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Blaine International Center1733 “H” Street • Blaine, Washington

Paul [email protected]

Colliers Retail Investment Services601 Union Street, Suite 5300, Seattle, WA 98101

206.223.0866 • www.colliers.com

Our Knowledge is your Property

I. INVESTMENT SUMMARYTerms of the Offering 3Offering Highlights 4

II. PROPERTY DESCRIPTIONProperty Overview 6Site Plan 7Aerial 8

III. AREA DESCRIPTIONArea Map 10Whatcom County 11

IV. MARKET DATARetail Map 14Traffi c Counts Map 15Blaine 16Taxable Retail Sales 18Demographics 19

V. FINANCIAL ANALYSISPro Forma 22Detailed Tenancy Schedule 23Argus Run 27Argus Matrix 28Tenant Descriptions 29

TABLE OF CONTENTS


2


I. INVESTMENT SUMMARY

3


TERMS OF THE OFFERING

This property is offered on an as-is basis. The Seller will consider offers on an all cash basis only. Legal documents and reports summarized in this Offering Memorandum are not intended to be comprehensive statements of the terms or contents of such documents and reports. Although the Seller and Colliers Retail Investment Services believe the information to be accurate, no warranty or representation is made as to its accuracy or completeness. Interested parties should conduct independent investigation and reach conclusions without reliance on materials contained herein.

The Seller reserves the right, for any or no reason, to withdraw any property from the market. The Seller has no obligation expressed or implied, to accept any offer. Further, the Seller has no obligation to sell any property unless and until the Seller executes and delivers a signed contract of sale on terms acceptable to the Seller, in its sole discretion. By submitting an offer, the offeror will be deemed to have acknowledged the foregoing and agreed to release the Seller from any liability with respect thereto.

The material contained in this Offering Memorandum is confi dential, furnished solely for the purpose of considering the purchase of the property described herein and is not to be copied and/or used for any other purpose, or made available to any other person without the express written consent of Colliers Retail Investment Services or the Seller.

Offers should be delivered to the offi ce of the Exclusive Listing Broker, Colliers Retail Investment Services attention Paul Sleeth. To facilitate analysis of offers, offeror’s are encouraged to provide information relative to funding sources, experience in owning and operating similar properties, familiarity with the market and any other information which is likely to favorably refl ect on the offeror’s ability to close this proposed transaction in a timely manner.

Inquiries, tours of the property, and offers are to be directed to Paul Sleeth at the address and phone number listed below.

Colliers Retail Investment Services601 Union Street, Suite 5300

Seattle, WA 98101Phone (206) 223-0866

Fax (206) 223-1427

Paul SleethSenior Vice President

Direct Line (206) [email protected]

The information contained herein has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness. Seller herby advises receiving party that seller is not currently the owner of the property, and receiving party expressly acknowledges and understands that any transaction contemplated herein is expressly subject to and conditioned upon seller becoming the owner of the property pursuant to successful completion of the pending merger between seller and Pan Pacifi c Retail Properties, Inc.

4


In addition to the Blaine Community, Blaine International Marketplace was originally built in 1990 to cater to the Canadian Shopper taking advantage of a strong Canadian Dollar. As the Canadian Dollar weakened and competing Canadian centers strengthened, Blaine International Marketplace suffered. The center is now rebounding as its US trade area population grows and border crossing increases sharply. The timing is excellent for the investor to take advantage of a strengthening trade area and property.

Strong Grocery and Drug Anchors – Blaine International Center is anchored by Cost Cutter Grocery and Rite Aid providing stability and draw to the center. Cost Cutter and Rite Aid have high sales volumes with annual sales of approximately $350/SF and $200/SF respectively.

Lack of Competing Retail – Blaine International Center is the only shopping center in Blaine. The closest grocery store, on the Washington State side of the border, is approximately 12 miles from the center.

Strategic, International Location – Blaine International Center is located a 1/2 mile from the Canadian Border off Route 543. The border crossing at Route 543 is the 4th busiest commercial truck crossing on the Canadian Border, providing substantial traffi c volumes adjacent to the center.

