique character and charm. Some popular neighborhoods include Capitol Hill, known for its vibrant nightlife and LGBTQ-friendly atmosphere; Ballard, which is home to a large Scandinavian community; and Queen Anne, which features stunning views of the city skyline. Other notable neighborhoods include Fremont, known for its quirky art scene; Wallingford, which is popular with young professionals; and Rainier Valley, which is home to a diverse community of small businesses and entrepreneurs. Some major employers in Seattle include Amazon, Microsoft, Boeing, Starbucks, and Nordstrom. The city is also home to many startups and small businesses in industries like tech, biotech, and clean energy. Seattle has a highly educated workforce, with many residents holding degrees from top-ranked universities like the University of Washington and Seattle University. Overall, Seattle is an urban city with a mix of dense neighborhoods and suburban areas. While it has a population density similar to other major cities in the United 1.800.801.3224 www.aeiconsultants.com States, its proximity to nature and outdoor recreational opportunities gives it a unique blend of urban and suburban characteristics. Renton-Tukwila Renton-Tukwila is a city located in King County, Washington, about 11 miles southeast of Seattle. The city has a rich history dating back to the early 19th century, when it was founded as a small logging town. Over the years, the city has grown and developed, becoming a hub for industry and commerce. Today, Renton- Tukwila is a thriving metropolitan area with a population of over 200,000 people. In terms of location, Renton-Tukwila is situated at the intersection of Interstate 405 and State Route 167, making it easily accessible by car. The city is also served by several bus routes, including the Sound Transit Express and the King County Metro bus system. The nearest airport is Seattle-Tacoma International Airport, which is about 15 miles north of the city. The city offers a range of amenities, including shopping centers, restaurants, and entertainment venues. The Westfield Southcenter Mall is one of the largest shopping centers in the region, featuring over 200 stores and restaurants. Other popular attractions include the Renton River Days Festival, which takes place every summer, and the Renton Farmers Market, which operates year-round. Renton-Tukwila can be considered both urban and suburban, as it has a mix of urban amenities like shopping centers and entertainment venues alongside suburban neighborhoods with single-family homes. 1.800.801.3224 www.aeiconsultants.com School District Map Source: Bing Maps and https://www.greatschools.org/ 1.800.801.3224 www.aeiconsultants.com Demographics Selected neighborhood demographics are shown in the following map and tables: Demographics Map Source: Bing Maps and www.easidemographics.com 1.800.801.3224 www.aeiconsultants.com County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Trade Area Area (sq miles)3.14 28.27 78.53 2,115.23 5,869.72 Density (pop/sq mile)4,092.30 4,065.20 3,424.30 1,072.00 688.00 Population Population 2010 (census)12,194 101,722 237,917 1,931,163 3,439,794 Population 2020 (census)12,839 115,534 269,531 2,269,675 4,018,762 Population 2023 (current)12,854 114,922 268,902 2,267,443 4,038,286 Population 2028 (5 yr proj)13,540 121,056 283,212 2,386,564 4,233,514 % Change 2020-Current 0.1%-0.5%-0.2%-0.1%0.5% % Change 5 Yr Forecast 5.3%5.3%5.3%5.3%4.8% % Change 2010-2020 5.3%13.6%13.3%17.5%16.8% Source: www.easidemographics.com Selected Demographics 1.800.801.3224 www.aeiconsultants.com The following table and chart details Age Distribution in the selected area: County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Median Age 39 38 38 38 38 Population Distribution by Age Age: 0-5 845 8,049 18,497 144,174 271,641 Age: 6-11 698 7,558 18,667 149,795 281,709 Age: 12-17 698 6,888 18,432 149,905 282,488 Age: 18-24 1,013 9,024 21,079 194,991 349,867 Age: 25-34 2,494 21,544 44,829 405,784 670,337 Age: 35-44 1,967 18,480 40,576 351,800 603,557 Age: 45-54 1,686 14,541 35,480 291,074 509,149 Age: 55-64 1,406 13,003 32,749 256,927 478,921 Age: 65-74 1,127 9,180 22,943 190,582 352,601 Age: 75-84 471 3,972 9,845 84,082 154,201 Age: 85+448 2,682 5,805 48,329 83,815 Source: www.easidemographics.com Age Demographics 1.800.801.3224 www.aeiconsultants.com County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Avg HH Size 2.1 2.42 2.56 2.32 2.4 Total Households 2000 (census)#N/A #N/A #N/A #N/A #N/A Total Households 2010 (census)5,446 40,405 89,139 789,208 1,357,513 Total Households 2023 (current)6,079 47,282 104,165 959,154 1,652,883 Total Households 2028 (5 yr proj)6,567 51,073 112,502 1,036,119 1,782,005 % Change 2010-Current #N/A #N/A #N/A #N/A #N/A % Change 5 Yr Forecast 5.34%5.34%5.32%5.25%4.83% % Change 2000-2010 #N/A #N/A #N/A #N/A #N/A Housing Units Total Housing Units 6,465 49,703 108,789 1,010,641 1,737,791 Median Year Built 1988 1984 1982 1988 1990 Housing Units % Vacant 5.97%4.87%4.25%5.09%4.89% Housing Units % Owner Occupied 26.82%46.16%56.09%52.59%57.52% Housing Units % Renter Occupied 67.21%48.97%39.66%42.32%37.60% Median Home Value (Owner Occupied)$460,235 $479,307 $548,658 $661,621 $524,868 Source: www.easidemographics.com Households and Housing 1.800.801.3224 www.aeiconsultants.com The following table and charts detail Income in the selected area: County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Household Income Median HH Income $67,695 $87,580 $101,678 $108,912 $100,128 Average HH Income $89,411 $114,731 $132,744 $157,079 $141,474 Population Distribution by Income -$15,000 662 3,000 5,401 57,567 95,798 $15,000-$24,999 585 2,848 5,299 41,302 73,078 $25,000-$34,000 528 2,800 5,803 43,532 81,079 $35,000-$49,999 609 4,361 8,846 69,850 131,204 $50,000-$74,999 1,054 8,040 16,502 123,013 233,623 $75,000-$99,999 795 6,989 14,711 109,826 210,727 $100K-$125K 583 5,714 11,774 96,740 181,795 $125K-$150K 323 4,145 9,326 80,830 144,511 $150K-$200K 427 4,278 11,116 118,906 198,939 $200K+513 5,107 15,386 217,588 302,129 Source: www.easidemographics.com Income The following table and chart details employment attributes in the selected area: County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Total Employees 12,028 51,394 125,217 1,192,547 1,693,233 Total Establishments 536 2,664 6,928 71,589 111,010 % College Graduate 30.37%34.31%38.96%55.46%45.43% Avg Work Travel Time 35.12 36.15 35.64 33.69 35.03 Source: www.easidemographics.com Employment 1.800.801.3224 www.aeiconsultants.com County CBSA Category 1 Mile 3 Mile 5 Mile King Seattle Income Per Capita Income $42,774 $47,481 $51,737 $67,003 $58,428 Spend Total Consumer Spend $403,370 $3,470,578 $8,089,612 $79,455,573 $133,279,098 Avg Spend / Household $66,355 $73,401 $77,662 $82,839 $80,634 Total Retail Spend $1,810,452,314 $6,718,312,918 $18,715,830,594 $164,246,611,000 $201,644,472,000 Spend by Industry Motor Vehicles $366,960,952 $1,132,072,889 $1,753,118,448 $11,465,888,000 $19,304,986,000 Furniture and Home Furnishings $33,197,655 $174,681,639 $282,609,050 $1,478,945,000 $1,576,489,000 Electrical and Appliances $829,369 $23,123,843 $219,871,737 $834,036,000 $1,207,860,000 Building Materials and Garden $2,291,386 $118,247,822 $274,329,804 $2,636,473,000 $4,744,927,000 Food and Beverage $70,230,458 $344,647,932 $875,873,543 $8,421,808,000 $13,634,274,000 Health and Personal Care $19,176,501 $163,435,487 $261,891,048 $2,035,234,000 $3,380,996,000 Gasoline Stations $11,949,000 $51,315,237 $357,965,998 $2,740,878,000 $4,829,523,000 Clothing and Accessories $20,778,626 $142,388,698 $494,832,048 $2,695,627,000 $4,094,469,000 Sporting Goods $18,951,000 $19,668,367 $105,123,331 $1,065,948,000 $1,613,981,000 General Merchandise $137,806,502 $726,089,119 $1,405,659,821 $6,649,334,000 $11,927,420,000 Miscellaneous $26,095,303 $127,345,131 $370,308,962 $2,532,549,000 $2,802,292,000 Nonstore Purchases $1,049,284,938 $3,405,635,662 $11,426,693,591 $113,099,535,000 $120,034,696,000 Food Services $52,900,625 $289,661,093 $887,553,212 $8,590,356,000 $12,492,559,000 Source: www.easidemographics.com Per Capita Income / Consumer and Industry Spend 1.800.801.3224 www.aeiconsultants.com Improved Sale Data Sheets 1.800.801.3224 www.aeiconsultants.com ID 12477 Address 636 Shattuck Ave S City Renton State WA Zip 98057-2421 County King Latitude 47.4739718 Longitude -122.2130549 ID 12477 Date 10/23/2023 Address 636 Shattuck Ave S Price $900,000 City Renton Price Per RA $443.79 State WA Price Per SF $443.79 Tax ID 784130-0525 Price Per Unit NA Grantor Michael Donnelly Transaction Type Closed Sale Grantee Voc Healthcare Financing 100% Cash Legal Description NA Property Rights Fee Simple Book/Page or Reference Doc 202310230562 Days on Market NA Sale Verification Source CoStar/Public Records Acres 0.2 Topography NA Land SF 7,706 Zoning RMU Road Frontage NA Flood Zone NA Shape NA Encumbrance or Easement NA Utilities NA Environmental