Newly Completed Buildings Quickly Sold or Leased As Tight Market Continues

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1 industrial San Gabriel Valley market report Newly Completed Buildings Quickly Sold or Leased As Tight Market Continues Market overview MARKET indicators - VACANCY 1.8% AVAILABILTY 3.7% NET ABSORPTION 16,500 CONSTRUCTION 1,274,700 RENTAL RATE $0.50 P NNN UNEMPLOYMENT 8.1% In Q3 there were 4 new projects that finished completion totaling 167,400. Of these 4 buildings, 100% of them were pre-leased or pre-sold prior to construction completion, a strong indicator of the pent up industrial demand that exists in the San Gabriel Valley market. With a vacancy rate of only 1.6% and an availability rate of only 4%, the San Gabriel Valley is one of the tightest most sought after markets within the Los Angeles Basin. Average asking rental rates increased by $0.01 to end at $0.50 per square foot, on a triple-net basis (NNN), and are up $0.05 (11.1%) over asking rates from the third quarter Lack of available product for tenants is putting upward pressure on rates. As the industrial market continues to recover in the San Gabriel Valley, we expect further increases in the asking rental rate. Sales and leasing activity in Q3 totaled 2,204,400 square feet, broken out into 38 leases totaling 1,534,300 and 21 sales totaling 670,100. This is around the same level of activity as was seen in the previous quarter. The lack of available industrial space is causing sales prices to rise and leading to increased build-to-suit and speculative projects. MARKET trends - >> Total vacancy rate steady at 1.8% HISTORICAL VACANCY VS RENTS Q HISTORICAL net absorption & Construction COMPLETIONS Q >> Weighted average asking rental rate increases to $0.50 P NNN 0.65 RENTS VACANCY 8% 7% NET ABSORPTION CONSTRUCTION COMPLETIONS >> Sales and leasing activity steady at 2,204,400 >> There was positive demand with 16,500 net absorption >> Construction activity steady at 1,274,700 $ P PER MONTH (NNN) Q10 3Q11 3Q12 3Q13 3Q14 6% 5% 4% 3% 2% 1% 0% % VACANT (TOTAL) (MILLIONS) (0.2) 3Q10 3Q11 3Q12 3Q13 3Q14 1 Colliers International continuously refines its database. As a result, data reflected in this report may not be consistent with data reported in previous quarters.

2 market Report industrial San Gabriel Valley VACANCY NET ABSORPTION San Gabriel Foothill Freeway 39 Industry >> Population: 10,064,000 (2014 Estimate) 10,423,700 (2019 Projection) 3.6% (Growth ) >> Household income: $76,000 (Average) $53,100 (Median) >> Job growth: 2.7% (past 12 months) >> Unemployment rate: 8.1% (as of August 2014) The total vacancy rate has remained stable over the quarter at 1.8 percent, down 30 basis points from the 2.1 percent reported one year ago. This quarter there was 167,400 of construction completions, 100% of which was pre-sold or pre-leased prior to construction completion. There is currently 1,274,700 of space currently under construction, but it is unlikely that this space will add to the vacancy rate as industrial demand currently far outpaces industrial supply. The vacancy rate was lowest in the San Gabriel submarket at 0.4 percent. This has historically been the tightest submarket in the region and contains many older, smaller spaces that seldom trade. The vacancy rate was highest in the Industry submarket at 2.1 percent. This is the largest submarket with the most competitive and modern properties. Space remains scarce for almost all size ranges, but is tightest for buildings sized 20,000-39,999 square feet at 0.8 percent. In, the San Gabriel Valley market recorded positive net absorption of 16,500 square feet, and was the sixteenth consecutive quarter of positive net absorption gains. Unemployment August 2014 figures for nonfarm employment in Los Angeles County showed a recovering job market. Over the past 12 months, Los Angeles County has gained 69,100 jobs for an increase of 2.7 percent. This gain in employment led to the unemployment rate lowering to 8.1 percent compared to 10.2 percent a year ago. Year-overyear job gains were seen in Trade, Transportation, and Utilities (7,700 jobs) and Construction (6,600 jobs) The largest decline in jobs was seen in Manufacturing (15,500 jobs). A positive sign for the San Gabriel Valley market is the rebounding housing market, which brings with it new housing construction and the need for supporting industrial real estate. VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET 3% 15,000 13, % 10,000 8,400 2% 1.7% 5,000 % VACANT 0 1% 0.4% (5,000) (5,800) 0% INDUSTRY FOOTHILL FREEWAY SAN GABRIEL (10,000) SAN GABRIEL FOOTHILL FREEWAY INDUSTRY p. 2 Colliers International

