>> Heightened Investment Activity Highlights Year End

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1 Research & Forecast Report South Bay OFFICE Accelerating success. >> Heightened Investment Activity Highlights Year End Key Takeaways > Leasing activity fell year-over-year by 23.5%, the fourth consecutive quarter of negative momentum after 11 straight quarters of growth. > Average asking rents for the overall market rose minimally from last quarter, climbing to $2.44 per square foot (P) full service gross (FSG) from $2.43. > Class B vacancy decreased for the quarter, dropping 70 basis points, while Class A increased by 20 basis points. > No projects were delivered to the market. The South Bay market has 349,100 square feet of inventory under construction, all of which is slated to deliver in the first half of > Sales activity ramped up to close the year, highlighted by Starwood Capital Group acquiring Pacific Corporate Towers in El Segundo for $605.5 million ($381 P) from General Motors Pension. Market Indicators Relative to prior period Forecast Net Absorption Construction Rental Rate Summary Statistics South Bay, Rate Class A Class B All Classes 13.8% 17.5% 15.2% Change from Q3 17 (Basis Points) Net Absorption* Construction Completions* Class A Class B All Classes $2.93 $2.22 $2.44 +$0.04 -$0.03 +$ % 6.4% 6.0% Under Construction* *, Thousands Asking Rents South Bay, South Bay Office Market The South Bay market saw rental rates continue to rebound with positive albeit minimal growth for the sixteenth time in seventeen quarters. made a modest drop from 15.6% to 15.2%. While there were no construction deliveries, three projects totaling 349,100 square feet are expected to deliver in early Leasing activity held relatively steady from last quarter, recording 583,900 square feet. Investment activity of $1.1 billion more than doubled that of any quarter in the past eight years and highlighted the potential the South Bay market has presented to investors as of late. Future demand, high-quality traditional and creative space, and moderately increasing rental rates will continue to attract a variety of media, technology and consumer product tenants. Average Asking Rent Change from Q3 17 ($) Y.O.Y. Change (%) Labor Force Los Angeles County, November 2017 Nonfarm Prof. & Business Services Financial Activities 12-mo Employment Growth (%) 0.8% 0.5% 2.4% 12-mo Actual Employment Change 36,900 2,800 5,200

2 South Bay OFFICE > The overall vacancy rate for the South Bay market at yearend saw a 40 basis-point decrease from the third quarter to 15.2%. > Year over year, vacancy dropped by 220 basis points in the South Bay as robust demand drove vacancies down. > The sublease vacancy rate creeped up to 1.3% from 1.0% due to give-backs in both El Segundo/Beach Cities and Downtown Long Beach. > Forecast: Sliding velocity and new construction deliveries through early 2018 will temper major vacancy gains in the South Bay market. Absorption and Leasing Activity > Absorption for the South Bay recorded at 140,500 square feet. For the year, the market absorbed 731,900 square feet of space. > Among the major move-ins for the quarter were food distributor Thai Union occupying 33,100 square feet at 2150 E. Grand Avenue in El Segundo and Barrett Business Services taking 11,300 square feet at Catalina Landing in Long Beach. > Leasing activity for the quarter comprised 583,900 square feet. Major leases signed included American Honda Finance Corp renewing for 102,300 square feet at Madrona Avenue in Torrance, as well as Quest Nutrition signing a direct lease for 54,000 square feet at 777 S. Aviation Boulevard in El Segundo. > Forecast: With leasing velocity tailing off to end the year, look for demand to lessen accordingly throughout Rental Rates > Class A rents increased by $0.04 to end the year, while Class B rents slid by $0.03 and Class