The Market Is Energized By Increased Development In Hollywood

OFFICE CENTRAL LOS ANGELES MARKET REPORT The Market Is Energized By Increased Development In Hollywood MARKET OVERVIEW MARKET INDICATORS - VACANCY 20.5% NET ABSORPTION 24,100 CONSTRUCTION 574,000 RENTAL RATE $1.92 P UNEMPLOYMENT 8.7% The Central Los Angeles office market began 2014 with 24,100 square feet of net absorption. During the first quarter, the total vacancy rate decreased 20 basis points to 20.5 percent. Direct weighted average asking rents increased by $0.02 to $1.92 per square foot, per month Full Service Gross (FSG). New leasing activity was 193,700 square feet in the first quarter of 2014, which was less than the quarterly new leasing activity recorded in 2013 of 201,300 square feet. The majority of leasing activity remains in the Hollywood submarket. The sales environment in the Central Los Angeles market witnessed the largest sale since the acquisition of Columbia Square by Kilroy Realty in Q3 2012. Jamison Services acquired 600 S Commonwealth Ave in Mid- Wilshire for $155 per square foot. The other sales transactions were as follows: Disorderly Kids LLC acquired 2520 W. 6th St in Los Angeles for $148 per square foot, SE Edinger LLC acquired 1545 Wilcox Ave in Hollywood for $296 per square foot, and Shi Ja Park 2006 Living Trust acquired 900 S Westmoreland Ave in Mid Wilshire for $184 per square foot. MARKET TRENDS - >> Total vacancy rate decreases to 20.5% from 20.7% HISTORICAL VACANCY VS RENTS Q1 2010 - RENTS VACANCY HISTORICAL NET ABSORPTION & CONSTRUCTION COMPLETIONS Q1 2010 - NET ABSORPTION CONSTRUCTION COMPLETIONS >> Weighted average asking rental rate increases to $1.92 P >> Leasing activity increases to nn193,700 >> Absorption of 24,100 >> Construction activity of 574,000 nnn $ P FSG PER ANNUM (WEIGHTED) $1.94 $1.92 $1.90 $1.88 $1.86 $1.84 $1.82 $1.80 $1.78 1Q10 1Q11 1Q12 1Q13 1Q14 22% 20% 18% 16% 14% 12% 10% % VACANT (TOTAL) 100,000 50,000 0 (50,000) (100,000) (150,000) (200,000) 1Q10 1Q11 1Q12 1Q13 1Q14 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 COUNTY DEMOGRAPHICS >> POPULATION: 10,063,995 (2014 Estimate) 10,423,669 (2019 Projection) 3.57% (Growth 2014-2019) >> HOUSEHOLD INCOME: $75,972 (Average) $53,125 (Median) >> JOB GROWTH: 2.1% (past 12 months) >> UNEMPLOYMENT RATE: 8.7% (as of February 2014) VACANCY The total vacancy rate, including sublet space decreased to 20.5 percent, down 20 basis points from 20.7 percent reported last quarter. A longer historical perspective of the total vacancy rate shows that the vacancy rate a year ago stood at 20.2 percent. Total vacancy rates continued to be highest in the Mid Wilshire submarket (24.2%) and lowest in the Hollywood submarket (8.6%). rates were highest for Class B space (27.4%) and lowest for Class A space (12.4%) with Class C space in-between at 17.0 percent. NET ABSORPTION Net Absorption was 24,100 in Q1 due to the positive absorption experienced in Mid-Wilshire (27,000 square feet) and negative absorption experienced in Hollywood (-2,900 square feet). The Central LA office market experienced 189,500 square feet of space givebacks in 2013, thus to begin 2014 with positive absorption is an positive occurrence. Net absorption from the perspective of building classes illustrates the appeal for Class A office space in the Central LA office market. Class A buildings recorded 20,200 square feet in positive absorption in Q1. UNEMPLOYMENT February 2014 figures for nonfarm employment in Los Angeles County showed a recovering job market. Over the past 12 months, Los Angeles County has gained 86,100 jobs for an increase of 2.1 percent. This gain in employment led to the unemployment lowering to 8.7 percent compared to 10.2 percent a year ago. Year-over-year job gains were most significant in Professional and Business Services (27,000 jobs), Educational