3 market Report industrial SAN GABRIEL VALLEY INDUSTRIAL OVERVIEW San Gabriel Valley EXISTING PROPERTIES CONSTRUCTION VACANCY AVAILABILITY ACTIVITY ABSORPTION RENTS Submarket/ Building Size Bldgs Total Inventory Completions Current Qtr Under Construction Vacancy Vacancy Prior Qtr Availability Sales Number of Activity Sales Lease Activity Number of Leases Total Gross Activity Current Qtr Total Gross Activity YTD Net Absorption Current Qtr Net Absorption YTD Weighted Avg Asking Lease Rates SAN GABRIEL 10,000-19, ,969, % 0.5% 1.2% 30, , , ,700 13,900 7,400 $ ,000-39, ,711, % 1.2% 2.3% ,100 - (15,800) $ ,000-69, ,826, % 0.3% 1.5% 114, , , ,100 - (10,200) $ ,000-99, ,024, % 0.0% 0.0% , , $ , , ,246, % 0.0% 8.1% $ , , ,006, % 0.0% 0.0% N/A 500, , % 0.0% 0.0% N/A Subtotal ,583, % 0.5% 2.2% 145, , , ,900 13,900 (18,600) $0.55 FOOTHILL FREEWAY 10,000-19, ,605, % 1.2% 3.2% 20, , ,200 97,900 (50,300) (108,000) $ ,000-39, ,437,300 33, % 1.4% 2.1% 62, , , ,700 68,700 51,400 $ ,000-69, ,182, , % 0.0% 4.4% , , ,900-84,100 $ ,000-99, ,379, % 7.1% 7.1% N/A 100, , ,850, % 2.8% 3.8% , ,500 22,100 (10,000) 7,400 $ , , , , % 0.0% 0.0% N/A 500, N/A Subtotal ,450,700 33, , % 1.6% 3.3% 82, , , ,600 8,400 34,900 $0.53 INDUSTRY 10,000-19, ,279, % 0.4% 2.5% 77, , , ,600 (77,600) (5,600) $ ,000-39, ,063, % 0.3% 3.4% 103, , , ,000 (59,500) (51,100) $ ,000-69, ,457, ,000 56, % 2.3% 3.6% 189, , , , , ,800 $ ,000-99, ,269, , % 6.7% 10.7% 71, , , , ,500 (90,800) $ , , ,496, , % 1.5% 4.0% , ,000 1,857,500 (211,700) 698,100 $ , , ,302, , % 2.3% 3.5% , , , ,000 (36,500) $ , ,971, % 2.3% 2.3% $0.45 Subtotal ,841, , , % 2.0% 4.1% 442, ,370, ,813,100 4,696,600 (5,800) 738,900 $0.49 MARKET TOTAL 10,000-19,999 1,665 22,853, % 0.6% 2.3% 128, , , ,200 (114,000) (106,200) $ ,000-39, ,212, % 0.8% 3.2% 165, , , ,800 9,200 (15,500) $ ,000-69, ,467, , % 1.0% 2.2% 304, , ,300 1,100, , ,700 $ ,000-99, ,673, , % 6.7% 10.2% 71, , , , ,500 (90,800) $ , , ,592, , % 1.5% 4.2% , ,500 1,879,600 (221,700) 705,500 $ , , ,304, , % 3.6% 5.5% , , , ,000 (36,500) $ , ,771, % 2.1% 2.1% $0.45 Totals 3, ,875, ,274, % 1.8% 3.7% 670, ,534, ,204,400 5,610,100 16, ,200 $0.50 Colliers International p. 3

4 market Report industrial San Gabriel Valley >> Total sales and leasing activity for the year was 5,610,100 CONSTRUCTION During Q3, there were four projects that finished construction totaling 164,700 and there is currently 1,274,700 of space under construction. The San Gabriel Valley is a tight infill market and new industrial development often means the demolition of under-utilized or obsolete buildings. ACTIVITY Total gross activity was 2,204,400 for the quarter broken up into 21 sales totaling 670,100 and 38 leases totaling 1,534,300. Significant lease transactions this quarter include Promise Logistics Corp. taking 120,000 of space in the City of Industry, Windster Hoods, Inc moving into 52,200 of space also in the City of Industry and Pacific Wine Distributors newly occupying 46,500 of space in Irwindale. rental rates The weighted average asking rental rate has increased $0.01 to end at $0.50 per square foot NNN. Rents have been slowly increasing over the past 15 quarters as industrial market fundamentals continue to improve and tenants take additional space. The San Gabriel Valley is a market driven by local population serving industrial uses, food manufacturing and import / export businesses. As economic conditions continue to improve, so too will the industrial tenants in this market. Landlords are now more bullish on rents than anytime in the past three years. This is a result of multiple offers from tenants on what is becoming a limited supply of desirable buildings. We expect future quarters to see further gains in asking rents as the industrial supply remains exceptionally tight. >> Tight sale market will drive up sales prices and lead to further development Significant sales this quarter include Unipac Shipping purchasing a 119,800 building in Pomona for $11.6 million ($97 P) and Gold River Holdings purchasing a 38,700 building in Baldwin Park for $4.2 million ($108 P). WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET GROSS ACTIVITY BY SUBMARKET $0.56 $0.55 $0.55 2,000,000 1,800,000 1,813,100 $ P PER MONTH (NNN) $0.54 $0.53 $0.52 $0.51 $0.50 $0.49 $0.49 $0.53 1,600,000 1,400,000 1,200,000 1,000, , ,000 $ ,000 $ , , ,300 $0.46 INDUSTRY FOOTHILL FREEWAY SAN GABRIEL 0 INDUSTRY SAN GABRIEL FOOTHILL FREEWAY p. 4 Colliers International

