South Bay Records Robust Investment Sales Amid Strong Demand

office SOUTH BAY market report South Bay Records Robust Investment Sales Amid Strong Demand Market overview MARKET indicators - VACANCY 20.5% NET ABSORPTION 295,000 CONSTRUCTION 365,300 RENTAL RATE $2.24 FSG UNEMPLOYMENT 6.9% The South Bay office market saw total vacancy decrease during the third quarter of 2015 by 80 basis points to 20.5% from 21.3% last quarter. Direct weighted average asking rents increased to $2.24 per square foot (P), per month Full Service Gross (FSG) from $2.20 P FSG last quarter. Demand for space was positive with 295,000 of net absorption, while leasing activity dropped from last quarter s 4-year high to a still-robust 493,100. The El Segundo submarket led all submarkets in both demand and leasing activity as tenants continue to flock to the increasingly tech-rich area in search of Silicon Beach-comparable space at a discount. Investment velocity increased as a joint venture of Greenlaw Partners and Walton Street Capital purchased One World Trade Center in Long Beach from SteelWave, Inc for $105.9M ($184 P) in the largest transaction for the market this quarter. Further activity included Onni Group acquiring Manhattan Towers in Manhattan Beach from CW Capital for $91.5M ($294 P), Sunny Hills-Palladium acquiring 5757-67 W. Century Blvd. in Los Angeles from Decron Properties for $61.3M ($121 P) and 101 N. Sepulveda Blvd. in El Segundo selling for $51.6M from Menlo Equities to AEW Capital Management. Tishman Speyer bought 555 S. Aviation in El Segundo and intends to convert the former flex building into creative office once current tenant Xerox vacates in 2017. MARKET trends - >> Total vacancy rate drops to 20.5% from 21.3% HISTORICAL VACANCY VS RENTS Q3 2011 - HISTORICAL net absorption & Construction COMPLETIONS Q3 2011 - >> Weighted average asking rental rate increases to $2.24 FSG >> Leasing activity drops to 493,100 55 >> There was positive absorption of 295,000 $ P FSG PER MONTH (WEIGHTED) $2.40 $2.30 $2.20 $2.10 $2.00 $1.90 $1.80 $1.70 RENTS VACANCY 24% 22% 20% 18% 16% 14% 12% % VACANT (TOTAL) 400,000 300,000 0 () () (300,000) (400,000) NET ABSORPTION CONSTRUCTION COMPLETIONS >> Construction activity at 365,300 $1.60 3Q11 3Q12 3Q13 3Q14 3Q15 10% (500,000) 3Q11 3Q12 3Q13 3Q14 3Q15 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/losangeles

los angeles DEMOGRAPHICS >> Population: 10,136,509 (2015 Estimate) 10,510,281 (2020 Projection) 3.69% (Growth 2015-2020) >> Household income: $78,309 (Average) $54,514 (Median) >> Job growth: 1.8% (past 12 months) >> Unemployment rate: 6.9% (as of August 2015) VACANCY The total vacancy rate decreased to 20.5%, down 80 basis points from 21.3% reported last quarter. A longer historical perspective of the total vacancy rate shows the rate a year ago at 21.4%. As demand increases and new or renovated properties deliver in varying states of prelease, the market will continue to experience fluctuations in vacancy. Total vacancy rates continued to be highest in the LAX/Los Angeles/Westchester submarket at 38.7%. Central Torrance recorded the lowest at a rate of 13.6%. rates were highest for Class B space (23.9%) and lowest for Class A space (16.7%) with Class C space in-between at 18.3%. Classes B and C saw decreases in vacancy for the quarter. NET ABSORPTION Net absorption was 295,000 in third quarter 2015, with all submarkets recording positive absorption numbers except Central Torrance (-7,200 ) and Downtown Long Beach (-13,500 ). Major move-ins for the quarter included: SCAN Health expanding by 49,800 at 3880 Kilroy Airport Way and True Religion occupying 72,200 of build-to-suit headquarter