Below Replacement Cost – As a result of low rents, Blaine International Center will sell substantially below replacement cost.

Expansion of Route 543 – The Washington State Department of Transit recently broke ground on a $35 million project to drastically increase the capacity of the Route 543 border crossing. The conversion of the 2-lane highway to a 5-lane highway is scheduled to be completed by the fall of 2008.

Excellent Visibility – The center benefi ts from a direct line of site from Route 543 which carries 11,000 cars per day.

Upside Potential – Potential upside exists through development of a vacant pad, additional lease up of current vacant space.

OFFERING HIGHLIGHTS

5


II. PROPERTY DESCRIPTION

6


PROPERTY OVERVIEW

LOCATION: Blaine International Center1733 “H” StBlaine, WA

TENANCY:

PURCHASE PRICE: Market

Cost Cutter 43,550 SF

Rite Aid 31,456 SF

Blaine Community Theater 8,500 SF

Dollar Plus 4,080 SF

Washington State Liquor Store 4,000 SF

Blockbuster 3,566 SF

US Border Patrol 3,511 SF

Everday Fitness 3,205 SF

Treasure Gifts 2,030 SF

Little Caesars Pizza 1,955 SF

Birch Point Cat & Dog Clinic 1,202 SF

Bow Wow & Woofs 1,152 SF

Nail Salon* 660 SF

Clinic* 647 SF

Kiras Grill 600 SF

Blaine Jewelry Source 525 SF

Shell Gas Ground Lease

Available 16,933 SF

TOTAL OFFERING: 127,572 SF*Based on LOI

7


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Jewelry430

Kira's Grill

400340

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UnconstructedPad Available

5,000

310

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SITE PLAN

8


AERIAL

I-5

Bla

ine

Inte

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ion

al C

ente

r

SR-5

43

9


III. AREA DESCRIPTION

10


AREA MAP

EVERETTEVERETT

BELLINGHAMBELLINGHAM

VANCOUVERVANCOUVER

VICTORIAVICTORIA

SEATTLESEATTLE

TACOMATACOMA

EVERETT

BELLINGHAM

5

5

90

VANCOUVER

VICTORIA

SEATTLE

TACOMA

BLAINE

BLAINE INTERNATIONALCENTER

CANADA

USA

11


Whatcom CountyWhatcom County bridges the gap on the I-5 corridor between Seattle and Vancouver, B.C., and offers the advantages of accessibility to local, national, and international businesses. The region provides easy access to ample vendors and suppliers, innovative and active ports, rail and air access, plus strong ties to Canada.

EmploymentThe paper and aluminum manufacturing industries are an important part of the economy in Whatcom County. The manufacturing of wood products and transportation equipment has seen gains in recent years. Boat building is a crucial segment of the transportation equipment sector, as its focus has shifted from fi shing vessels to the production of luxury yachts and military boats.

Healthcare is becoming increasingly vital to the local economy. Comprised of such areas as hospitals, nursing and residential care, ambulatory clinics, and social assistance, the healthcare fi eld employed nearly 7,600 residents of Whatcom County in 2003.

Whatcom County - Largest employers, Number of employeesWestern Washington University, 2,100St. Joseph Hospital, 2,061Bellingham School District, 1,300Whatcom County, 840City of Bellingham, 797Haggen Inc., 850Sodexho Services, 550Brown & Cole, 640Heath Tecna Inc., 360Wal-Mart, 350

Commercial ShippingWhatcom County has four major locations for U.S.-Canada border crossings: two in Blaine, one in Lynden, and one in Sumas. Freight rail service is offered in Bellingham by the Burlington Northern Santa Fe, Canadian Rail, and Canadian Pacifi c railroads. Among its motor freight companies are Puget Sound Truck Lines, Roadway Express, and Yellow Transportation. The area is also home to 10 local freight brokers. Bellingham International Airport (BIA) serves as a base for charter airlines and is a port of entry for general aviation aircraft. The airport is home to Foreign Trade Zone #129, an area where foreign goods bound for international destinations can be temporarily stored without incurring an import duty.