Issues NA Corner NA GBA 2,028 PGI NA Rentable Area 2,028 EGI NA No. of Buildings NA Occupancy NA No. of Stories 2 Vacancy NA No. of Units NA Expense Ratio NA Year Built 1989 NOI NA Renovations NA Cap Rate NA Condition NA EGIM NA Property Type Office Building Parking Spaces 7 No Of Retail Units NA Parking Type NA Retail GBA NA Parking Adequacy NA GLA Parking Ratio GBA 3.45 Parking Ratio RA 3.45 Percent Retail 0.00%Parking Ratio Unit 0.00 Improved Sale 1 Transaction Improvements & Financial Data AEI Consultants was unable to find any Brokers on record. All information is from CoStar/Public Record. Sale Comments Office Property Type Characteristics Site 1.800.801.3224 www.aeiconsultants.com ID 12478 Address 433 Park Ave N City Renton State WA Zip 98057-5523 County King Latitude 47.4896325 Longitude -122.2024452 ID 12478 Date 10/20/2023 Address 433 Park Ave N Price $955,000 City Renton Price Per RA $311.68 State WA Price Per SF $311.68 Tax ID 722400-0730 Price Per Unit NA Grantor John Galluzzo and Linda Transaction Type Closed Sale Grantee Fofo Anga Seattle Community Financing 100% 1st T.D. Legal Description NA Property Rights Fee Simple Book/Page or Reference Doc 20231023000764 Days on Market 66 Sale Verification Source Acres 0.2 Topography NA Land SF 9,583 Zoning CA Road Frontage NA Flood Zone NA Shape NA Encumbrance or Easement NA Utilities NA Environmental Issues NA Corner NA GBA 3,064 PGI NA Rentable Area 3,064 EGI NA No. of Buildings NA Occupancy No. of Stories 2 Vacancy No. of Units NA Expense Ratio NA Year Built 1934 NOI NA Renovations $2,013 Cap Rate NA Condition NA EGIM NA Property Type Office Building Parking Spaces 7 No Of Retail Units NA Parking Type NA Retail GBA NA Parking Adequacy NA GLA Parking Ratio GBA 2.28 Parking Ratio RA 2.28 Percent Retail 0.00%Parking Ratio Unit 0.00 Sale Comments Improved Sale 2 Office Property Type Characteristics AEI Consultants confirmed with Listing Broker James Betzer (206) 605-3568. Property sold for over asking price to an owner user buyer, multiple offers. Improvements & Financial Data Site Transaction 1.800.801.3224 www.aeiconsultants.com ID 12479 Address 941 Powell Ave SW City Renton State WA Zip 98057 County King Latitude 47.470706 Longitude -122.231603 ID 12479 Date 7/31/2023 Address 941 Powell Ave SW Price $2,650,000 City Renton Price Per RA $270.10 State WA Price Per SF $270.10 Tax ID 918800-0071 Price Per Unit NA Grantor Maschmedt & Associates Transaction Type Closed Sale Grantee Jaime Barron, P.C.Financing 80% 1st T.D. Legal Description NA Property Rights Fee Simple Book/Page or Reference Doc 20230731000439 Days on Market 228 Sale Verification Source Acres 1.0 Topography NA Land SF 41,818 Zoning IM Road Frontage NA Flood Zone NA Shape NA Encumbrance or Easement NA Utilities NA Environmental Issues NA Corner NA GBA 9,811 PGI NA Rentable Area 9,811 EGI NA No. of Buildings NA Occupancy NA No. of Stories 1 Vacancy NA No. of Units NA Expense Ratio NA Year Built 1985 NOI NA Renovations NA Cap Rate NA Condition NA EGIM NA Property Type Office Building Parking Spaces 46 No Of Retail Units NA Parking Type NA Retail GBA NA Parking Adequacy NA GLA NA Parking Ratio GBA 4.69 Parking Ratio RA 4.69 Percent Retail 0.00%Parking Ratio Unit 0.00 Site Sale Comments Improved Sale 3 Improvements & Financial Data AEI Consultants attempted to contact Listing Broker Brian Kenny (425) 444-3626. Office Property Type Characteristics Transaction 1.800.801.3224 www.aeiconsultants.com ID 12480 Address 19400 108th Ave SE City Renton State WA Zip 98055 County King Latitude 47.4285819 Longitude -122.1966449 ID 12480 Date 7/31/2023 Address 19400 108th Ave SE Price $1,825,000 City Renton Price Per RA $232.10 State WA Price Per SF $232.10 Tax ID 662340-0169 Price Per Unit NA Grantor Estate of William Ruth Transaction Type Closed Sale Grantee Manjit Singh Financing 100% Cash Legal Description NA Property Rights Leased Fee Book/Page or Reference Doc 202307311080 Days on Market NA Sale Verification Source Acres 0.7 Topography NA Land SF 30,091 Zoning CC-MU Road Frontage NA Flood Zone NA Shape NA Encumbrance or Easement NA Utilities NA Environmental Issues NA Corner NA GBA 7,863 PGI NA Rentable Area 7,863 EGI NA No. of Buildings NA Occupancy NA No. of Stories 2 Vacancy 85.0% No. of Units NA Expense Ratio NA Year Built 2004 NOI NA Renovations NA Cap Rate NA Condition NA EGIM NA Property Type Office Building Parking Spaces 33 No Of Retail Units NA Parking Type NA Retail GBA NA Parking Adequacy NA GLA NA Parking Ratio GBA 4.20 Parking Ratio RA 4.20 Percent Retail 0.00%Parking Ratio Unit 0.00 Site Office Property Type Characteristics Improved Sale 4 AEI Consultants confirmed Listing Broker Brian Manaois (206) 890-2585. Seller took a cash offer due to an estate sale, property probably sold for 5-10% less due to that. 85% leased at time of sale, Lease wasn't NNN, more like modified gross and trying to sell as NNN. Cap rate was around 6%. Improvements & Financial Data Transaction Sale Comments 1.800.801.3224 www.aeiconsultants.com ID 12481 Address 3500 Maple Valley Hwy City Renton State WA Zip 98058-2871 County King Latitude 47.4747563 Longitude -122.1723736 ID 12481 Date 4/14/2023 Address 3500 Maple Valley Hwy Price $1,210,000 City Renton Price Per RA $378.72 State WA Price Per SF $378.72 Tax ID 512690-0505 Price Per Unit NA Grantor Humble & Davenport Transaction Type Closed Sale Grantee Kristin & Mike Griffith Financing 60% 1st T.D. Legal Description NA Property Rights Fee Simple Book/Page or Reference Doc 20230413000693 Days on Market 48 Sale Verification Source Acres 0.3 Topography NA Land SF 13,974 Zoning CN Road Frontage NA Flood Zone NA Shape NA Encumbrance or Easement NA Utilities NA Environmental Issues NA Corner NA GBA 3,195 PGI NA Rentable Area 3,195 EGI NA No. of Buildings NA Occupancy NA No. of Stories 1 Vacancy NA No. of Units NA Expense Ratio NA Year Built 1998 NOI NA Renovations NA Cap Rate NA Condition NA EGIM NA Property Type Office Building Parking Spaces 8 No Of Retail Units NA Parking Type NA Retail GBA NA Parking Adequacy NA GLA NA Parking Ratio GBA 2.50 Parking Ratio RA 2.50 Percent Retail 0.00%Parking Ratio Unit 0.00 Improved Sale 5 Sale Comments Transaction Site AEI Consultants confirmed with Listing Broker James Betzer (206) 605-3568. The seller negotiated with the buyer after the sale a leaseback for 6 months until their new property was ready, it had no effect on the sales price. Broker state that small offices for around $1,000,000 are very desirable and have a lot of interest and sell quickly. Broker stated that downtown Renton is pretty tired, property owners do not keep buildings updated and maintained, rent tends to be less in the downtown district. Office Property Type Characteristics Improvements & Financial Data 1.800.801.3224 www.aeiconsultants.com Rent Comparable Data Sheets Address City State Zip County Latitude Longitude Tax ID Property Major Type Property Type Property Sub Type ID Name Address City State Property Major Type Property Type Property Type No Of Retail Units Retail GBA GLA Percent Retail Tenant Size Base Rent/SF Start Date Term Office 4,025 $27.00 4/6/2024 0 Totals 4,025 $27.00 Averages 4,025 $27.00 Office 47.4513598 Building Office Building 575 Andover Park W Low Rise Parking Adequacy 1980 575 Andover Park W 575 Andover Park W Office NA NA Parking Type Parking Ratio GBA 13 Leases NA NA Parking Ratio Unit Parking SpacesOffice Building Type FS Parking Ratio RA NA NA 4,025 Lease Comparable 1 -122.2555301 262304-9143 NAVacancy Tukwila 0.0% Office Property Type Characteristics 12487 Year Built Condition No. of Buildings GBA Rentable Area No. of Units Office Building AEI Consultants attempted to contact Leasing Broker Michael George (425) 586-5618. 4,025 Comments Location WA Tukwila WA 98188 NA 3.23 3.23 0.00 1.800.801.3224 www.aeiconsultants.com Address City State Zip County Latitude Longitude Tax ID Property Major Type Property Type Property Sub Type ID Name Address City State Property Major Type Property Type Property Type No Of Retail Units Retail GBA GLA Percent Retail Tenant Size Base Rent/SF Start Date Term Office 2,053 $20.04 6/1/2023 5 years Totals 2,053 $20.04 Low Rise No. of Buildings NNN NA 0.97 Type NA WA WA 98057 NA 47.4808931 Rentable Area No. of Units NA Office Building NA Leases 0.97 0.000.0% 1980 NA Vacancy Office Building 263 Rainier Ave S Renton 2Parking Spaces -122.2185765 263 Rainier Ave S AEI Consultants attempted to contact Leasing Broker Alex Ardiente (425) 273-3386. Comments Office NA Lease Comparable 2 Office 263 Rainier Ave S NA Renton 2,053 Office Building NA Parking Adequacy Year Built Parking Type Parking Ratio GBA Parking Ratio RA Parking Ratio Unit 12488 GBA Office Property Type Characteristics 182305-9033 2,053 Condition Location Building 1.800.801.3224 www.aeiconsultants.com Address City State Zip County Latitude Longitude Tax ID Property Major Type Property Type Property Sub Type ID Name Address City State Property Major Type Property Type Property Type No Of Retail Units Retail GBA GLA Percent Retail Tenant Size Base Rent/SF Start Date Term Office 4,565 $30.00 6/9/2023 0 Totals 4,565 $30.00 Office Property Type Characteristics Parking Ratio Unit Type FS Comments AEI Consultants attempted to contact Leasing Broker Bojidar Gabrovski (847) 275-8474. 