C rents stalled with no change. > The overall asking rent of $2.44 P FSG is up 6.0% yearover-year. Class A and B rents recorded 6.9% and 6.4% over the same period. > All but two submarkets recorded rent increases. Both Long Beach submarkets posted no changes in rental rate. > Forecast: South Bay rental growth had been steady through 2017 but has started to show some softness at the end of the year. Through 2018, rental growth will be minimal until new projects deliver to push rents upward again. Historical v. Rents South Bay Office Market Q $ P FSG PER MONTH (WEIGHTED) Net Absorption by Submarket South Bay Office Market Q4 17 $2.50 $2.40 $2.30 $2.20 $2.10 $2.00 $1.90 $1.80 $1.70 $ , , , , ,000 50,000 0 (50,000) (100,000) (150,000) RENTS VACANCY 4Q13 4Q14 4Q15 4Q16 4Q17 44,700 LONG BEACH AIRPORT/LAKEWOOD 14,700 LAX/LOS ANGELES/WESTCHESTER 47, TH STREET CORRIDOR 93,700 CENTRAL TORRANCE (95,700) DOWNTOWN LONG BEACH 24% 22% 20% 18% 16% 14% 12% 10% % VACANT (TOTAL) 35,500 Historical Leasing Activity South Bay Office Market Q EL SEGUNDO/BEACH CITIES Q13 4Q14 4Q15 4Q16 4Q17 2

3 South Bay OFFICE Construction > Three projects constituting 349,100 are currently under construction in the South Bay market. All three are in the El Segundo/Beach Cities submarket. > The largest property is 555 S. Aviation Boulevard, a new 259,100-square-foot creative office complex being developed by Tishman Speyer. > Looming on the horizon are Sares Regis purchase of the former Toyota headquarters in Torrance and Hackman Capital s purchase of Northrup Grumman s facility at 888 Douglas Street. Both could potentially be converted into creative office. > Forecast: Construction will lag behind the boom the market saw in the past few years. However, all current projects, which account for 10% of all construction activity in the county, are due to deliver within a year. Investment Trends > Investment activity for properties over 25,000 square feet experienced a huge uptick to end the year, recording more than $1.1 billion in volume across 12 transactions. > This quarter marks the second time Campus 2100 has sold in the past five years. Deutsch Asset Management acquired the 94% occupied property for $117.1 million ($566 P). Seller Rockwood Capital previously bought it in 2013 for $24 million ($121 P) and invested about $20 million in capital improvements. > Investment activity will continue through the end of 2017 as Torrance Technology Campus goes to market at 91% occupied. L3 Technologies leased the majority of that occupancy, which doesn t expire until > Forecast: The disposition of converted industrial and obsolescent office inventory and the associated returns the market is currently seeing will sustain interest in value-add projects going forward. Outlook The outlook for the South Bay market remains positive. should continue to decrease into the first half of 2018, although movement will be incremental due to lessened leasing activity in 2017 and projected deliveries of new inventory. Likewise, rental growth will increase at a more measured pace than in previous years. In addition to core investment properties, value-add and creative conversion projects will remain part of the investment environment as sellers divest completed projects and buyers seek opportunities to enter the market. Historical Net Absorption & Construction Completions South Bay Office Market Q , , , ,000 0 (100,000) (200,000) (300,000) (400,000) (500,000) (600,000) NET ABSORPTION 4Q13 4Q14 4Q15 4Q16 4Q17 Investment Trends Chart South Bay Office Market $/P $ $ $ $ $ $ $50.00 CONSTRUCTION COMPLETIONS Unemployment Rate U.S., CA & Los Angeles County November % 4.6% 4.5% 4.4% 4.3% 4.2% 4.1% 4.0% $- 4.1% Average Price P 4.6% Cap Rate % Cap Rate 3 3.9% 3.8% United States California Los Angeles County

