Orange County Industrial Continues Positive Momentum

INDUSTRIAL ORANGE COUNTY MARKET REPORT Orange County Industrial Continues Positive Momentum MARKET INDICATORS - VACANCY 2.9% AVAILABILTY 5.2% NET ABSORPTION 394,960 SF CONSTRUCTION 676,700 SF RENTAL RATE $0.70 NNN UNEMPLOYMENT 4.2% MARKET OVERVIEW Orange County Industrial continued to stride with positive momentum into fourth quarter of 2015. Net absorption was positive, recording 394,960 square feet (SF) compared to 509,800 SF one quarter ago. This caused the vacancy rate to decrease by 20 basis points and availability fell to 5.2% over the previous quarter. Average asking rents stayed flat from last quarter at $0.70 PSF NNN. As the economy improves, asking rents have increased steadily over the past 16 quarters since bottoming out at $0.56 PSF NNN in late 2011. Since that time, rents have increased $0.14 or roughly 24%. As market conditions remain tight and quality industrial space remains scarce, it is expected that asking rents will rise by another 2% to 3% over the next four quarters. Industrial demand has grown this quarter as the market continues to tighten. This is especially true for buildings under 100,000 SF, which have a vacancy rate of 2.8% or well below the vacancy rate for the Orange County region. MARKET TRENDS - >> Total vacancy rate down 20 basis points to 2.9% HISTORICAL VACANCY VS RENTS Q4 2011 - $0.75 Rents Vacancy 6% HISTORICAL NET ABSORPTION & CONSTRUCTION COMPLETIONS Q4 2011 - Net Absorption Completions 1,000,000 >> Weighted average asking rental rate remained at $0.70 PSF NNN >> Total gross activity at 3,395,100 SF >> Construction activity at 508,300 SF $ PSF PER MONTH (NNN) $0.70 $0.65 $0.60 5% 4% 3% % VACANT 750,000 500,000 250,000 - (250,000) (500,000) (750,000) $0.55 4Q11 4Q12 4Q13 4Q14 4Q15 2% (1,000,000) 4Q11 4Q12 4Q13 4Q14 4Q15 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. www.colliers.com/greaterlosangeles

MARKET REPORT INDUSTRIAL ORANGE COUNTY ORANGE COUNTY DEMOGRAPHICS >> POPULATION: 3,160,437 (2015 Estimate) 3,314,198 (2020 Projection) 4.9% (Growth 2015-2020) >> HOUSEHOLD INCOME: $99,500 (Average) $72,900 (Median) >> JOB GROWTH: 2.5% (past 12 months) >> UNEMPLOYMENT RATE: 4.2% (as of November 2015) VACANCY In fourth quarter 2015, the total vacancy rate for Orange County decreased 20 basis points to 2.9%. Over the past 12 months, the vacancy rate has decreased 30 basis points as industrial demand continues to outpace any gains in supply. In terms of building sizes, market conditions remain tight for the smallest buildings of the size range between 40,000-69,999 SF and under 10,000 SF, which have a vacancy rate of 1.5%. Buildings over 100,000 SF have the highest vacancy rate at 5.2%. NET ABSORPTION In fourth quarter 2015, the market recorded positive net absorption of 394,960 SF, marking historical levels last witnessed at mid-2013. The North County recorded the largest amount of net absorption at 468,640 SF, with South County tailing behind at 284,700 SF and Airport Area recorded the least amount at -247,100SF. Moving into 2016, net absorption is expected to remain positive as available supply is limited. UNEMPLOYMENT November 2015 figures from the Employment Development Department of California showed total nonfarm employment in Orange County reached 1,570,500 jobs as the unemployment rate decreased to 4.2%. This was an increase of 39,000 jobs over the past twelve months. Construction added 12,200 payroll jobs, Trade, Transportation and Utilities added 10,200 jobs and Manufacturing added 4,900 jobs over the year. These industries are heavy users of industrial real estate. VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET 5% 5% 4.4% 600,000 500,000 468,640 4% 3.6% 400,000 % VACANT 4% 3% 3% 2% 2% 1% 1% 0% 2.9% 2.1% NORTH WEST AIRPORT SOUTH 300,000 200,000 100,000 0 (100,000) (200,000) (300,000) 284,700 (111,280) (247,100) AIRPORT WEST SOUTH NORTH 2 Source: California Employment Development Department, August 2015. P. 2 COLLIERS INTERNATIONAL

