Continental Mills - Offering Memorandum

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CO N T I N E N TA L M I L L S 1 0 0 % N N N L E A S E D C O R P O R AT E H E A D Q U A R T E R S

84,250 Square Feet, Seattle Metro Area, T u k w i l a , W a s h i n g t o n


Affiliated Business Disclosure

Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner.

CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate

Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or

businesses including, but not limited to, brokerage services, property and facilities

representatives make any representation or warranty, expressed or implied, as to the accuracy

management, valuation, investment fund management and development. At times

or completeness of this Memorandum or any of its contents, and no legal commitment or

different Affiliates may represent various clients with competing interests in the same

obligation shall arise by reason of your receipt of this Memorandum or use of its contents;

transaction. For example, this Memorandum may be received by our Affiliates, including

and you are to rely solely on your investigations and inspections of the Property in evaluating

CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express

a possible purchase of the real property.

an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You

The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions

hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved

of interest or offers to purchase the Property, and/or to terminate discussions with any entity at

Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the

any time with or without notice which may arise as a result of review of this Memorandum. The

sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best

Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum

interest of the client(s) it represents in the transaction described in this Memorandum

or making an offer to purchase the Property unless and until written agreement(s) for the

and will not act in concert with or otherwise conduct its business in a way that benefits

purchase of the Property have been fully executed, delivered and approved by the Owner and

any Affiliate to the detriment of any other offer or or prospective offer or, but rather will

any conditions to the Owner’s obligations therein have been satisfied or waived.

conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will

Confidentiality Agreement

not disclose this Memorandum or any of its contents to any other entity without the prior written

This is a confidential Memorandum intended solely for your limited use and benefit in

or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc.

determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not

authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.

purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective

Disclaimer

investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions

© 2016 CBRE, Inc. The information contained in this document has been obtained from sources

relating to the general economy, market conditions, competition and other factors beyond

believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified

the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other

it and makes no guarantee, warranty or representation about it. It is your responsibility to

information provided and made herein are subject to material variation. All references

independently confirm its accuracy and completeness. Any projections, opinions, assumptions

to acreages, square footages, and other measurements are approximations. Additional

or estimates used are for example only and do not represent the current or future performance

information and an opportunity to inspect the Property will be made available to interested

of the property. The value of this transaction to you depends on tax and other factors which

and qualified prospective purchasers. In this Memorandum, certain documents, including

should be evaluated by your tax, financial and legal advisors. You and your advisors should

leases and other materials, are described in summary form. These summaries do not purport

conduct a careful, independent investigation of the property to determine to your satisfaction

to be complete nor necessarily accurate descriptions of the full agreements referenced.

the suitability of the property for your needs.


TABLE OF CONTENTS

CO N T I N E N TA L M I L L S

EXECUTIVE SUMMARY

6

TENANT OVERVIEW

14

PROPERTY DESCRIPTION

18

AREA & MARKET OVERVIEW

28

FINANCIAL OVERVIEW

38



EXECUTIVE SUMMARY


EXECUTIVE SUMMARY CBRE, Inc., as exclusive advisor, presents the opportunity to acquire Continental Mills Corporate

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

Headquarters, a two building, Class A, 84,250 square foot office campus located in the Seattle Metro submarket of Tukwila, Washington. The property is 100% leased through April 2026 on a NNN lease basis to Continental Mills, a leader in the food products industry since its founding in 1932. Continental Mills has maintained its headquarters location in Seattle South Business Park since 1978, expanding its corporate offices in 1986 and again in 2011. The most recent expansion included the development of the new 57,568 SF corporate headquarters building and the complete renovation of the 26,682 product innovation center, reflecting the tenant’s long-term commitment to this location. Building B Exterior

PROPERTY SUMMARY

Address

Building A

Building B

Innovation Center

Headquarters

18000 Andover Park West

18100 Andover Park West

Tukwila, Washington 98188 Building Rentable Area

26,682 SF

Total Rentable Area

6

84,250 SF

Occupancy

100%

100%

Land Area

1.62 acres

5.03 acres

768990-0010

352304-9055

Two

Two

1986 / 2011

2011

86 stalls

208 stalls

Parcel Number Stories Year Built /Renovated Parking

Building B Reception Area

57,568 SF


SEATTLE

PUGET SOUND

BELLEVUE

PORT OF SEATTLE

LAKE WASHINGTON

5

Westfield Southcenter Mall

Boeing Commercial Airplanes Headquarters

405

5

EXECUTIVE SUMMARY

SEATTLE-TACOMA INTERNATIONAL AIRPORT

Sound Transit Link Light Rail Tukwila Station

7

CO N T I N E N TA L M I L L S

TO

OM TAC

A


INVESTMENT HIGHLIGHTS STABLE, NNN INCOME PROFILE

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

The Property is 100% leased on a net basis through April 2026, reflecting a remaining lease term of 9.3 years and lease structure that provide for tenant reimbursement of all operating expenses. The stable and secure cash flow enables investors to secure attractive financing options and enhanced leveraged cash returns.

ESTABLISHED CREDIT WORTHY TENANT Continental Mills is a third generation, privately held company founded in 1932. The company is a leader in the food products industry and maintains a growing portfolio of exceptional breakfast, baking and snack brands products including the

Innovation Center Exterior

Krusteaz and Albers brands. The company operates four production plants and two major distribution facilities in four states, and its products are sold through retail, foodservice, and club store channels throughout the United States.

MISSION CRITICAL ASSET The tenant has maintained its headquarters and main production facilities in the submarket for over 50 years, and the Property location has been home to the company’s headquarters since 1978. The company’s owned and operated regional

8

manufacturing plant is located less than 2-miles away. Building A (26,682 SF) serves as the company’s research and innovation center and Building B (57,568 SF) is the corporate headquarters. The tenant has recently invested over $7.0 million ($80/SF) into the buildings, reflecting the Property‘s importance to Continental Mills.

Headquarters Entry


HIGH QUALITY CONSTRUCTION The property comprises two Class A, high quality, two-story, concrete and steel buildings situated on separate tax parcels with abundant surface parking capacity. Building B was constructed in 2011 on a build-to-suit basis, accommodating an expansion of the company’s corporate headquarters footprint and Building A was fully renovated in 2011, accommodating upgrades to the tenant’s research and product development facilities.

