CREATIVE OFFICE INVESTMENT

MULTI-TENANT NNN LEASED OFFICE INVESTMENT 940 & 942 Calle Negocio San Clemente, California CREATIVE OFFICE INVESTMENT Exclusively Listed By: BRIAN GARBUTT MIA PHAM Senior Vice President Vice President BRE# 01215482 BRE# 01875144 949.790.3166 949.790.3129 bgarbutt@leeirvine.com mpham@leeirvine.com Lee & Associates, Inc. - Irvine 9838 Research Drive Irvine, California 92618 www.lee-associates.com

DISCLAIMER This Confidential Offering Memorandum (this Memorandum ) is being delivered subject to the terms of the Confidentiality Agreement signed by you (the Confidentiality Agreement ) and constitutes part of the Evaluation Material (as defined in the Confidentiality Agreement). It is being given to you for the sole purpose of evaluating the possible acquisition of 940 & 942 Calle Negocio, San Clemente, California ( Property ), and is not to be used for any other purpose or made available to any other party without the prior written consent of the Owner or Lee & Associates Commercial Brokerage ( Broker ). This Memorandum was prepared by the Broker based on information supplied by the Owner and the Broker. It contains selected information about the Property and the real estate market but does not contain all the information necessary to evaluate the acquisition of the Property. The financial projections contained herein (or in any other Evaluation Material, including any computer diskettes) are for general reference only. They are based on assumptions relating to the general economy and local competition, among other factors. Accordingly, actual results may vary materially from such projections. Various documents have been summarized herein to facilitate your review; these summaries are not intended to be a comprehensive statement of the terms or a legal analysis of such documents. While the information contained in this Memorandum and any other Evaluation Material is believed to be reliable, neither Broker nor Owner guarantees its accuracy or completeness. Because of the foregoing and since the Property will be sold on an AS IS, WHERE IS basis, a prospective purchaser must make its own independent investigations, projections, and conclusions regarding the acquisition of the Property without reliance on this Memorandum or any other Evaluation Material. Although additional Evaluation Material (which may include engineering, environmental or other reports) may be provided to qualified parties as marketing proceeds, prospective purchasers should seek advice from their own attorneys, accountants, and engineering/environmental experts. Owner expressly reserves the right, at its sole discretion, to reject any offer to purchase the Property or to terminate any negotiations with any party at any time with or without written notice. Owner shall have no legal commitment or obligations to any prospective purchaser until a written sale agreement has been fully executed, delivered and approved by Owner and any conditions to Owner s obligations hereunder have been satisfied or waived. Owner has retained Broker as its exclusive broker and will be responsible for any commission due to Broker in connection with a sale of the Property pursuant to separate agreement. Broker is not authorized to make any representation or agreement on behalf of Owner. Each prospective purchaser will be responsible for any claims for commissions by any other Broker in connection with a sale of the Property if such claims arise from acts of such prospective purchaser or its Broker. This Memorandum is the property of Owner and Broker and may be used only by parties approved by Owner and Broker. No portion of this Memorandum may be copied or otherwise reproduced or disclosed to anyone except as permitted under the Confidentiality Agreement. Exclusively Offered By: BRIAN GARBUTT MIA PHAM Senior Vice President Vice President BRE# 01215482 BRE# 01875144 949.790.3166 949.790.3129 bgarbutt@leeirvine.com mpham@leeirvine.com

OFFERING SUMMARY This offering is for a fee simple interest in a 12,451 square foot, freestanding creative office building in San Clemente, California. PROPERTY DESCRIPTION The property is located in the desirable beach community of San Clemente off of Avenida Pico on the 5 Freeway. The property has an inplace condominium map and the subject property consists of eight (8) condominiums. PROPERTY HIGHLIGHTS Pricing: $3,530,420 ($283 PSF) Projected First Year NOI: $187,374 CAP Rate: 5.7% LEASE DETAILS - 940 CALLE NEGOCIO Suite 210 Tenant: Cintas, Inc. Square Feet: 1,774 SF Lease Start Date: June 2013 Lease Term: November 2016 Monthly Rent: $1,525.64 Suite 225 Tenant: Solis, Inc. Square Feet: 1,593 SF Lease Start Date: April 2013 Lease Term: March 2018 Monthly Rent: $1,704.51 LEASE DETAILS - 942 CALLE NEGOCIO Suite 310/320/330/340/350 Tenant: The Surfrider Foundation Square Feet: 7,573 SF Lease Start Date: November 1, 2007 Lease Term: February 29, 2021 Monthly Rent: $11,283.77 Increases: $0.05 PSF annual increases Suite 300 Tenant: Vacant Square Feet: 1,511 SF Proforma: $2,191.00 Property Description

