B R I A N M AY E R

National Retail Group

Vice President

Tel. 206.826.5716

brian.mayer@marcusmillichap.com

H A N K WO L F E R

National Retail Group

Vice President

Tel. 206.826.5730

hank.wolfer@marcusmillichap.com

O F F E R I N G M E M O R A N D U M

SOUTH LAKE UNION

MIXED-USE16 2 8 D E XT E R AV E N S E AT T L E WA

INVESTMENT OVERVIEWMarcus & Millichap has been selected to exclusively market for sale the 1628 Dexter Building in Seattle, WA. The Property consists of a three-story, 3,360 square foot mixed-use structure on the corner of Dexter Ave N and Hayes Street, in the South Lake Union Neighborhood of Seattle.

The Property is 100% occupied by The Toledo, Pot Shot and Capes & Powers; each tenant occupies an entire floor of the building. All Tenants are on NN leases, and reimburse for taxes, insurance and utilities. The site is zoned NC3P-55, allowing for development up to 55 feet in height, which creates additional development upside.

Although currently leased, the 3rd floor can be converted to a residential use without any additional permitting, creating future opportunity for a buyer to live in the space, or lease the floor as an apartment unit.

PRICE $2,750,000

CAP RATE 6.0%

YEAR 1 NOI: $164,899

NUMBER OF SUITES 3

PRICE PER SF $818.45

GROSS LEASABLE AREA 3,360 SF

ZONING NC3P-55 (M)

YEAR BUILT/RENOVATED 1932/2016

OCCUPANCY 100%

OFFERING MEMORANDUM | South Lake Union Mixed-Use 2

INVESTMENT HIGHLIGHTS

SEATTLE TROPHY ASSET

Rare trophy asset in the South Lake Union neighborhood of Seattle; situated blocks from Amazon’s world headquarters and Facebook’s new Seattle campus

RECENT 5-YEAR LEASE EXTENSIONS

The Pot Shop and The Toledo recently renewed their leases for 5-year terms, showing their commitment to the site

STRONG POT SHOP SALES

The Pot Shop’s gross sales between 2018-2019 ranged between $2.4M - $2.85M, and sales for 2020 are on pace to achieve $2.8M - $2.9M.

PASSIVE & STABLE INVESTMENT

100% Occupied by three tenants -all subject to NN leases, creating a passive investment with minimal landlord responsibilities

FUTURE DEVELOPMENT POTENTIAL

NC3P-55 zoning provides potential development upside

CONVERSION TO RESIDENTIAL USE

3rd fl oor can be converted to a residential use without any additional permitting required

S U BJ E CT P RO P E RT Y

HQ Planned ConstructionHQ Planned Construction

SLU Buildings

AURORA AVE N

DEXTER AVE N

99

HQ Campus

Lake UnionPark

SOUTH LAKE UNION TRADE MAP

OFFERING MEMORANDUM | South Lake Union Mixed-Use 4

New HQ

GASWORKS

FREMONT

WALLINGFORDUNIVERSITY

DISTRICT

S U BJ E CT P RO P E RT Y

DE

XT

ER

AV

E N

OFFERING MEMORANDUM | South Lake Union Mixed-Use 6

SOUTH LAKE UNION

DOWNTOWN

QUEEN ANNE

S U BJ E CT P RO P E RT Y

DEXTER AVE N

OFFERING MEMORANDUM | South Lake Union Mixed-Use 7

PATH OF PROGRESSIn 2019, the Seattle City Council approved zoning changes which allowed for increased density and greater heights in the South Lake Union neighborhood of Seattle. Parcels within two blocks of the property were upzoned to allow residential structures up to 145 feet in height. The parcel on the block immediately to the south are zoned to allow structures up to 75 feet in height.”

SUBJECT PROPERTY

NC3-55Neighborhood commercial 3 zoning. Allows for mixed-use residential structures up to 40 feet in height

NC3-75Neighborhood commercial 3 Zoning. Allows for mixed-use residential structures up to 65 feet in height

C1-75 & C2-75Commercial 1 and Commercial 2 zoning. Allows for residential structures up to 65 feet in height.

SM-SLU 100/95Seattle Mixed South Lake Union Urban Center Zoning. Allows for residential structures up to 95 feet in height and non-residential commercial structures up to 100 feet in height.

SM-SLU 100/65-145Seattle Mixed South Lake Union Urban Center Zoning. Allows for residential structures up to 145 feet in height and non-residential commercial structures up to 100 feet in height.

OFFERING MEMORANDUM | South Lake Union Mixed-Use 8

TENANT OVERVIEW

Pot Shop is a recreational cannabis retailer that has been in the same location on Dexter Avenue since early 2016. The Pot Shop benefi ts from having minimal competition in the area given Seattle’s laws regarding where a dispensary can be located (i.e. minimum distance from schools, parks, etc.). Washington State requires all dispensaries to report their annual revenues and Pot Shop has experienced extremely high sales and in some recent years totaling near $2,900,000.