MASTER PLANNED BUSINESS PARK ENVIRONMENT Continental Mills Corporate Headquarters is located in the Seattle South Business Park, a 1.3 million square foot, 76-acre master planned park. Companies located in Tukwila have the unique opportunity to use a “Seattle” mailing address and “206” area code

Building Exteriors

DESIRABLE, AMENITY-RICH LOCATION The Property is located three miles from SeaTac International Airport, two miles from the Sounder Region Commuter rail station, and benefits from multiple access points to Interstates 5 and 405, providing excellent access and transit options. Downtown Seattle and Bellevue are each located 14 miles to the north, and the Westfield

EXECUTIVE SUMMARY

while avoiding the Seattle Business & Opportunity (B&O) tax.

Southcenter regional mall is located one mile from the Property, providing access to over 90 restaurants and 40 hotels in the area.

SUPERIOR REGIONAL ECONOMIC PERFORMANCE The Puget Sound Region is one of most dynamic and best performing markets in the United States, possessing a highly diversified economy with an unemployment rate of 4.3% and median household income that is 28.8% above the national average. Since 2010 the regional economy has created over 276,000 new jobs resulting in the absorption of over 13 million square feet of office space.

Innovation Center Atrium

9


REGIONAL MAP 520

520

Redmond

5

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

Port of Seattle

Seattle

405

90

90

Mercer Island

West Seattle

Newcastle

5

900 900

Renton

Tukwila

509 10

Bellevue

169

518

Seattle-Tacoma International Airport

CO N T I N EN TA L M I L L S 167 181

Des Moines 516

5

515

Kent


LOCAL MAP 518

5

518

405

99

181

Andover Park West

Southcenter Seattle-Tacoma International Airport

t h St S 180

en

te

rP

kw y

5

EXECUTIVE SUMMARY

CO N T I N EN TA L M I L L S Sou t hc

509

181 r

Green Rive

Angel Lake

11

99 5

O’Brien

S



TENANT OVERVIEW


CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

TENANT OVERVIEW

Based in Seattle, Washington, Continental Mills is a privately held company that has been producing a wide variety of products since 1932. Continental Mills Corporate Headquarters comprises two buildings; the Business Center (Building B) and the Innovation Center (Building A). The Property serves as the company’s headquarters as well as their research and development laboratory. Continental Mills has occupied Building A since 1996 and Building B since 2011. The modern and spacious Business Center is home to corporate employees that support various aspects of the business. The building features unique art installations that tell the story of their People, Products and Plants with imagery and large wall graphics. Adjacent to the Business Center is the Innovation Center, which also reflects a modern feel that provides inspiring space for employees to create new and exciting products for customers and consumers. The company’s products are sold on an international scale with various wellknown brand names, such as Krusteaz, Alpine, and Ghirardelli. Krusteaz is one of Continental Mills most well-known brands and is best known for the various baking mixes they sell. Alpine produces apple and spiced ciders for

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Continental Mills. The brand is popular year round, as a caffeine-free and rich in Vitamin C alternative to coffee and tea. Continental Mills has a nationwide presence, featuring product distribution internationally and in all 50 states, supported by four manufacturing facilities, two distribution centers, and Corporate Business and Innovation Centers. They are continually investing in their people and facilities through equipment modernization and implementation of technology efficiencies, all with an eye toward verifiably better quality.


Company Information Tenant

Continental Mills

Website

www.continentalmills.com

Headquarters

Tukwila, WA

Lease Information Address Number Building Leased Area

Building A

Building B

18000

18100

27,002 SF

57,568 SF

Total Leased Area

84,250 SF

% of Project NRA

31.7%

68.3%

Total In Place Rent/Year

$1,565,007

Total In Place Rent/Year/SF

$18.58/SF May 2011

May 2011

Lease Expiration

April 2026

April 2026

BRANDS

LICENSED BRANDS

TENANT OVERVIEW

Lease Start Date

15



PROPERTY DESCRIPTION


CONTINENTAL MILLS Property Details

ADDRESS

BUILDING A

BUILDING B

18000 Andover Park West

18100 Andover Park West Tukwila, Washington 98188

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

TENANT OCCUPANCY BUILDING RENTABLE AREA

Continental Mills

Continental Mills

100%

100%

26,682 SF

57,568 SF

TOTAL RENTABLE AREA STORIES LAND AREA

84,250 SF Two

Two

1.62 Acres

5.03 Acres

TOTAL LAND AREA

6.65 Acres

YEAR BUILT /RENOVATED

1986 / 2011

2011

FLOOR - FLOOR HEIGHT

13’

15’

352304-9055

768990-0010

HI with TS Overlay

HI with TS Overlay

PARCEL NUMBER ZONING PARKING

UTILITIES

18 FOUNDATION SYSTEM

A total of 86 surface parking stalls are provided, including two designated as disabled-accessible. Water: Sanitary/Sewer: Electric: Gas: Telephone: The building is supported on conventional concrete spread footings. Rectangular footings support the precast concrete fins and the precast concrete stem walls at the perimeter of the buildings. Square pad footings, 3’-0” and 4’-0” square by 12" deep, support the interior steel columns.

A total of 208 surface parking stalls are provided, including seven designated as disabled-accessible. Highline Water City of Tukwila Puget Sound Energy (PSE) Puget Sound Energy (PSE) Century Link The building is supported on conventional concrete spread footings. Continuous strip footings, 9-1/4” deep and 24” wide, support the perimeter walls. Rectangular footings support the precast concrete fins at the perimeter of the building. Square pad footings, 7’-0” square by 21” deep, support the interior steel columns. Rectangular footings ranging in size from 10’-6” to 12’-0” in width, 44’ to 53’ in length, and 38” to 48” in depth support the interior concrete walls.


Property Details

VERTICAL LOAD-RESISTING SYSTEM

BUILDING B

A 4” thick concrete topping slab occurs beneath the rooftop mechanical unit near the center of the roof structure. Elevated floor framing utilizes a 4” concrete slab reinforced with welded wire fabric supported by metal form deck, which is supported by open-web steel joist girders and precast concrete spandrel beams. Steel tube columns support the roof and floor framing at the interior of the structure while precast concrete fins support the framing at the perimeter.