space at 1888 Rosecrans Ave. In addition to the True Religion move-in, El Segundo also recorded Sanrio moving into 29,000 at 2101 E. El Segundo Blvd. and Bandai taking 28,000 at 2120 E. Park Pl. UNEMPLOYMENT August 2015 figures for nonfarm employment in Los Angeles County showed continued recovery for the job market. Over the past 12 months, Los Angeles County has gained 76,300 jobs for an increase of 1.8%. This gain in employment led to unemployment lowering to 6.9% compared to 8.1% one year ago. Nine out of the eleven industries tracked by the EDD posted year-overyear gains. Educational and Health Services (+22,500), Trade, Transportation, and Utilities (+17,100) and Leisure and Hospitality (+16,800) posted the largest gains. Government (+ 7,500), and Professional and Business Services (+6,500) also increased year-over-year. VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET % VACANT 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 0.0% 38.7% DIRECT VACANCY 0.1% 20.5% 0.0% 21.8% SUBLEASE VACANCY 0.4% 0.1% 0.0% 17.6% 15.0% 13.6% 300,000 250,000 150,000 50,000 0 (50,000) 58,900 15,200 18,800 (7,200) (13,500) 222,800 p. 2 Colliers International

office OVERVIEW EXISTING PROPERTIES VACANCY ACTIVITY ABSORPTION CONSTRUCTION RENTS Submarket/ Class Bldgs Total Inventory Direct Sublease Total Total 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 10,000-24,999 - - - - - - - - - - - - - 25,000 + 60 12,516,500 16.4% 0.3% 16.7% 16.2% 301,200 609,000 (11,100) (51,200) 53,800 0 $2.58 Subtotal 60 12,516,500 16.4% 0.3% 16.7% 16.2% 301,200 609,000 (11,100) (51,200) 53,800 0 $2.58 B 10,000-24,999 85 1,360,700 10.8% 0.0% 10.8% 12.7% 19,100 58,100 25,100 12,200 0 0 $1.97 25,000 + 179 15,726,500 25.0% 0.0% 25.0% 26.7% 149,400 831,500 272,200 13,200 0 365300 $2.05 Subtotal 264 17,087,200 23.9% 0.0% 23.9% 25.6% 168,500 889,600 297,300 25,500 0 365,300 $2.05 c 10,000-24,999 75 1,187,100 8.6% 0.0% 8.6% 9.3% 12,600 48,300 8,600 22,600 0 0 $1.82 25,000 + 37 2,309,700 23.1% 0.2% 23.2% 23.3% 10,800 80,800 200 28,800 0 0 $1.69 Subtotal 112 3,496,800 18.2% 0.1% 18.3% 18.5% 23,400 129,100 8,800 51,400 0 0 $1.71 SUBMARKET/BUILDING SIZE 10,000-24,999 10 162,500 14.3% 0.0% 14.3% 20.4% 8,200 14,200 9,800 11,600 0 0 $1.91 25,000 + 25 4,190,800 39.6% 0.0% 39.6% 39.7% 16,800 78,500 5,400 43,300 0 0 $1.59 Subtotal 35 4,353,300 38.7% 0.0% 38.7% 39.0% 25,000 92,700 15,200 54,900 0 0 $1.59 10,000-24,999 39 555,700 3.4% 0.0% 3.4% 5.7% 5,000 31,000 12,700 16,600 0 0 $2.45 25,000 + 79 10,637,700 18.4% 0.4% 18.8% 20.3% 231,100 839,900 210,100 (185,900) 53,800 365300 $2.94 Subtotal 118 11,193,400 17.6% 0.4% 18.0% 19.6% 236,100 870,900 222,800 (169,300) 53,800 365,300 $2.94 10,000-24,999 60 1,030,400 10.9% 0.0% 10.9% 11.0% 16,400 39,800 1,000 1,600 0 0 $1.96 25,000 + 52 3,237,500 14.5% 0.0% 14.5% 14.3% 32,200 143,300 (8,200) (6,800) 0 0 $2.51 Subtotal 112 4,267,900 13.6% 0.0% 13.6% 13.5% 48,600 183,100 (7,200) (5,200) 0 0 $2.40 10,000-24,999 12 178,000 13.0% 0.0% 13.0% 12.0% 0 1,600 (1,800) (11,900) 0 0 $1.44 25,000 + 35 3,373,600 22.3% 0.0% 22.3% 22.9% 58,200 134,500 20,600 52,100 0 0 $1.98 Subtotal 47 3,551,600 21.8% 0.0% 21.8% 22.3% 58,200 136,100 18,800 40,200 0 0 $1.96 10,000-24,999 23 371,500 16.1% 0.0% 16.1% 15.4% 0 2,200 (2,300) (4,200) 0 0 $1.35 25,000 + 52 4,416,500 14.9% 0.1% 15.0% 16.3% 56,400 143,300 61,200 92,900 0 0 $1.99 Subtotal 75 4,788,000 15.0% 0.1% 15.0% 16.3% 56,400 145,500 58,900 88,700 0 0 $1.94 10,000-24,999 16 249,700 4.6% 0.0% 4.6% 10.3% 2,100 17,600 14,300 21,900 0 0 $1.85 25,000 + 32 4,696,600 21.3% 0.1% 21.4% 20.8% 66,700 181,800 (27,800) (5,400) 0 0 $2.31 Subtotal 48 4,946,300 20.5% 0.1% 20.6% 20.3% 68,800 199,400 (13,500) 16,500 0 0 $2.30 MARKET TOTAL Total 435 33,100,500 20.4% 0.1% 20.5% 21.3% 493,100 1,627,700 295,000 25,800 53,800 365,300 $2.24 Colliers International p. 3