MARKET REPORT INDUSTRIAL ORANGE COUNTY INDUSTRIAL OVERVIEW EXISTING PROPERTIES CONSTRUCTION VACANCY AVAILABILITY ACTIVITY ABSORPTION RENTS Submarket/ Building Size Bldgs Total Inventory SF Completions Current Qtr SF Under Construction Vacancy Vacancy Prior Qtr SF Availability Sales Number of Activity SF Sales Lease Activity SF Number of Leases Total Gross Activity Current Qtr SF Total Gross Activity YTD SF Net Absorption Current Qtr SF Net Absorption YTD SF Weighted Avg Asking Lease Rates AIRPORT 1-9,999 388 2,773,336 0 0 1.0% 0.8% 2.8% 21,300 3 29,200 4 50,500 232,800 (5,300) (13,200) $1.20 10,000-39,999 1,201 22,633,132 0 12,100 1.6% 1.5% 2.5% 133,800 7 194,200 5 328,000 1,046,900 (13,100) 114,700 $0.85 40,000-69,999 154 7,732,027 0 0 2.2% 0.8% 4.9% 0 0 50,800 3 50,800 446,300 (103,200) 158,300 $0.72 70,000-99,999 68 5,546,597 0 0 4.8% 4.0% 6.9% 0 0 48,000 1 48,000 181,300 (48,000) 85,335 $0.62 100,000 + 75 12,880,034 0 124,000 8.0% 7.4% 12.8% 0 0 113,500 1 113,500 758,100 (77,500) (162,700) $0.65 SUBTOTAL 1,886 51,565,126 0 136,100 3.6% 3.1% 5.9% 155,100 10 435,700 14 590,800 2,665,400 (247,100) 182,435 $0.70 NORTH 1-9,999 521 3,694,384 0 0 0.8% 1.6% 2.9% 36,200 6 19,500 6 55,700 179,800 29,800 51,000 $0.86 10,000-39,999 1,800 33,030,484 33,700 0 1.0% 1.3% 1.7% 196,600 10 359,700 16 556,300 2,034,100 89,300 229,000 $0.73 40,000-69,999 246 12,726,013 108,900 0 1.4% 2.2% 2.5% 164,200 3 150,800 4 315,000 1,050,900 109,900 269,700 $0.57 70,000-99,999 89 7,027,569 0 0 1.7% 0.0% 3.2% 87,700 1 94,200 2 181,900 686,000 (116,960) 151,540 $0.82 100,000 + 148 28,372,604 339,300 367,200 3.9% 5.2% 8.4% 0 0 308,900 2 308,900 1,020,500 356,600 58,900 $0.55 SUBTOTAL 2,804 84,851,054 481,900 367,200 2.1% 2.6% 4.2% 484,700 20 933,100 30 1,417,800 4,971,300 468,640 760,140 $0.61 SOUTH 1-9,999 226 1,458,221 0 0 1.4% 1.6% 2.5% 18,000 2 31,300 5 49,300 155,300 2,500 12,700 $1.05 10,000-39,999 393 7,524,519 26,400 0 3.3% 3.8% 5.6% 43,000 2 122,100 11 165,100 648,700 38,800 45,500 $1.07 40,000-69,999 46 2,305,415 0 0 3.3% 2.6% 2.9% 0 0 25,200 1 25,200 117,200 (16,000) (8,100) $0.84 70,000-99,999 17 1,388,276 0 0 6.0% 15.0% 12.5% 0 0 0 0 0 116,700 124,900 154,600 $0.72 100,000 + 43 8,385,775 0 0 6.0% 7.6% 12.2% 0 0 260,200 2 260,200 499,600 134,500 41,200 $0.84 SUBTOTAL 725 21,062,206 26,400 0 4.4% 5.8% 8.2% 61,000 4 438,800 19 499,800 1,537,500 284,700 245,900 $0.89 WEST 1-9,999 286 2,063,822 0 0 1.4% 1.7% 2.4% 68,900 10 26,500 6 95,400 173,200 7,000 1,100 $0.87 10,000-39,999 711 12,259,547 0 38,700 1.7% 1.3% 2.3% 91,400 7 111,300 8 202,700 638,600 (46,200) 28,300 $0.83 40,000-69,999 101 5,288,928 0 0 3.5% 3.5% 7.6% 154,100 3 69,600 1 223,700 468,000 (480) 27,920 $0.67 70,000-99,999 31 2,530,380 0 0 0.0% 0.0% 3.5% 0 0 0 0 0 200,800 0 200,500 $0.60 100,000 + 53 11,620,010 0 134,000 4.7% 4.1% 7.0% 115,000 1 249,900 2 364,900 1,149,800 (71,600) 248,100 $0.62 SUBTOTAL 1,182 33,762,687 0 172,700 2.9% 2.5% 4.8% 429,400 21 457,300 17 886,700 2,630,400 (111,280) 505,920 $0.67 MARKET TOTAL 1-9,999 1,421 9,989,763 0 0 1.1% 1.4% 2.5% 144,400 21 106,500 21 250,900 741,100 34,000 51,600 $0.96 10,000-39,999 4,105 75,447,682 60,100 50,800 1.5% 1.6% 2.4% 464,800 26 787,300 40 1,252,100 4,368,300 68,800 417,500 $0.86 40,000-69,999 547 28,052,383 108,900 0 2.2% 2.1% 4.2% 318,300 6 296,400 9 614,700 2,082,400 (9,780) 447,820 $0.67 70,000-99,999 205 16,492,822 0 0 2.8% 2.6% 5.3% 87,700 1 142,200 3 229,900 1,184,800 (40,060) 591,975 $0.69 100,000 + 319 61,258,423 339,300 625,200 5.2% 5.8% 9.6% 115,000 1 932,500 7 1,047,500 3,428,000 342,000 185,500 $0.64 TOTAL 6,597 191,241,073 508,300 676,000 2.9% 3.1% 5.2% 1,130,200 55 2,264,900 80 3,395,100 11,804,600 394,960 1,694,395 $0.70 COLLIERS INTERNATIONAL P. 3