The roof framing consists of 1-1/2” metal deck supported by open-web steel joists and steel wide flange beams, which are in turn supported by open-web steel joist girders, steel wide flange beams, and precast concrete spandrel beams. Elevated floor framing utilizes a 4” concrete slab which is reinforced with welded wire fabric supported by metal form deck, which is supported by open-web steel joists and steel wide flange beams. Open-web steel joist girders, steel wide flange beams, and precast concrete spandrel beams support the elevated floor framing. The perimeter concrete fins, interior steel tube columns, and concrete walls support the roof and elevated floor framing.

The ground level floor consists of a 4” thick concrete slab-on-grade reinforced with welded wire fabric at the slab centerline. ROOFING

The low-slope roof is finished with a 60mil thermo-plastic polyolefin (TPO) roof membrane manufactured by GAF. The roof slopes to a series of interior roof drains and overflows set in recessed sumps. The roofing is an overlay that was installed in 2011 over an unknown roof system over rigid insulation and the metal roof deck. The roofs of the covered entries also have a TPO membrane on a low-slope roof with interior roof drains.

The low-slope roof is finished with a 60mil thermo-plastic polyolefin (TPO) roof membrane manufactured by Firestone. The roof slopes to a series of interior roof drains and overflows set in recessed sumps. The roofing is original to the building's construction. The roofs of the eastern porte-cochere and western covered entry also have a TPO membrane on a low-slope roof with interior roof drains. The roof of the stair overrun drains via a through-wall scupper with downspout that discharges to the main roof level. The roof of the covered walkway consist of prefinished raised-rib metal panels sloped to perimeter gutters with downspouts.

MANUFACTURER'S WARRANTIES:

The roof carries a 20-year Everguard Diamond Pledge NDL Roof Guarantee by GAF that expires September 7, 2031. The warranty is transferable subject to owner's payment of a transfer fee and inspection by GAF.

The TPO roof carries a 20 year Red Shield Warranty by Firestone that expires January 31, 2031. The warranty is transferable subject to owner's payment of a transfer fee.

EXTERIOR WALLS

The exterior of the building primarily consist of precast concrete wall panels set between exposed concrete perimeter columns. The columns generally have a smooth finish. The wall panels typically have a board-form texture and smooth perimeter trimmed edge. Although no finish is visible on the concrete, property management indicates the exposed concrete has been sealed. Flexible sealant joints are utilized between the concrete wall panels and columns and at the perimeter of most openings.

PROPERT Y DESCRIPTION

BUILDING A

19


Property Details

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

BUILDING A

20

BUILDING B

WINDOWS

Windows generally consist of aluminum storefront framed ribbon windows with dark tinted insulated glazing units. The frames have a dark anodized finish and integral weeps at the sills. Storefront glazing is utilized at the side of the various storefront entry doors around the building perimeter. Glazing is typically set into the frames with friction fit EPDM gaskets.

EXTERIOR DOORS/FRAMES

Doors generally consist of insulated glazed storefront doors integral with the aforementioned storefront glazing. Doors are fitted with exterior pull-hardware, interior push or panic hardware, automatic closers and aluminum thresholds. The door for the roof level stair-overrun consist of a painted hollow metal door in metal frame.

INTERIOR WALLS

The Interior framed walls define the office areas and are metal stud with gypsum wall-board. The perimeter office walls are provided with an upgraded "Dirtt" wall system with opaque screening band for privacy.

INTERIOR DOORS/FRAMES

Interior office doors are typically solid-core wood doors set in wood or "Dirtt" window system frames with lever or pull hardware.

CEILINGS

Office area ceilings are typically 2' x 4' metal T-bar frame with conventional acoustic ceiling panels. Fluorescents lighting fixtures are integrated in the ceiling of the office spaces.

FLOORS

Floors of the office areas are typically carpeted except in the few instances of resilient tile in preparation spaces.

RESTROOMS

Tenant restrooms are typically multi-user, with wall-mounted porcelain toilets, and under-mount porcelain sinks with solid surface countertops.

Tenant restrooms are typically multi-user, with wall-mounted porcelain toilets, and under-mount porcelain sinks with solid surface countertops. Laminated toilet partitions are ceilingand wall-mounted.

KITCHENS

Kitchenettes are typically provided within the office spaces and consist of a stainless steel surface-mounted sink, laminated cabinets, and refrigerator. A large kitchen and preparation area is provided on the second floor and dominates the floor plate. Large ovens and several preparation tables with tenant equipment is provided in the southern half and perimeter spaces. A northern perimeter blind-taste testing room and associated preparation room is also provided.

Kitchenettes are typically provided within the office spaces and consist of a stainless steel surface-mounted sink, laminated cabinets, and refrigerator.


Property Details BUILDING A

BUILDING B

Interior stairs consist of concrete treads poured into metal pans and landings covered with a commercial carpet finish, painted gypsum board walls and ceiling, and tubular metal handrails.

Interior egress stairs and central open stair consist of concrete treads poured into metal pans and landings. The egress stairs are covered with a commercial carpet finish, painted gypsum board walls and ceiling, and tubular metal handrails.

HEATING, VENTILATION, AND AIR CONDITIONING

The office areas are cooled by one Trane model SFHLF 60-ton capacity packaged RTUs. The RTU has a gas-fired heating section used for morning warmup. The RTU serves fan-powered variable air volume (VAV) boxes. Zone heating is provided by electric heating coils in the VAV boxes. The main lobby is heated and cooled by a separate Trane Model TSC 7.5 ton capacity RTU with gas heating. RTUs are mounted on equipment curbs, have PVC condensate drains that discharge onto the roof, and use R-22 refrigerant.

The office areas are cooled by two Trane model SFHLF 60-ton capacity packaged RTUs. Each RTU has a gasfired heating section used for morning warmup. The RTUs serve fan-powered variable air volume (VAV) boxes. Zone heating is provided by electric heating coils in the VAV boxes. The main lobby is heated and cooled by a separate Trane Model TSC 7.5 ton capacity RTU with gas heating. The server room is cooled by two Trane model TCD 20-ton capacity RTUs. RTUs are mounted on equipment curbs, have PVC condensate drains that discharge onto the roof, and use R-410A refrigerant.