5 market Report industrial SAN GABRIEL VALLEY OUTLOOK As lease rates continue to rise and quality industrial space remains exceedingly rare, industrial users within the San Gabriel Valley are purchasing or pre-leasing newly constructed industrial space. The lack of developable space, desirable locations and tight market conditions make the San Gabriel Valley an attractive place for owners of industrial real estate as well as investors. As such, the last few quarters have seen an increase in sales and investment demand, especially within the Industry submarket. market description The San Gabriel Valley industrial market comprises million square feet, and represents 12 percent of the total industrial space in buildings measuring 10,000 square feet and greater within the Los Angeles Basin. It includes a mix of newer and older buildings, 54 percent of which were built in 1980 or later. Half (50.3%) of the total space is contained in big-box buildings measuring over 100,000 square feet, with the balance (49.7%) in small to medium-sized buildings. The area has a significant concentration of firms in the high-tech sector and import/export-related businesses. HISTORICAL GROSS ACTIVITY Q UNEMPLOYMENT RATE United States, California & Los Angeles County August 2014 (MILLIONS) % 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 6.3% 7.8% 8.0% 0.0 3Q10 3Q11 3Q12 3Q13 3Q14 0.0% United States California Los Angeles County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER nd, Pomona 119,800 $11.6 Million $97 P Unipac Shipping Seventh Street Development nd, Pomona 42,200 $5.3 Million $125 P Vertex China Hoi & Lily Shum Lower Azusa, Arcadia 32,200 $4.7 Million $145 P YLJ, LLC Mak's Family, LLC 470 Cloverleaf, Baldwin Park 38,700 $4.2 Million $108 P Gold River Holding, LLC Wegener Trust LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 505 7th, City of Industry 120,000 Direct Distribution Promise Logistic Corp. Majestic Realty, Co Nelson, City of Industry 52,200 Direct Distribution Windster Hoods, Inc Nelson, LLC Tapia, Irwindale 46,500 Direct Distribution Pacific Wine Distributors Clarion Partners 328 Arrow, San Dimas 33,400 Direct Light Harbin Chen International Argent, LLC MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION nd, Pomona Seventh Street Development 51,200 Industry Completed nd, Pomona Seventh Street Development 42,200 Industry Completed Colliers International p. 5

6 market Report industrial SAN GABRIEL VALLEY DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Industrial space in buildings with 10,000 square feet or more of industrial space. Includes speculative as well as owner-occupied buildings. Excludes Research & Development (R&D) buildings (industrial buildings with at least 30 percent office build-out, 3/1000 parking ratio and a high level of finish). Excludes space that is under-construction or renovation. Direct Vacancy: Space in existing buildings that are vacant and immediately available during the quarter for direct lease or for sale, plus space that is vacant but not available for direct lease or sublease (for example, that is being held for a future commitment). Total Vacancy: Space in existing buildings that are vacant and immediately available during the quarter for direct lease, for sublease or for sale, plus space that is vacant but not available for direct lease or sublease. Total Available: All space that is being currently marketed for occupancy, includes space which may be currently occupied or which may be under construction or renovation. 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). Gross Activity: Square feet sold or leased for all known transactions completed during the quarter. Includes lease renewals. Excludes investment sale transactions. Weighted Average Asking Rental Rates: Weighted by square feet available for direct lease. Data is based on Triple Net rents, and excludes expenses such as taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per square foot basis. Average Sales Price: Calculated using a straight average of actual sales transactions. Added (Net): Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Under Construction/Renovation: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. Also includes buildings that are under going substantial renovation. 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 63 countries on 6 continents United States: 143 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85 united states: San Gabriel Valley Office License No Castleton, Suite 158 City of Industry, CA tel FAX BELLITTI, STEVEN J. Senior Executive COULTER, SUMMER CHOU, ERIC CHANG, JACK DEVRIES, IAN Executive GALVIN, THOMAS R. Regional Analyst Research Services GILFILLAN, WHIT C. Senior HAYES, JOSH HEATON, SCOTT A. Executive KIM, JEFFERY KIM, WILLIAM H. LEE, PETER LIN, JOESEPH Senior MELE, RYAN NUNEZ, RICK R. Senior PASTOR, STEFAN >> $2.1 billion in annual revenue >> 1.46 billion square feet under management >> Over 15,800 professionals PHADUNGSILP, JULIET Research Research Services PHU, TONY T. Executive PUTNAM, RICHARD Managing Director, Western Region Capital Markets RENWICK, WILLIAM B. Senior SCHWARTZ, RICHARD SIGLAR, TAL Senior TAYLOR, THOMAS E. Senior Executive THYS, JON H. WILLIAMS, JOSEPH YATES, BRAD ZORN, MARK Senior Accelerating success. p. 6 Colliers International