1000 Oakesdale Ave SW Renton WA 98057 0.0% Office Building WA NA Office NA 4,565 085022-0010 NA NA 4,565 47.4707137 NA 3.94 0.00 Renton Office Building 1000 Oakesdale Ave SW NA Lease Comparable 3 1000 Oakesdale Ave SW 12489 1989 Parking Ratio RA Leases Parking Ratio GBA NA Parking Adequacy Building Parking Type Office Building Low Rise Location 18 NA 3.94 Office NA Parking Spaces -122.2337481 Washington Year Built Condition No. of Buildings GBA Rentable Area No. of Units Vacancy 1.800.801.3224 www.aeiconsultants.com Address City State Zip County Latitude Longitude Tax ID Property Major Type Property Type Property Sub Type ID Name Address City State Property Major Type Property Type Property Type No Of Retail Units Retail GBA GLA Percent Retail Tenant Size Base Rent/SF Start Date Term Available 4,338 $15.00 1/0/1900 0 Totals 4,338 $15.00 Renton NA Parking Ratio Unit Parking Adequacy NA Comments WA 98057 Washington 47.4732719 NA Parking Ratio RA Parking Ratio GBA Low Rise Lease Comparable 4 4,338 711 Powell Ave SW 0.0% 4.15 Condition711 Powell Ave SW Location 12490 4.15 Leases AEI Consultants attempted to contact Leasing Broker Bojidar Gabrovski (847) 275-8474. Office Building NA -122.231541 Renton No. of Buildings 4,338 1983 NA Office NA 18Parking Spaces 0.00 Office Building NA GBA Rentable Area No. of Units Office Building NA Vacancy Building NA Office Property Type Characteristics Parking Type Year Built Type NNN 711 Powell Ave SW 085020-0010 Office WA 1.800.801.3224 www.aeiconsultants.com Address City State Zip County Latitude Longitude Tax ID Property Major Type Property Type Property Sub Type ID Name Address City State Property Major Type Property Type Property Type No Of Retail Units Retail GBA GLA Percent Retail Tenant Size Base Rent/SF Start Date Term Office 3,340 $18.96 1/0/1900 0 Totals 3,340 $18.96 1200 Whitman Ct NE Year Built Condition 3,340 3,340 No. of Buildings GBA 2000 WA NA 0.0% 47.5031886 10 Rentable Area 0.00 Comments 1200 Whitman Ct NE Vacancy NA NNN Type 2.99 Office AEI Consultants attempted to contact Leasing Broker JEFF JEREMIAH (425) 453-4545. Elevator access, Furnished, Open space for cubicles, Professional reception & 10 private offices. 1200 Whitman Ct NE 12491 NA NA Leases Location Parking Spaces Parking Type Parking Ratio RA Parking Ratio Unit NA Parking Adequacy NA Office Building Renton NA 2.99 NA Office -122.1617778 032305-9283 Renton Building WA 98059 Washington No. of Units Low Rise Office Property Type Characteristics NA Lease Comparable 5 Office Building Parking Ratio GBA Office Building 1.800.801.3224 www.aeiconsultants.com Supporting Documents *This image has been modified from its original form KYLE STERLING ksterling@nai-psp.com For Sale 211 Morris Ave S RENTON, WA Offering Summary NAI Puget Sound Properties is pleased to present for sale 211 Morris Avenue South in Renton, WA. The property is comprised of a 4,666 square foot single-story office building, situated on a 12,284 square foot lot. Originally built in 1965, the building underwent a full remodel in 2006/2007, creating a beautiful open-concept office space with exterior private office suites. The property is currently owner-occupied with the ability to vacate soon after closing, creating an opportunity for an owner-user buyer. $1,400,000 BUILDING SIZE 4,666 SF LOT SIZE 12,284 SF ZONING CD YEAR BUILT/RENOVATED 1965/2007 HEATING/COOLING Heat Pump (Roof-Mounted) PARKING 24 Striped Spaces (Opportunity to add more to west side of building). Southern row of spaces is located on city owned land. The owner of subject property pays ground rent of $5,000 annually for perpetual use. Offering Memorandum | 2nai-psp.com +OWNER-USER OPPORTUNITY Property will be delivered vacant at or soon after closing. (Seller may require a short-term lease back.) +FANTASTIC BUILDING CONDITION Building went through a full remodel in 2006/2007 and current floor plan is open concept on the interior surrounded by a ring of private offices, bathrooms, mail room, breakroom and kitchen, etc. +PRIME LOCATION Centrally located in the heart of downtown Renton’s commercial core. +FLEXIBLE ZONING Zoning allows for any office and retail uses. Including educational facilities and laboratories for light manufacturing, research, or testing. Investment Highlights VIEW ZONING INFO Offering Memorandum | 3nai-psp.com Offering Memorandum | 4nai-psp.com Market Overview The Puget Sound Region is considered one of the fastest-growing markets in the United States. Home to innovative industry leaders Amazon, Microsoft, Costco, Starbucks, Boeing, Nordstrom, Expedia, Concur Technologies, UW Medicine, Nintendo, and T-Mobile. The presence of these global leaders has attracted companies from all over the country including tech giants Facebook, Google, Apple, Uber, and Salesforce. Exponential growth from these companies has allowed many cities within the Seattle submarket to flourish. Renton is emerging as the next hot neighborhood since it is zoned appropriately and has room to grow. It offers convenient access to Seattle, Bellevue, Tacoma, and SeaTac International Airport. Home to 99,692 residents, this industrial city has transformed into one of the most affluent areas in the region. The city’s close proximity to Seattle (11 miles) and Bellevue (9 miles) factor into being such a desirable location for commercial tenants. Renton is well known for manufacturing, technology, and healthcare organizations, including the Boeing 737 family of commercial airplanes, Valley Medical Center, Amazon Fulfillment Center, IKEA, Wizards of the Coast and Providence Health & Services. Boeing currently occupies 1.1 million square feet of factory space, which is next to the Renton Municipal Airport. Renton is also adjacent to Tukwila’s Westfield Southcenter, which is the largest shopping center in Washington and the Pacific Northwest. The 2-level indoor shopping mall has over 200 stores and eateries. In addition to the mall, the surrounding area offers a plethora of retail amenities and activities. Some include: iFLY Indoor Skydiving, Acme Bowl, Northwest Seaplanes, DEFY, Family Fun Center and The Museum of Flight. Offering Memorandum | 5nai-psp.com Custom map April 26, 2024 ©2024 Esri Page 1 of 1 1 MILE 3 MILES 5 MILES Population 12,770 112,360 271,043 Households 5,884 44,259 100,457 Median Age 38.3 37.1 38.0 Median HH Income $65,500 $88,343 $98,859 Avg. HH Income $99,862 $120,621 $137,125 Renter Occupied Housing Units 4,243 22,613 42,533 Demographic Overview Offering Memorandum | 6nai-psp.com THE INFORMATION CONTAINED HEREIN HAS BEEN GIVEN TO US BY THE OWNER OF THE PROPERTY OR OTHER SOURCES WE DEEM RELIABLE, WE HAVE NO REASON TO DOUBT ITS ACCURACY, BUT WE DO NOT GUARANTEE IT. ALL INFORMATION SHOULD BE VERIFIED PRIOR TO PURCHASE OR LEASE. G:\SHARED DRIVES\ADMIN TEAM\MARKETING\MARKETING - INDESIGN\2024\OFFERING MEMORANDUM\211 MORRIS AVE - KS\211 MORRIS AVE S EXCLUSIVELY LISTED BY: 211 Morris Ave S RENTON, WA KYLE STERLING 425 586 5608 ksterling@nai-psp.com 1.800.801.3224 www.aeiconsultants.com CoStar Market Analysis Renton/Tukwila PREPARED BY Jesselyn Gulla Office Capital Markets Report Seattle - WA USA OFFICE CAPITAL MARKETS REPORT - SUBMARKET Capital Markets Overview 1 Market Pricing 6 Buying & Selling By Owner Type 8 Investment Trends By Buyer & Seller Origin 9 Submarket Sales Trends 10 Recent Significant Sales 11 Players 13 Sale Trends 17 Renton/Tukwila Office 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Capital Markets Overview Renton/Tukwila Office $3.9B $103.6M 7.3%-7.2% Asset Value 12 Mo Sales Volume Market Cap Rate Mkt Sale Price/SF Chg (YOY) 12 MO SALES PRICE Average Lowest Highest Market Cap Rate 7.0%6.0%8.4%7.3% Sale Price/SF $151 $139 $528 $344 Sale Price $10.4M $750K $85.8M - Sale vs Asking Price -7.3%-12.2%7.4%- % Leased at Sale 94.2%82.2%100%- 12 MO SALES VOLUME Total Lowest Highest Transactions 13 -- Sales Volume $103.6M $750K $85.8M Properties Sold 11 -- Transacted SF 696.2K 1.3K 617.2K Average SF 53.6K 1.3K 617.2K KEY PERFORMANCE INDICATORS SUMMARY Annual sales volume in the Renton/Tukwila office submarket has averaged $86.2 million over the past five years, and the 12-month high over that stretch was $150 million. The average transaction sales price over the past year was $151/SF. That compares to the Seattle metro average of $240/SF. After a stretch with little sales activity, Alaska Airlines signaled its long-term commitment to the area by purchasing a 600,000 SF office space where it had already leased about 107,000 SF. Alaska plans to use the space as a training and operations center. The company bought the North Building at Longacres for $86 million and plans to spend another $100 million building out and renovating the space, with completion set for the end of 2025. Most sales have been significantly smaller than this. One 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 2 Capital Markets Overview Renton/Tukwila Office of the most recent sales was for a 1980 vintage two- story office building traded in 23Q4 for $4.6 million. The buyer was an owner-user medical tenant already occupying part of the building. Aside from Alaska's purchase, this deal was the largest driver of sales volume over the past year. Many large institutional buyers remain sidelined in the current capital environment, providing an opportunity for owner users. These buyers will likely remain the core of the buyer pool over the next few months. 