THE HERSCHEL. A 36,870 SF creative, mixed-use investment opportunity in San Diego s coastal community of La Jolla.

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1 THE HERSCHEL A 36,870 SF creative, mixed-use investment opportunity in San Diego s coastal community of La Jolla. A 36,870 SF creative, mixed-use investment opportunity in San Diego s coastal community of La Jolla.

2 THE HERSCHEL HFF, as exclusive advisor, is pleased to offer for sale the 100% fee simple interest in The Herschel (hereinafter, the Property ), a four-story, 36,870 square foot mixed-use, creative office building with ground floor retail located in San Diego s most exclusive coastal market, the La Jolla Village. Ideally situated on one of the most walkable (92 Walk Score), hard corner locations in all of La Jolla, The Herschel is just steps from an abundant amenity base that includes restaurants, bars, shopping, and fitness/ health/beauty services establishments. Built before the coastal height restriction was put into effect, the Herschel features an above-standard total height resulting in exceptional ocean views and the best slab-to-slab heights in all of La Jolla. Currently 70% leased to a diverse and dedicated tenant roster (multiple tenants have committed 20+ years at the Property), approximately 34% of the NRA has been converted into some of the highest-end, cutting-edge creative office space in all of San Diego. The Herschel represents the ideal combination of an irreplaceable coastal location, best-in-market creative build outs, a durable in-place income stream, and near term value enhancement potential through additional conversion/lease up and potential development of the included 0.24 acre parking lot. PROPERTY ADDRESS NET RENTABLE AREA BOMA PERCENT OFFICE/RETAIL PERCENT LEASED NO. OF FLOORS WEIGHTED AVG. LEASE TERM PERCENT CREATIVE OFFICE LAND AREA WALK SCORE 7911 HERSCHEL AVE SAN DIEGO, CA ,870 SF 60% OFFICE 21% RETAIL 18% LOWER LEVEL 70% YEARS 34% 0.48 ACRES ON 3 PARCELS 92 2 THE HERSCHEL

3 AMENITY RICH LOCATION A SAMPLING OF NEARBY AMENITIES 1 Polo Ralph Lauren 2 Lorna Jane 3 Lucky Brand Jeans 4 Geppetto s 5 Lucy Activewear 6 Francesca s 7 Talbot s 8 Lululemon 9 Banana Republic 10 The Gap 11 Lolo 12 RETAIL White House Black Market 13 Kate Spade 14 Benefit Cosmetics 15 Sunglass Hut 16 Diane s Beachwear 17 Brooks Brothers 18 Quicksilver 19 Roxy 20 We Olive RESTAURANTS 22 Nine-Ten Restaurants 23 Smash Burger 24 The Living Room 25 The Spot 26 Sushi on the Rock II 27 Gelaterra Frizzante 28 Karl Strauss Brewery 29 Whisknladle 30 Puesto 31 Jersey Mike s 32 Hennessey s Tavern 33 Herringbone Restaurant 34 Burger Lounge 35 Coffee Cup 36 Starbucks 37 Haagen-Das DRAPER AVE EADS AVE Well-positioned in the community of La Jolla that boasts 1,293 merchants to explore and 101 restaurants to try. -Source: La Jolla Village Merchants Association LA JOLLA CHILDREN S POOL LA PLAZA SHOPPING CENTER HOTELS Yogasmoga 21 Azzuri Capri 21 K. Barlis 21 La Scarpa 21 Catania Restaurant 21 Elixir Cafe 21 Beaming Cafe KLINE ST GIRARD AVE 38 The Grande Colonial Hotel 39 La Valencia Hotel 40 Pantai Inn 41 Empress Hotel FAY AVE SCRIPPS PARK HERSCHEL AVE SILVERADO ST LA JOLLA MEDIAN HOME PRICE: $1,682, IVANHOE AVE WALL ST PROSPECT ST THE HERSCHEL LA JOLLA COVE 3