and Health Services (25,900 jobs) and Trade, Transportation, and Utilities (15,900 jobs). The largest decline in jobs was seen in Manufacturing (8,800 jobs). CONSTRUCTION No new projects were delivered to the market in Q1, however there is 574,000 square feet of office space under construction or renovation. Columbia Square is a $300 million mixed use project expected to consist of a 22 story residential tower, 33,000 square feet of retail, and 330,000 of creative office space. The expected delivery of the office space is 2016 and will provide large media and entertainment tenants the opportunity to be located in the heart of Hollywood. The other project under VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET 30% SUBLEASE VACANCY DIRECT VACANCY 30,000 27,000 25,000 25% 0.2% 20,000 % VACANT 20% 15% 24.0% 15,000 10,000 10% 0.2% 5,000 5% 8.4% 0 0% (5,000) (2,900) 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 A 16 3,712,500 13.2% 0.5% 13.7% 14.1% 36,900 36,900 15,000 15,000 0 0 $1.86 B 40 5,947,900 30.3% 0.0% 30.3% 30.3% 37,000 37,000 (2,900) (2,900) 0 0 $1.61 C 10 784,300 27.1% 0.0% 27.1% 29.0% 1,900 1,900 14,900 14,900 0 0 $1.51 SUBTOTAL 66 10,444,700 24.0% 0.2% 24.2% 24.5% 75,800 75,800 27,000 27,000 0 0 $1.66 A 12 1,633,900 9.4% 0.1% 9.6% 9.9% 92,300 92,300 5,200 5,200 0 574,000 $3.35 B 17 993,700 9.6% 0.4% 10.0% 9.3% 24,300 24,300 (7,000) (7,000) 0 0 $3.31 C 14 594,800 3.6% 0.0% 3.6% 3.4% 1,300 1,300 (1,100) (1,100) 0 0 $2.20 SUBTOTAL 43 3,222,400 8.4% 0.2% 8.6% 8.5% 117,900 117,900 (2,900) (2,900) 0 574,000 $3.22 MARKET TOTAL A 28 5,346,400 12.1% 0.4% 12.4% 12.8% 129,200 129,200 20,200 20,200 0 574,000 $2.39 B 57 6,941,600 27.3% 0.1% 27.4% 27.3% 61,300 61,300 (9,900) (9,900) 0 0 $1.74 C 24 1,379,100 17.0% 0.0% 17.0% 18.0% 3,200 3,200 13,800 13,800 0 0 $1.64 TOTAL 109 13,667,100 20.3% 0.2% 20.5% 20.7% 193,700 193,700 24,100 24,100 0 574,000 $1.92 COLLIERS INTERNATIONAL P. 3

>> Class A buildings recorded 20,200 square feet in positive absorption in Q1 >> No new projects were delivered to the market in Q1; however, the Columbia Square redevelopment has begun construction >> Tenants continue to illustrate great interest in Class A office space in the Hollywood submarket construction is 959 Seward St in Hollywood which is expected to deliver 244,000 square feet of creative office space in 2016. ACTIVITY New leasing activity in was 193,700 square feet compared to 187,100 square feet in Q4 2013, an increase of 3.5 percent. The major leases to occur include: SAE Institute leasing 41,000 square feet at 1017 N Las Palmas Ave in Hollywood and Kemosabe Records leasing 11,700 square feet at 7039 W Sunset Blvd in Hollywood. Class A office space generated 129, 200 of new leasing activity in Q1. Tenants continue to illustrate great interest in Class A office space in the Hollywood submarket. In fact, Hollywood accounts for 71 percent of new leasing activity in Class A office space, yet only holds 30 percent of the Class A inventory in the Central Los Angeles office market. The strong demand illustrated by media and entertainment firms is expected to continue as the economy strengthens. The fundamentals in Hollywood have enticed developers to propose new projects and begin construction of new office developments. The 574,000 square feet of creative office space that is expected to deliver in 2016 represents this rush to deliver new product into the market. RENTAL RATES The weighted average asking rent for direct space increased to $1.92 P from $1.90 P. Average asking rents remained highest in the Hollywood submarket ($3.22 P), and lowest in the Mid Wilshire submarket ($1.66 P). The decrease in available space in Class A office space will allow Class B buildings to raise their rents. The asking rent in Class A office space in Hollywood is $3.35 P compared to $3.31 in Class B office space. The trend for asking rents in Hollywood in 2014 is expected to remain upwards but the trend for asking rents in Mid- Wilshire in 2014 is expected to remain flat. WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET LEASING ACTIVITY BY SUBMARKET $3.50 $3.22 140,000 $3.00 120,000 117,900 $ P PER ANNUM (FSG) $2.50 $2.00 $1.50 $1.00 $1.66 100,000 80,000 60,000 40,000 75,800 $0.50 20,000 $0.00 0 P. 4 COLLIERS INTERNATIONAL