Temperature controls are provided by a Trane Traces SC direct digital control (DDC) system. Outside air is supplied to the air conditioned spaces via the RTUs and their air distribution systems. Restrooms are ventilated by a roof-mounted exhaust fan.

PLUMBING

Temperature controls are provided by a Trane Traces SC direct digital control (DDC) system. Outside air is supplied to the air conditioned spaces via the RTUs and their air distribution systems. Restrooms are ventilated by a roof-mounted exhaust fan.

Domestic water is supplied through a meter and backflow Domestic water is supplied through a meter and preventer; both are located in pits in the landscaped area backflow preventer; both are located in pits in the on the south side of the building. landscaped area on the south side of the building. Domestic hot water for the first floor restrooms is produced by an 80-gallon capacity electric water heater, and hot water for the second floor restrooms is produced by a 50-gallon capacity residential grade water heater. Each water heater has an expansion tank and the relief valve is piped in copper to mop sink. The water heaters are seismically braced.

Domestic hot water is produced by a 50-gallon capacity electric water heater located in the janitor’s closet. The water heater has an expansion tank, circulation pump, and the relief valve is piped in copper to mop sink. The water heater is seismically braced.

PROPERT Y DESCRIPTION

INTERIOR STAIRS

21


Property Details

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

ELECTRICAL

22

BUILDING A

BUILDING B

Power is supplied to the building from the local utility through a padmounted transformer to a 800-amp, 277/480-volt, 3-phase, 4-wire main switchboard (MSB) located in the main electrical room.

Power is supplied to the building from the local utility through a padmounted transformer to a 1,600-amp, 277/480-volt, 3-phase, 4-wire main switchboard (MSB) located in the main electrical room.

Power is distributed from the MSB via conduit and wire to an electrical room on each floor that contain 277/480-volt breaker panels, stepdown transformers, and 120/208-volt breaker panels.

Power is distributed from the MSB via conduit and wire to an electrical room on each floor that contain 277/480-volt breaker panels, stepdown transformers, and 120/208-volt breaker panels.

EMERGENCY POWER:

No emergency generator is provided. Emergency power for exit signs and emergency lighting is provided by battery-backed fixtures.

LIGHTING SYSTEM:

Generally, light fixtures are 2' x 2' and 2' x 4' recessed fixtures that use T-8 fluorescent tubes. Lighting is controlled by a Watt Stopper control panel.

FIRE ALARM SYSTEM:

The building is protected by a fire alarm system with a Simplex model 4100ES addressable fire alarm control panel (FACP) that monitors smoke detectors, pull stations, and fire sprinkler flow and tamper switches. The FACP activates interior horn/strobe devices and an exterior bell. The FACP is monitored off-site by Simplex Grinnell.

EMERGENCY LIGHTING/EGRESS SIGNAGE:

Emergency lights and exit signs are typically battery-backed combination fixtures.

FIRE SPRINKLER SYSTEM:

The fire sprinkler system consists of a post indicator valve, fire department connection, and two 8" wet-pipe risers. Design criteria tags indicated a design flow of 0.15 gallons per minute per square foot over 1,500 square feet.

The fire sprinkler system consists of a post indicator valve, fire department connection, a 3" and a 4" wet-pipe risers. Design criteria tags indicated a design flow of 0.15 gallons per minute per square foot over 1,500 square feet.

ELEVATORS

"The vertical transportation system consists of one hydraulic elevator that serves Floors one and two. The elevator was manufactured and installed by Otis Elevator presumably during original building construction in 1986. The elevator is rated for 2,500 and has fast and efficient center opening doors. The elevator has an LVR 4 simplex controller.

The vertical transportation system consists of one hydraulic elevator that serves Floors 1 and 2. The elevator was manufactured and installed by ThyssenKrupp Elevator, is rated for 2,500, has a side opening door, and has a TAC 20 electronic controller.

The interior of the elevator has laminate wall panels, translucent ceiling panels, carpet flooring, and a stainless steel car operating panel. The elevator has been updated with infrared safety edges.

The building is protected by a fire alarm system with a Simplex model 4100U addressable fire alarm control panel (FACP) that monitors smoke detectors, pull stations, and fire sprinkler flow and tamper switches. The FACP activates interior horn/strobe devices and an exterior bell. The FACP is monitored off-site by Simplex Grinnell.

The interior of the elevator has decorative wood veneer wall panels, translucent ceiling panels, carpet flooring, and a stainless steel car operating panel. The elevator is equipped with infrared safety edges. ADA features include Braille signage, floor passing chimes, and hands free communications.


N

SITE PLAN N

ANDOVER PARK W

280’

S 180TH STREET

100’

BUILDING B HEADQUARTERS 57,568 SF 2 STORY OFFICE

INN BU OV ILD AT IN 2 S 27,0 ION G A TO 02 CEN RY SF TE R OF FIC 14 3’ E

PROPERT Y DESCRIPTION

89

23


FLOOR PLAN BUILDING A

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

Main Building Entry

24

FIRST FLOOR

SECOND FLOOR

N


FLOOR PLAN BUILDING B

Main Building Entry

N

FIRST FLOOR

PROPERT Y DESCRIPTION

SECOND FLOOR

25



AREA & MARKET OVERVIEW


PUGET SOUND REGION OVERVIEW The greater Seattle area possesses a critical mass of well-capitalized and innovative companies that are global leaders in industries such as aerospace, biotechnology, global health, research, retail, software, technology, and wireless services. Leading companies and organizations that draw upon the area’s

ADOBE SYSTEMS

MICROSOFT

ALASKA AIRLINES

NINTENDO USA

AMAZON.COM

NORDSTROM

T-Mobile USA, and PACCAR.