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 3 Capital Markets Overview Renton/Tukwila Office MARKET SALE PRICE & TRANSACTION SALE PRICE PER SF MARKET CAP RATE & TRANSACTION CAP RATE SALES VOLUME BY TRANSACTION TYPE 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 4 Capital Markets Overview Renton/Tukwila Office CAP RATE DISTRIBUTION PAST 12 MONTHSSALE PRICE PER SF DISTRIBUTION PAST 12 MONTHS CAP RATE BY TRANSACTION TYPESALE PRICE PER SF BY TRANSACTION TYPE SOLD SF AS % OF TOTAL SFCUMULATIVE SALES VOLUME BY YEAR 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 5 Capital Markets Overview Renton/Tukwila Office ASSET VALUE BY OWNER TYPESALES VOLUME BY BUYER TYPE PAST 12 MONTHS OCCUPANCY AT SALESALE TO ASKING PRICE DIFFERENTIAL PROBABILITY OF SELLING IN MONTHSMONTHS TO SALE 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 6 Market Pricing Renton/Tukwila Office MARKET CAP RATEMARKET SALE PRICE PER SF MARKET CAP RATE BY STAR RATINGMARKET SALE PRICE PER SF BY STAR RATING MARKET CAP RATE DISTRIBUTIONMARKET SALE PRICE PER SF DISTRIBUTION 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 7 Market Pricing Renton/Tukwila Office 4-5 STAR MARKET CAP RATE DISTRIBUTION4-5 STAR MARKET SALE PRICE PER SF DISTRIBUTION 3 STAR MARKET CAP RATE DISTRIBUTION3 STAR MARKET SALE PRICE PER SF DISTRIBUTION 1-2 STAR MARKET CAP RATE DISTRIBUTION1-2 STAR MARKET SALE PRICE PER SF DISTRIBUTION 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 8 Buying & Selling By Owner Type Renton/Tukwila Office SALES VOLUME BY BUYER TYPE SALES VOLUME BY SELLER TYPE NET BUYING & SELLING BY OWNER TYPE 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 9 Investment Trends By Buyer & Seller Origin Renton/Tukwila Office ASSET VALUE BY OWNER ORIGINSALES VOLUME BY BUYER ORIGIN PAST 12 MONTHS SALES VOLUME BY OWNER ORIGIN Year Sales Volume Bought Sold Net Trans Bought Sold Net Trans Bought Sold Net Trans Total Local National Foreign YTD $93.7M $43.8M $49.6M -$5.8M $45.5M $44.1M $1.4M --- 2023 $26.1M $2.9M $6.2M -$3.3M $23.2M $20M $3.3M --- 2022 $115.6M $44.8M $54.5M -$9.7M $64.8M $61.2M $3.7M $5.6M -$5.6M 2021 $150.1M $94.7M $41.4M $53.3M $52.2M $99.2M -$47M $2.6M $8.8M -$6.2M 2020 $19.2M $9.1M $17.1M -$8.1M $10.1M $2.1M $8.1M --- 2019 $97M $18M $15.6M $2.4M $79M $79.9M -$927K -$1.5M -$1.5M 2018 $75.7M $40.4M $12.9M $27.4M $34.1M $61.4M -$27.2M $591.7K $788.9K -$197.2K 2017 $120.2M $37M $19.3M $17.7M $82.2M $100.5M -$18.4M --- 2016 $171.2M $38.9M $80.8M -$41.9M $132.3M $87.8M $44.5M -$2.6M -$2.6M 2015 $73.7M $27.6M $13.8M $13.8M $46.1M $59.8M -$13.7M $0 $110.8K -$110.8K 2014 $82.2M $19.9M $6.7M $13.2M $62.4M $390K $62M -$75.2M -$75.2M CAP RATE BY BUYER ORIGINSALE PRICE PER SF BY BUYER ORIGIN 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 10 Submarket Sales Trends Renton/Tukwila Office SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS Submarket Name Sales Volume Transactions Transacted SF Avg SF Mkt Cap Rate Mkt Sale Price/SF Renton/Tukwila $103,554,500 13 696,207 53,554 7.3%$344 Coal Creek/Issaquah $69,816,600 4 191,754 47,939 7.5%$423 Tacoma CBD $58,359,200 24 1,263,236 52,635 7.5%$176 Lake Union $56,870,594 3 248,138 82,713 6.8%$530 Queen Anne/Magnolia $53,330,000 4 168,901 42,225 7.2%$396 Seattle CBD $36,600,000 1 362,661 362,661 6.7%$456 520 Corridor $36,050,000 5 61,439 12,288 7.0%$387 Tacoma Suburban $33,503,993 28 293,386 10,478 8.5%$180 Suburban Bellevue $25,122,480 6 52,357 8,726 7.2%$430 Kirkland $24,700,000 6 49,157 8,193 6.9%$451 S Snohomish County $23,995,000 5 61,079 12,216 8.4%$219 Federal Way/Auburn $20,105,000 11 166,344 15,122 8.4%$220 Northgate/N Seattle $18,000,000 5 62,713 12,543 7.4%$314 Mill Creek/Woodinville $17,325,000 6 79,567 13,261 8.2%$269 Redmond $16,975,000 4 31,385 7,846 6.9%$398 N Snohomish County $16,349,000 10 76,886 7,689 7.9%$217 Ballard/U Dist $15,785,000 8 38,661 4,833 7.1%$393 Bothell/Kenmore $14,090,000 4 30,203 7,551 7.2%$299 S Everett/Harbor Point $13,545,000 4 39,347 9,837 8.1%$241 Univ. Place/Lakewood $12,372,270 15 153,618 10,241 8.6%$170 E King County $9,312,000 9 38,602 4,289 7.8%$292 Capitol Hill/Central Dist $9,080,000 5 15,619 3,124 7.1%$423 Seatac/Burien $8,424,950 6 26,268 4,378 7.5%$263 Pioneer Square/Waterfront $8,125,000 1 55,268 55,268 7.1%$376 E Pierce County $6,100,000 3 36,942 12,314 8.2%$216 Edmonds/Lynnwood $6,060,000 2 24,713 12,357 8.1%$258 Gig Harbor/W Pierce Co $4,397,500 6 52,372 8,729 8.2%$197 S Seattle $4,150,000 6 46,920 7,820 7.1%$332 Everett CBD $4,149,000 6 22,033 3,672 7.9%$223 Belltown/Denny Regrade $3,200,000 1 16,508 16,508 7.0%$451 Puyallup $1,900,000 8 14,735 1,842 8.1%$208 I-90 Corridor $1,800,000 1 1,896 1,896 7.3%$391 Spanaway $995,000 3 19,668 6,556 8.6%$194 Vashon/Maury Island $825,000 1 2,350 2,350 8.5%$225 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 11 Recent Significant Sales Renton/Tukwila Office 1301 SW 16th St • Boeing Longacres Bldg 25-01 Boeing Longacres Park • Renton, WA 98057 Buyer Alaska Air Group, Inc. (USA) Broker JLL Seller Unico Properties (USA) Sale Type Owner User Sale Cond Purchase By Tenant,Furniture, Fixture… Sale Date May 2024 Sale Price $85.8M ($139/SF) Leased 0% Hold Period 29 Months RBA 617,238 SF Year Built 1993 3900 E Valley Rd • 3900 Building Renton, WA 98057 Buyer Pacific NW Oral & Maxillof… (USA) Broker KW Commercial Seller The STG Group (USA) Broker Kidder Mathews Sale Type Investment Sale Date Oct 2023 Sale Price $4.6M ($228/SF) Cap Rate 6.0% (Actual) Leased 83% Hold Period 37 Months RBA 20,341 SF Year Built 1980 505 Strander Blvd • Wolverine Bldg Tukwila, WA 98188 Seller Andover Management Co… (USA) Broker The Andover Company, Inc. Sale Type Investment Sale Date Jun 2024 Sale Price $4.4M ($229/SF) Cap Rate 7.1% (Actual) Leased 100% Hold Period 20+ Years RBA 19,244 SF Year Built 1969 941 Powell Ave SW Renton, WA 98057 Buyer Jaime Barron, P.C. (USA) Broker Accent Commercial Real Estate Seller Maschmedt & Associates (USA) Broker CBRE Sale Type Owner User Sale Date Jul 2023 Sale Price $2.7M ($270/SF) Leased 100% Hold Period 195 Months RBA 9,811 SF Year Built 1985 15200 52nd Ave S • 52nd Ave Office Building Tukwila, WA 98188 Buyer Maryam Iqbal (USA) Broker Windermere Real Estate NE, Inc. Seller Christopher Benis (USA) Broker Cannon Commercial Real Estate Servi… Sale Type Investment Sale Date Mar 2024 Sale Price $1.7M ($210/SF) Cap Rate 8.4% (Actual) Leased 100% Hold Period 81 Months RBA 8,163 SF Year Built 1986 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 12 Recent Significant Sales Renton/Tukwila Office 433 Park Ave N Renton, WA 98057 Buyer Fofo Anga Seattle Comm… (USA) Broker CBRE Seller John Galluzzo and Linda… (USA) Broker The Remlinger Group Sale Type Owner User Sale Date Oct 2023 Sale Price $955K ($312/SF) Leased 100% Hold Period 20+ Years RBA 3,064 SF Year Built 1934 (Renov 2013) 3507 NE Sunset Blvd Renton, WA 98056 Buyer Arasu Elangovan (USA) Broker Leibsohn & Company Seller Joseph T Aaron (USA) Broker KW Mountains To Sound Realty Sale Type Investment Sale Date Jun 2024 Sale Price $950K ($528/SF) Leased 100% Hold Period 20+ Years RBA 1,800 SF Year Built 1958 (Renov 1997) 636 Shattuck Ave S Renton, WA 98057 Buyer Voc Healthcare (USA) Seller Michael Donnelly (USA) Sale Type Owner User Sale Date Oct 2023 Sale Price $900K ($444/SF) Leased 100% Hold Period 121 Months RBA 2,028 SF Year Built 1989 321 Burnett Ave S • Century 321 Bldg Renton, WA 98057 Buyer Prisma Wellnes (USA) Seller Boyd Buckingham (USA) +1 Sale Type Owner User Sale Date Feb 2024 Sale Price $850K ($216/SF) Hold Period <1 Month RBA 15,752 SF Year Built 1970 3459 S 152nd St Tukwila, WA 98188 Buyer Faisal Mohamed (USA) Broker Lee & Associates Commercial Real Es… Seller Vernon H & Leslie J Kacz… (USA) Broker NAI Puget Sound Properties Sale Type Investment Sale Cond Sale Leaseback Sale Date Oct 2023 Sale Price $750K ($521/SF) Cap Rate 6.5% (Actual) Leased 100% Hold Period 20+ Years RBA 1,440 SF Year Built 1978 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 13 Players Renton/Tukwila Office TOP OWNERS Company Name Owned SF Owned Props Avg SF 12 Mo Bought 12 Mo Sold 12 Mo Net Trans The Boeing Company 925,924 6 154,321 --- Starwood