EVERGREEN HEALTH - Amazon Web Services

EVERGREEN HEALTH RECOVERY CENTER

OFFERING MEMORANDUM

Table of Contents

Contact Information

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.

This Marketing Brochure 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. Kidder Mathews 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, current or past tax payments, 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 Marketing Brochure has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews 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.

This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.

Erik [email protected]

Mike [email protected]

kiddermathews.com

Executive SummaryThe Opportunity

Investment Highlights

Property Summary

Retail Aerials

Site Plan

Financial AnalysisPricing Summary

Income

Rent Roll

Lease Options

Expenses

Proposed New Financing

Tenant ProfileEvergreen Health Recovery Center

Location & Market OverviewLocation Overview

Location Map

Site Overview

Demographics


01

02

03

04

Executive Summary

01

Investment Overview

Investment Highlights

Property Summary

Retail Aerials

Site Plan


KIDDER MATHEWS | OFFERING MEMORANDUM 4Evergreen Health Recovery Center

Investment OverviewThe Evergreen Health Recovery Center is a 22,867 SF outpatient medical facility that is 100% leased to Snohomish Public Hospital District No 1. The lease includes a 7% rent increase in November 2017.

The facility consists of 35 residential units and is situated on a 39,964 SF lot. The building was originally built as an assisted-living facility and is now occupied by Evergreen Health’s regional substance abuse recovery center.

The improvements consist of two interconnected buildings that contain a mix of residential units, business offices, dining and living areas, kitchens, nurse’s stations, and public spaces which are accessed by the stairwells and a single elevator.

This site has an excellent location in Monroe, situated off of Highway 522, across from Evergreen Health Monroe Hospital, a Level-4 trauma facility that provides surgical and emergency services.

Providence Medical Center also occupies a number of office buildings surrounding the property, including a medical clinic that employs over 100 people.

$6,250,000

6.75%

100%

$273

1990

Offering Price

Current Cap Rate

Occupancy

Price per SF

Year Built

Investment Summary


INVESTMENT HIGHLIGHTS

Located on Evergreen Health Monroe CampusSituated off of Highway 522 and across the street from Evergreen Health Monroe Hospital.

NNN Lease StructurePassive investment with minimal landlord responsibility for roof and structure.

Stable TenantLeased through November 2023 with three 5 year options.

No DebtThe property is offered without any obligation to assume debt.

Strong Snohomish County EconomySnohomish County has experienced exceptional economic growth over the past decade and has become nationally recognized as a strong, stable and expanding economy. Boeing and the US Navy are the largest employers in the area. Organizations such as Premera Blue Cross, the Tulalip Tribe, Intermec and many other local companies add to the county’s diversified employment.


PROPERTY OVERVIEW

BUILDING

Property Name Evergreen Health Monroe Recovery Center

Address 17880 147th Street SE, Monroe, WA 98272

Year Built The east wing was constructed in 1987; the west wing was added in 2003.

Total Building SF± 22,867

AmenitiesCommon areas include social, living, and dining areas, a beauty-barber shop, restrooms, and a sunroom. The facility contains two commercial kitchens, a laundry room, nurse’s station, storage rooms, mechanical rooms, and offices. One elevator serves both floors.

Stories Two (2)

Units10 residential units in the east wing 13 main floor units and 8 second floor units in the west wing 3 second floor office spaces could be used as residential units, thereby increasing the unit count to 35 “

Foundation Concrete footings with concrete foundation walls

Framing Wood frame

Roof Pitched, composition roof replaced in 2002 with 30-year estimated life

Windows Double-paned sliders

HVAC The building is air-conditioned and is heated with gas. Raidiant floor heat is installed in the residential units. The facitility has a total of three heat pumps totaling 8 tons of capacity installed in 2007.

Security The building is sprinklered and equipped with emergency lighting. Smoke detection and carbon monoxide alarms have been installed.