The Port of Bellingham, a municipal corporation dedicated to fulfi lling the essential transportation needs of the region, operates a cargo terminal with three ship berths, backed up by two warehouses. Among its exports are wood pulp and aluminum from local factories; its primary import is cottonseed pulp for cattle feed. The port administers fi ve federally designated foreign trade zones to promote manufacturing, warehousing, and trade in the region.

WHATCOM COUNTY

12


Whatcom Transportation Over the years, the Fairhaven waterfront has evolved into the city’s transportation center with the Alaska Ferry, Greyhound Bus Line terminal and Amtrak station conveniently grouped in the same area.

The Alaska Ferry Terminal serves as a host for many different ferry and cruise companies. These public and private companies offer service to Alaska, the San Juan Islands as well as Victoria, B.C. The terminal is the southern-most destination for Alaska’s Marine Highway System (AMHS). The AMHS offers year round service from Bellingham to Alaska.

Amtrak offers train service between Seattle to Vancouver, British Columbia and makes stops in Blaine, Bellingham, Mount Vernon and Everett. Greyhound offers bus service from Seattle to Vancouver with stops in Blaine, Mount Vernon and Everett.

WHATCOM COUNTY

13


IV. MARKET DATA

14


RETAIL AERIAL/MAP

BE

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15


TRAFFIC COUNTS MAP

BLAINE INTERNATIONALCENTER

LINCOLNPARK

H Street

CANADA

USA

Ludwick A

venue

Odell Road

176t

h St

reet

176t

h St

reet

0 Avenue

5

543

H Street Road

Hwy 543 at ‘H’ Street (2005): 11,000

16


Neighborhood DescriptionLocated in the northwest corner of Washington at the Canadian Border is Blaine. The town is situated on the banks of Drayton Harbor and at the foothills of the Cascade Mountain Range within Whatcom County. Vancouver, British Columbia lies 35 miles to the north and Bellingham and Seattle lie 23 miles and 110 miles to the southeast respectively. Semiahmoo is a newer residential area between Blaine and Birch Bay. It boasts a world-class destination resort and golf course, The Resort Semiahmoo and a marina.

LocationBlaine is connected to the greater Puget Sound Region and British Columbia via Interstate-5. Rail access north and south is also available and frequently used. The Blaine International Center is located centrally less then 1 mile off of Interstate-5. The shopping center is easily accessible by State Route 543 and located off of H Street, a main hub in Blaine.

PopulationThe population of the city of Blaine was estimated to be 4,240 in 2005. It is estimated that the population in this area will be 4,509 in 2010, representing a change of 6.34% from 2005. In 2005, the median age of the population in this area was 38.1, compared to the US median age that was 36.3. The population density is 749.2 people per square mile.

EmploymentIn 2005, there were 2,280 employees in the city of Blaine (daytime population) and there were 289 establishments.

DevelopmentTo accommodate the high growth rate in Blaine, the city has been committed to continuing infrastructure improvements. The City Council has recently completed several amendments to the existing comprehensive plan and is working on developing a new plan, one geared towards growth.

BLAINE

POPULATION

2000 (census) 2001 (est.) 2002 (est.) 2003 (est.) 2004 (est.) 2005 (est.)

Blaine 3,770 3,855 3,975 4,025 4,115 4,240

Yearly Growth Rate 2.25% 3.11% 1.26% 2.24% 3.04%

Whatcom County 166,826 170,600 172,200 174,500 177,300 180,800


King County 1,737,046 1,758,312 1,774,312 1,779,300 1,788,300 1,808,300


Pierce County 700,818 713,398 724,998 733,700 744,000 755,900


17


The fourth busiest commercial truck crossing and third busiest passenger vehicle crossing is located on the U.S.–Canada Border in Blaine, Washington. The Washington State Department of Transportation recently broke ground (May 2006) on a $35 million project that will dramatically improve the crossing. Crews will convert state Route 543 through Blaine from a congested narrow two-lane highway to fi ve-lane highway with truck-designated lanes. The construction is well under way and the project is scheduled to be complete by the fall of 2008.