Capital Group 731,669 3 243,890 --- Alaska Air Group, Inc.617,238 1 617,238 $85,750,000 -$85,750,000 Sabey Corporation 595,188 6 99,198 --- Ryan Companies US, Inc.518,672 4 129,668 --- Ryan Companies 518,672 4 129,668 --- Kaiser Permanente 518,672 4 129,668 --- Seattle Children's Hospital 476,487 6 79,415 --- Hines 404,884 3 134,961 --- Innovatus Capital Partners, LLC 404,884 3 134,961 --- Unico Properties 332,798 1 332,798 -$85,750,000 -$85,750,000 John C. Radovich Development 330,662 7 47,237 --- Greenbridge Management Company 327,127 5 65,425 --- National Real Estate Advisors 288,972 3 96,324 --- AAA Management LLC 287,587 2 143,794 --- Kairos Investment Management Com…273,903 2 136,952 --- City of Renton 253,051 7 36,150 --- Laird Norton Properties 236,461 13 18,189 --- Laird Norton Company 236,461 13 18,189 --- Omar and Christine Lee 223,646 11 20,331 --- BH Properties, LLC 197,446 1 197,446 --- Federal Partners 197,446 1 197,446 --- Talon Private Capital, LLC 171,155 3 57,052 --- U-Haul Holding Company 167,000 1 167,000 --- Valley Medical Center 166,016 4 41,504 --- Healthcare Realty Trust Incorporated 155,497 3 51,832 --- Healthcare Realty Trust Incorporated 155,497 3 51,832 --- PACCAR 137,247 2 68,624 --- Bridge33 Capital 126,758 4 31,690 --- Boeing Employees’ Credit Union 125,250 1 125,250 --- Federal Reserve System 104,288 1 104,288 --- The Carlyle Group 103,759 2 51,880 --- Healthpeak Properties, Inc.103,000 1 103,000 --- GIC Private Limited 99,363 3 33,121 --- City of Tukwila 96,321 2 48,161 --- King County Property Services 95,552 1 95,552 --- Sandorffy & Company 83,964 1 83,964 --- June Yoo 78,461 2 39,231 --- Rizk Ventures 71,057 1 71,057 --- Workspace Property Trust 71,057 1 71,057 --- GIC Real Estate 71,057 1 71,057 --- King County Dept. of Assessment 70,238 1 70,238 --- 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 14 Players Renton/Tukwila Office TOP BUYERS PAST 12 MONTHS Company Name Sales Volume Transactions Transacted SF Avg SF Cap Rate Sale Price/SF Alaska Air Group, Inc.$85,750,000 1 617,238 617,238 -$139 Pacific NW Oral & Maxillofacial Surgeons $4,637,000 1 20,341 20,341 6.0%$228 Jaime Barron, P.C.$2,650,000 1 9,811 9,811 -$270 Maryam Iqbal $1,712,500 1 8,163 8,163 8.4%$210 Fofo Anga Seattle Community $955,000 1 3,064 3,064 -$312 Arasu Elangovan $950,000 1 1,800 1,800 -$528 Voc Healthcare $900,000 1 2,028 2,028 -$444 Prisma Wellnes $850,000 1 3,938 3,938 -$216 Faisal Mohamed $750,000 1 1,440 1,440 6.5%$521 Xiaoying Wang -2 7,828 3,914 -- 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 15 Players Renton/Tukwila Office TOP SELLERS PAST 12 MONTHS Company Name Sales Volume Transactions Transacted SF Avg SF Cap Rate Sale Price/SF Unico Properties $85,750,000 1 617,238 617,238 -$139 The STG Group $4,637,000 1 20,341 20,341 6.0%$228 Andover Management Company LLC $4,400,000 1 19,244 19,244 7.1%$229 Maschmedt & Associates $2,650,000 1 9,811 9,811 -$270 Christopher Benis $1,712,500 1 8,163 8,163 8.4%$210 John Galluzzo and Linda Galluzzo $955,000 1 3,064 3,064 -$312 Joseph T Aaron $950,000 1 1,800 1,800 -$528 Michael Donnelly $900,000 1 2,028 2,028 -$444 Vernon H & Leslie J Kaczmarski $750,000 1 1,440 1,440 6.5%$521 Boyd Buckingham $425,000 1 1,969 1,969 -$216 Karen A. Buckingham $425,000 3 9,797 3,266 -$43 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 16 Players Renton/Tukwila Office TOP BROKERS PAST 12 MONTHS Company Name Sales Volume Transactions Transacted SF Avg SF Cap Rate Sale Price/SF JLL $85,750,000 1 617,238 617,238 -$139 Keller Williams Realty $5,587,000 2 22,141 11,071 6.0%$252 Kidder Mathews $4,637,000 1 20,341 20,341 6.0%$228 CORFAC International Inc.$4,400,000 1 19,244 19,244 7.1%$229 CBRE $3,605,000 2 12,875 6,438 -$280 Accent Commercial Real Estate $2,650,000 1 9,811 9,811 -$270 Cannon Commercial Real Estate Services $1,712,500 1 8,163 8,163 8.4%$210 Windermere Real Estate $1,712,500 1 8,163 8,163 8.4%$210 The Remlinger Group $955,000 1 3,064 3,064 -$312 Leibsohn & Company $950,000 1 1,800 1,800 -$528 Lee & Associates $750,000 1 1,440 1,440 6.5%$521 NAI Global $750,000 1 1,440 1,440 6.5%$521 Rob Gasca Real Estate Group -2 7,828 3,914 -- 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 17 Sale Trends Renton/Tukwila Office OVERALL SALES Completed Transactions (1) Turnover Avg Price/SFDealsVolumeYear Market Pricing Trends (2) Avg Price Price IndexAvg Cap Rate Price/SF Cap Rate 2028 -----156-$327.84 6.7% 2027 -----141-$296.66 7.1% 2026 -----133-$280.45 7.4% 2025 -----132-$276.98 7.7% 2024 -----146-$307.50 7.6% YTD $93.7M7 5.9%$144.01$18,732,500 1637.7%$343.99 7.3% 2023 $26.1M11 0.9%$268.32$2,902,444 1666.3%$350.10 7.2% 2022 $115.6M25 9.3%$185.98$6,086,737 1905.8%$398.97 6.4% 2021 $150.1M22 14.1%$94.90$6,824,498 2026.3%$424.74 5.9% 2020 $19.2M7 1.0%$182.91$3,205,000 1864.5%$390.37 6.1% 2019 $97M20 5.3%$165.35$4,851,066 1786.0%$374.06 6.3% 2018 $75.7M26 7.0%$105$2,912,539 1657.0%$346.79 6.4% 2017 $120.2M28 8.5%$138.70$4,809,749 1577.3%$330.09 6.2% 2016 $171.2M19 7.8%$223.19$9,009,844 1535.4%$322.93 6.0% 2015 $73.7M19 5.1%$157.23$4,913,534 1467.0%$308.17 6.0% 2014 $82.2M7 5.3%$159.29$11,748,970 1367.5%$285.19 6.1% 2013 $18.5M10 1.2%$162.89$2,055,000 1248.3%$260.42 6.4% (1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred. 4 & 5 STAR SALES Completed Transactions (1) Turnover Avg Price/SFDealsVolumeYear Market Pricing Trends (2) Avg Price Price IndexAvg Cap Rate Price/SF Cap Rate 2028 -----147-$480.08 6.0% 2027 -----133-$434.93 6.4% 2026 -----127-$414.41 6.8% 2025 -----126-$412.19 7.0% 2024 -----143-$465.56 6.9% YTD $85.8M1 20.5%$138.93$85,750,000 162-$527.88 6.6% 2023 -----164-$537.20 6.5% 2022 $49.6M2 7.7%$213.73$24,783,049 189-$617.60 5.8% 2021 $72M3 34.1%$70.08$23,993,265 203-$662.34 5.2% 2020 -----191-$623.48 5.4% 2019 -----185-$604.75 5.6% 2018 -----173-$565.94 5.6% 2017 $72.4M4 24.9%$139.63$18,105,306 166-$541.14 5.5% 2016 $36.1M3 12.6%$172.40$12,048,082 160-$523.22 5.4% 2015 -----153-$498.39 5.4% 2014 -----140-$458.52 5.5% 2013 $12M1 4.5%$168.88$12,000,000 1287.9%$416.87 5.7% (1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred. 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 18 Sale Trends Renton/Tukwila Office 3 STAR SALES Completed Transactions (1) Turnover Avg Price/SFDealsVolumeYear Market Pricing Trends (2) Avg Price Price IndexAvg Cap Rate Price/SF Cap Rate 2028 -----163-$277.93 6.8% 2027 -----147-$251.59 7.2% 2026 -----139-$236.91 7.6% 2025 -----137-$233.17 7.8% 2024 -----150-$256.17 7.7% YTD $1.7M1 0.2%$209.79$1,712,500 1668.4%$284.01 7.4% 2023 -----170-$289.53 7.3% 2022 $24.9M9 11.0%$148.68$8,305,450 193-$329.04 6.5% 2021 $69.7M11 9.8%$132.87$6,339,280 2046.3%$348.16 6.0% 2020 $4.7M2 0.4%$302.11$4,651,939 183-$312.27 6.3% 2019 $80.9M7 8.8%$171.54$11,552,860 1736.0%$295.88 6.5% 2018 $32.2M9 5.9%$102.66$3,573,522 159-$270.89 6.6% 2017 $31.8M11 3.9%$152.66$2,890,001 1507.1%$256.53 6.5% 2016 $56.1M7 5.3%$198.02$8,009,158 1485.9%$253.16 6.2% 2015 $61M9 7.4%$167.12$12,192,000 1427.0%$243.24 6.2% 2014 $64.6M4 8.2%$147.29$16,153,197 133-$227.12 6.3% 2013 $630K1 0.1%$134.04$630,000 1228.7%$208.43 6.6% (1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred. 1 & 2 STAR SALES Completed Transactions (1) Turnover Avg Price/SFDealsVolumeYear Market Pricing Trends (2) Avg Price Price IndexAvg Cap Rate Price/SF Cap Rate 2028 -----161-$260.57 7.1% 2027 -----145-$235.04 7.6% 2026 -----136-$220.53 7.9% 2025 -----133-$216.26 8.2% 2024 -----146-$236.72 8.1% YTD $6.2M5 1.2%$248.18$2,066,667 1627.1%$262.12 7.7% 2023 $26.1M11 3.5%$268.32$2,902,444 1646.3%$265.98 7.7% 2022 $41.2M14 7.8%$185.15$2,940,397 1855.8%$299.06 6.9% 2021 $8.4M8 1.1%$278.56$1,053,385 196-$317.26 6.3% 2020 $14.6M5 3.1%$162.46$2,915,612 1794.5%$290.49 6.6% 2019 $16.2M13 4.0%$140.02$1,242,408 1716.0%$276.91 6.7% 2018 $43.6M17 14.3%$106.79$2,562,606 1597.0%$257.55 6.8% 2017 $16M13 5.3%$114.48$1,603,248 1517.6%$245.01 6.5% 2016 $79M9 9.6%$288.01$8,775,409 1494.9%$242.15 6.2% 2015 $12.7M10 3.6%$122.52$1,274,301 141-$228.92 6.3% 2014 $17.6M3 2.7%$227.14$5,876,667 1307.5%$210.92 6.4% 2013 $5.9M8 1.4%$155.23$837,857 119-$192.61 6.7% (1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred. 7/8/2024© 2024 CoStar Group - Licensed to AEI Valuation - 1335277 Page 19 1.800.801.3224 www.aeiconsultants.com Scope, Methodology & Definitions Scope of Work The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It also conforms to Title XI Regulations and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) updated in 1994 and further updated by the Interagency Appraisal and Evaluation Guidelines promulgated in 2010. According to the Uniform Standards of Professional Appraisal Practice, it is the appraiser’s responsibility to develop and report a scope of work that results in credible results that are appropriate for the appraisal problem and intended user(s). Therefore, the appraiser must identify and consider: • the client and intended users; • the intended use of the report; • the type