PROPERTY OVERVIEW CONTINUED

SITE

Land Area Acres± 0.92

Land Area SF± 39,946

Parcel Number (APN) 280635-004-008-00

County Snohomish

Municipality City of Monroe, Washington

Parking Spaces 23 spaces

Access 147th Street SE provides vehicular access to the property

Frontage ±249 feet of frontage on the south side of 147th Street SE ±160 feet of frontage on the west side of 179th Avenue SE

Zoning PO - Professional Office

TAX ASSESSMENT

Taxable Value of Land $423,400

Taxable Value of Improvements $3,692,600

Total Taxable Value $4,116,000

2016 Property Tax $0

As an entity of a non-profit public hospital, the property is currently exempt from real property taxes.


Site Overview Aerial

SITE CHARACTERISTICS

• Large, level corner lot at intersection

• Easy access to Highway 2 and Highway 522

• Directly across the street from Evergreen Health Monroe Hospital

Stevens Pass Hwy

EVERGREEN HEALTH MONROE HOSPITAL

SKYRIVER MEDICAL CENTER

PROVIDENCE HEALTH MONROE CLINIC

N

179t

h A

ve S

E

149th St SE EVERGREEN HEALTH RECOVERY CENTER


Stevens Pass Hwy


West Main Street

THE EVERGREEN STATE FAIRGROUNDS

N

EVERGREEN HEALTH MONROE HOSPITAL

PROVIDENCE HEALTH MONROE CLINIC

SKYRIVER MEDICAL CENTER

Financial Analysis

02

Pricing Summary

Rent Roll

Lease Abstract

Proposed New Financing



$6,250,000PRICE

6.75%CAP RATE

$273PRICE / SF

100%OCCUPANCY

RENT ROLL

TENANT START END MONTHLY RENT ANNUAL RENT ANNUAL RENT/SF % INCREASE COMMENTS

Evergreen Health Recovery Center

11/01/13 11/15/17 $34,864.17 $418,370.04 $18.30

11/16/17 11/30/23 $37,304.48 $447,653.76 $19.58 7.00% 7.22% CAP rate at offering price

12/01/23 11/30/28 First option

12/01/28 11/30/33 Second option

12/01/33 11/30/38 Third option


Tenant/Guarantor Snohomish County Public Hospital Distrct No. 1

Lease Type Triple Net (NNN)

Roof & Structure Landlord Responsibility

HVAC Tenant Responsibility

Insurance Tenant Responsibility (Landlord carries building insurance which is reimbursed by tenant)

Utilities Tenant Pays Direct

Property Taxes As an entity of non-profit public hospital, the property is currently exempt from real property taxes.

Parking & CAM Tenant Responsibility

Lease Term 10 Years

Annual Base Rent (Current) $418,370

Annual Rent / SF $18.30

Security Deposit N/A

Lease Commencement 11/01/13

Current Term Expiration 11/30/23

Renewal Options 3 - 5 Year Options

Right of First Offer The tenant has a 15 business day right of first offer from initial offering. The tenant has been given notice as part of this offering.

Option to Purchase

The tenant has the right to purchase the property at a fixed price of $6,973,000 at the end of the fifth lease year and continuing at the end of each lease year through the end of the initial term. At the end of the tenth lease year the tenant has the option to purchase the property at fair market value, however, in no event will the purchase price be less than the purchase price paid by the then-current Landlord/Owner.

Estoppels Tenant to provide within 20 days

Tenant Financials Tenant to provide within 20 days

EVERGREEN HEALTH RECOVERY CENTER LEASE ABSTRACT


$6,250,000

$421,970

6.75%

$273

PRICING SNAPSHOT

Offering Price

Net Operating Income

CAP Rate

Bulding Price/SF

POTENTIAL LOAN TERMS

BANK LIFE INS CO

Loan to Value 70% LTV 65% LTV

Amortization 15-30 Years 25 Years

Term 5-10 Years 7-10 Years

Rate Range 4.60% - 5.50% 4.25% - 5.25%

Recourse Full Full to Partial

Holdbacks Leasing Fees None

PROPOSED FINANCING

Price $6,250,000

Down Payment $1,875,000

Loan To Value (LTV) 70%

New Loan Amount $4,375,000

Interest Rate 4.65%

Amortization 30

Debt Coverage Ratio 1.56

Current Net Operating Income $421,970

Annual Debt Service ($270,709)