The items below illustrate the major projects that are under construction, have recently received approval or projects that are pending with the city.

Gepetto Properties LLC received approval for development by the Department of Community Development in July of 2006. They intend to build a 68-unit multifamily residential subdivision on a 20-acre site on the Semiahmoo Split in Blaine. The project will be called, Seagrass Cottages II.The Trillium Corporation is waiting for permitting to build 64 residential units on a 16.25-acre site. The units will include; 18 single family homes, 5 duplex buildings totaling 10 residential units and 9 fourplex townhomes totaling 36 residential units. The project will be called, Carnoustie at Semiahmoo.Florence Estates is waiting for permitting to build a residential subdivision with 21 lots on a 4.38 area site located at the corner of Boblett Street and Odell Road.

Retail MarketBlaine International Center is located one block off of State Route 543 on H Street in Blaine, Washington. The center is approximately ½ mile east from I-5 on H Street and approximately ½ mile north from I-5 off of State Route 543. There are no other competing shopping centers in Blaine. There is a small local retail corridor approximately 1 mile to the east of Blaine International on Peace Portal Drive along the Puget Sound waterfront.

The closest competing properties are in the neighboring towns of Birch Bay, Ferndale, and Lynden. Birch Bay Square is located just west off of I-5 at exit #270 approximately 5 ½ miles southeast of Blaine International. Birch Bay Square is currently a 107,598 square foot retail outlet center that is in the initial stages of a $12mm redevelopment and expansion. The initial phase is scheduled to open a 25,000 square foot specialty grocer in December 2007.

The 60,887 square foot grocery anchored Cost Cutter Center in Ferndale is approximately 13 miles southeast of Blaine International just east off of I-5. There are two more grocery anchored shopping centers in Lynden, the 73,511 square foot Marketplace at Lynden and the 110,000 square foot Fairway Center. Lynden is approximately 12 miles southeast of Blaine International (8 miles east of I-5).

Blaine International Center benefi ts from being the only shopping center in the city of Blaine and its proximity to the United States border with Canada. It is approximately ½ mile from the Pacifi c Highway U.S.-Canada border crossing at the end of State Route 543.

•

•

•

BLAINE

18


ANNUAL TAXABLE RETAIL SALES

County 2005

King $40,463,996,808

Pierce $11,177,879,150

Snohomish $9,292,804,838

QUARTERLY TAXABLE RETAIL SALES

CITY OF BLAINE

2003 2004 2005 2006

Q1 $16,874,568 $15,190,751 $19,980,530 $20,205,287

Q2 $20,662,943 $20,942,354 $25,356,541

Q3 $24,746,698 $22,400,691 $27,148,216

Q4 $17,733,273 $21,800,846 $25,616,171

Totals $80,017,482 $80,334,642 $98,101,458

QUARTERLY TAXABLE RETAIL SALES

WHATCOM COUNTY

2003 2004 2005 2006

Q1 $523,616,452 $553,199,760 $604,812,394 $678,096,952

Q2 $618,394,254 $650,187,735 $703,288,463

Q3 $644,994,111 $697,144,552 $765,333,761

Q4 $638,843,582 $704,415,622 $780,274,890

Totals $2,425,848,399 $2,604,947,669 $2,853,709,508

Source: Washington State Department of Revenue

TAXABLE RETAIL SALES

19


SITE NAME: Sea-07 - 4 Sea-07 - 4 Sea-07 - 4

TRADE AREA SIZE: 1 mi 3 mi 10 mi

VALUE % VALUE % VALUE %

POPULATION

Population (1990) 2,485 3,838 12,828

Population (2000) 3,097 4,932 18,112

Population (2005) 3,331 5,342 20,001

Population (2010) 3,556 5,735 21,805

Population (2015) 3,810 6,179 23,850

Pct. Population Growth (‘90-’00) 24.61 28.49 41.19



Population Density (2005) 925.92 409.47 203.58

DAYTIME MARKETPLACE (2005)