Company profi le as stated on https://potshopseattle.co/

Pot Shop Seattle is a retail cannabis store located in the South Lake Union/Queen Anne neighborhood of Seattle, Washington. We carry a wide variety of cannabis products including Flower, Edibles, Concentrates, Pre-rolls, Vapes, CBD products, and Topicals as well as an assortment of Accessories and Paraphenelia. Our knowledgeable Budtenders are always happy to help you get just the right thing you are looking for!

The Pot Shop works with prestigious vendors to provide top-tier cannabis products. The team at Pot Shop Seattle strives to earn the trust of their cannabis community by exclusively working with vendors who provide test results with their cannabis products to assure they meet their high-caliber standards. We are dedicated to providing Seattle customers with superior service. Marijuana users with questions are encouraged to stop by Pot Shop Seattle and speak with one of our knowledgeable and friendly Budtenders.

The Toledo Bar opened in early 2016 along Dexter Avenue in the former space of the widely known “Dexter & Hayes Public House” which closed their doors in 2015 after many years in business. The bar and restaurant is located in the lower level of the three story building and during the warmer months one can enjoy their food and cocktails on the outdoor patio. The Toledo offers happy hour daily and opens at 3:00 PM Tuesday through Saturday and opens early on Sunday during the football season. On most week day afternoons you can fi nd the bar full of local tech employees who walk from their nearby offi ces to share a drink with friends and colleagues. The Toledo benefi ts from having a 4.5 star rating on Yelp and a 4.7 star review on Google.

https://www.thetoledobar.com/

THE TOLEDO RESTAURANT

POT SHOP SEATTLE

OFFERING MEMORANDUM | South Lake Union Mixed-Use 9

TENANT OVERVIEW

Founded in 2008 and still a privately held company, Capes and Powers is headquartered in Seattle and has offi ces in Vermont and North Carolina. The company specializes in providing custom IT services, network support and data security. Some of the specifi c services they provide include Managed Services, Cloud Services, Unlimited Support Plans, Security & Compliance Audits, Backup & Disaster Recovery, VoIP, Hardware as a Service (HaaS), Offi ce Relocations, Wireless Infrastructure, IT Staffi ng, Help Desk Support, Workfl ow Analysis and Effi ciency , Retail Websites, Healthcare, Legal, Cannabis, Industry Service POS, Government Security, Construction and CAD, Financial Services PCI, Non-Profi t Productivity, wireless, WiFi, and HIPAA.

Company profi le as stated on https://www.capesandpowers.com/

At Capes & Powers we pride ourselves on our success in helping our clients achieve their goals. Since our inception in 2008, various types of clients have come to us with one important question: “How can I maximize IT performance and minimize costs?” And over the years, we have shown them that the answer lies in IT services that pay attention to the tiniest details, dedicated customer care, and best-in-class technology.

Are you a small- or medium-sized business, a government agency, a municipality, or a nonprofi t organization seeking to improve your technology? Allow our IT specialists to help you realize your IT potential today, and see for yourself why at Capes & Powers, your technology is our priority is not just a pretty tagline.

At Capes & Powers, we have it all. And we have no required Annual contract commitment! Come see how clients are treated with empathy and care build partnerships with a robust technology team!

CAPES & POWERS IT SOLUTIONS

RENT ROLL

Lease Dates

Tenant Name Suite SF % Bldg Share

Comm. Exp. Rent/SF Total Rent/Mo.

Total RentPer Year

LeaseType

RenewalIncreases

RenewalOptions

The Toledo BSMT 1,120 33.3% 2/1/16 2/1/26 $33.12 $3,092 $37,098 NNNLess of

CPI or 5%1 x 5 Years

Pot Shop MAIN 1,120 33.3% 2/11/16 2/11/26 $90.70 $8,465 $101,583 NNNLess of

CPI or 5%1 x 5 Years

Capes & Powers 2ND 1,120 33.3% 2/1/20 1/31/23 $30.00 $2,800 $33,600 NNNLess of

CPI or 5%2 x 3 Years

Total 3,060 $51.27 $14,357 $171,281 $23,476

OFFERING MEMORANDUM | South Lake Union Mixed-Use 10

OFFERING MEMORANDUM | South Lake Union Mixed-Use 11

Income Year 1 Per SF Proforma Per SF Notes

Scheduled Base Rental Income 175,727 52.30 179,242 53.35

Expense Reimbursement Income

CAM 4,294 1.28 4,379 1.30 1

Insurance 8,464 2.52 8,633 2.57 2

Real Estate Taxes 10,718 3.19 10,933 3.25 2

Total Reimbursement Income $23,476 82.9% $6.99 $23,945 82.9% $7.13

Potential Gross Revenue 199,203 59.29 203,187 60.47

General Vacancy (5,976) 3.0% (1.78) (6,096) 3.0% (1.81)