Cash Flow After Debt Service $151,261

LEVERAGED CASH ON CASH RETURN 8.07%

Principal Reduction $68,724

Return with Principal Reduction $219,985

TOTAL RETURN ON EQUITY 11.73%

PROPOSED FINANCING

Tenant Profile

03

Evergreen Health Recovery Center



Tenant ProfileEvergreen Health Recovery Center

The Recovery Center at EvergreenHealth Monroe serves those seeking help for chemical dependency throughout the Pacific Northwest. All programs are conducted at the center, located adjacent to the hospital in Monroe.

Evergreen Health Monroe is governed by an Alliance Governance Board (AGB), consisting of two Board members from EvergreenHealth, two Commissioners from Snohomish County Public Hospital District #1 and the CEO of EvergreenHealth.

The AGB governs Valley General Hospital’s operations, while the Snohomish County Public Hospital District #1 Board retains responsibility for the public hospital district’s health needs.

On March 1, 2015, Valley General Hospital in Monroe became part of the EvergreenHealth system – a change reflected by its new name, EvergreenHealth Monroe.

This completed the final phase of an affiliation agreement that began in late 2012, in which EvergreenHealth committed to working more closely with Valley General, locating additional physicians and adding services to the Monroe hospital. EvergreenHealth provided assistance and expertise in support areas as well (see news release for more detail).

Since the affiliation agreement, EvergreenHealth has added new primary care, prenatal obstetrics, orthopedic surgery and rehabilitation care to the Monroe community. A new 34-bed psychiatric hospital, operated by Fairfax Behavior Health, will open at hospital in 2016.

The financial position of the Monroe hospital has improved greatly since the affiliation formed, thanks in part to improved management and added tax support approved in 2012. EvergreenHealth Monroe is an accredited, full-service district hospital serving East Snohomish County. Since opening in 1960, the hospital has met the needs of the community by providing emergency services, surgical and specialty services. Located in Monroe, Washington, near the junction of US 2 and SR 522, Evergreen Health Monroe believes in a patient and family-centered philosophy, combined a commitment to advancing medical technologies.

Source: https://www.evergreenhealth.com

Location & Market Overview

04

Location Overview

Location Map

Site Overview

Demographics

Representative Photo



Location Overview

Monroe

Monroe is located in southeast Snohomish County and is the home of the Evergreen State Fairgrounds, Evergreen Speedway, and Equestrian Park. Highways 2, 522 and 203 converge in this city. Only an hour away from Stevens Pass, Monroe is the largest city on Highway 2 between Everett and Wenatchee. Monroe and surrounding areas present a kaleidoscope of past and present. Dairy farming, berry farming, vegetables, poultry and beef, nurseries, tree farms and logging, horse breeding and training, all blend harmoniously with the majesty of the mountains, swift-running rivers, ancient cedar and hemlock forests, and many wonderful parks and trails full of natural beauty. The Monroe Chamber of Commerce sponsors the Annual Fair Days Parade on the first Saturday of the Evergreen State Fair. Participants come from all over to showcase a wide variety of entertainment, from marching bands to antique autos and show horses.

Snohomish County

The Northern Snohomish County is the manufacturing center of Washington State. Twenty-five percent of our workforce is associated with manufacturing; twice the State average. The assembly of commercial aircraft is significant in our local economy, including both The Boeing Company and the associated supply chain. This supply chain, representing both products and services, is not limited to The Boeing Company. Many are doing business with Airbus while looking for opportunities with the growing list of single-aisle airframe manufacturers. Additionally, these suppliers have diversified to serve multiple markets including shipbuilding, defense, energy generation, etc.

Southern Snohomish County, with its proximity to Seattle, has a concentration of knowledgeable workers and life science companies. T-Mobile has an engineering technology center with a staff of 600 and Google is planning to open a facility in Bothell that is designed to house 800 workers. On the life science side, we have a cluster of medical device companies with a specific focus in ultrasound diagnostics. Philips Healthcare and Sonosite have a combined workforce of 3000. On the pharmaceutical side and smaller in scale, CMC Biologics has 200 scientists researching and producing pharmaceuticals on a contract basis.