APPTIO

PACCAR

AT&T

PROVIDENCE HEALTH & SERVICES

The region benefits from the unique confluence of capital, a highly educated

BILL & MELINDA GATES FOUNDATION

PUGET SOUND ENERGY

workforce, and an environment of collaboration. At the center of this

THE BOEING COMPANY

REDFIN

environment is the University of Washington, a globally respected research-

CONCUR TECHNOLOGIES

REI

based institution with an annual research budget exceeding $ 1.4 billion, and

COSTCO WHOLESALE

SAFECO

The Bill and Melinda Gates Foundation with an endowment now exceeding

EDDIE BAUER

SEATTLE’S CHILDREN

$40 billion. This significant capital base paired with a highly knowledgeable

EXPEDIA

STARBUCKS

workforce is providing the opportunity for continued research and business

F5 NETWORKS

SYMETRA

activity at critical institutions such as the Fred Hutchinson Cancer Research

FACEBOOK

T-MOBILE USA

Center, Institute for Systems Biology, PATH, Allen Institute for Brain Research,

FRED HUTCH

VALVE

GOOGLE

VERIZON

GROUP HEALTH

ZILLOW

highly educated and productive workforce include Amazon.com, Microsoft, CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

The Boeing Company, Expedia, F5 Networks, Nordstrom, Costco Wholesale, Concur Technologies, REI, Starbucks, Nintendo USA, Esterline Technologies,

Center for Infectious Disease Research, and Juno Therapeutics. This positive environment has attracted and motivated other innovative and high-growth companies to establish a presence in the region, including

28

MAJOR EMPLOYERS

industry leaders Apple, Google, Facebook, Linked In, Intel, Salesforce.com, Adobe Systems, and Alibaba, to name a few.

JUNO THERAPEUTICS


12 including Computer Services, Data Processing/Hosting, Scientific Research, Software Development, and Wireless Communications.

7 MILLION The regional economy has demonstrated record levels of employment

Washington's population topped 7 million in 2015

and population growth since 2010, creating over 276,000 new jobs and

GROWING POPULOUS AND NET MIGRATION

absorbing over 13.2 million square feet of office space. The Brookings Institute ranked Seattle #2 nationally in its 2015 survey of regional economies that boast high concentrations of “Advanced Industries”, noting there is “depth and balance across multiple advanced industry categories”. Out of 12 rated categories, Seattle possesses significant concentrations in 9 of the 12 including Computer Services, Data Processing/Hosting, Scientific Research, Software Development, and Wireless Communications.

LAST 5 YEARS

445K (+6.6%) Increase in Population

#9

Seattle ranks No. 9 in the US for net migration

MAJOR EMPLOYERS

#1

Ranked #1 by Forbes as the Best City for Jobs in the Nation in 2015

NEXT 5 YEARS

437K (+6.1%) Projected Increase in Population

#1

Washington state ranks No. 1 for combined job and wage growth

Amazon.com, Microsoft, Boeing, Google, Costco, T-Mobile USA, Facebook, Expedia, Starbucks

AREA & MARKET OVERVIEW

29

The Puget Sound regional office market benefits from the highly diversified economy and the presence of high-growth industries software development, technology, digital gaming, life sciences, aerospace manufacturing, retailing, and global health research. •

110 million square foot office market, 3rd largest market on the West Coast and 10th largest in the United States

13.2 million square feet of net absorption since 2010, the 4th highest of all markets in the United States

Net positive absorption in 24 of last 25 quarters reflects stable and continued growth in Downtown and Eastside markets

West Coast markets Seattle, San Francisco, San Jose, and Portland all registered year-over-year job growth of 3.5% or greater


30 CONTINENTAL MILLS CORPOR ATE HEADQUARTERS


TUKWILA/SOUTHEND OFFICE MARKET The Southend office market has broad appeal to tenants with the average

and SR-167, just minutes from Seattle, Bellevue, Tacoma and Seattle-Tacoma

cost of office space 40% and 50% below Bellevue and Seattle full service rents

International Airport, the Southend office submarket has a strong and diversified

respectively. Additionally, housing costs in the Southend are substantially

employment base. Employers with headquarters in the Southend include: REI,

lower than Bellevue and much of Seattle, thereby allowing employers

one of the largest outdoor apparel retailers in the world; Alaska Airlines, the

access to a large, nearby and relatively inexpensive labor pool. For workers

highest rated major airline carrier in the country; Boeing Commercial Airplanes,

living in Seattle and Bellevue the Southend is effectively a reverse commute

the largest business division within The Boeing Company; Providence Health,

allowing businesses to enjoy lower space costs without the challenges and

one of the largest health care providers in the West with 64,000 employees;

lost efficiencies due to traffic congestion. The Southend market also provides

and Hasbro/Wizards of the Coast, a multinational gaming company. Large

immediate access to the Seattle-Tacoma International Airport, both Ports of

organizations that have chosen to locate significant divisions or offices in the

Seattle and Tacoma and is adjacent to the Kent Valley industrial market. The

Southend include BECU, Group Health Cooperative, PACCAR, the Federal

Kent Valley market has over 100 million square feet and provides most of the

Aviation Administration and the Federal Reserve Bank. The Southend market

greater Puget Sound region’s distribution and manufacturing space.

consists of approximately 10 million square feet of space distributed over six primary submarkets: Renton, Sea-Tac, Tukwila, Kent, Auburn, and Federal Way. Renton and Tukwila are the most centrally located of the Southend submarkets and comprise 5.3 million square feet of office space, and reflect a direct vacancy rate of 9.5% as of Q2/2016.

SOUTHEND MAJOR EMPLOYERS

AREA & MARKET OVERVIEW

Located at the intersection of I-5 and I-405, and South between and along I-5

ALASKA AIRLINES (HQ) BECU (HQ) BOEING COMMERCIAL AIRPLANES (HQ) CONVERGENT RESOURCES FEDERAL AVIATION ADMINISTRATION FEDERAL RESERVE BANK GROUP HEALTH (KAISER) INTEGRA TELECOM PACCAR PROVIDENCE HEALTH & SERVICES (HQ) REI (HQ) WIZARDS OF THE COAST (HASBRO)

31


LL TUKWILA, ALL TUKWILA, WASHINGTON WASHINGTON WESTFIELD SOUTHCENTER MALL

SOUND TRANSIT LINK LIGHT RAIL TUKWILA STATION

SOUTHCENTER M

SOUTHCENTER MALL TUKW CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

SOUTHCENTER MALL TUKWILA, WASHING 405 SOUTHCENTER MALL TUKWILA, WASHINGTON SOUTHCENTER MALL TUKWILA, TUKWILA,WASHINGTON WASHINGTON SOUTHCENTER MALL SOUTHCENTER MALL TUKWILA, WASHINGTON

5

SOU

THC

ENT

ER

PAR KW AY

© 2014 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. ejs 06-23-14

32

SEATTLE - TACOMA INTERNATIONAL AIRPORT

2014 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of property for your needs. ejs 06-23-14 © 2014 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. ejs 06-23-14

CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.