Effective Gross Revenue $193,227 $57.51 $197,091 $58.66

Operating Expenses Year 1 Per SF Proforma Per SF Per SF

Common Area Maintenance (CAM)

Repairs & Maintenance 1,680 0.50 1,714 0.51 3

Utilities 4,294 1.28 4,379 1.30 4

Legal Fees 500 0.15 510 0.15 5

Accounting 2,000 0.60 2,040 0.61 5

Insurance 8,464 2.52 8,633 2.57 4

Real Estate Taxes 10,718 3.19 10,933 3.25 6

Other Expenses - Non Reimbursable 672 0.20 685 0.20

Total Expenses $28,328 $8.43 $28,894 $8.60

Real Estate Taxes 14.7% 14.7%

Net Operating Income $164,899 $49.08 $168,197 $50.06

OPERATING STATEMENT

NOTES TO OPERATING STATEMENT1. CAM reimbursements include only utilities. All utilities are fully reimbursed by tenants.2. Fully reimbursed by tenants.3. Adjusted to industry standard - $0.50/SF. Not reimbursed by tenants.4. Per actual 2019 expenses5. Proforma figures.6. Based on 2020 tax assessment7. Adjusted to industry standard - $0.20/SF

OFFERING MEMORANDUM | South Lake Union Mixed-Use 12

5 MILES

3 MILES

1 MILE

POPULATION 1 MILE 3 MILES 5 MILES

2025 Projection 43,105 296,676 532,898

2020 Estimate 38,443 263,468 485,052

2010 Census 30,268 205,263 398,409

2000 Census 27,111 181,014 363,960

Current Daytime Population 51,609 527,586 795,598

HOUSEHOLDS 1 MILE 3 MILES 5 MILES

2025 Projection 25,857 170,126 276,708

2020 Estimate 22,892 148,765 247,999

2010 Census 17,717 111,461 196,229

2000 Census 15,681 97,172 177,186

2025 Occupied Units 27,159 182,083 291,605

2020 Occupied Units 24,0990 158,898 260,955

HOUSEHOLDS BY INCOME 3 MILE 5 MILES 10 MILES

$150,000 or More 32.5% 28.0% 29.6%

$100,000 - $149,000 22.4% 19.6% 20.1%

$75,000 - $99,999 12.2% 10.9% 11.1%

$50,000 - $74,999 12.7% 12.3% 12.3%

$35,000 - $49,999 9.0% 8.8% 8.2%

Under $35,000 11.2% 20.6% 18.6%

Average Household Income $155,388 $138,756 $143,377

Median Household Income $108,903 $94,337 $99,500

Per Capita Income $92,804 $79,267 $74,085

DEMOGRAPHICS

CONFIDENTIALITY & DISCLAIMER

The information contained in the following Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Offering Memorandum has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

NON-ENDORSEMENT NOTICE

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

NET-LEASED DISCLAIMER

Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided.

As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer.

Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property.

The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs.

Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success.

Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property.

By accepting this Offering Memorandum you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.

SPECIAL COVID-19 NOTICE

All potential buyers are strongly advised to take advantage of their opportunities and obligations to conduct thorough due diligence and seek expert opinions as they may deem necessary, especially given the unpredictable changes resulting from the continuing COVID-19 pandemic. Marcus & Millichap has not been retained to perform, and cannot conduct, due diligence on behalf of any prospective purchaser. Marcus & Millichap’s principal expertise is in marketing investment properties and acting as intermediaries between buyers and sellers. Marcus & Millichap and its investment professionals cannot and will not act as lawyers, accountants, contractors, or engineers. All potential buyers are admonished and advised to engage other professionals on legal issues, tax, regulatory, financial, and accounting matters, and for questions involving the property’s physical condition or financial outlook. Projections and pro forma financial statements are not guarantees and, given the potential volatility created by COVID-19, all potential buyers should be comfortable with and rely solely on their own projections, analyses, and decision-making.

ACTIVITY ID:

PRESENTED BY

BRIAN MAYER

National Retail GroupVice President

Tel. 206.826.5716Fax. 206.826.5710

brian.mayer@marcusmillichap.com

HAILEY VILETA

Marketing CoordinatorAgent Support Specialist

Tel. 206.826.5786Fax. 206.826.5710

hailey.vileta@marcusmillichap.com

HANK WOLFER

National Retail GroupVice President

Tel. 206.826.5730Fax. 206.826.5710

hank.wolfer@marcusmillichap.com