4 INVESTMENT HIGHLIGHTS RARE LA JOLLA VILLAGE ACQUISITION OPPORTUNITY WITH UPSIDE POTENTIAL The Herschel is one of a few office/retail buildings to be offered for sale in recent years in La Jolla Village. Only five office/retail assets over 30,000 SF have traded in the past 10 years and the Herschel is one of just six Class A office assets in this coastal community making acquisition opportunities of this caliber in La Jolla Village exceptionally rare. The Herschel offers significant net operating income upside, totaling $2.3 million at current market rental rates through lease-up of the existing vacancy and additional development added to the site. LEASE-UP OF VACANCY: Currently 70% leased, the Herschel offers exceptional future value enhancement through immediate lease-up of 11,163 square feet of vacancy consisting of 4,598 square feet on the second floor and 6,565 square feet in the lower level. A projected $400,000 of additional NOI may be achieved by leasing this vacant space at current market rents. ADDITIONAL DEVELOPMENT: An investor could pursue construction of an additional structure on the adjacent parking lot, which consists of 10,500 square feet or 0.24 acres. The Property is zoned LJPD-1, which allows for multiple uses including retail, office, residential and hotels. The base FAR is 1.3 and with the residential bonus can go up to *10,500 (lot size) = 17,850 buildable square feet. ADDITIONAL NOI POTENTIAL $2,500 $2,000 $815K $2.3M $ Thousands $1,500 $1,000 $1.0M $400K $500 $0 In-place NOI Vacant Lease-up Additional Development (1) Total NOI (1) Assumes a 1.3 FAR multiplied by 10,500 (lot size) and a $60.00 NNN market rent. 4 THE HERSCHEL

5 DESIRABLE OFFICE SPACE AND DESIGN The Herschel represents the best of creative office space in San Diego due to the imaginative re-design of the top two floors that were completed in 2016 and 2017, access to local amenities and ocean views. Bringing the outside in, the creative design includes natural materials such as brick and wood while providing abundant natural light and exposed ceilings. The Property features unequaled physical attributes such as column free floor-plates, floorto-ceiling glass lines, 14 slab-to-slab heights and operable balconies. Due to The Herschel being built prior to the implementation of current height restrictions in La Jolla Village, the Property is also one of the tallest buildings standing at 56 feet compared to 30 feet permitted by zoning allowing for superior ocean views. DURABLE IN-PLACE YIELD WITH ESTABLISHED RETAIL TENANCY In-place retail tenants, Citibank (Moody s: A1) and Tommy Bahama, occupying the ground floor (24% of in-place NOI), have been in occupancy for over 20 and 18 years. A flagship San Diego location for Tommy Bahama (10.5% of NRA), the tenant recently extended its lease term by 120 months through November 2025 further demonstrating its commitment and success at the Herschel Avenue and Wall Street intersection. The Herschel is also a strategic location for Citibank (11.1% of NRA) as it is a high-deposit branch with over $100 million in deposits. THE HERSCHEL 5

6 LA JOLLA VILLAGE OFFICE MARKET OUTPERFORMANCE Office buildings in the La Jolla Village were 93.4% leased (as of 2Q 2018) versus 90.9% leased for the overall San Diego market and has maintained an average occupancy of 91.7% over the past 10 years. Average asking rents were $3.16/SF in La Jolla Village compared to $2.70/SF in San Diego at quarter-end with Class A office space in La Jolla Village asking rents exceeding $4.00/SF + Electricity. 25% AVG PREMIUM OVER SAN DIEGO ASKING RENTS 6.6% VACANCY RATE VS 9.1% ALL SAN DIEGO OFFICE 2.9% UNEMPLOYMENT RECORD LOW FOR SAN DIEGO ONE OFFICE BUILDING DELIVERED IN THE LAST 10 YEARS 15 MINUTES FROM DOWNTOWN SAN DIEGO $1,682,900 MEDIAN HOME PRICE; MORE THAN TRIPLE OF SAN DIEGO COUNTY $545,000 With no office construction on the horizon and occupancy at or above 93.0% for the past five quarters, asking rents are expected to increase with Class A buildings asking upwards of mid- $4.00 per square foot + Electricity. LA JOLLA VILLAGE (LJV) OFFICE VS. SAN DIEGO OFFICE: ASKING RENTS LA JOLLA VILLAGE (LJV) OFFICE VS. SAN DIEGO OFFICE: OCCUPANCY La Jolla Village averages a 25% premium over San Diego % Asking Rent $ $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 Occupancy 100.0% 95.0% 90.0% 85.0% 80.0% 75.0% 2018 Q2 Occupancy: La Jolla Village: 93.4% San Diego: 90.9% SD Office Asking Rent LJV Office Asking Rent SD Office Occupancy LJV Office Occupancy 6 THE HERSCHEL

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8 INVESTMENT ADVISORS NICK FRASCO Senior Director CA. License # NICK PSYLLOS Senior Managing Director CA. License # GLEB LVOVICH Managing Director CA. License # KARA MATHIS, CFA Senior Associate CA. License # TAYLOR BERGTHOLD Real Estate Analyst CA. License # DEBT ADVISORS ALDON COLE Senior Managing Director CA. License # CHRIS COLLINS Director CA. License # LEASING TEAM JAY ALEXANDER JLL CA. License # TIM OLSON JLL CA. License # HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on