TH AVENUE WEST, LYNNWOOD, WASHINGTON

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1 BROKER OPINION OF VALUE 6 th Street Townhomes TH AVENUE WEST, LYNNWOOD, WASHINGTON DAVE SCHUMACHER Senior Vice President direct: mobile: Dave.Schumacher@Colliers.com DAVID W. MORTENSEN Senior Associate direct: mobile: David.Mortensen@Colliers.com COLLIERS INTERNATIONAL 601 Union St., Ste Seattle, WA

2 6th Avenue West 6TH STREET TOWNHOMES BOV Executive Summary Martha Lake 164th ST SW 6 th Street Townhomes Executive Overview 6th Street Townhomes has been approved as a 30-unit townhome development configured in seven duplex and four 4-plex buildings with varying rooflines to accommodate two- and three-story units. Each unit has a one- or two-car attached garage, stacked/full size?? washer/dryer, and condominiumquality finishes. The property is highly visible and conveniently located off 164th Street SW, a major eastwest arterial connecting the city of Mill Creek with I-5. Commuters have exceptional access to major employment centers, shopping and recreation. The Ash Way Park & Ride and onramp to I-5 are blocks away. Development Overview & Details Proposed Use Residential townhomes with attached garages Location th Avenue West Lynnwood, WA Total Units 30 Lot Size 1.4 Acres Building Height 2 & 3 stories Parking 64 (53 attached garage stalls; 11 on grade) Construction Type Wood frame Parcel Numbers , Existing Zoning CB (Community Business) P. 2 COLLIERS INTERNATIONAL

3 6TH STREET TOWNHOMES BOV Executive Summary Location 6th Street Townhomes is located in the Mill Creek area of southeast Snohomish County. This easily accessible location at the confluence of the Puget Sound s most important freeways, I-5 and I-405, draws a broad-based population attracted to the quality of life, proximity to major employment centers and competitive cost of living. The property is situated across the street from Martha Lake Park, within walking distance of grocery stores, dining and services, and less than two miles from four large shopping centers. The Puget Sound region is rebounding from the Great Recession due in large part to the aerospace industry and technology sector. 6th Street Townhomes is centrally located to the Technology Corridor which stretches from the business district of Bellevue and the heart of the software industry in Redmond, past the biotech and high-tech support services found in Bothell to the aerospace centers in Everett. Mill Creek is a great home base for the thousands of employees working at Technology Corridor businesses. 6 th Street Townhomes Rental Market The Mill Creek rental submarket has a five-year average vacancy rate of 4. despite the recent recession and is predicted to be undersupplied through 2012 and beyond. Average rent for the submarket is $1,106 per unit and $1.19 per SF, an increase of over 3rd Quarter MILL CREEK AVG RENT AND VACANCY $1,200 10% $1,200 10% $500 0% $500 0% $500 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 0% Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Average Rent/SF Mkt Vacanc Average Rent/SF Mkt Average Vacancy Rent/SF Mkt Vacancy Average Rent/SF Mkt Vacancy Average Rent Mkt Vacancy Source: Dupre+Scott & Apartment Insights SNOHOMISH COUNTY PLANNED NEW DEVELOPMENT Completed Under Const. Planned Only 803 units are planned for all of Snohomish County through As a result, supply will continue to be less than the peak of 35,244 units in 2002 prior to the condo-conversion cycle. P. 3 COLLIERS INTERNATIONAL

