PRIVATE CLIENT INVESTMENT REPORT

PRIVATE CLIENT INVESTMENT REPORT PRIVATE CLIENT INVESTMENT REPORT SAN DIEGO COUNTY 2Q 2015 Colliers of San Diego s Quarterly Investment Report is produced for Owner User and Private Client Investors with a focus on Office and Industrial products. The quarterly report provides market data and identifies trends in transactions up to $10 Million in total sales consideration.

SECOND QUARTER 2015 Market Commentary CAP RATE RATE TRENDS OVERVIEW Cap Rate (%) 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% Office Industrial 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 YTD Office Office net absorption throughout San Diego County reached 328,045 SF in Q2 2015. This brought overall net absorption to 738,216 SF for the first half of 2015. Most of the demand occurred in Class A space (210,549 SF). Strong Class A absorption has been a consistent trend over the last several years as this segment continues to outperform the other classes. Countywide demand is likely to keep pace over the remainder of 2015 and should put net absorption at more than 1.5 million SF for the year. This is on par with last year s overall net absorption of 1.72 million SF. Countywide vacancy continues to trend downward. While vacancy did increase slightly to 12.2% in Q2, it was only a 5 basis point increase. This was due to the fact that new construction outpaced positive net absorption by 91,264 SF. In particular, Class A vacancy dropped by 17 basis points to 11.9% during the quarter since most of the new construction completed in Q2 was comprised of Class B space. INTEREST RATES RATE 14.0 New projects being completed during the remainder of the year, coupled with similar absorption levels will likely keep vacancy flat through the end of the year. 13.0 12.0 Interest Rate * 2014 Average Industrial/R&D Interest Rate (%) 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 10-Yr. Historical Avg. ('05-'14) 20-Yr. Historical Avg. ('95-'14) Industrial/R&D demand throughout San Diego County has exceeded pre-recession levels and is outperforming traditionally strong periods of expansion over the last 20 years. For the first half of the year, net absorption has exceeded 2.83 million SF with 1.52 million SF occurring in Q2. Net absorption for Industrial space (manufacturing, warehouse, distribution and multi-tenant/incubator building uses) reached nearly a million SF during Q2 while R&D space (flex, wet lab and R&D building uses) exceeded a half-a-million SF. 1.0 0.0 6/90 6/91 6/92 6/93 6/94 6/95 6/96 6/97 Source: U.S. Dept. of the Treasury 6/98 6/99 6/00 6/01 6/02 6/03 6/04 6/05 6/06 6/07 6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 YTD * 10-Year Treasury Rate + 250 Basis Points Demand is likely to keep a slightly more conservative, yet robust pace during the last half of 2015 which should put net absorption over 4.5 million SF for the year. Demand hasn t been this strong since 2000 when nearly 4.6 million SF was absorbed. Countywide Industrial/R&D vacancy stood at 5.3% at the end of the quarter; by year-end this rate will likely be around 4.5%. Cap rates continue their compression and are averaging around 6.5%.

PRIVATE CLIENT INVESTMENT REPORT Owner-User Sales OFFICE OWNER-USER TRANSACTIONS AND AND PRICING PRICING OWNER/USER SALES OFFICE $300 $250 $263 $257 $245 $244 $230 90 75 Office User demand and pricing from 1Q 2015 Price Per Square Foot ($) $200 $150 $50 $188 $170 $136 $130 $124 $210 $197 $196 $196 $189 $174 60 45 30 15 # of Transactions Average Price PSF $230 15% from 1Q 2015 Owner-user demand steadily increasing, but pricing is still below peak levels in 2006 $0 0 2000 2001 20022003 200420052006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 YTD Number of Transactions Average Price Per SF Source: CoStar Group, Inc. Includes properties sold between $1M to $10M. INDUSTRIAL OWNER-USER TRANSACTIONS TRANSACTIONS AND PRICING AND PRICING OWNER/USER SALES INDUSTRIAL $180 $160 $162 $152 $153 180 160 Industrial User demand from 1Q 2015 Price Per Square Foot ($) $140 $120 $80 $60 $40 $71 $71 $83 $119 $92 $131 $129 $119 $110 $105 $106 $106 140 120 100 80 60 40 # of Transactions Average Price PSF $129 9% from 2014 A lack of of inventory for sale is driving prices upward $20 20 $0 0 2000 2001 20022003 200420052006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2YTD Number of Transactions Average Price Per SF Source: CoStar Group, Inc. Includes properties sold between $1M to $10M.