SUITE 210 ±1,774 SF SUITE 225 ±1,593 SF office office conference room office office kitchen/ server office break room server/ storage office reception reception BUILDING DESCRIPTION Address: 940 Calle Negocio, Suite 210 San Clemente, CA 92673 Assessor's Parcel Number: 930-079-55 Address: 940 Calle Negocio, Suite 225 San Clemente, CA 92673 Assessor's Parcel Number: 930-079-57 Location: San Clemente, California Location: San Clemente, California Year Built: 1989 - Renovated 2011 Year Built: 1989 - Renovated 2011 Total Condo Area: 1,774 Sq. Ft. Total Condo Area: 1,593 Sq. Ft. Zoning: RSC-BP Zoning: RSC-BP Property Description

BUILDING DESCRIPTION Address: 942 Calle Negocio San Clemente, CA 92673 Assessor's Parcel Number: Suite 300-930-079-61 Suite 310-930-079-62 Suite 320-930-079-63 Suite 330-930-079-64 Suite 340-930-079-65 Suite 350-930-079-66 Location: Parcel 1: Year Built: 1989 Total Building Area: Zoning: Parking: San Clemente, California 29,620 SF (.68 acres) 9,084 Sq. Ft. RSC-BP 4:1 Ratio Stories: One (1) Flooring: Construction: HVAC: Clearance: Power: Loading: Reinforced Concrete CTU Package Units 12 Feet 2,000 Amps @ 277/488 Volts Two (2) GL Doors Property Description

INVESTMENT HIGHLIGHTS Rare opportunity to purchase a multi-tenant, creative office building in South Orange County. 83% of the building is leased to The Surfrider Foundation for a 7-year lease. They just renewed their lease and have been in the building for seven (7) years. Little management as the tenants are on NNN leases and they pay for all operating expenses for the building. 5.6% CAP rate on first year projected NOI. Tight market with an 8% vacancy rate for low-rise office and flex buildings in South Orange County and 6% in San Clemente, High image creative improvements make the space desirable and re-leasable at top of market rents. 3% annual increases in the existing lease. Smaller condos at 940 Calle Negocio could be renewed or sold to small owner users. Property Description

TENANCY The Surfrider Foundation USA is a U.S. 501(c) (3) grassroots non-profit environmental organization that works to protect and preserve the world s oceans, waves, and beaches. The Surfrider Foundation largely focuses its work on such issues as water quality, beach access, beach and surf spot preservation, and sustaining marine and coastal ecosystems. Cintas Corporation is an American company which provides specialized services to businesses of all types, primarily throughout North America. Headquartered in Cincinnati, Ohio, Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom cleaning and supplies, tile and carpet cleaning, promotional products, first aid, safety, fire protection products and services for businesses. Headquartered in San Clemente, California, the Surfrider Foundation maintains a small staff, which work to support the organization s network of grassroots chapters. The current CEO is Chad Nelsen. Their mission statement is the protection and enjoyment of oceans, waves and beaches through a powerful activist network. The Surfrider Foundation was started in Malibu, California in 1984 by a handful of surfers to protest threats to their local surf break at Malibu Point. The organization continued on for several years as a loose advocacy group until 1991, when the first chapters were founded. At that point the Surfrider Foundation transitioned into a grassroots activist organization. Today the Surfrider Foundation maintains over 50,000 members and 80 chapters worldwide.