and definition of value; • the effective date of value; • assignment conditions; • typical client expectations; and • typical appraisal work by peers for similar assignments. Methodology Three basic approaches may be used to arrive at an estimate of market value. They are: 1. The Cost Approach 2. The Income Approach 3. The Sales Comparison Approach Cost Approach The Cost Approach is summarized as follows: Cost New - Depreciation + Land Value = Value Income Approach The Income Approach converts the anticipated flow of future benefits (income) to a present value estimate through a capitalization and or a discounting process. Sales Comparison Approach The Sales Comparison Approach compares sales of similar properties with the subject property. Each comparable sale is adjusted for its inferior or superior characteristics. The values derived from the adjusted comparable sales form a range of value for the subject. By process of correlation and analysis, a final indicated value is derived. Final Reconciliation The appraisal process concludes with the Final Reconciliation of the values derived from the approaches applied for a single estimate of market value. Different properties require different means of analysis and lend themselves to one approach over the others. This glossary contains the definitions of common words and phrases, used throughout the appraisal industry, as applied within this document. Please refer to the publications listed in the Works Cited section below for more information. 1.800.801.3224 www.aeiconsultants.com Highest & Best Use Highest and best use may be defined as the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. 1. Legally Permissible: What uses are permitted by zoning and other legal restrictions? 2. Physically Possible: To what use is the site physically adaptable? 3. Financially Feasible: Which possible and permissible use will produce any net return to the owner of the site? 4. Maximally Productive. Among the feasible uses which use will produce the highest net return, (i.e., the highest present worth)? Land Value The Sales Comparison Approach is based on the premise that a buyer would pay no more for a specific property than the cost of obtaining a property with the same quality, utility, and perceived benefits of ownership. It is based on the principles of supply and demand, balance, substitution and externalities. The following steps describe the applied process of the Sales Comparison Approach. • The market in which the subject property competes is investigated; comparable sales, contracts for sale and current offerings are reviewed. • The most pertinent data is further analyzed and the quality of the transaction is determined. • The most meaningful unit of value for the subject property is determined. • Each comparable sale is analyzed and where appropriate, adjusted to equate with the subject property. • The value indication of each comparable sale is analyzed and the data reconciled for a final indication of value via the Sales Comparison Approach. Cost Approach The Cost Approach is based on the principle of substitution - that a prudent and rational person would pay no more for a property than the cost to construct a similar and competitive property, assuming no undue delay in the process. The Cost Approach tends to set the upper limit of value before depreciation is considered. The applied process is as follows: • Estimate the land value according to its Highest and Best Use. We have used the Sales Comparison Approach; the process is as follows: o Comparable sales, contracts for sale and current offerings are researched and documented. o Each comparable is analyzed and adjusted to equate with the subject property. o The value indication of each comparable is analyzed and the data reconciled for a land value indication. • Estimate the replacement cost of the building and site improvements. • Estimate the physical, functional and/or external depreciation accrued to the improvements. Sum the depreciated value of the improvements with the value of the land for an indication of value. Depreciation Depreciation may be defined as any loss of value from any cause. There are three general areas of depreciation: physical deterioration, functional obsolescence and external obsolescence. Depreciation may be curable or incurable, the test being that money spent to cure the depreciation be gained in value. If the depreciation costs more to fix than will be gained in value, then the depreciation is considered incurable. Physical Deterioration This results from deterioration from aging and use. This type of depreciation may be curable or incurable. 1.800.801.3224 www.aeiconsultants.com Functional Obsolescence This results from a lack of utility or desirability due to design or market perception of the improvements. This type of depreciation may be curable or incurable. External Obsolescence This is due to circumstances outside the property itself, such as industry, demographic and economic conditions or an undesirable proximate use. This type of depreciation is rarely curable. Sales Comparison Approach The Sales Comparison Approach is based on the premise that a buyer would pay no more for a specific property than the cost of obtaining a property with the same quality, utility, and perceived benefits of ownership. It is based on the principles of supply and demand, balance, substitution and externalities. The following steps describe the applied process of the Sales Comparison Approach. • The market in which the subject property competes is investigated; comparable sales, contracts for sale and current offerings are reviewed. • The most pertinent data is further analyzed and the quality of the transaction is determined. • The most meaningful unit of value for the subject property is determined. • Each comparable sale is analyzed and where appropriate, adjusted to equate with the subject property. • The value indication of each comparable sale is analyzed and the data reconciled for a final indication of value via the Sales Comparison Approach. Income Approach The Income Capitalization Approach to value is based on the present worth of the future rights to income. This analysis considers the subject from an investor point of view, the basic premise being that the amount and quality of the income stream are the basis for value of the property. Direct Capitalization Analysis The steps involved in capitalizing the subject's net operating income are as follows: • Develop the subject's Potential Gross Income (PGI) through analysis of the subject’s actual historic income and an analysis of competitive current market income rates. • Estimate and deduct vacancy and collection losses to develop the Effective Gross Income (EGI). • Develop and subtract operating expenses to derive the Net Operating Income (NOI). • Develop the appropriate capitalization rate (Ro). • Divide the net operating income by the capitalization rate for an estimate of value through the income approach. _______________________ Works Cited: ▪ Appraisal Institute. The Appraisal of Real Estate. 15th ed. Chicago: Appraisal Institute, 2020. PDF. ▪ Appraisal Institute. The Dictionary of Real Estate Appraisal. 7th ed. 2022. PDF. Revised edition of The dictionary of real estate appraisal, [2015] ▪ The Appraisal Foundation. 2020-2022 Uniform Standards of Professional Appraisal Practice (USPAP). Eff. January 1, 2020 through December 31, 2022 PDF. Definitions Alquist-Priolo Earthquake Fault Zones Alquist-Priolo earthquake fault zones are regulatory zones surrounding the surface traces of active faults in California. (A trace is a line on the earth's surface defining a fault.) Wherever an active fault exists, if it has the potential for surface rupture, a structure for human occupancy cannot be placed over the fault and must be a minimum distance from the fault (generally fifty feet). 1.800.801.3224 www.aeiconsultants.com Earthquake fault zones were conceived in the Alquist-Priolo Earthquake Fault Zoning Act (Alquist-Priolo Act). The intent of the Alquist-Priolo Act is to reduce losses from surface fault rupture. An active fault, for the purposes of the Alquist-Priolo Act, is one that has ruptured in the last 11,000 years. Band of Investment A technique in which the capitalization rates attributable to components of an investment are weighted and combined to derive a weighted-average rate attributable to the total investment (i.e., debt and equity, land and improvements). (Dictionary, 7th Edition) Common Area 1. The total area within a property that is not designed for sale or rental but is available for common use by all owners, tenants, or their invitees, e.g., parking and its appurtenances, malls, sidewalks, landscaped areas, recreation areas, public toilets, truck and service facilities. 