MARKET REPORT INDUSTRIAL ORANGE COUNTY >> Sales and leasing activity at 3,395,100 SF for the quarter >> Asking rents remained at $0.70 PSF NNN CONSTRUCTION In fourth quarter 2015, 508,300 SF of space was delivered to the market. There is currently 676,000 SF of industrial space under construction, most of which is expected to deliver by first quarter 2016 with the largest located at 1225 W Imperial Hwy in Brea consisting of 367,200 SF. Although there is strong demand for new industrial buildings in Orange County, developers are challenged with finding available infill sites and rising development costs. As a result, many industrial properties are being sold for their land value for multi-family residential redevelopment and creative office projects. ACTIVITY Sales and leasing activity totaled 3,395,100 SF, broken down into 1.13 million SF of sales activity and 2.26 million SF of leasing activity. The largest investment sale of the quarter was Guardian Commercial Real Estate purchase 3030 & 3080 Airway Ave totaling 157,200 SF building in Costa Mesa for $25.7 million ($165 PSF). An owner/user sale this quarter included J-Five Holdings LLC purchasing a 87,700 SF warehouse in Anaheim for $19.3 million ($220 PSF) and Rexford Industrial made an investment purchase of a 114,900 SF building in Huntington Beach for $17.1 million ($148 PSF). In fourth quarter, the average price per SF sold was $166 compared to $140 PSF one year ago. Overall sales volume for the market recorded at $186.3 million, a 30% decrease from last quarter. Average cap rates recorded at 5.5%. The largest lease of the quarter was Kawasaki Motors Corp. taking 203,200 SF of space in Anaheim. Other leases include Disney taking 161,800 SF in Anaheim and South Coast Baking taking 113,500 SF in Costa Mesa. RENTAL RATES The weighted average asking rental rate for Orange County recorded at $0.70 per square foot NNN. Rents have been slowly rising over the past 3 years as industrial demand has strengthened. Average asking rates were highest in the South County submarket at $0.89 per square foot NNN and lowest in the North submarket at $0.61 PSF NNN. Rents remained highest for the smallest spaces at $0.96 PSF NNN, and lowest for spaces 100,000+ SF at $0.64 PSF NNN. WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET GROSS ACTIVITY BY SUBMARKET 1-9,999 SF $1.30 $1.20 $1.10 $1.20 $1.05 $1.07 10,000-39,999 SF 40,000-69,999 SF 70,000-99,999 SF 100,000+ SF 1,600,000 1,400,000 1,200,000 1,417,800 $ PSF PER MONTH (NNN) $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.85 $0.72 $0.62 $0.65 $0.86 $0.73 $0.57 $0.82 $0.55 $0.84 $0.72 $0.84 $0.87 $0.83 $0.67 $0.60 $0.62 1,000,000 800,000 600,000 400,000 499,800 590,800 886,700 $0.40 200,000 $0.30 $0.20 AIRPORT NORTH SOUTH WEST 0 SOUTH AIRPORT WEST NORTH P. 4 COLLIERS INTERNATIONAL

MARKET REPORT INDUSTRIAL ORANGE COUNTY OUTLOOK The Orange County industrial market activity remains to move forward with positive momentum. There is currently 676,000 SF of industrial space under construction that will be completed in the next 3-12 months. With minimal increases in supply, asking rental rates are expected to continue to climb. As a result of rising redevelopment costs, many industrial properties are being sold for their land value for multi-family residential redevelopment and creative office projects. As small to mid-sized local distributors and manufactures continue to expand and available supply remains low, vacancy rates will remain at historically low levels moving into 2016. MARKET DESCRIPTION The Orange County industrial market is a large market comprised of 191 million square feet representing 17% of the total industrial space in the greater Los Angeles basin. Most of the space (68%) is in small and medium sized buildings, with the balance in big box space (100,000+ SF). The market includes many mid-sized manufacturers and distributors from a wide array of industries, including information, technology, electronics, food, apparel and communications. These firms pay a premium to be in the midst of Orange County s highly educated labor force and concentration of high-end firms and distributors. HISTORICAL GROSS