BIRD'S EYE AERIAL 942 Calle Negocio 940 Calle Negocio Property Description

LOCATOR MAP Property Description

PARCEL MAP SITE Property Description

RENT ROLL San Clemente, CA Presentation Rent Roll & Current Term Tenant Summary As of Aug-2016 for 12,451 Square Feet t - 4B Tenant Name Floor Rate & Amount CPI & Current Months Pcnt Description of Imprvmnts Commssns Sales Assumption about Type & Suite Number SqFt per Year Changes Porters' Wage to to Operating Expense Rate Rate Breakpoint subsequent terms for Lease Dates & Term Bldg Share per Month on Changes to Miscellaneous Abate Abate Reimbursements Amount Amount Overage % this tenant 1 The Surfrider Foundation $17.40 Jan-2015 $17.88 - - - Net: Pays a full - - - Renew Office, Suite: 310,320,330,340,350 7,573 $131,770 Jan-2016 $0.00 pro-rata share of See assumption: Nov-2007 to Feb-2021 60.82% $1.45 Feb-2016 $18.48 all reimbursable Z2-$ 160 Months $10,981 Jan-2017 $0.00 expenses. Feb-2017 $19.08 Jan-2018 $0.00 Feb-2018 $19.56 Jan-2019 $20.16 Jan-2020 $20.76 Jan-2021 $21.00 2 Cintas, Inc. $0.00 May-2015 $10.32 - - - Net: Pays a full - - - Market Office, Suite: 210 1,774 $0 May-2016 $10.92 pro-rata share of See assumption: Jun-2014 to Jun-2017 14.25% $0.00 all reimbursable Z2-$ 37 Months $0 expenses. 3 Solis, Inc. $0.00 Feb-2016 $10.20 - - - Net: Pays a full - - - Market Office, Suite: 225 1,593 $0 Mar-2016 $12.84 pro-rata share of See assumption: Apr-2014 to Mar-2018 12.79% $0.00 Mar-2017 $13.44 all reimbursable Z2-$ 48 Months $0 expenses. 4 VACANT $15.60 Nov-2017 $16.20 - - - Net: Pays a full $10.00 $3.00 - Market Office, Suite: 300 1,511 $23,572 Nov-2018 $16.80 pro-rata share of 6.00% See assumption: Nov-2016 to Nov-2019 12.14% $1.30 all reimbursable $15,110 $4,533 Z2-$ 37 Months $1,964 expenses. Total Occupied SqFt 10,940 Total Available SqFt 1,511 The recipients of this cash flow analysis acknowledge that they have been made aware that an investor, buyer or seller should not purchase or sell predicated on this analysis without the advice of Financial, Tax and Legal Counsel. We make no guarantees, warranties or representations, expressed or implied, about this analysis. It is the recipient's responsibility to independently confirm its accuracy and completeness. Financial Analysis

TRANSACTION SUMMARY Asking Price: $3,530,420 Terms: All cash Projected first year NOI 8/2016 $187,374 Financial Analysis

CASH FLOW ANALYSIS San Clemente, CA Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 8/1/2016 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Jul-2017 Jul-2018 Jul-2019 Jul-2020 Jul-2021 Jul-2022 Jul-2023 Jul-2024 Jul-2025 Jul-2026 Jul-2027 Potential Gross Revenue Base Rental Revenue $190,130 $224,319 $251,745 $264,029 $283,318 $302,208 $309,890 $313,758 $317,650 $332,154 $350,340 Scheduled Base Rental Revenue 190,130 224,319 251,745 264,029 283,318 302,208 309,890 313,758 317,650 332,154 350,340 Base Rental Step Revenue 89 1,472 3,492 6,116 10,493 11,493 15,777 20,226 16,718 10,493 Expense Reimbursement Revenue 88,060 93,136 95,510 97,953 100,460 103,032 105,674 108,382 111,167 114,025 151,298 Total Potential Gross Revenue 278,190 317,544 348,727 365,474 389,894 415,733 427,057 437,917 449,043 462,897 512,131 Effective Gross Revenue 278,190 317,544 348,727 365,474 389,894 415,733 427,057 437,917 449,043 462,897 512,131 Operating Expenses Management 9,000 9,270 9,548 9,835 10,130 10,433 10,746 11,069 11,401 11,743 12,095 Association Dues 38,076 39,218 40,395 41,607 42,855 44,141 45,465 46,829 48,234 49,681 51,171 HVAC 1,000 1,030 1,061 1,093 1,126 1,159 1,194 1,230 1,267 1,305 1,344 Insurance 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 Property Taxes 1.164% 40,740 41,555 42,386 43,234 44,098 44,980 45,880 46,797 47,733 48,688 84,002 Total Operating Expenses 90,816 93,133 95,512 97,954 100,460 103,032 105,673 108,385 111,169 114,027 151,300 Net Operating Income 187,374 224,411 253,215 267,520 289,434 312,701 321,384 329,532 337,874 348,870 360,831 Leasing & Capital Costs Tenant Improvements 25,311 9,435 9,494 42,617 11,825 10,937 11,006 56,816 13,709 Leasing Commissions 11,694 6,613 6,636 29,746 8,243 7,614 7,643 39,407 9,497 Total Leasing & Capital Costs 37,005 16,048 16,130 72,363 20,068 18,551 18,649 96,223 23,206 Cash Flow Before Debt Service $150,369 $208,363 $253,215 $251,390 $217,071 $292,633 $302,833 $329,532 $319,225 $252,647 $337,625 & INCOME TAX ============ ============ ============ ============ ============ ============ ============ ============ ============ ============ ============ The recipients of this cash flow analysis acknowledge that they have been made aware that an investor, buyer or seller should not purchase or sell predicated on this analysis without the advice of Financial, Tax and Legal Counsel. We make no guarantees, warranties or representations, expressed or implied, about this analysis. It is the recipient's responsibility to independently confirm its accuracy and completeness. Financial Analysis