OUTLOOK A newly renovated building at 1017 N Las Palmas in Hollywood landed a big tenant in Q1. The amount of available creative space at this project allowed a 40,000 square foot tenant to locate in Hollywood. The lack of large blocks of creative office space in Hollywood is expected to be satisfied by the strong development pipeline in Hollywood. The next project to break ground in Hollywood is expected to be a 405,000 square feet Class A office building. MARKET DESCRIPTION Central Los Angeles is an office market comprised of 13.6 million square feet, representing 6 percent of the total office space 25,000 square feet and greater in the Los Angeles Basin. Mid-Wilshire is attractive to small, entrepreneurial, and often Pacific Rim-owned businesses while Hollywood has a mix of firms from the professional services, high-tech and entertainment/media sectors. HISTORICAL LEASING ACTIVITY Q1 2010 - UNEMPLOYMENT RATE United States, California & Los Angeles County February 2014 4,000,000 350,000 10% 300,000 3,500,000 9% 8% 8.0% 8.7% 250,000 3,000,000 200,000 2,500,000 7% 6% 5% 6.7% 150,000 4% 2,000,000 100,000 1,500,000 50,000 3% 2% 1% 1,000,0000 4Q08 1Q10 4Q09 1Q11 4Q10 1Q12 4Q11 1Q13 4Q121Q14 0% United States California Los Angeles County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 600 S Commonwealth Ave, Los Angeles 323,000 $50,000,000 $155 P Jamison Services Commonwealth Management 2520 W. 6th St, Los Angeles 53,700 $7,950,000 $148 P Disorderly Kids LLC The Standard Oil Investment 1545 Wilcox Ave, Hollywood 48,900 $14,500,000 $296 P SE Edinger LLC BCP-Wilcox LLC 900 S Westmoreland Ave, Los Angeles 20,800 $3,825,000 $184 P Shi Ja Park 2006 Living Trust 900 S Westmoreland LLC LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 1017 N Las Palmas Ave, Los Angeles 41,000 New B SAE Institute Lincoln Property Company 7039 W Sunset Blvd, Los Angeles 11,700 New C Kemosabe Records BIRD Design MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION Columbia Square Kilroy Realty 330,000 Hollywood Under Construction Q1 2016 COLLIERS INTERNATIONAL P. 5

DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total 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 singletenant and multi-tenant buildings. Excludes non-competitive owner-occupied buildings, buildings that include 30% or greater of medical or retail space, and space that is underconstruction, 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. 482 offices in 62 countries on 6 continents United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85 >> $2.0 billion in annual revenue >> 1.12 billion square feet under management >> Over 13,500 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. 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: 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. UNITED STATES: Downtown Los Angeles Office License No. 01908231 865 S. Figueroa Street, Suite 3500 Los Angeles, CA 90017 TEL +1 213 627 1214 FAX +1 213 327 3200 ALGERMISSEN, STEPHEN Executive Vice President DWIGHT, TIM Associate MIDZI, TINASHE Regional Analyst Research Services MUMPER, HANS Executive Managing Director PELLOW, NATHAN Senior Vice President PUTNAM, RICK Managing Director Western Region Capital Markets 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. 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. Accelerating success. P. 6 COLLIERS INTERNATIONAL www.colliers.com/marketname