4 South Bay OFFICE Market Description The South Bay office market is comprised of 33.2 million square feet, representing 11% of the total office space in buildings 10,000 square feet and greater in the Los Angeles Basin. Most of the space (64%) was built in the 1980s, and only 8% was built after Nearly half (49%) of its space is contained within mid-rise buildings (5 13 stories), followed by 32% in low-rise buildings and 19% in high-rise. It has a large concentration of firms in aerospace (although many fewer than in the 1980s), automotive, telecommunications, information technology, healthcare and business services, and is served by a highly educated labor force. Submarket Map RECENT TRANSACTIONS & MAJOR DEVELOPMENTS South Bay Office Market SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER Pacific Corporate Towers, El Segundo (3 Bldgs.) 1,588,100 $605,454,000 $381 P Starwood Capital Group DivcoWest Campus 2100, El Segundo (3 Bldgs.) 203,900 $117,100,000 $566 P Deutsche Asset & Wealth ManagementMarshall Property Development, Hawthorne Blvd., Torrance 306,800 $106,750,000 $348 P Cruzan Stream Realty Partners, LP 5210 Pacific Concourse Dr., El Segundo 169,800 $53,000,000 $312 P Karney Management Company Siemens Corporation 3701 Doolittle Dr., Redondo Beach 143,800 $36,700,000 $255 P Miramar Capital Advisors Gramercy Property Trust, Inc. 898 N. Sepulveda Blvd., El Segundo (3 Bldgs.) 88,900 $35,500,000 $399 P Second City Capital Partners TA Realty E PCH, Long Beach (2 Bldgs.) 105,700 $25,500,000 $241 P Carmel Partners The Colton Company The Knox, Torrance (2 Bldgs.) 106,600 $21,600,000 $203 P Wilshire Capital Partners The Ruth Group 2400 Marine Ave., Redondo Beach 50,000 $17,850,000 $357 P EverWest Real Estate Partners Montana Avenue Capital Partners S. Vermont Ave., Torrance (2 Bldgs.) 117,700 $14,500,000 $124 P Westport Capital Partners Saunders Property Company Western Ave., Redondo Beach 28,000 $10,100,000 $361 P Red Hook Capital Western Avenue Investors 3447 Atlantic Ave., Long Beach 37,700 $7,700,000 $204 P ILWU Positive Investments, Inc. LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG CLASS LESSEE LESSOR Madrona Ave., Torrance 102,300 Renewal A American Honda Finance Corp Continental Development 777 S. Aviation Blvd., El Segundo 54,000 Direct B Quest Nutrition Embarcadero Capital Partners 310 Golden Shore, Long Beach 14,700 Expansion A CSU Trustees Colony Northstar 111 W. Ocean Blvd., Long Beach 6,000 Expansion A Carroll, Kelly, Trotter, Franzen John Hancock MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 555 S. Aviation Blvd., El Segundo Tishman Speyer 259,100 El Segundo/ Under Construction Q Utah Ave., El Segundo NSB Associates 80,000 El Segundo/ Under Construction 123 Nevada St., El Segundo Smoky Hollow LLC 10,000 El Segundo/ Under Construction Douglas Park Sares-Regis Group 67,000 Long Beach Proposed TBD 4

5 South Bay OFFICE office OVERVIEW South Bay Office Market EXISTING PROPERTIES VACANCY ACTIVITY ABSORPTION CONSTRUCTION RENTS Submarket/ Class Bldgs Inventory Direct Sublease Prior Qtr Leasing Activity Current Qtr Leasing Activity YTD Net Absorption Current Qtr Net Absorption YTD Completions Current Qtr Under Construction Weighted Avg Asking Lease Rate BUILDING CLASS/SIZE A 10,000-24, , ,845, % 3.2% 13.8% 13.6% 290, ,900 (30,300) (92,900) 0 339,100 $2.93 Subtotal 61 12,845, % 3.2% 13.8% 13.6% 290, ,900 (30,300) (92,900) 0 339,100 $2.93 B 10,000-24, ,387, % 0.1% 5.2% 6.0% 20,300 59,400 11,100 48, ,000 $ , ,172, % 0.1% 18.6% 19.2% 234, , , , $2.22 Subtotal ,559, % 0.1% 17.5% 18.2% 254, , , , ,000 $2.22 c 10,000-24, ,202, % 0.0% 5.4% 4.9% 10,700 62,600 (5,100) 23, $ , ,942, % 0.0% 9.8% 12.6% 27, ,000 55,000 1, $1.92 Subtotal 111 3,144, % 0.0% 8.1% 9.7% 38, ,600 49,900 24, $1.94 SUBMARKET/BUILDING SIZE LAX/LOS ANGELES/WESTCHESTER 10,000-24, , % 0.0% 12.1% 11.2% ,800 (1,400) 7, $ , ,191, % 0.1% 33.0% 33.4% 18, ,400 16, , $1.88 Subtotal 35 4,353, % 0.1% 32.2% 32.6% 