Sources: Economic Alliance of Snohomish County & Experiencewa.com


Location Overview

PUGET SOUND


MONROE

EVERETT

BOTHELL

LYNNWOOD

KIRKLAND

SEATTLE

20 MINSEVERETT

40 MINSSEATTLE

30 MINSBELLEVUE N


DEMOGRAPHICS

1 MILE 3 MILES 5 MILES

Population

Estimated Population (2015) 9,012 24,140 34,777

Projected Population (2020) 9,749 25,876 37,393

Census Population (2010) 8,798 23,487 33,844

Projected Annual Growth (2015-2020) 737 (1.6%) 1,736 (1.4%) 2,617 (1.5%)

Historical Annual Growth (2010-2015) 214 (0.5%) 653 (0.6%) 933 (0.6%)

Population by Race

White 7,007 (77.8%) 19,499 (80.8%) 29,201 (84.0%)

Black or African American 77 (0.9%) 712 (2.9%) 779 (2.2%)

American Indian or Alaska Native 73 (0.8%) 243 (1.0%) 307 (0.9%)

Asian 304 (3.4%) 691 (2.9%) 886 (2.5%)

Hawaiian or Pacific Islander 14 (0.2%) 65 (0.3%) 80 (0.2%)

Other Race 1,145 (12.7%) 2,015 (8.3%) 2,270 (6.5%)

Two or More Races 391 (4.3%) 914 (3.8%) 1,255 (3.6%)

Households

Estimated Average Household Income (2015) $73,287 $85,521 $95,311

Projected Average Household Income (2020) $78,426 $92,905 $104,719

Census Average Household Income (2010) $64,782 $77,210 $82,951

Projected Annual Change (2015-2020) $3,823 (1.1%) $4,643 (1.2%) $5,296 (1.2%)

Historical Annual Change (2000-2015) $17,411 (2.3%) $23,153 (2.8%) $27,596 (3.1%)

Housing Units Owner-Occupied (2015) 1,868 (59.5%) 5,239 (70.1%) 8,575 (75.7%)

Housing Units Renter-Occupied (2015) 1,273 (40.5%) 2,236 (29.9%) 2,746 (24.3%)

Estimated Median Household Income (2015) $68,108 $79,111 $87,167

Projected Median Household Income (2020) $71,931 $83,754 $92,463

Estimated Per Capita Income (2015) $25,618 $28,509 $32,437

Census Per Capita Income (2010) $22,273 $23,530 $26,609

Households by Income Distribution

HH Income $200,000 or More 62 (2.0%) 362 (4.8%) 769 (6.8%)

HH Income $150,000 to $199,999 145 (4.6%) 545 (7.3%) 1,061 (9.4%)

HH Income $125,000 to $149,999 193 (6.1%) 545 (7.3%) 972 (8.6%)

HH Income $100,000 to $124,999 466 (14.8%) 1,170 (15.7%) 1,182 (16.0%)

HH Income $75,000 to $99,999 520 (16.6%) 1,248 (16.7%) 1,819 (16.1%)

HH Income $50,000 to $74,999 677 (21.6%) 1,386 (18.5%) 1,962 (17.3%)

HH Income $35,000 to $49,999 389 (12.4%) 825 (11.0%) 1,133 (10.0%)

HH Income $25,000 to $34,999 257 (8.2%) 628 (8.4%) 756 (6.7%)

HH Income $15,000 to $24,999 228 (7.3%) 350 (4.7%) 451 (4.0%)

HH Income $10,000 to $14,999 90 (2.9%) 212 (2.7%) 293 (2.6%)

3 MILES

5 MILES

1 MILE

$95,311

37,393

34,7775-MILE TRADE AREA DEMOGRAPHICS

Population (2015)

Estimated Population (2020)

Average Household Income

Monroe


Contact Information

Erik [email protected]

Mike [email protected]

Kidder Mathews 601 Union Street, Suite 4720 Seattle, WA 98101

kiddermathews.com

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