Total Business Establishments 228 334 714

Total Daytime Employment 1,884 2,579 6,350

HOUSEHOLDS

Households (1990) 1,008 1,548 4,771

Households (2000) 1,196 1,915 6,862

Households (2005) 1,321 2,132 7,795

Households (2010) 1,435 2,329 8,661

Households (2015) 1,566 2,557 9,654

Households: Family (2005) 888 67.2% 1,429 67.0% 5,558 71.3%

RACE & ETHNICITY (2005)

Race: White (2005) 2,907 87.3% 4,773 89.3% 18,272 91.4%

Race: Black (2005) 38 1.1% 51 1.0% 151 0.8%

Race: Asian or Pacifi c Islander (2005) 162 4.9% 201 3.8% 395 2.0%

Race: Other Race (2005) 101 3.0% 149 2.8% 747 3.7%

Race: Two or More Races (2005) 123 3.7% 169 3.2% 434 2.2%

Race: Hispanic (2005) 166 5.0% 262 4.9% 1,209 6.0%

MEDIAN HOUSEHOLD INCOME

Median Household Income (1990) 25,417 26,370 31,029




DEMOGRAPHICS

20


SITE NAME: Sea-07 - 4 Sea-07 - 4 Sea-07 - 4

TRADE AREA SIZE: 1 mi 3 mi 10 mi

VALUE % VALUE % VALUE %

MEDIAN HOUSEHOLD INCOME BY AGE (2005)

Median Income: Age 75+ (2005) 19,429 25,802 35,208

AVERAGE HOUSEHOLD INCOME

Average Household Income (1990) 31,218 32,504 36,830




MEDIAN DISPOSABLE INCOME

Median Disposable Income (2005) 36, 073 38,263 41,622

Median Disposable Income (2010) 39,224 41,643 45,468

AGGREGATE INCOME

Aggregate Income ($MM) (2005) 69.98 121.91 508.85

Aggregate Income ($MM) (2010) 83.01 144.68 619.99

INCOME DISTRIBUTION (2005)

HH Inc. $0–$15k (2005) 235 17.8% 333 15.6% 858 11.0%

HH Inc. $15–$25k (2005) 151 11.4% 241 11.3% 881 11.3%

HH Inc. $25–$35k (2005) 170 12.9% 259 12.1% 824 10.6%

HH Inc. $35–$50k (2005) 256 19.4% 419 19.7% 1,514 19.4%

HH Inc. $50–$75k (2005) 260 19.7% 462 21.7% 1,800 23.1%

HH Inc. $75–$100k (2005) 151 11.4% 228 10.7% 944 12.1%

HH Inc. $100–$150k (2005) 64 4.8% 116 5.4% 629 8.1%

HH Inc. $150–$200k (2005) 14 1.1% 27 1.3% 112 1.4%

HH Inc. $200k+ (2005) 20 1.5% 46 2.2% 232 3.0%

HOUSEHOLD SIZE (2005)

1 Person Household (2005) 365 27.6% 584 27.4% 1,767 22.7%

2 Person Households (2005) 450 34.1% 735 34.5% 3,047 39.1%

Source: Applied Geographic Solutions Report Created with iSITE, Version: 2006.01.24

DEMOGRAPHICS

21


V. FINANCIAL ANALYSIS

22


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17

,382

,223

17

,065

,396

16

,755

,865

16

,453

,437

7.00

%20

,013

,137

18

,001

,670

17

,670

,446

17

,346

,903

17

,030

,841

16

,722

,065

16

,420

,380

16

,125

,603

7.25

%19

,323

,029

17

,650

,854

17

,327

,722

17

,012

,067

16

,703

,693

16

,402

,411

16

,108

,033

15

,820

,379

7.50

%18

,678

,928

17

,323

,426

17

,007

,847

16

,699

,553

16

,398

,355

16

,104

,068

15

,816

,508

15

,535

,502

29


TENANT DESCRIPTIONS

Cost Cutter Public/ Private: Private No. of Locations: 20+ Description: Cost Cutter is an independent grocery store chain with over 20 stores in the Pacifi c Northwest.