Š 2014 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. ejs 06-23-14

mation has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used mation has been obtained from sources believed reliable. We have not your verified it andshould make conduct no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates usedof ot represent the current or future performance of the property. You and advisors a careful, independent investigation of the property to determine to your satisfaction the suitability ot06-23-14 represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of smation 06-23-14 has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used ot represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of s 06-23-14

CO N T I N E N TA L M I L L S AN

DOopinions, ined from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, VE assumptions or estimates used nt or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine toR your satisfaction PA the suitability of

PARKWAY

S

SOU

TH CEN entation about it. Any projections, opinions, assumptions or estimates usedT E R nvestigation of the property to determine to your satisfaction the suitability of

18

0T

H

ST

RE

ET

RK W

E, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used e only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of or your needs. ejs 06-23-14


CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

COMPETITIVE SET

34

ASKING RATES NNN

OWNERSHIP

100.0%

N/A

Subject Property

6,410

90.1%

$18.00

JCR Development

40,000

0

100.0%

$16.50

JCR Development

1991/2000

60,782

0

100.0%

$16.50

JCR Development

1999

40,922

0

100.0%

$16.50

JCR Development

1600 Lind and 1601 East Valley, Renton

1986-87/2004

273,903

4,996

98.2%

$16.50

Redwood Kairos

Time Square

500-800 SW 39th Street, Renton

1984-86/2003

324,287

27,862

91.4%

$17.00

LBA Realty

5

Triton Tower One

555 South Renton Village Place, Renton

1986/1991

132,511

15,137

88.6%

$18.00

Hines / Oaktree

6

Rivertech Corporate Center 500 Naches Ave SW, Renton

1990/2012

73,132

0

100.0%

$18.50

Griffin Capital

1,094,655

54,405

95.0%

NAME

ADDRESS

YR BUILT/ RENOVATED

RSF

CONTINENTAL MILLS

18000-18100 Andover Park West, Tukwila

1986/2011

84,250

0

1

Southcenter Place

16400 Southcenter Parkway, Tukwila

1979/2007

64,868

2

Fort Dent I

6720 Fort Dent Way, Tuwkila

1987/2014

Fort Dent II

6840 Fort Dent Way, Tukwila

Fort Dent III

7100 Fort Dent Way, Tukwila

3

Landmark West and East

4

TOTAL

VACANT OCCUPANCY


COMPETITIVE SET MAP 518

5

6

5

405

2

518

3

405

99

1

167 181

4

Seattle-Tacoma International Airport

Andover Park West

Southcenter 5

t h St

S 180th St

en

te

rP

kw y

S 180

AREA & MARKET OVERVIEW

CO N T I N EN TA L M I L L S

Sou t hc

509

181 r

Green Rive

Angel Lake

167

35

99 5

O’Brien



FINANCIAL ANALYSIS


FINANCIAL SUMMARY

CASH FLOW ASSUMPTIONS Cash Flow Start Date:

January 1, 2017

where is” condition of the Property.

2016 Market Rents Building A Building B

$16.50 NNN per square foot per year $17.50 NNN per square foot per year

Summarized below are the financial results for Continental Mills Corporate

Rent Abatement (Months)

5 Months New / 3 Months Renewal

Market Rent Growth Rate:

3.00% 3.00% 3.00% 3.00%

Lease Term:

5 Years

Rent Increases During Term:

$0.50 per square foot per year

Reimbursable Expenses:

NNN

Renewal Probability:

80%

Downtime: Building A Building B

9 Months 12 Months

Continental Mills Corporate Headquarters is being offered for sale without

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

an asking price. All investors should base their offer and price on the “As is,

38

Headquarters. Total Rentable Area (as-leased): Percentage Leased:

84,250 RSF 100.00%

Year 1 Projected Net Operating Income:

$1,619,814

Year 2 Projected Net Operating Income:

$1,667,844

The following information is provided in the Financial Analysis and Tenant Overview Section to assist investors in their initial underwriting. •

Financial Summary

Eleven-Year Cash Flow Projection

Supporting Schedules

Rent Roll

-

CY 2018 CY 2019 CY 2020 CY 2021+

Tenant Improvements:

$25.00 PSF New / $10.00 PSF Renewal It is assumed $35.00 will be necessary for new deals upon the first rollover for Building B.

Leasing Commissions:

$7.50 PSF New / $5.00 PSF Renewal

CPI/Inflation Rate:

3% Annually

Real Estate Tax Growth Rate and Treatment:

Growth rate is 3% annually. Note that real estate taxes have not been reassessed.

General Vacancy:

5% of potential gross revenue. Continental Mills is excluded from general vacancy loss.

The cash flow period begins January 1, 2017 and has been prepared using Argus DCF software v15.


REVENUE LINE ITEM ASSUMPTIONS Roof Fee Income:

Roof Fee Income is per the 2016 budget, assumed to remain flat through the term of the analysis.

OPERATING EXPENSES Year 1 and Year 2 projected operating expenses are summarized in the chart below: Projected Year 1

Projected Year 2

Landscaping

(0.12)

(9,962)

(10,260)

Repairs & Maintenance

(0.12)

(10,489)

(10,803)

Security

(0.01)

(460)

(473)

Utilities

(0.09)

(9,235)

(9,512)

Other Property Expenses

(0.00)

(72)

(74)

Management Fee

(0.23)

(19,212)

(19,784)

Insurance

(0.25)

(20,660)

(21,280)

Real Estate Taxes

(2.00)

(168,771)

(173,834)

TOTAL OPERATING EXPENSES

(2.82)

(238,861)

(246,020)

FINANCIAL ANALYSIS

Year 1 PSF

MANAGEMENT FEE Management Fee expense is calculated as 1.0% of Base Rent, plus a 15% Work Fee charged on all Repairs & Maintenance and Landscaping expenses.

REAL ESTATE TAXES Real Estate Taxes are estimated based on the CY 2016 bills and have not been reassessed to reflect a sale.