SECOND QUARTER 2015 Investment Sales OFFICE INVESTMENT TRANSACTIONS AND AND PRICING PRICING INVESTMENT SALES OFFICE $250 $214 $216 $210 $200 100 90 Office investment demand on par with 1Q 2015 Price Per Square Foot ($) $200 $150 $121 $109 $140 $136 $171 $180 $184 $154 $146 $127 $131 $180 80 70 60 50 40 30 # of Transactions Average Price PSF $210 5% from 2014 Office Investment demand continues its trend upward since 2014 $50 20 10 $0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 YTD Number of Transactions Average Price Per SF Source: CoStar Group, Inc. Includes properties sold between $1M to $10M. INDUSTRIAL INVESTMENT TRANSACTIONS AND PRICING AND PRICING INVESTMENT SALES INDUSTRIAL $180 $160 $147 $152 180 160 Industrial Investment demand on par with 2014 Price Per Square Foot ($) $140 $120 $80 $60 $40 $73 $80 $132 $105 $108 $90 $84 $131 $122 $87 $116 $108 $99 $99 140 120 100 80 60 40 # of Transactions Average Price PSF $116 7% from 2014 Industrial Investment Price PSF continues to increase but is still 24% below peak pricing in 2008 $20 20 $0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2YTD Number of Transactions Average Price Per SF Source: CoStar Group, Inc. Includes properties sold between $1M to $10M.

PRIVATE CLIENT INVESTMENT REPORT Broker Profiles MARC Marc Posthumus is a Commercial Real Estate Broker with over seventeen years experience in the industry. During his career he has completed over 400 transactions and has leased or sold over $300 million worth of commercial property. Mr. Posthumus is committed to the highest level of client service and his primary areas of focus are office, industrial and R&D properties. Mr. Posthumus is an expert in the area of owner occupied real estate and private capital investment sales. He takes a consultative approach to advising his clients on their long term real estate strategy. Mr. Posthumus has extensive experience in both acquisitions and dispositions and works closely with his clients to navigate through the process of both conventional and SBA financing. Giving back is an important part of Mr. Posthumus strategic approach and he donates 10% of his commission on sales transactions to the charity of the clients choosing. MARC POSTHUMUS +1 760 930 7950 marc.posthumus@colliers.com Lic# 01440118 AMY Amy McNamara is a Vice President with Colliers International, specializing in leasing and sales of high-rise, mid-rise and garden office / investment properties. She has joined Colliers International from Cushman & Wakefield with 25 years experience in real estate. Amy has participated in leasing and sales transactions totaling over five million square feet. She works closely with business owners, investors, developers and financial institutions to help formulate and execute a comprehensive real estate strategy to achieve her client s goals and objectives. Amy has represented such clients as Wachovia, Wells Fargo, New York Life Insurance Company, NuVision Credit Union, RYAN Companies, Suburban Water Systems, Kaiser Permanente Fed Credit Union, Principal Financial Group, AMC, and Rockefeller Group Development Corporation. Since 1993 she has completed sales transactions totaling over $213 million. Amy has received numerous honors and awards including Top Office Producer for 16 years and Top Producer Overall. She attended Mount San Antonio College and received her Associate of Arts degree. She also attended University of California Los Angeles for Real Estate Finance courses. She is involved with NAIOP, Commercial Real Estate Woman: Membership & Sponsorship Committees (CREW) and is a Commercial Investment Consultant (CIC). AMY MCNAMARA +1 760 930 7920 amy.mcnamara@colliers.com Lic# 01083491