4 6TH STREET TOWNHOMES BOV VALuatiON Valuation UNIT MIX Units Type Avg SF Total SF Avg Rent Rent/SF Monthly Rent Annual Rent 8 2 Bed / 2.5 Bath TH 1,388 11,104 $1,632 $1.18 $13,056 $156, Bed / 2.5 Bath TH 1,344 20,160 $1,709 $1.27 $25,635 $307, Bed / 2.5 Bath TH 1,580 11,060 $1,820 $1.15 $12,740 $152, Averages/Totals 1,411 42,324 $1,714 $1.22 $51,431 $617,172 CASH FLOW ANALYSIS Market Rent $617,172 Loss to Lease 0.0% 0 Scheduled Gross Rents $617,172 Vacancy 5.0% (30,859) Concessions 0.0% 0 Total Rental Income $586,313 Other Income Per Unit Monthly Total* 35,910 RUBS $70 $1,995 Misc. $35 $998 * Monthly Total Other Income shown at 9 Effective Gross Income $622,223 Total Expenses (166,830) Per Unit $5,561 Per SF $3.94 Net Operating Income $455,393 CAP RATE ANALYSIS Cap Rate Value Per Unit Per SF 5.50% $8,300,000 $276,667 $ Assumptions The attached analysis is our opinion as brokers who have done a considerable amount of work in the area. The Lynnwood/Mill Creek/North Bothell triangle is very tight with low vacancy (4., 4.0% and 4. respectively). That kind of demand with relatively little new development on the horizon bodes extremely well for lease-up of 6th Street Townhomes. For units this size, we believe utility billback for Water/ Sewer/Garbage will average $70/unit monthly. At 9 occupancy, that adds up to $1,995/mo. We would expect the largest units (3x2.5 TH with 1,580 SF) to rent for $1820, especially given that there are only 7 of them with 236 additional square feet, all in duplexes sharing just one wall. Northshore Townhomes in Bothell has similar units renting for $1880 and rising, according to the management. P. 4 COLLIERS INTERNATIONAL

5 6TH STREET TOWNHOMES BOV Broker Qualifications SCHUMACHER MULTI-HOUSING TEAM The Schumacherl Multi-Housing Team at Colliers Seattle includes Dave Schumacher, David Mortensen and Jill Prestegard. We are the experienced specialists in serving the needs of imultifamily property owners with a reputation for expertise, personal service and integrity. Over the years, we have brokered some of the area s largest and most complex transactions, and we are consistently recognized as top performers in the industry. Each deal that we work on receives an unsurpassed amount of personal attention. That is what allows us to perform on our promise to bring our clients the highest possible price for their properties. Dave Schumacher Sr. Vice President dave.schumacher@colliers.com dir mob With 34 invaluable years of multifamily investment sales experience, Dave has personally closed well over $2 billion in apartment transactions, and he is widely recognized as one of the top apartment brokers in Seattle. The client relationships he has developed are with pension fund advisors, REITs, large syndicators and wealthy individuals and families. Dave Schumacher began his multifamily career at what is now CB Richard Ellis, winning Rookie of the Year in his first year. He remained the top apartment broker in the Seattle office for most of his 14 years there, and in 1990 he was the top CB investment broker in the country. The following year, he left to form his own brokerage firm, Columbia Partners. That company was one of the most successful boutique commercial real estate brokerages on the West Coast for many years. When Colliers International came to Columbia Partners expressing a strong desire to establish an institutional multifamily presence in Seattle, it was clear that the relationship would provide tremendous synergies that would benefit clients. Dave Schumacher and the entire Columbia Partners team joined Colliers International in November David Mortensen Sr. Associate david.mortensen@colliers.com dir mob David Mortensen has specialized in multifamily real estate since he began working with Dave Schumacher in Mr. Mortensen has represented buyers and sellers in market-rate apartments, student housing and condominium conversions. His technical expertise in apartment value analysis and tireless marketing efforts have proven invaluable to his clients. November Jill Prestegard Client Services Administrator jill.prestegard@colliers.com dir mob Jill Prestegard began her multifamily real estate career supporting three vice presidents in the development group of Lincoln Property Co. predecessor of Legacy Partners. She has been a licensed assistant to Mr. Schumacher since 1993 and is an important asset in supporting the team s marketing efforts. Colliers named the #1 real estate company in the US by Multi-Housing News Top US Companies, multihousingnews.com - January 11, 2011 P. 5 COLLIERS INTERNATIONAL