2. In a shopping center, the walkways and areas onto which the stores face and which conduct the flow of customer traffic. (ICSC) (Dictionary, 7th Edition) Common Area Maintenance (CAM) 1. The expense of operating and maintaining common areas; may or may not include management charges and usually does not include capital expenditures on tenant improvements or other improvements to the property. 2. [For shopping centers, t]he amount of money charged to tenants for their shares of maintaining a center’s common area. The charge that a tenant pays for shared services and facilities such as electricity, security, and maintenance of parking lots. Items charged to common area maintenance may include cleaning services, parking lot sweeping and maintenance, snow removal, security, [amenities,] and upkeep. (ICSC) (Dictionary, 6th Edition) Debt Coverage Ratio (DCR) The ratio of net operating income to annual debt service (DCR = NOI/IM), which measures the relative ability of a property to meet its debt service out of net operating income; also called debt service coverage ratio (DSCR). A larger DCR typically indicates a greater ability for a property to withstand a reduction of income, providing an improved safety margin for a lender. (Dictionary, 6th Edition) Discount Rate A rate of return on capital used to convert future payments or receipts into present value. (Dictionary, 7th Edition) Effective Age The age of property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age. (Dictionary, 7th Edition) Effective Date 1. The date on which the appraisal or review opinion applies. (SVP) 2. The date to which an appraiser’s analyses, opinions, and conclusions apply; also referred to as date of value. (USPAP, 2020-2022 ed.) 3. The date that a lease goes into effect. (Dictionary, 7th Edition) Exposure Time 1. The time a property remains on the market. 2. An opinion, based on supporting market data, of the length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. (USPAP, 2020-2022 ed.) (Dictionary, 7th Edition) External Obsolescence A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent. There are two forms of external obsolescence: economic and locational. (Dictionary, 7th Edition) Extraordinary Assumption An assignment- specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. Comment: Uncertain information might include physical, legal, or economic characteristics of the subject property, or conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. (USPAP, 2020-2022 ed.) (Dictionary, 7th Edition) 1.800.801.3224 www.aeiconsultants.com Fee Simple Estate Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. (Dictionary, 7th Edition) Functional Obsolescence The impairment of functional capacity of improvements according to market tastes and standards. (Dictionary, 7th Edition) Functional Utility The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards; the efficiency of a building’s use in terms of architectural style, design and layout, traffic patterns, and the size and type of rooms. (Dictionary, 7th Edition) Gross Building Area (GBA) Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in the region. (Dictionary, 7th Edition) Gross Leasable Area (GLA) 1. Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above grade area. This includes mezzanines and basements if and when typically included in the market area of the type of property involved. 2. Gross leasable area plus all common areas. 3. For residential space, the total area of all floor levels measured from the exterior of the walls and including the superstructure and substructure basement; typically does not include garage space. (Dictionary, 7th Edition) Highest and Best Use 1. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) 4. [For fair value determination] The use of a nonfinancial asset by market participants that would maximize the value of the asset or the group of assets and liabilities (for example, a business) within which the asset would be used. (FASB Glossary) The highest and best use of a nonfinancial asset takes into account the use that is physically possible, legally permissible, and financially feasible. (FASB 820-10-35-10B). The highest and best use of a nonfinancial asset establishes the valuation premise used to measure the fair value of the asset, as follows: (a) The highest and best use of a nonfinancial asset might provide maximum value to market participants through its use in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities (for example, a business). (b) The highest and best use of the asset might provide maximum value to market participants on a standalone basis. (FASB 820-10-35-10E) (Dictionary, 7th Edition) Highest and Best Use of Land or a Site as Though Vacant Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. (Dictionary, 5th Edition) Highest and Best Use of Property as Improved The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. (Dictionary, 5th Edition) Hypothetical Condition 1. A condition that is presumed to be true when it is known to be false. (SVP) 2. A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comment: Hypothetical conditions 1.800.801.3224 www.aeiconsultants.com are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, 2020-2022 ed.) (Dictionary, 7th Edition) Lease Types Absolute Net Lease - A lease in which the tenant pays all expenses including structural maintenance, building reserves, and management; often a long-term lease to a credit tenant. Gross Lease - A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called full-service lease. Modified Gross Lease - A lease in which the landlord receives stipulated rent and is obligated to pay some, but not all, of the property’s operating and fixed expenses. Since assignment of expenses varies among modified gross leases, expense responsibility must always be specified. In some markets, a modified gross lease may be called a double net lease, net net lease, partial net lease, or semi-gross lease. (Dictionary, 7th Edition) Leased Fee Interest The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. (Dictionary, 7th Edition) Market Area The geographic region from which a majority of demand comes and in which the majority of competition is located. Depending on the market, a market area may be further subdivided into components such as primary, secondary, and tertiary market areas, or the competitive market area may be distinguished from the general market area. (Dictionary, 7th Edition) Market Rent The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution market support of a lease as of a specified date under conditions whereby • Lessee and lessor are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their best interests; • Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs). (Dictionary, 7th Edition) Market Value A type of value that is the major focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and refined, such as the following. 1. The most widely accepted components of market value are incorporated in the following definition: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self- interest, and assuming that neither is under undue duress. 2. Market value is described, not defined, in the Uniform Standards of Professional Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories: a) the relationship, knowledge, and motivation of the parties (i.e., seller and buyer); b) the terms of sale (e.g., cash, cash equivalent, or other terms); and c) the conditions of sale (e.g., exposure in a competitive market for a reasonable time prior to sale). Appraisers are cautioned to identify the exact definition of market value, and its authority, applicable in each appraisal completed for the purpose of market value. (USPAP, 2020-2022 ed.) 1.800.801.3224 www.aeiconsultants.com USPAP also requires that certain items be included in every appraisal report. Among these items, the following are directly related to the definition of market value: • Identification of the specific property rights to be appraised. • Statement of the effective date of the value opinion. • Specification as to whether cash, terms equivalent to cash, or other precisely described financing terms are assumed as the basis of the appraisal. • If the appraisal is conditioned upon financing or other terms, specification as to whether the financing or terms are at, below, or above market interest rates and/or contain unusual conditions or incentives. The terms of above- or below-market interest rates and/or other special incentives must be clearly set forth; their contribution to, or negative influence on, value must be described and estimated; and the market data supporting the opinion of value must be described and explained. 