SECOND QUARTER 2015 Team Sales Transactions PROJECT ADDRESS BUYER SELLER BUILDING SF COE SALE PRICE PRICE/SF YEAR BUILT NOTES 355 Grand Ave. Escondido, CA 92025 Undisclosed Physician s Medical Building, LLC 11,833 7/14/15 $984,550 $83,00 1951 Investment 531 Encinitas Blvd. Encinitas, CA 92024 Paul Meardon Barbara A. Halper & David W. Halper 4,986 5/26/15 $1,271,430 $255.00 1984 Investment 3580 Fifth Ave. San Diego, CA 92103 Exchange Resources, Inc. Cha-Cha Properties 11,390 5/21/15 $2,385,000 $209.00 1971 Investment 3042-3044 Harding St. Carlsbad, CA 92008 Toltek, Inc. Eric T. and Tracy L. Bucchare Trust 2,294 5/5/15 $896,500 $390.00 1951 Owner-User 539 Encinitas Blvd. Encinitas, CA 92024 Sdori Charter School Props LLC North Coast Business Park 34,992 3/25/2015 $8,750,000 $250.06/SF 1984 Owner-User 921-923 S Coast Hwy Oceanside, CA 92054 921 S Coast Hwy Real Estate Paula L. Meeks 1,691 3/23/2015 $620,000 $367.00 - Owner-User 6186 Innovation Way Unit P1 Carlsbad, CA 92009 Castlehills LLC Innovation Way LLC 2,160 3/17/2015 $750,000 $347.22 2007 Owner-User 5927 Balfour Ct., Unit 112 Carlsbad, CA 92008 JCA International Corporation WL Investments 1,720 2/27/2015 $440,000 $255.81 2005 Owner-User

Team Sales Transactions PRIVATE CLIENT INVESTMENT REPORT PROJECT ADDRESS BUYER SELLER BUILDING SF COE SALE PRICE PRICE/SF YEAR BUILT NOTES 7428 Trade St. San Diego, CA 92121 Williams Turley & Associates Trademark Design Group, Inc. 5,900 1/9/2015 $845,000 $143.22/SF 1980 Owner-User 3150 Pio Pico Dr. Carlsbad, CA 92008 Viking Construction Robert Nightengale Jr. 11,555 12/22/2014 $1,550,000 $134.14 1978 Owner-User 2437 Morena Blvd. San Diego, CA 92110 JWJ Properties One LLC SDH Fund 1 LLC (Dba SD Homes) 11,390 12/31/2014 $3,000,000 $263.39 1987 Owner-User 2420 Vista Way Oceanside, CA 92054 Trollman Properties Oceanview Plaza Investors LLC 25,386 8/2014 $5,950,000 $234.38 1989 Investment 150 La Terraza Blvd. Escondido, CA 92025 Dana Dodds Coastline RE Holdings Corp 12,241 6/2/2014 $2,205,000 $180.13 2006 Owner-User 2381-2385 Melrose Dr. Vista, CA 92081 Premier Surgical LLC Vista Medical Office Partners LLC 4,829 05/30/2014 $843,500 $174.67 2008 Owner-User Multiple Property 12751 Poway Rd. 13204-13206 Carriage Rd. Poway, CA 92064 Poway Carriage Properties LLC Poway Carriage Road LLC 10,776 05/23/2014 $1,550,000 $143.84 1991 Owner-User Investment 3548 Seagate Way Oceanside, CA 92056 Eric D & Judith A Opdahl Rock-Sea, LLC 14,595 05/23/2014 $295,000 $246.86 2007 Owner-User

SECOND QUARTER 2015 502 OFFICES IN 67 COUNTRIES UPDATED MARCH 2015 AT A GLANCE Colliers International COLLIERS SERVICE LINES We offer a complete range of services to owners, investors and occupiers on a local, regional, national and international basis. The foundation of our service is the strength and depth of our local specialists. Our clients depend on our ability to draw on years of direct local market experience. In addition to these sectors, we provide our clients with a deep level of knowledge in specialized industries and product types, such as law, technical facilities, and healthcare. > View a video of our latest results at colliers.com/global-stats Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners our clients, professionals and communities. 502 offices in 67 countries > US $2.3 billion in annual revenue > 16,300 professionals and staff > 1.7 billion* square feet under management > $97 billion USD in total transaction value * Square footage includes office, industrial and retail property under management. Residential property is excluded from this total. All statistics are for 2014. Founding member of the World Green Building Council Member of World Economic Forum Recognized and ranked 10 consecutive years, more than any other real estate services firm.