FINANCIAL ANALYSIS CASH FLOW ASSUMPTIONS: Software: The cash flow analysis has been prepared with the assistance of ARGUS software. Analysis Period: A 10-year discounted cash flow is prepared commencing August 1, 2016. Square Footage: Growth Rates: There is a total of 12,451 square feet. General operating expenses, capital expenditures, and property taxes are inflated 3% per year.

940 CALLE NEGOCIO OPERATING EXPENSES 942 CALLE NEGOCIO OPERATING EXPENSES Direct Expense Reconciliation Project Size: 3,367 Category Budgeted Expenses 1. Security $0 2. Cleaning $0 3. Management Fee $5,100 4. HVAC $0 5. Elevator $0 6. Maintenance & Repairs $1,200 7. Utilities $0 8. Parking Lot $0 9. Landscaping $0 10. Common Area Association $11,172 11. Insurance $789 12. Taxes $7,004 13. Miscellaneous $0 TOTAL $25,265 Total PSF/Mo. $0.625 Direct Expense Reconciliation Project Size: 9,084 Category Budgeted Expenses 1. Security $0 2. Cleaning $0 3. Management Fee $5,100 4. HVAC $900 5. Elevator $0 6. Maintenance & Repairs $1,800 7. Utilities $0 8. Parking Lot $0 9. Landscaping $0 10. Common Area Association $30,168 11. Insurance $2,300 12. Taxes $22,936 13. Miscellaneous $0 TOTAL $63,204 Total PSF/Mo. $0.580 Financial Analysis

SALE COMPARABLES ADDRESS SIZE SALE PRICE (PRICE PSF) SALE DATE BUYER s 32332 Camino Capistrano San Juan Capistrano, CA 92675 12,000 SF $3,990,000 ($3632.50) 4/16/2016 SPM-Grey Wolf, LLC dsfdf 9821 Irvine Center Drive Irvine, CA 92618 7,700 SF $2,890,000 ($375.32) 11/18/2015 C & C Partnership df 9861 Irvine Center Drive Irvine CA 92618 9,920 SF $3,670,000 ($369.96.) 11/30/2015 KJSD Investments, LLC