3. The following definition of market value is used by agencies that regulate federally insured financial institutions in the United States: The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994) 4. The International Valuation Standards Council defines market value for the purpose of international standards as follows: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. (IVS) 5. The Uniform Standards for Federal Land Acquisitions defines market value as follows: Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. (Uniform Appraisal Standards for Federal Land Acquisitions) (Dictionary, 7th Edition) Marketing Time An opinion of the amount of time to sell a property interest at the concluded market value or at a benchmark price during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which precedes the effective date of an appraisal. (Advisory Opinion 7 and Advisory Opinion 35 of the Appraisal Standards Board of The Appraisal Foundation address the determination of reasonable exposure and marketing time.) (Dictionary, 7th Edition) Net Operating Income (NOI or Io) The actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted. Note: This definition mirrors the convention used in corporate finance and business valuation for EBITDA (earnings before interest, taxes, depreciation, and amortization). (Dictionary, 7th Edition) Obsolescence One cause of depreciation; an impairment of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or external factors that make a property less desirable and valuable for a continued use; may be either functional or external. (Dictionary, 7th Edition) 1.800.801.3224 www.aeiconsultants.com Parking Ratio A ratio of parking area or parking spaces to an economic or physical unit of comparison. Minimum required parking ratios for various land uses are often stated in zoning ordinances. (Dictionary, 7th Edition) Rentable Area For office or retail buildings, the tenant’s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. The rentable area of a floor is computed by measuring to the inside finished surface of the dominant portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice. (Dictionary, 7th Edition) Replacement Cost The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout. (Dictionary, 7th Edition) Scope of Work 1. The type of data and the extent of research and analyses. (SVP) 2. The type and extent of research and analyses in an appraisal or appraisal review assignment. (USPAP, 2020- 2022 ed.) (Dictionary, 7th Edition) Stabilized Occupancy 1. The occupancy of a property that would be expected at a particular point in time, considering its relative competitive strength and supply and demand conditions at the time, and presuming it is priced at market rent and has had reasonable market exposure. A property is at stabilized occupancy when it is capturing its appropriate share of market demand. 2. An expression of the average or typical occupancy that would be expected for a property over a specified projection period or over its economic life. (Dictionary, 7th Edition) Tenant Improvements (TIs) 1. Fixed improvements to the land or structures installed for use by a lessee. 2. The original installation of finished tenant space in a construction project; subject to periodic change for succeeding tenants. (Dictionary, 7th Edition) Vacancy and Collection Loss A deduction from potential gross income (PGI) made to reflect income reductions due to vacancies, tenant turnover, and nonpayment of rent; also called vacancy and credit loss or vacancy and contingency loss. (Dictionary, 7th Edition) 1.800.801.3224 www.aeiconsultants.com Limiting Conditions & Assumptions Acceptance of and/or use of this report constitutes acceptance of the following limiting conditions and assumptions; these can only be modified by written documents executed by both parties. This appraisal is to be used only for the purpose stated herein. While distribution of this appraisal in its entirety is at the discretion of the client, individual sections shall not be distributed; this report is intended to be used in whole and not in part. No part of this appraisal, its value estimates or the identity of the firm or the appraiser(s) may be communicated to the public through advertising, public relations, media sales, or other media. All files, work papers and documents developed in connection with this assignment are the property of AEI Valuation. Information, estimates and opinions are verified where possible, but cannot be guaranteed. Plans provided are intended to assist the client in visualizing the property; no other use of these plans is intended or permitted. No hidden or unapparent conditions of the property, subsoil or structure, which would make the property more or less valuable, were discovered by the appraiser(s) or made known to the appraiser(s). No responsibility is assumed for such conditions or engineering necessary to discover them. Unless otherwise stated, this appraisal assumes there is no existence of hazardous materials or conditions, in any form, on or near the subject property. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyl, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, was not called to the attention of the appraiser nor did the appraiser become aware of such during the appraiser’s inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test for such substances. The presence of such hazardous substances may affect the value of the property. The value opinion developed herein is predicated on the assumption that no such hazardous substances exist on or in the property or in such proximity thereto, which would cause a loss in value. No responsibility is assumed for any such hazardous substances, nor for any expertise or knowledge required to discover them. Unless stated herein, the property is assumed to be outside of areas where flood hazard insurance is mandatory. Maps used by public and private agencies to determine these areas are limited with respect to accuracy. Due diligence has been exercised in interpreting these maps, but no responsibility is assumed for misinterpretation. Good title, free of liens, encumbrances and special assessments is assumed. No responsibility is assumed for matters of a legal nature. Necessary licenses, permits, consents, legislative or administrative authority from any local, state or Federal government or private entity are assumed to be in place or reasonably obtainable. It is assumed there are no zoning violations, encroachments, easements or other restrictions which would affect the subject property, unless otherwise stated. The appraiser(s) are not required to give testimony in Court in connection with this appraisal. If the appraisers are subpoenaed pursuant to a court order, the client agrees to pay the appraiser(s) AEI Valuation’s regular per diem rate plus expenses. Appraisals are based on the data available at the time the assignment is completed. Amendments/modifications to appraisals based on new information made available after the appraisal was completed will be made, as soon as reasonably possible, for an additional fee. Americans with Disabilities Act (ADA) of 1990 A civil rights act passed by Congress guaranteeing individuals with disabilities equal opportunity in public accommodations, employment, transportation, government services, and telecommunications. Statutory deadlines become effective on various dates between 1990 and 1997. AEI Valuation has not made a determination regarding the subject’s ADA compliance or non-compliance. Non-compliance could have a negative impact on value, however this has not been considered or analyzed in this appraisal. 1.800.801.3224 www.aeiconsultants.com Letter of Engagement 1.800.801.3224 www.aeiconsultants.com Qualifications/License www.aeiconsultants.com J. Richard West, Jr., MAI National Leader AEI Valuation | Executive Vice President EDUCATION • University of Southern California, B.S. Business Administration/RE Finance- 1993 CERTIFICATIONS • Member Appraisal Institute, MAI • Certified General Real Estate Appraiser: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, Washington SUMMARY OF PROFESSIONAL EXPERIENCE Over 20 years in the commercial real estate (CRE) valuation space and 10 years CRE investing for NCREIF investors. Spent a few years in CRE PropTech (General Manager for RIMS, Collateral 360, and LightBox Valuation). Now building a modern valuation company with AEI Consultants. PRIOR EXPERIENCE • LightBox, General Manager, Lender & Valuation Segments • CBRE Valuation & Advisory, Head of Americas Valuation, Executive Managing Director • Cushman & Wakefield Valuation & Advisory, Senior Director • PM Realty Advisors (RE Investor), Vice President Portfolio Management • Russell Real Estate Advisors, Vice President Portfolio Management Notable properties appraised: Ala Moana Mall (Hawaii), Los Angeles Coliseum & Sports Arena, LA Live, South Coast Plaza. Oversaw Americas practice of CBRE that delivered over 80,000 appraisals per year. State of Washington DEPARTMENT OF LICENSING APPRAISER PROGRAM PO Box 9021 Olympia, WA 98507-9021 JOHN RICHARD WEST 27511 VIA VALOR CAPISTRANO BEACH CA 92624 CERTIFIED GENERAL REAL ESTATE APPRAISER JOHN RICHARD WEST 27511 VIA VALOR CAPISTRANO BEACH CA 92624 1102027 11/07/2022 09/21/2024 License Number Issue Date Expiration Date