ACTIVITY Q4 2011 - UNEMPLOYMENT RATE United States, California & Orange County November 2015 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 6.0% 5.0% 4.0% 3.0% 2.0% 5.0% 5.7% 4.2% 2,000,000 1,500,000 1.0% 1,000,000 4Q11 4Q12 4Q13 4Q14 4Q15 0.0% United States California Orange County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SF SALE PRICE PRICE PSF BUYER SELLER 3030/3080 Airway Ave, Costa Mesa 157,200 SF $25,681,000 $163/PSF Guardian Commercial Real Estate LP Lincoln Property Company 5300 E La Palma Ave, Anaheim 87,700 SF $19,303,000 $220/PSF J-Five Holdings LLC Fairmont Private Schools 3325 E La Palma Ave, Anaheim 63,800 SF $10,842,000 $170/PSF NSWC Norman Wright Alston Construction Company 12621 Western Ave, Garden Grove 66,000 SF $10,528,000 $160/PSF Smith Family Trust Amrapur Overseas, Inc. 3321 E La Palma Ave, Anaheim 45,100 SF $7,552,500 $167/PSF Bluefin Distribution Alston Construction Company LEASING ACTIVITY PROPERTY ADDRESS LEASED SF LEASE TYPE BLDG TYPE LESSEE LESSOR 26972 Burbank Ave, Foothill Ranch 203,200 SF Direct - New Distribution Kawasaki Motors Corporation, USA FFP, LLC 1200 N Miller St #D, Anaheim 161,800 SF Direct - New Distribution Disney Panattoni Development Company 1683 Sunflower Ave, Costa Mesa 113,500 SF Direct - New Distribution South Coast Baking Sakura Paper, Inc. 1202 N Miller St #C, Anaheim 108,839 Direct - New Distribution Phillips Pet Supply Panattoni Development Company 10800-10850 Valley View St, Cypress 100,550 SF Direct - New Distribution Ok International Warland MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SF SUBMARKET STATUS ESTIMATED COMPLETION 1225 W Imperial Hwy, Brea LIT Industrial, LP 367,194 SF North County Under Construction Q1 2016 11488 Slater Ave, Fountain Valley Snyder Langston 134,000 SF Airport Area Under Construction Q1 2016 1601 Alton Pky, Irvine Rexford Industrial 124,000 SF Airport Area Under Renovation Q1 2016 COLLIERS INTERNATIONAL P. 5

MARKET REPORT INDUSTRIAL ORANGE COUNTY DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Industrial space in buildings with 1 SF or more of industrial space. Includes speculative as well Under Construction: Includes buildings that are in some phase of construction, beginning with foundation work as owner-occupied buildings. Excludes and ending with the issuance of a Certificate of Research & Development (R&D) buildings Occupancy. (industrial buildings with at least 30% office build-out, 3/1000 parking ratio and a high level of finish). Excludes space that is underconstruction or 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 Vacancy: changes in the database. Space in existing buildings that is 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. 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 Availability: All space that is being currently marketed for occupancy, includes space which may be currently occupied or which may be under construction or renovation. 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 Net Absorption: from. Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). This report and other research materials may be found on our website at www.colliers.com/greaterlosangeles. 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 >> $2.3 billion in annual revenue >> 1.7 billion square feet under management >> Over 16,200 professionals UNITED STATES: Orange County Office License No. 00813140 3 Park Plaza, 12th Floor Irvine, CA 92614 TEL +1 949 725 5500 FAX +1 949 724 5600 CAUDILL, ROBERT Regional Director/Orange County MATTESON, CAITLIN Research Director PUPIL, MARTIN President, Southwest Region STAUFF, BILL Research Associate Gross Activity: Square feet sold and leased for all known transactions completed during the quarter. Excludes 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 SF basis. Construction Completions: 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. Accelerating success. www.colliers.com/marketname www.colliers.com/greaterlosangeles