>> The South Bay market saw increased investment sales activity in both core, value-add and creative conversion properties >> Construction activity remains robust with 218,700 of office space under renovation and another 96,000 under construction >> The average asking rates in El Segundo have escalated from $2.48 P in Q3 2013 to $2.94 P in CONSTRUCTION Two new projects delivered to the market in third quarter 2015. Elevon at Campus El Segundo, a fifteen building creative office campus totaling 210,000, came to the market as a sale only property, providing another gateway to the submarket that potentially bypasses escalating asking rates. 2201 E. El Segundo Blvd., fresh off its sale to AGI Properties from Montana Avenue Capital Partners, also delivered fully leased to L Oreal Cosmetics. Renovation activity in South Bay remains strong, as 2040 E. Mariposa Ave. (88,700 ), 2175 E. Park Place (130,000 ) and 2400 Marine Ave (50,600 ) in El Segundo are slated to complete their renovations next quarter. Developer SteelWave also started construction on 2030 E. Maple Ave., a 96,000 creative office property. ACTIVITY New leasing activity during the third quarter totaled 493,100 compared to 645,613 in the second quarter of 2015, a decrease of -24%. The El Segundo/Beach Cities submarket continues to lead the South Bay market in leasing activity, recording 48% of the total activity. Major leasing activity this quarter included Guthy- Renker agreeing to consolidate their Southern California operations to 90,700 at 100 N. Sepulveda Blvd. in El Segundo and HealthCare Partners, Inc. signing for 32,300 at 4910 Airport Plaza Dr. in Long Beach. Rounding out the major leases for the quarter were Barrister Executive Suites renewing 30,700 at 21250 Hawthorne Blvd. in Torrance and Crimson Pipeline renewing and expanding for 28,400 at 3760 Kilroy Airport Way in Long Beach. RENTAL RATES The weighted average asking rent for direct space increased to $2.24 P from $220 P last quarter. This represents the 8th consecutive quarter of rate increases for the market. Average asking rents remained highest in the El Segundo/Beach Cities submarket ($2.94 P), and lowest in the LAX/Los Angeles/Westchester submarket ($1.59 P). In some top-tier buildings, particularly in El Segundo, asking rates continue to push past the $3.00 P mark. The delivery of the Elevon campus as a sale only property has driven rents higher, as the vacancy continues to drop without the influx of additional inventory. WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET LEASING ACTIVITY BY SUBMARKET $3.50 250,000 236,100 $ P PER MONTH (FSG) $3.00 $2.50 $2.00 $1.50 $1.59 $1.94 $1.96 $2.40 $2.30 $2.94 $1.00 150,000 50,000 56,400 68,800 25,000 48,600 58,200 0 p. 4 Colliers International

outlook The South Bay market continues to see increased velocity as demand remains robust. The additions of the sale-only Elevon campus and the fully-leased Station have contributed to climbing rental rates as no vacant inventory has been added this quarter. Tenants continue to look to the market for space comparable to West Los Angeles at a relatively significant price discount, especially compared to Playa Vista and Santa Monica. Value-add properties and strong tenant demand for creative space are creating profitable opportunities for developers willing to take on renovation projects. The outlook for the overall South Bay market remains positive. market description The South Bay office market is comprised of 32.4 million, representing 