CAPITAL RESERVES Capital Reserves are calculated at $0.20 per square foot per year. Year 1 projected operating expenses are based on the operating expenses provided by management for 2016, grown at 3%. All expenses increase by 3.0% on an annual basis.

39


CASH FLOW PROJECTIONS Calendar Year

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

83.33%

100.00%

Overall Economic Occupancy [1]

99.98%

99.99%

99.99%

99.99%

99.99%

99.99%

99.99%

99.99%

99.99%

61.60%

95.00%

Weighted Average Market Rent

$17.18

$17.70

$18.23

$18.78

$19.34

$19.92

$20.52

$21.13

$21.77

$22.42

$23.09

Weighted Average In Place Rent [2]

$19.16

$19.73

$20.15

$20.60

$21.67

$22.44

$23.11

$23.91

$24.61

$15.76

$22.67

$2.84

$2.92

$3.01

$3.09

$3.19

$3.29

$3.39

$3.49

$3.59

$3.58

$3.78

Physical Occupancy

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

Total Operating Expenses PSF Per Year

40

[3] CY 2017 REVENUES

$/SF/YR

Scheduled Base Rent Gross Potential Rent

$1,614,441

$1,662,470

$1,698,030

$1,735,590

$1,825,758

$1,890,176

$1,947,208

$2,014,118

$2,073,146

$1,956,424

$1,909,974

Absorption & Turnover Vacancy

0.00

0

0

0

0

0

0

0

0

0

(314,818)

0

Base Rent Abatements

0.00

0

0

0

0

0

0

0

0

0

(535,191)

0

1,614,441

1,662,470

1,698,030

1,735,590

1,825,758

1,890,176

1,947,208

2,014,118

2,073,146

1,106,415

1,909,974 318,413

Total Scheduled Base Rent

$19.16

19.16

Expense Reimbursements

2.84

238,861

246,021

253,262

260,725

268,925

277,092

285,407

294,053

302,863

251,383

Roof Fee Income

0.07

5,656

5,656

5,656

5,656

5,656

5,656

5,656

5,656

5,656

5,656

5,656

TOTAL GROSS REVENUE

22.06

1,858,958

1,914,147

1,956,948

2,001,971

2,100,339

2,172,924

2,238,271

2,313,827

2,381,665

1,363,454

2,234,043

General Vacancy Loss

(0.00)

(283)

(283)

(283)

(283)

(283)

(283)

(283)

(283)

(283)

0

(111,702)

22.06

1,858,675

1,913,864

1,956,665

2,001,688

2,100,056

2,172,641

2,237,988

2,313,544

2,381,382

1,363,454

2,122,341

EFFECTIVE GROSS REVENUE OPERATING EXPENSES Landscaping

(0.12)

(9,962)

(10,260)

(10,569)

(10,886)

(11,212)

(11,549)

(11,895)

(12,252)

(12,620)

(12,998)

(13,388)

Repairs & Maintenance

(0.12)

(10,489)

(10,803)

(11,128)

(11,461)

(11,805)

(12,160)

(12,524)

(12,900)

(13,287)

(13,685)

(14,096)

Security

(0.01)

(460)

(473)

(488)

(502)

(518)

(533)

(549)

(565)

(583)

(600)

(618)

Utilities

(0.11)

(9,235)

(9,512)

(9,798)

(10,092)

(10,394)

(10,706)

(11,027)

(11,358)

(11,699)

(12,050)

(12,411)

Other Property Expenses

(0.00)

(72)

(74)

(76)

(79)

(81)

(84)

(86)

(88)

(91)

(94)

(97)

Management Fee

(0.23)

(19,212)

(19,784)

(20,235)

(20,708)

(21,710)

(22,458)

(23,135)

(23,914)

(24,618)

(15,067)

(23,222)

Insurance

(0.25)

(20,660)

(21,280)

(21,918)

(22,576)

(23,253)

(23,950)

(24,669)

(25,409)

(26,171)

(26,956)

(27,766)

Real Estate Taxes

(2.00)

(168,771)

(173,834)

(179,049)

(184,421)

(189,953)

(195,652)

(201,522)

(207,567)

(213,794)

(220,208)

(226,814)

TOTAL OPERATING EXPENSES

(2.84)

(238,861)

(246,020)

(253,261)

(260,725)

(268,926)

(277,092)

(285,407)

(294,053)

(302,863)

(301,658)

(318,412)

NET OPERATING INCOME

19.23

1,619,814

1,667,844

1,703,404

1,740,963

1,831,130

1,895,549

1,952,581

2,019,491

2,078,519

1,061,796

1,803,929 0

CAPITAL COSTS Tenant Improvements

0.00

0

0

0

0

0

0

0

0

0

(1,316,101)

Leasing Commissions

0.00

0

0

0

0

0

0

0

0

0

(604,600)

0

(16,850)

(17,356)

(17,876)

(18,412)

(18,965)

(19,534)

(20,120)

(20,723)

(21,345)

(21,985)

(22,645)

Capital Reserves

(0.20)

TOTAL CAPITAL COSTS

(0.20)

(16,850)

(17,356)

(17,876)

(18,412)

(18,965)

(19,534)

(20,120)

(20,723)

(21,345)

(1,942,686)

(22,645)

OPERATING CASH FLOW

$19.03

$1,602,964

$1,650,488

$1,685,528

$1,722,551

$1,812,165

$1,876,015

$1,932,461

$1,998,768

$2,057,174

($880,890)

$1,781,284

[1] This figure takes into account vacancy/credit loss, absorption vacancy, turnover vacancy, and base rent abatements. [2] This figure does not include any amount related to expense reimbursements. Only Scheduled Base Rent and Fixed/CPI Increases are included in this calculation, which is based on the weighted-aver age physical occupancy during each fiscal year. [3] Based on 84,250 square feet.