18, ,200 14, , $1.89 EL SEGUNDO/BEACH CITIES 10,000-24, , % 0.3% 2.0% 1.1% 6,700 21,700 (5,500) 9, ,000 $ , ,120, % 1.5% 11.7% 12.0% 244, ,400 41, , ,100 $3.32 Subtotal ,701, % 1.4% 11.2% 11.5% 251, ,100 35, , ,100 $3.32 CENTRAL TORRANCE 10,000-24, ,030, % 0.0% 9.0% 9.4% 10,600 37,100 4,300 13, $ , ,249, % 0.2% 9.8% 12.5% 156, ,600 89,400 42, $2.83 Subtotal 112 4,279, % 0.2% 9.6% 11.8% 167, ,700 93,700 56, $ TH STREET CORRIDOR 10,000-24, , % 0.0% 4.2% 4.2% 0 2,500 (100) (5,100) 0 0 $ , ,369, % 2.8% 23.8% 25.2% 41, ,200 47, , $2.14 Subtotal 47 3,547, % 2.7% 22.8% 24.2% 41, ,700 47, , $2.14 LONG BEACH AIRPORT/LAKEWOOD 10,000-24, , % 0.0% 0.5% 3.1% 11,900 31,800 10,100 33, $ , ,402, % 0.7% 8.7% 9.5% 30, ,900 34,600 94, $2.13 Subtotal 77 4,789, % 0.7% 8.1% 9.0% 42, ,700 44, , $2.13 DOWNTOWN LONG BEACH 10,000-24, , % 0.0% 1.2% 0.6% 1,400 11,100 (1,400) 13, $ , ,628, % 2.8% 16.8% 14.7% 60, ,400 (94,300) (3,700) 0 0 $2.43 Subtotal 47 4,878, % 2.6% 16.0% 14.0% 62, ,500 (95,700) 9, $2.43 MARKET TOTAL ,549, % 1.3% 15.2% 15.6% 583,900 2,061, , , ,100 $2.44 Note: revisions to the inventory base were made effective, historical data reported here reflect these revisions and may not match data reported in previous quarters. 5

6 South Bay OFFICE Definitions of key terms in this report Rentable Square Feet: Office space in buildings with 25,000 or more of speculative office space. Includes competitive space in Class A, B and C single-tenant and multi-tenant buildings. Excludes non-competitive owner-occupied buildings, buildings that include 30 percent or greater of medical or retail space, and space that is under-construction, underrenovation or off-market. Class A Space: Space that an image-conscious company would lease for its headquarters. Typically, this space has a very high level of finish and an excellent location, and commands the highest rents in the market. Class B Space: Highly functional, attractive space, but less prestigious than Class A Space, and commanding lower rental rates. Class C Space: Functional, competitive space, but with a lower level of finish and/or a less desirable location than with Class B Space, and commanding lower rental rates. Low-Rise: Buildings with a total of 4 floors or less. Mid-Rise: Buildings with a total of 5 to 13 floors. High-Rise: Buildings with 14 or more floors. Direct : Space in existing buildings that is vacant and immediately available during the quarter for direct lease, plus space that is vacant but not available for direct lease or sublease (for example, that is being held for a future commitment). : Space in existing buildings that is vacant and immediately available during the quarter for direct lease or for sublease, plus space that is vacant but not available for direct lease or sublease. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Leasing Activity: Square feet leased from all known transactions completed during the quarter. Excludes lease renewals. Weighted Average Asking Rental Rates: Weighted by the total square feet available for direct lease. Data is based on Full Service Gross rents, and includes all costs associated with occupying the space, including taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Space Added (Net): added during the quarter via construction completions, including renovated space returned to market, less total taken off-market due to demolitions or conversions. Under Construction: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy Technical Note: Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 UNITED STATES: South Bay Office License No Rosecrans Ave, Ste 3301 El Segundo, CA HANS MUMPER Executive Managing Director CHRIS WONG Regional Research Analyst Research Services > $2.6 billion in annual revenue > 2.0 billion square feet under management > Over 15,000 professionals TEL: FAX: CAITLIN MATTESON Research Director Research Services 6