ECONOMIC OVERVIEW The industrial real estate markets showed positive signals for 2012, as the South Bay industrial real estate market had three out of four quarters of positive absorption, and a steady decline of the vacancy rate. The market indicators were positive heading into the new year. However, the delivery of new Class A product into the marketplace raised the market s overall vacancy to 6% as the South Bay experienced (-138,961) SF of net absorption. Lee & Associates believes that the strengthening of the overall economy, the increase in access to capital across the globe, and the increase in infrastructure projects will all lead to a continued strong demand for industrial real estate in the South Bay market and a gradual decline in the vacancy rate for the 2nd Quarter. The direct industrial vacancy rate in the South Bay marketplace increased from 4.5% in the 4th Quarter 2012 to 6% in the 1st Quarter 2013. Developers delivered over 1,000,000 SF to the South Bay over the past two quarters. One of the largest deliveries, 16325 Avalon, Carson (230,000 SF), was recently sold to a Teachers Annuity Plan from Trammel Crow. Consequently, investors continue to flock to quality Class A projects, as the industrial demand for this product continues to be strong. MARKET SNAPSHOT Base Inventory: 206,357,246 Availability: 7.9% Vacancy: 6.0% Net Absorption: Construction Completed: -138,961 SF 373,020 SF *Calculations are comprised of existing single and multi-tenant buildings 10,000 SF or larger. Source: Lee & Associates Los Angeles-Long Beach Office KEY TERMS & DEFINITIONS Base Inventory: SF of existing and under-construction buildings. Availability: SF of available buildings, whether vacant or occupied. Vacancy: SF of existing buildings that are vacant. Net Absorption: SF of increased/decreased vacant available space at the end of the period. The amount of sublease space increased slightly from the previous quarter, as the total availability rate increased to 7.9%. Asking rents remained steady at $0.57 Net. The average sale price continued to be steady at $90 PSF as sellers and buyers expectations get more in line based upon the quality and location of the property. The South Bay industrial real estate market has one of the lowest vacancy rates in the country, as Dr. Walter Kemmsies, Chief Economist for Moffat & Nichol, discussed why this is at the 2013 Pulse of the Ports. According to Dr. Kemmsies, the Port of Long Beach moved more than 6 million TEUs in 2012, the second largest volume in the nation. Dr. Kemmsies believes this pattern will continue in 2013, with higher economic growth. Heading into the 2nd Quarter of 2013, Lee & Associates remains optimistic that the current demand for South Bay industrial real estate will continue to be strong. Two intangibles that we are currently tracking are the consumption pattern changes in energy as natural gas continues to be a cheap alternative to diesel that the US produces and the Grey Tsunami, or the aging US population that the government has to address as it relates to US budgetary policy and the deficit.

SOUTH COUNTY OFFICE MARKET South County encompasses Irvine Spectrum, Aliso Viejo, Laguna Beach, Laguna Hills, Mission Viejo, Rancho Santa Margarita, San Clemente, San Juan Capistrano, and some outlying Orange County Areas. South County is broken down into approximately 22 million square feet of class B office space and 6.9 million square feet of Class A office space. 20% 15% 10% 7% 7% 8% 15% 9% 14% 16% SOUTH COUNTY OFFICE VACANCY RATES 14% 17% 19% 18% 19% 15% 17% 15% 13% 15% 15% 11% 14% 13% 9% 11% 10% 8% 9% 9% 7% 9% South County finished 2015 with a vacancy rate of 8.6%. This submarket observed a positive net absorption of 231,624 square feet for the year. An estimated 575,044 square feet of new construction is underway with another 400,000 square feet planned. 5% 0% 5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Low Rise High Rise Total 1,000,000 800,000 600,000 400,000 200,000 865,108 90,678 955,786 73,513 35,230 SOUTH COUNTY OFFICE NET ABSORPTION 539,485 565,769 676,605 494,745 627,610 168,221 212,906 110,836 76,865 155,625 232,490 132,865 380,850 47,323 15,938 221,935 9,689 231,624 0-200,000-400,000-600,000-800,000-41,283-371,264-462,244-159,887-622,131-392,181-179,275 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Low Rise High Rise Total

SOUTH COUNTY ASKING OFFICE RENTAL RATE CHANGES The South County submarket has the second highest asking rates of all the submarkets with an average annual rate of $28.08 or $2.34 per month. 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% 6% 32% -1% -8% SOUTH COUNTY OFFICE PERCENTAGE CHANGE IN ASKING RENTAL RATES -5% -13% -14% -8% -7% -12% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-2% 1% -3% 3% 6% 5% 8% 3% 7% 7% Low Rise High Rise SOUTH COUNTY OFFICE AVERAGE ASKING RENTAL RATES (FSG) $3.50 $3.00 $2.50 $2.00 $2.46 $3.36 $2.42 $3.09 $2.30 $2.68 $2.17 $2.43 $1.89 $2.24 $1.86 $2.27 $1.80 $2.33 $1.92 $2.46 $2.09 $2.54 $2.25 $2.71 $1.50 $1.00 $0.50 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Low Rise High Rise

Exclusively Listed By: BRIAN GARBUTT MIA PHAM Senior Vice President Vice President BRE# 01215482 BRE# 01875144 949.790.3166 949.790.3129 bgarbutt@leeirvine.com mpham@leeirvine.com Lee & Associates - Irvine, Inc. 9838 Research Drive Irvine, California 92618 www.lee-associates.com