IN-PLACE AND PROJECTED NOI SUMMARY In-Place NOI

Pro Forma NOI

Jan-17, Annualized

$ PSF

Size of Improvements

Jan-17 to Dec-17

$ PSF

84,250 SF

84,250 SF

REVENUES Scheduled Base Rent Gross Potential Rent

$1,565,004

$18.58

$1,614,441

$19.16

Absorption & Turnover Vacancy

0

0.00

0

0.00

Base Rent Abatements

0

0.00

0

0.00

1,565,004

18.58

1,614,441

19.16

238,848

2.83

238,861

2.84

5,652

0.07

5,656

0.07

Total Scheduled Base Rent Expense Reimbursements Roof Fee Income TOTAL GROSS REVENUE

1,809,504 [1]

1,858,958

22.06

0.00

(283)

(0.00)

EFFECTIVE GROSS REVENUE

1,809,504

21.48

1,858,675

22.06

OPERATING EXPENSES Landscaping

(9,960)

(0.12)

(9,962)

(0.12)

(10,488)

(0.12)

(10,489)

(0.12)

Security

(456)

(0.01)

(460)

(0.01)

Utilities

(9,228)

(0.11)

(9,235)

(0.11)

(72)

(0.00)

(72)

(0.00)

Management Fee

(18,720)

(0.22)

(19,212)

(0.23)

Insurance

(20,664)

(0.25)

(20,660)

(0.25)

(168,768)

(2.00)

(168,771)

(2.00)

(238,356) [2]

(2.83)

(238,861)

(2.84)

$18.65

$1,619,814

$19.23

Repairs & Maintenance

Other Property Expenses

Real Estate Taxes TOTAL OPERATING EXPENSES NET OPERATING INCOME

$1,571,148

FINANCIAL ANALYSIS

21.48

0

General Vacancy Loss

41 In-Place Occupancy (At Start of Analysis With No Vacant Lease-Up) Average Occupancy (Includes Vacant Lease-Up and Rollover)

100.00%

100.00%

-

100.00%

Notes: [1] In-Place Net Operating Income is calculated using contractual rents and expense reimbursements as of January 2017, Annualized (with no General Vacancy Loss). In-Place NOI does not include vacant lease-up revenue, downtime due to near-term expirations, or future rent increases for existing tenants. [2] Real Estate Taxes in this analysis are not reassessed based on the sales price, but rather are equal to the most recent available tax bills (plus estimated inflation).


RENT ROLL

CONTINENTAL MILLS CORPOR ATE HEADQUARTERS

Market Suite

Tenant Name

Square Feet

Bldg A

Continental Mills (Bldg A)

26,682

% of Property 31.67%

Lease Term Begin End May-2011

Apr-2026

Begin

Rental Rates Monthly PSF Annually

PSF

Recovery Type

Market Rent

Current

$16,676

$0.63

$200,115

$7.50

NNN + 15%

Market

May-2017

$20,012

$0.75

$240,138

$9.00

Work Fee

$16.50 NNN

May-2021

$26,682

$1.00

$320,184

$12.00

(Bldg A)

(A)

May-2023

$28,906

$1.08

$346,866

$13.00

May-2024

$31,129

$1.17

$373,548

$14.00

May-2025

$32,241

$1.21

$386,889

$14.50

Notes: Two (2) 5-year options at 95% FMV. TT has ROFO to purchase building if LL elects to sell as single parcel or if an offer is received. Reimburses management fee equal to 1% of Base Rent (modeled). Tenant reimburses a work fee equal to 15% of R&M and Landscaping expenses (modeled). Bldg B

Continental Mills (Bldg B)

57,568

68.33%

May-2011

Apr-2026

Current

$113,741

$1.98

$1,364,892

$23.71

NNN + 15%

Market $17.50 NNN (B) [$35 TI-N 1st]

May-2017

$116,575

$2.03

$1,398,902

$24.30

Work Fee

May-2018

$119,502

$2.08

$1,434,019

$24.91

(Bldg B)

May-2019

$122,476

$2.13

$1,469,711

$25.53

May-2020

$125,690

$2.18

$1,508,282

$26.20

May-2021

$128,664

$2.24

$1,543,974

$26.82

May-2022

$131,927

$2.29

$1,583,120

$27.50

May-2023

$135,189

$2.35

$1,622,266

$28.18

May-2024

$138,595

$2.41

$1,663,140

$28.89

May-2025

$142,049

$2.47

$1,704,588

$29.61

Notes: Two (2) 5-year options at 90% FMV. TT has ROFO to purchase building if LL elects to sell as single parcel or if an offer is received. Reimburses management fee equal to 1% of Base Rent (modeled). Tenant reimburses a work fee equal to 15% of R&M and Landscaping expenses (modeled). It is assumed $35 PSF is required upon initial roll if TT vacates.

42

Assumption /

TOTALS / AVERAGES

84,250

OCCUPIED SqFt

84,250

100.0%

0

0.0%

84,250

100.0%

VACANT SqFt TOTAL SqFt

WEIGHTED-AVERAGE LEASE TERM REMAINING:

$130,417

9.33 Years

WEIGHTED-AVERAGE LEASE TERM LAPSED:

5.67 Years

WEIGHTED-AVERAGE LEASE TERM FROM INCEPTION:

15.00 Years

$1.55

$1,565,007

$18.58


FINANCIAL ANALYSIS

43

CO N T I N E N TA L M I L L S


INVESTMENT CONTACTS

LEASING MARKET CONTACT

TOM PEHL

LOU SENINI

GEOFF PENDERGAST

Senior Vice President

Senior Vice President

First Vice President

Lic. 0007850

Lic. 0007024

+1 425 462 6950

206 442 2722

206 292 6050

geoff.pendergast@cbre.com

tom.pehl@cbre.com

lou.senini@cbre.com

BRETT HARTZELL

TAYLOR ODEGARD

Executive Vice President

Manager, Capital Markets

VAL ACHTEMEIER

Lic. 0005876

Lic. 112227

Executive Vice President

+1 206 292 6100

+ 1 206 292 6104

Lic. 01868169

brett.hartzell@cbre.com

taylor.odegard@cbre.com

+1 213 613 3109

DEBT & STRUCTURED FINANCE

val.achtemeier@cbre.com

DARLA LONGO

BARBARA EMMONS

Vice Chairman

Vice Chairman

Lic. 00639911

Lic. 00969169

+1 909 418 2105

+1 213 613 3033

darla.longo@cbre.com

barbara.emmons@cbre.com

CBRE, INC.

Š 2016 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes

Broker Lic. 00409987

no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for

1420 Fifth Avenue, Suite 1700

example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax,

Seattle, WA 98101, USA

financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.


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