Blockbuster Public/ Private: Public: NYSE: BBI No. of Locations: 9,040 Description: Blockbuster is the world’s largest video rental chain, with about 9,040 company-owned or franchised stores in 25 countries (about 62% are in the US). The company rents more than 1 billion videos, DVDs, and video games at its Blockbuster Video outlets each year. It also operates Blockbuster Online and has marketing partnerships with companies such as Time Warner and DIRECTV. At one point entertainment giant Viacom (now CBS Corp.) owned about 80% of Blockbuster until the media giant fi nally spun off its entire stake in Blockbuster to the public in late 2004.

Little Caesar’s Public/ Private: Private No. of Locations: Operates in more than 20 countries Description: Started as a single store in 1959, Little Caesars began franchising in 1962 and today has grown to one of the top four international pizza chains with restaurants operating in more than 20 countries across fi ve continents.

Bow Wow and Woofs Public/ Private: Private No. of Locations: 1 Description: Bow Wow & Woofs carry innovative canine accessories and giftware from around the globe. They also offer a carefully selected variety of dog food.

Washington State Liquor Public/ Private: Private (Government) No. of Locations: 600+ Description: State run liquor stores throughout Washington State.

30


Treasure Gifts, Etc. Public/ Private: Private No. of Locations: 1 Description: Treasure Gifts provides consumers with collectibles, antiques and small gifts for multiple occasions.

Kira’s Gifts Public/ Private: Private No. of Locations: 1 Description: Kira’s Gifts sells a variety of seasonal products, framing supplies and silk and dried fl owers.

Blaine Jewelry Store Public/ Private: Private No. of Locations: 1 Description: Offers diamond jewelry, rings, bracelets, necklaces and watches for consumers.

Dollar Plus Public/ Private: Private No. of Locations: 3 Description: Discounted goods store that provides an assortment of items for consumers.

Rite Aid Public/ Private: Public: NYSE: RAD No. of Locations: 3,300+ Description: Rite Aid is the nation’s third largest drugstore chain in the United States. They remain one of the nation’s leading drugstore chains by combining strong brand identity, modern distribution centers and superior pharmacy technology with a team of 72,000 associates. The nation’s #3 drugstore chain (behind #1 Walgreens and #2 CVS), the company runs about 3,300 drugstores in 27 states. Rite Aid has entered into a defi nitive agreement to acquire The Jean Coutu Group (337 Grooks stores and 1,521 Eckerd stores) for $3.4 billion dollars. Rite Aid will grow to approximately 5,000 drug stores once the deal is closed. This is a corporate owned store.

TENANT DESCRIPTIONS

31


U.S. Border Patrol Public/ Private: Government Agency No. of Locations: N/A Description: US Customs and Border Protection (CBP) is the primary Federal agency in charge of securing the Nation’s borders. The agency’s duties include stopping terrorists and terrorist weapons, illegal drugs, aliens, and materials harmful to agriculture and the American public from entering at or between ports of entry. Established in 2003 as part of the Department of Homeland Security, CBP is the unifi ed border agency with a broad legal authority encompassing customs, immigration, and agricultural enforcement duties. The CBP is also responsible for assessing and collecting duties, taxes, and fees on imported goods. The CBP has an annual budget of more than $7 billion.

Birch Point Cat and Dog Public/ Private: Private No. of Locations: 1 Description: Birch Point Cat and Dog is a full service veterinarian clinic offering medical, surgical, and dental care.

Everyday Fitness Public/ Private: Private No. of Locations: 1 Description: Everyday Fitness offers state-of-the-art equipment, top-fl ight instructors, comprehensive programs, and personal amenities.

Shell Public/ Private: Public: (NYSE RDS’A) No. of Locations: 140+ countries Description: Shell is owned by Royal Dutch Shell (NYSE: RDS’A [ADR]), is the world’s #3 petroleum company (behind Exxon Mobil and BP). This location is operated by a franchisee.

TENANT DESCRIPTIONS

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