9% of the total office space in buildings 30,000 square feet and greater in the Los Angeles Basin. Most of the space (64%) was built in the 1980s, and only 8% was built 1990 current. Nearly half (49%) of its space is contained within mid-rise buildings (5 13 stories), followed by 32 percent in lowrise buildings and 19% in high-rise. It has a large concentration of firms in aerospace (although much less than in the 1980s), automotive, telecommunications, information technology, healthcare, and business services, and is served by a highly educated labor force. HISTORICAL leasing ACTIVITY - UNEMPLOYMENT RATE United States, California & Los Angeles County August 2015 1, 1,000,000 900,000 800,000 700,000 8.0% 7.0% 6.0% 5.0% 5.2% 6.1% 6.9% 600,000 4.0% 500,000 3.0% 400,000 300,000 2.0% 1.0% 3Q11 3Q12 3Q13 3Q14 3Q15 0.0% United States California Los Angeles County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 1 World Trade Ctr., Long Beach 575,00 $105,850,000 $184 P Greenlaw Part./Walton Street Cap. SteelWave, Inc. 1230-40 Rosecrans Ave., Manhattan Beach (2 Bldgs.) 311,500 $91,500,000 $294 P Onni Group CW Capital Asset Management LLC 5757-67 W.Century Blvd., Los Angeles 505,000 $61,250,000 $121 P Sunny Hills-Palladium Decron Properties Corporation 101 N. Sepulveda Blvd., El Segundo 198,500 $51,600,000 $260 P AEW Capital Management Menlo Equities 555 S. Aviation Blvd., El Segundo 258,000 $45,000,000 $174 P Tishman Speyer 555 Aviation Boulevard Ltd LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 100 N. Sepulveda Blvd., El Segundo 90,700 Direct A Guthy-Renker Pacific Corporate Towers 4910 Airport Plaza Dr., Long Beach 32,300 Direct A HealthCare Partners, Inc. LNR Properties 21250 Hawthorne Blvd., Torrance 30,700 Renewal A Barrister Executive Suites Stream Realty 3760 Kilroy Airport Way, Long Beach 28,400 Renewal A Crimson Pipeline Kilroy Realty 21041 S. Western Ave., Torrance 15,600 Renewal A American Honda Motor, Inc. Amstar MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 2175 E Park Place, El Segundo Invesco 130,000 El Segundo/Beach Under Renovation Q4 2015 2030 E. Maple Ave., El Segundo SteelWave, Inc. 96,000 El Segundo/Beach Under Construction Q2 2016 2040 E Mariposa Ave, El Segundo Overton Moore Properties 88,700 El Segundo/Beach Under Renovation Q4 2015 2400 Marine Ave., El Segundo Montana Avenue Capital LLC 50,600 El Segundo/Beach Under Renovation Q4 2015 Trisonic-El Segundo Live Oak Properties, LLC 72,000 El Segundo/Beach Proposed TBD Colliers International p. 5

DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Office space in buildings with 10,000 or more of speculative office space. Includes competitive space in Class A, B and C single-tenant and multi-tenant buildings. Excludes noncompetitive owner-occupied buildings, buildings that include 30% or greater of medical or retail space, and space that is under-construction, under-renovation or off-market. 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. 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 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). Total : 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. 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): 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 www.colliers.com/greaterlosangeles. united states: South Bay Office License No. 01908231 2121 Rosecrans Ave, Suite 3301 El Segundo, CA. 90245 tel +1 310 787 1000 FAX +1 310 381 2500 HOLLINGSWORTH, JOHN Executive Managing Director MATTESON, CAITLIN Research Director Research Services WONG, CHRISTOPHER Research Analyst Research Services Accelerating success. p. 6 Colliers International www.colliers.com/marketname